Basic Allowance for Housing (BAH) paid to service members living off base in stateside areas will climb an average of 7.3 percent next month to keep pace with local rental costs.

A total of 1.2 million service members will draw BAH in 2008, an increase of 250,000 over 2007, said Susan A. Brumbaugh, director of the BAH program for the Department of Defense.

Most of the jump, she said, is probably reservists called to active duty to support contingency operations, including wars in Iraq and Afghanistan. But part of the growth is the effect of housing privatization partnerships.

As the inventory of military housing falls, private contractors are building or refurbishing units with government help for rent exclusively to military members.  The result is a dwindling population living in base housing and a rising population who qualify for BAH but see their allowance transferred monthly as rent to live in contractor-owned housing.

The 2008 BAH rates are on line. They vary by pay grade and assignment area.

Also, service members with dependents draw higher BAH than those without. The single-married disparity has been criticized as indefensible in modern compensation system, most recently by the Defense Advisory Committee on Military Compensation in 2006. The panel of outside pay experts said BAH at the "without dependents" should be raised to match the married rate. But the estimated cost was $550 million a year.

The 10th Quadrennial Review of Military Compensation (QRMC), an internal Pentagon study group, will make a host of pay recommendations next year. One idea being studied is to raise BAH for single members gradually until the difference disappears in four or five years.

QRMC officials did recommend in recent months that a floor be set when calculating 2008 BAH rates so members without dependents receive no less than 75 percent of the BAH "with dependents" rate. Defense officials accepted the recommendation. As a result, members without dependents will be paid an additional $34 million in BAH during 2008.

Is the 75-percent floor a first step toward eliminating the BAH disparity, to be followed by an 80-percent rate floor in 2009 and so on. One official suggested it could be. But Virginia Penrod, director of military compensation in the Office of the Secretary of Defense, said it is too early to know if that scenario will play out. The QRMC, she said, won't make its recommendation until early 2008, and Defense officials haven't decided yet whether to support a phase out of the allowance disparity.

Adoption of 75-percent floor in setting 2008 BAH rates "definitely is good news for single members," Penrod said.  But it should be viewed simply as a move "to ensure that our single members have comfortable housing compared with civilian counterparts."

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