Administration of Certain Allowances and Differentials Paid to Civilian Employees Located Overseas

Published by the Government Accountability Office on 1971-04-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)


                Dear      Mr.     Macomber:

                        As a part of our continluing            review     of the State       Department        opera-
                tions,     our office       reviewed    the activities         governed    by the Standardized
                Regulations        issued     by the Department        which concern       payment    of allowances
                and differentials           to civilian     em??oyees       located     at overseas      posts.        We
                also looked        into   the use of the regulations              by severa!     Government
                agencies.        Our review       was conducted       in Washington,       D. C., and at 13
                overseas      posts.

                       We believe    that     generally     the policies       and guide?lnes      set            forth
                in the Regulations        provide       an adequate     framework    for administration                   of
                allowances     and differentials          by all    Government    agencies.

                     Many of the specific       matters   disclosed    by our review     in the f5eld
                were brought   to the attention       of appropriate    officials     at the post
                where they occurred     and corrective      action   was taken.     In addition,   we
                have discussed    these matters      and some of our general      observations
                with the Director     of the Allowances       Staff.

                      We understand             that       several      management   actions     have already       been
                taken  to improve             administration            of the allowance      program    and that      more
                will  be forthcoming              as a result           of the Department's        new program      of
                management    reform           contained         in   the "Diplomacy      for the 70ā€™sā€      report,

                        We trust      that our observations,         which primarily        concern     education
                and living       quarters   allowances;       post differential;         and orovlding        Govern-
                ment leased       quarters    versus     payment   of living     quarters      allowances       will
                provide    a constructive        contribution      to attaining       ?Improved     management.

                ---__----           ALLOWANCE

                        An education        allowance   is provided      to assist              an employee      in meeting
                the extraordinary           and necessary    expenses,     incurred               by reason    of his
                service    overseas,        for an adequate     elementary      and            secondary    education     of
                his dependent        children.

                       In meeting    this   responsibility,        we believe     that   savings can be
                achieved   by greater     utilization       of State   Department      sponsored   schools
                and Department     of Defense         (DOD) operated    schools     at or away from post.
        In view of the DOD policy change in June 1969 providing     that civilian
agency employeds would have equal and guaranteed use of DOD schools, we
believe    that "away from post" education  allowance rates (grades 9 to 12)
should be based primarily     on the cost of attending  DOD dormitory    schools.

       We believe      that the Allowances Staff should consider appropriate
changes in computing "away from post'l' education allowances          giving more
weight to use of costs of DOD schools and American sponsored schools in
establishing      education    allowance rates.     Freedom of choice of schools
is still     preserved     but any additional   costs which may be incurred   by
the civilian       employee for his dependent child should be borne by him.,

      We found that overpayments        of education allowances        resulted   from
a lack of definitive      guidelines    concerning     allowable    education   expenses.
We noted a number of instances where employees were not absorbing                   the
$30 U.S. cost factor for miscellaneous           supplies     and other items when the
total allowable     educational     expenses of dependents were less than the
maximum education     rate.

      The Allowances Staff had adopted the position      that certain   items,
in addition   to those covered by the $30 U.S. cost factor,       were nonreim-
bursable education    expenses such as gym clothes,   activity    fees, and
personal items.     We found, however, that this position      was not made
clear in the regulations     or to all posts, and that a number of educa-
tion allowance grants included      some of the items which the Allowances
Staff had determined     to be nonreimbursable.

       We found a lack of uniformity     in providing      transportation     expenses
for dependent children      going away to school.        The Allowances Staff in
computing the "away from post" education          allowance includes      transporta-
tion cost for two round trips between post and school.                However, an
analysis    of a number of education grants indicated          that some employees
were being reimbursed     for more than two round trips when their actual
expenses for sending their dependent children            away to school were less
than the "away from post" education        allowance rate.

       We believe    that the Department should clarify  its regulations
regarding    reimbursement   of the costs of round trips between post and


      A living  quarters    allowance is granted to an employee for the annual
cost of suitable,     adequate living   quarters  for the employee and his
family when government-furnished       hous5ng is not available.    The allowance
rates vary by costs at the post, by the salary of the employee and, by
family status (single,      married,  and number of dependents)   of the employee.
       The rates are established   and revised        primarily     upon cost data
furnished    by the post employees receiving        living     quarters  allowancesa

       In our review we noted certain     conditions    existing    which would
appear to be appropriate     for consideration      in establishing     the living
quarters   allowanceso    The conditions    included   (1) employees residing
in high cost areas for personal reasons rather           than for official      purposes,
(2) employees leasing quarters       in excess of adequate needs, and (3)
employees reporting    estimated expenses in excess of actual costs,

      We believe  that the extent of these conditions  existing   at different
posts might be explored by the Allowances Staff and appropriate        adjust-
ments made, still    maintaining a reasonable and fair living   quarters


        The post differential,      a computed percentage of an employee's basic
salary,    is provided     to compensate him for extraordinarily     difficult
living    conditions,    excessive physical hardship,     or notable unhealthy
sanitary     conditions    as compared with living   conditions   in the United

      The amount of post differential             authorized     for a particular     post
depends on the level of hardship            (isolation,       and lack of recreation,
housing,   sanitation,     medical facilities,          and other conditions)      present
as computed by the Allowances Staff.                The rate is limited      by law to a
maximum of 25 percent of salary.              The rates are determined on the basis
of an evaluation       of certain    information       supplied by the post concerning
the hardship conditions         at the post.        The information    is "scored" against
a set of predetermined         standards with points being awarded if a specific
element meets the level of hardship,

        We noted that the current    standards and weights assigned to the
hardship    factors were established     in 1951, and with very few changes
have remained the sameo We noted also that the weights assigned to the
different     factors need to be reexamined and may require     some changes as
a result of changes in values and living         conditions to be found at the
various posts,

     In discussing  this matter with the Allowances Staff,    we were informed
that a task force would be established   to review the existing   criteria
and update the standards and weights,   as appropriate.


     We believe   that there is a need for more definitive             guidelines      and
management controls     concerning    when leased quarters will        Se provided      in
lieu of a living    quarters    allowance.
        The Department of State, Agency for International            Development,   United
States Information         Agency, and several other Government agencies lease
living    quarters     for personnel     stationed   overseas,  This is in lieu of
providing     a living     quarters  allowance and is usually done when it is
considered      in the best interests         of the Government or for reasons of
hardships     and circumstances      beyond the control .of individual      employees.

       Inadequate or unrealistic        quarters   allowance is not of itself       reason
for official     leasing.     We believe,    however, that representational        obliga-
(ions are a major factor in leasing housing for personnel               stationed
 3     We noted, generally,       that the leasing program at several posts had
desulted     in substantial     costs in excess of the authorized       living    quarters
Allowance which would have been provided             in lieu of leasing quarters.
In some instances,        the leased quarters    appeared to be in excess of normal

       We did observe, however, that uniform housing standards governing
costs and the general nature of leased quarters       to be occupied were
established   at one post.   A housing board had been established      at the
post to review new leases and inspect each housing unit before a lease
was signed to ensure that the quarters     were appropriate    for representa-                 ".
tional purposes and not ostentatious    or extravagant.

        We think these or other similar       management    controls      should be
explored and adopted where conditions          warrant.     Along these lines,
improved coordination       on housing matters among       Government agencies at
posts would, in our opinion,        help to hold down      the escalating       rental costs
resulting     from the competition     between agencies'      employees for adeq-late
residential      living quarters,


      We found that the Allowances Staff rarely made visits                 to overseas
posts to evaluate      the conditions      reported.     This was further     emphasized
in the "Diplomacy for the 70'~~" report.             The Allowances Staff has relied
on the audit and inspection         staffs    to perform any needed evaluations.
+wever,      we found that these evaluations         generally   related    to the posts'
  ministration      of the allowances rather than evaluating             the appropriate-
  ss of the allowances established            for a particular     post.

      We understand     that the Allowances Staff will perform more on-site
inspections   of the    environmental  and economic conditions  at the overseas
posts to ensure the       accuracy and completeness of the data used to establish
the allowances and      differential.

                               u           -4-
          In addition,    wz believe     that the audit     and inspection     staffs,     as
    a part of their    post examinations,       should   place   more emphasis       on review-
    ing the validity    of factors     and other    data compiled       in the field    and
    used in the development       of the allowances      and differentials.

         We do not plan to issue         any additional              reports    on these matters     at
    this  time.      However,   we would be glad to             discuss      any of the details    of
i   our observations       with your representatives.

           The assistance     and cooperation      given     to our staff  by your representa-
    tives   in conducting     our review     is appreciated.       We would appreciate    any
    comments   you have     or advice   of action      taken on the matters    discussed

          A copy of this      letter     is being     sent to the Foreign   Operations       and
    Government   Information        Subcommittee,      Committee on Government      Operations,
    House of Representatives.

                                                    Sincerely        your

                                                    James A. Duff
                                                    Associate Direct0

    The Hondrable     William    B. Macomber,      .Jr.
    Deputy    Under Secretary     for Administration
    Department     of State

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