Basic Allowance for Housing (BAH) paid to nearly a million servicemembers living off base in stateside areas will increase an average of 2.5 percent in January to keep up with rising rental costs.

But in 158 military housing areas — 43 percent of the total nationwide — current BAH recipients will see no change to their allowance for 2010. That is because local rents, on average, have fallen over the last year, said Cheryl Anne Woehr, an analyst for the Defense Department’s BAH program.

BAH rates are adjusted annually for 364 military housing areas based on changes in local rents, utilities and renters’ insurance for the type of housing appropriate for each military pay grade. The overall increase for 2010 is the smallest for the BAH program since it began a decade ago, a predictable result in a distressed economy.

In areas where rental data show costs have climbed, BAH will increase effective Jan. 1. Where rental costs have declined, BAH rates will be lowered. But the lower rates only will affect servicemembers newly assigned to these areas on or after Jan. 1. Current BAH rates will remain in effect for those already living in areas where rents have fallen from last year.

This rate protection feature ensures that members who entered into rental contracts or mortgage agreements before 2010 will not see their take-home pay crimped by a slide in the local rental market.

With the 2010 rates, the annual cost of the BAH program will reach $19 billion, up from the $17.4 billion estimate last year. About 50,000 more members will draw the payments than did at the start of 2009. The typical married junior enlisted will see his or her monthly allowance climb an average of $25. Married senior noncommissioned officers will see, on average, a $42 a month BAH increase. Actual rate will vary by location, pay grade, location and whether a member has dependents to house.

Some of the largest average BAH increases for members with dependents will occur in Louisville, Ky. (13.6 percent), West Point, N.Y. (11.4 percent), Camp Lejeune, N.C. (10.9 percent) and Salina, Kansas (10.5 percent). Some of the steepest declines in BAH for new arrivals with dependents will happen in Fallon, Nev. (down 7.3 percent), Brunswick, Maine (down 5.8 percent), Panama City, Fla. (down 5 percent) and Salt Lake City, Utah, (down 5 percent). New BAH rates for every housing area can be viewed on line at:

Woehr said the rate declines can’t be categorized by region or by high-, median- or low-rent areas. Rental cost data are collected from May through July “when the housing markets are most active,” she said.

Sixty percent of the data was gathered by local military housing offices by surveying local markets, excluding inadequate units such as mobile homes and listings in high-crime areas. The other 40 percent of rental data is gathered by Runzheimer International, a contractor hired to verify the accuracy of all the cost data used to set BAH rates.

Rental cost data are collected for six types of housing with different numbers of bedrooms. Rates are set based on costs for the type of housing deemed appropriate for each pay grade, with and without dependents. The “without dependents” rates have been protected since 2008 by an artificial floor. If rental data doesn’t support rates for members without dependents equal to at least 75 percent of the local “with dependents” rate for the same pay grade, then the “without” rate is raised to meet that 75 percent benchmark.

A Pentagon pay study several years ago recommended that this 75 percent floor be a first step toward ending the BAH disparity tied to family status, calling it antiquated and unfair. But to end the disparity would boost BAH costs for single members by about $600 million a year. Instead, since 2008, Defense officials have applied the 75 percent floor to protect those “without dependents” from losing ground. The Washington area is one where rates for single members would be lower without the floor in place.

BAH recipients unhappy with their new rate can complain to their military housing offices but it won’t result in a rate change, Woehr explained. By law, rates can only be set once a year. But legitimate complaints can have an impact for next year. Woehr said, for example, that BAH officials visited the Fort Campbell housing office earlier this year to assess how cost data were collected. With some added instruction, she suggested, the data to set rates for married mid-grade and senior-grade officers needed to be targeted three- and four-bedroom housing more appropriate to their ranks.

“In areas where we do have complaints, if housing offices or commands ask us to visit we will, and we’ll look at the housing that has been used” to set rates, Woehr said. “A lot of times it results in an education process for the housing office [to] improve their submission. The new rate [for the next year] may be different as a result of our visit but only because the data collection process is improved … A lot of it is matching expectation for quality of living with the pay grade that the rates will be set for.”

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