Civilian post allowance increases in Germany and Italy
June 8, 2006
If civilians working for the U.S. military in Europe think they are getting left out on payday, they may be right.
When the State Department updated its Web site earlier this week, many civilians living abroad learned that they would see a little extra in their next paycheck.
But the news wasn’t all good.
While civilian workers living in Germany and Italy received an increase in their cost-of-living allowance, known as post allowance, workers in England weren’t as lucky.
For example, a civilian with three dependents who is earning $45,000 a year working in Kaiserslautern, Germany, will see his or her post allowance increase to $6,750 a year from $5,400, an increase of about $50 per paycheck. In Vicenza, Italy, that worker saw a $2,160 annual increase in post allowance, which would amount to about $83 per paycheck.
But, in England, there was no change.
Calls to the State Department’s Office of Allowances to explain the changes, or lack thereof, were not returned.
Furthermore, civilians working for the U.S. military in parts of England are receiving less cost-of-living allowance than their green-suited counterparts, while the opposite is true in parts of Italy.
In some parts of Europe, the difference between the cost-of-living allowance given to servicemembers and the civilian COLA is more than 20 percent.
Military COLA and the civilian post allowance, both of which can change every two weeks depending on a number of factors — including the strength of the dollar — are calculated much the same way. Both rely on something called a cost-of-living index, which compares the cost of living in a foreign city or country to the cost of living in the States.
Though they are similar, COLA and post allowance actually are two separate systems.
The reasons for this aren’t exactly clear, though there are some factors that could explain some of the disparity.
The post allowance civilians get is regulated by the U.S. State Department while COLA is regulated by the Department of Defense. Both systems use surveys of spending habits and of the costs of overseas goods to determine their cost-of-living indexes.
Both systems’ indexes define their index numbers the same way. An index number of 124 indicates that the cost of living in a given area is 24 percent more expensive than living in the States. An index of 100 indicates the cost of living is about the same.
However, the DOD and State Department often do not come up with the same index calculation for foreign cities.
At RAF Mildenhall, England, the index is now set at 130 for civilians working for the U.S. military. The index for U.S. military personnel stationed in the area, on the other hand, is set at 136 — six percentage points higher.
Some civilians there don’t seem to mind the disparity.
“I think that it’s covering fine, but if the dollar devalues anymore it won’t,” said Sandra Power, a human resources specialist with the 100th Civilian Personnel Flight on RAF Mildenhall.
Jean Prosio, a human resources assistant with the 100th Civilian Personnel Flight, disagreed with Power, and said that the COLA surveys are not accurate.
“It’s a Catch-22 because the [COLA] survey asks you how much money you spend on the economy. Well, people spend less money on the economy because their COLA isn’t very high, so when they take the surveys, it’s not accurate. They’re spending more money on base because they can’t afford to spend it off base,” Prosio said.
But the fact is that civilians aren’t the only ones stuck in the COLA gap.
In Naples, Italy, the index for civilians is now 150, while the index for servicemembers there is eight points lower. Between April 30 and May 14 the index for civilians went up eight points in Naples. In nearly the same time period, the index increased only four points for servicemembers.
Every bit helps, said Cort Jamison, a civilian firefighter who has been stationed at Naval Support Activity Naples, Italy, for three years.
“It’s not much, especially when the exchange rate between the euro and the dollar takes a dive, but it helps,” Jamison said of the increase in the living expense differential.
Still, his increase was more than that received by military personnel stationed at Naples. This gap can be partly explained by the differences in how the DOD and State Department calculate their indexes.
The military’s COLA index is highly dependent on how much its personnel rely on shopping at on-base facilities, according to information posted on the Department of Defense Travel and Transportation Allowance Committee’s Web site. The committee is in charge of managing COLA for overseas servicemembers. “In general, the higher the proportion of on-base shopping, the lower the index,” according to the site.
It goes on to say, “COLA is not intended to measure all of the differences in living overseas and living in [the continental U.S.]. Cultural differences, climate differences and inconvenience factors are more properly addressed through hardship duty pay.”
Post allowance, on the other hand, takes many of these types of circumstances — such as climate and security concerns — into consideration, according to the State Department Web site.
The result is that servicemembers and civilians working on the same post, even in the same office, often see a disparity in the way the government compensates them.
This doesn’t, by far, explain the huge gaps seen in some areas of Europe. In Hamburg, Germany, for example, the index number for civilians is 142 while military members serving there enjoy an index of 162.
Calls to the State Department’s Office of Allowances and the Defense Department’s Defense Finance and Accounting Service were not returned.
Sandra Jontz and Sean Kimmons contributed to this story.
Figuring the formulaThe State Department computes post allowance by looking at spendable income — which it defines as total income minus housing expenses, taxes, savings, life insurance and gifts and contributions — the number of people in a household eligible for the allowance and what it calls the market basket.
For any given overseas post, the market basket is determined by averaging the spending patterns reported by the people living at that post. These patterns are determined through living pattern questionnaires. The basket includes spending on food, alcohol, tobacco, clothing, personal care, transportation, household furniture and operation, medical care, recreation and other miscellaneous items.
The market basket does not include everything you would spend money on in the U.S. Things such as housing, utilities and life insurance are not included in the calculation.
Circumstances unique to a given post that could cause one of the market basket items, such as transportation, to be particularly costly also can affect the index number. Things such as security needs, the climate and local sanitary standards could affect the amount spent on market basket items.
After prices are collected in Washington and the posts, they are compared. An index measuring the gap in price between a given post and Washington is computed for each market basket category. Each category is weighted differently in the calculation. Transportation, for example, is given more weight than personal care, so it will have more of an effect on the overall cost of the market basket.
The difference in prices between a post and Washington is given as a percentage. That percentage is rounded off and becomes the index number. That means if the cost of all market basket items at a post is 10 percent more than in Washington (or 110 percent of the cost in Washington) the index number for that post is 110.
The amount of Post Allowance or COLA is determined by multiplying the percentage by an individual's spendable income.
— Matt Millham