Basic Allowance for Housing (BAH) paid to a million service members living off base in the United States will rise by an average half percentage point in January as two slimming changes to rate calculations take hold.
The 2015 BAH rates no longer will include added dollars for renters insurance, a move that dampens rates an average of one percent.
Also, the fiscal 2015 Defense Authorization Act that President Obama signed Dec. 19 slows BAH growth so new rates cover 99 percent rather than 100 percent of average rental costs for stateside service members.
Both steps are intended to free up about a billion in housing allowance dollars over the next five years so the services can divert them to other readiness accounts as defense spending continues to be squeezed by the 2011 Budget Control Act with its automatic “sequestration” enforcement tool.
BAH rates in January will climb by an average of $17 per recipient. But individual rate adjustments will vary by pay grade, dependency status and assignment area. For example, rates will climb an average of 8 percent in San Diego and 7 percent near Travis Air Force Bas, Calif. But BAH will fall an average of 11 percent near Fort Huachuca, Ariz., and 8 percent in Ogden, Utah, two areas that will see the sharpest rates declines.
The good news for current BAH recipients is individual rate protection remains in effect. No service member will see his or her BAH drop unless they change assignment areas “and as long as they do not have a reduction in pay grade or a change in dependency status,” said Navy Lt. Cmdr. Nate Christensen, a spokesman for the offices of assistant secretary of defense for personnel and force readiness.
Rate protection is an “integral part of the BAH program,” Christensen added, and it “ensures that members who have made long-term commitments in the form of a lease or contract are not penalized if the area’s housing costs decrease.”
The Pentagon eliminated renters’ insurance coverage from BAH through “procedural changes,” Defense officials said. For BAH recipients, it means a rate drop of $200 to $300 a year.
The other dampening of rates, so they cover 99 percent of average rental costs and utilities, needed a change in law. Senior defense officials and military leaders proposed earlier this year that BAH rates be capped through 2017, until rates covered 95 percent of rental costs and utilities. Congress decided to limit the impact on BAH to one percent in 2015 only.
House-Senate conferees on the defense bill, however, warned that some heftier compensation savings sought by the Joint Chiefs will be reconsider after the Military Compensation and Retirement Modernization Commissions delivers its recommendations in February.
Also taking effect Jan. 1 are new basic allowance for subsistence (BAS) rates which will increase by 2.9 percent. The new rates are $367.92 per month for enlisted members and $253.38 per month for officers.
BAS adjustments are linked to changes in food prices as measured by the annual change in the U.S. Department of Agriculture cost of food at home index.
The Defense Department also released its 2015 contiguous United States (CONUS) cost of living allowance (COLA) rates. About 12,000 members will see a decrease in CONUS COLA payments and 7,000 will see an increase or no change.
Roughly 4,000 members no longer will draw CONUS COLA payments, a taxable supplemental allowance to help offset higher prices in high-cost locations. CONUS COLA rates vary based on location, pay grade, years of service and dependent status.
The BAH budget for 2015 is about $20 billion.
The president’s 2016 budget request in February is expected to call for more dampening of BAH payments. Congress would have to approve them. When BAH rates first were set more a decade ago, initial rates covered only 80 percent of members’ actual rental costs. During recent wars, Congress adopted a phased program to close that BAH gap with rental costs gradually, and finally achieved that goal in 2005.
In 2015 that trend begins to reverse course.
Service members living off base overseas get an Overseas Housing Allowance instead of BAH. OHA is not adjusted with BAH. OHA is based on what members actually pay in rent and so gets adjusted periodically based on shifts in the dollar’s value against local foreign currency.
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# # # # #Tom Philpott has been breaking news for and about military people since 1977. After service in the Coast Guard, and 17 years as a reporter and senior editor with Army Times Publishing Company, Tom launched "Military Update," his syndicated weekly news column, in 1994. "Military Update" features timely news and analysis on issues affecting active duty members, reservists, retirees and their families.
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