Paycheck Chronicles

DOD: Troops Not Paid If Government Shuts Down


Military personnel will not be paid (effective 15 October 2015) and civilian personnel may be furloughed if Congress fails to pass a federal budget or a continuing resolution preventing a government shutdown, per guidance issued by the Office of the Secretary of Defense on Friday, 25 September 2015.

With the excitement of John Boehner's resignation last week, most analysts decreased the likelihood of a government shutdown.  However, it still could happen.  How would a government shutdown impact military pay?

Military pay is not safe from a government shutdown, but the military pay schedule means that the impact of a shutdown would not be felt unless it lasted for two weeks or longer.  The 1 October 2015 military pay will not be impacted by a government shutdown because it is the end-of-month pay for September 2015,  which is in Fiscal Year 15 and is not impacted by the lack of federal budget for Fiscal Year 16.  The first military payday of Fiscal Year 16 is 15 October 2015.

Now, there is some lead time necessary to process military pay.  The Defense Finance and Accounting Service (DFAS) processes well over 1 million deposits each payday.  If the government does shut down, it will have to "open up" at least a few days prior to the 15 October 2015 military payday for deposits to be received on time.

Another possibility is that the government shuts down, but Congress votes to protect military pay despite the absence of approved funding for that pay.  This occurred in the 2013 shutdown, and there's a reasonable chance it could happen again.

Thankfully, most military-friendly banks and credit unions are ramping up their "we'll advance your pay" plans, similar to the offers given during previous times of pay uncertainty.  USAA has already announced its intention to provide interest free loans in the amount of expected pay to active duty military, which requirements and limitations.  I anticipate similar offers being made by other financial institutions if it becomes likely that pay will be delayed.

While I am cautiously optimistic that military pay will not be interrupted, I'm also taking some steps to shore up our family's finances.  I'm not making unnecessary purchases right now, and I'm working on lower-cost meals that will free up some money for other expenses if necessary.  Take a few minutes and think about how your family can flex if pay is delayed, either 15 October or later.

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