ARTICLE II - COST-OF-LIVING ADJUSTMENTS

Section 1 - Amount and Effective Dates of Cost-of-Living Adjustments

     (a)   The cost-of-living allowance which, on October 31, 1985 is 13 cents per hour, will subsequently be adjusted, in the manner set forth in and subject to all the provisions of paragraphs (e) and (g) below, on the basis of the "Consumer Price Index for Urban Wage Earners and Clerical Workers (Revised Series) (CPI-W)" (1967 = 100), U.S. Index, all items - unadjusted, as published by the Bureau of Labor Statistics, U.S. Department of Labor, and hereinafter referred to as the BLS Consumer Price Index. The first such cost-of-living adjustment shall be made effective November 1, 1985, based (subject to paragraph (e)(i) below) on the BLS Consumer Price Index for March 1985 as compared with the index for September 1984. Such adjustment, and further cost-of-living adjustments which will be made effective as described below, will be based on the change in the BLS Consumer Price Index during the respective measurement periods shown in the following table subject to the exception in paragraph (e)(ii) below, according to the formula set forth in paragraph (f) below as limited by paragraph (g) below:

                     Measurement Periods    
                       Effective Date
      Base Month.    Measurement Month   Month of Adjustment
          (1)              (2)                 (3)
    September 1984      March 1985        November 1, 1985
        March 1985      September 1985    January 1, 1986
    September 1985      March 1986        July 1, 1986
        March 1986      September 1986    January 1, 1987
    September 1986      March 1987        July 1, 1987
        March 1987      September 1987    January1, 1988

     (b) While a cost-of-living allowance is in effect, such cost-of-living allowance will apply to straight time, overtime, vacations, holidays and to special allowances in the same manner as basic wage adjustments have been applied in the past, except that such allowance shall not apply to duplicate time payments, including arbitraries and special allowances that are expressed in time, miles or fixed amounts of money or to mileage rates of pay for miles run in excess of the number of miles comprising a basic day.

(c) The amount of the cost-of-living allowance, if any, which will be effective from one adjustment date to the next may be equal to, or greater or less than, the cost-of-living allowance in effect in the preceding adjustment period.

     (d) On June 30, 1988 all of the cost-of-living allowance then in effect shall be rolled into basic rates of pay and the cost-of-living allowance in effect will be reduced to zero. Accordingly, the amount rolled in will not apply to duplicate time payments, including arbitraries and special allowances that are expressed in time, miles or fixed amounts of money, and mileage rates of pay for miles run in excess of the number of miles comprising a basic day.

     (e)   Cap. (i) In calculations under paragraph (f) below, the maximum increase in the BLS Consumer Price Index (C.P.I.) which will be taken into account will be as follows:

     Effective Date    Maximum C.P.I. Increase
     of Adjustment  Which May Be Taken into Account
       (1)                      (2)
   November 1, 1985     4% of September 1984 CPI
    January 1, 1986     8% of September 1984 CPI, less the
                           increase from September 1984
                            to March 1985
       July 1, 1986     4% of September 1985 CPI
    January 1, 1987     8% of September 1985 CPI, less the
                           increase from September 1985
                            to March 1986
       July 1, 1987     4% of September 1986 CPI
    January 1, 1988     8% of September 1986 CPI, less the
                            increase from September 1986
                            to March 1987

     (ii)  If the increase in the BLS Consumer Price Index from the base month of September 1984 to the measurement month of March 1985, exceeds 4% of the September base index, the measurement period which will be used for determining the cost-of-living adjustment to be effective the following January will be the twelve-month period from such base month of September; the increase in the index which will be taken into account will be limited to that portion of increase which is in excess of 4% of such September base index, and the maximum increase in that portion of the index which may be taken into account will be 8% of such September base index less the 4% mentioned in the preceding clause, to which will be added any residual tenths of points which had been dropped under paragraph (f) below in calculation of the cost-of-living adjustment which will have become effective July I during such measurement period.

     (iii) Any increase in the BLS Consumer Price Index from the base month of September 1984 to the measurement month of September 1985 in excess of 8% of the September 1984 base index, will not be taken into account in the determination of subsequent cost-of-living adjustments.

     (f)   Formula. The number of points change in the BLS Consumer Price Index during a measurement period, as limited by paragraph (e) above, will be converted into cents on the basis of one cent equals 0.3 full points. (Bv "0.3 full points" it is intended that any remainder of 0.1 point or 0.2 point of change after the conversion will not be counted).

The cost-of-living allowance in effect on October 31, 1985 will be adjusted (increased or decreased) effective November 1, 1985 by the whole number of cents produced by dividing by 0.3 the number of points (including tenths of points) change, as limited by paragraph (e) above, in the BLS Consumer Price Index during the measurement period from the base month of September 1984 to the measurement month of March 1985. Any residual tenths of a point resulting from such division will be dropped. The result of such division will be added to the amount of the cost-of-living allowance in effect on October 31, 1985 if the Consumer Price Index will have been higher at the end than at the beginning of the measurement period, and subtracted therefrom only if the index will have been lower at the end than at the beginning of the measurement period and then, only, to the extent that the allowance remains at zero or above.

The same procedure will be followed in applying subsequent adjustments.

     (g) Offsets. The amounts calculated in accordance with the formula set forth in paragraph (f) will be offset by the increases provided for in Article I of this Agreement as applied on an annual basis against a starting rate of $12.54 per hour. This will result in the cost-of-living increases, if any, being subject to the limitations herein described:

     (i)   Any increase to be paid effective November 1, 1985 is limited to that in excess of 13 cents per hour. Since the formula produces 10 cents per hour for the November 1, 1985 adjustment, no change will be made on that date in the amount of the cost-of-living allowance.

     (ii)  The combined increases, if any, to be paid as a result of the adjustments effective November 1, 1985 and January 1. 1986 are limited to those in excess of 38 cents per hour.

     (iii) Any increase to be paid effective July 1, 1986 is limited to that in excess of 19 cents per hour.

     (iv) The combined increases, if any, to be paid as a result of the adjustments effective July 1, 1986 and January 1, 1987 are limited to those in excess of 48 cents per hour.

     (v) Any increase to be paid effective July 1, 1987 is limited to that in excess of 20 cents per hour.

     (vi) The combined increases, if any, to be paid as a result of the adjustments effective July 1. 1987 and January 1, 1988 are limited to those in excess of 51 cents per hour.

     (h)   Continuance of the cost-of-living adjustments is dependent upon the availability of the official monthly BLS Consumer Price Index (CPI-W) calculated on the same basis as such Index, except that, if the Bureau of Labor Statistics, U.S. Department of Labor, should during the effective period of this Agreement revise or change the methods or basic data used in calculating the BLS Consumer Price Index in such a way as to affect the direct comparability of such revised or changed index with the CPI-W Index during a measurement period, then that Bureau shall be requested to furnish a conversion factor designed to adjust the newly revised index to the basis of the CPI-W Index during such measurement period.

Section 2 - Application of Cost-of-Living Adjustments 

     In application of the cost-of-living adjustments provided for by Section I of this Article II, the cost-of-living allowance will not become part of basic rates of pay except as provided in Section 1(d). Such allowance will be applied as follows:

     (a)   For other than dining car stewards and yardmasters, each one cent per hour of cost-of-living allowance will be treated as an increase of 8 cents in the basic daily rates of pay produced by application of Article I and by Section 1(d) of this Article II. The cost-of-living allowance will otherwise be applied in keeping with the provisions of Section 8 of Article I.

     (b)   For dining car stewards, each one cent per hour of cost-of-living allowance will be treated as an increase of $1.80 in the monthly rates of pay produced by application of Sections 8 and 9 of Article I and by Section 1(d) of this Article II.

     (c)   For yardmasters, each one cent per hour of cost-of-living allowance will be treated as an increase of $2.00 in the monthly rates of pay produced by application of Sections 8 and 9 of Article I and by Section 1(d) of this Article II.