Military Update: Housing allowances to rise
Pacific edition, Wednesday, December 17, 2008
Basic Allowance for Housing paid to servicemembers living off base in stateside areas will increase an average of 6.9 percent in January to keep pace with local rental costs.
The new rates will pump an additional $1 billion into servicemember paychecks in 2009, raising total BAH costs to $17.4 billion a year, said Susan A. Brumbaugh, director of BAH for the Department of Defense.
The average monthly increase will be about $68 for a typical junior enlisted member with dependents and $93 for a married senior noncommissioned officer.
BAH rates will climb in most military housing areas but they will fall in some locales where rents have dropped. In rate-decline areas, however, only servicemembers moving in after Jan. 1 will be affected. A rate protection feature ensures that no current BAH recipients see allowances fall.
Lowered BAH rates don’t hurt new renters either, Brumbaugh said, because “we are confident we’ve got the right rates. So even if they move to the area on 2 January, we’re confident they can find something in their area that is within their BAH.”
See chart for 2009 BAH rates in our area. All rates will be viewable on line by Dec. 19 at: http://perdiem.hqda.pentagon.mil/perdiem/bah.html
Areas showing the largest jump in rents over the past year include Denver (17.7%), Yuma, Ariz. (15.5%) and Louisville, Ky. (15.3%).
Rents fell around Eglin Air Force Base, Fla. (-4%), Edwards AFB, Calif. (-2.8%) and the Hawaiian islands of Maui (-6.5%), Kauai (-6.3%) and Honolulu (-2.8%).
BAH rates vary by pay grade and assignment area, and members with dependents are paid more for housing than members without.
The 10th Quadrennial Review of Military Compensation, a Pentagon pay study, recommended that this disparity tied to family status be phased out because it is antiquated and perceived as unfair by single members. Defense officials took a first step toward doing that last year with a policy that the “without dependents” rate cannot be set below 75 percent of the “with dependents” rate.
That 75 percent floor remains in effect for 2009 rates, Brumbaugh said. The department, however, has not yet embraced the QRMC’s call to boost “without dependents” BAH enough to equal 95 percent of “with dependents” BAH. That would cost about $550 million more a year.
An estimated 950,000 servicemembers receive BAH. Last year’s estimate of 1.2 million recipients was based on a looser formula used to estimate BAH costs by military housing area. The new estimate has returned to “counting noses,” an official explained.
BAH rates are readjusted annually in more than 400 military housing areas across the country based on fresh rental data collected for different types of housing deemed appropriate for specific pay grades.
Ideally, Brumbaugh said, 60 percent of rental cost data is gathered by local military housing offices through surveys of local markets, excluding units deemed inadequate for the military such as mobile homes or housing in high-crime areas. The other 40 percent of cost data is gathered by Runzheimer International, a contractor hired to conduct rental cost surveys near military facilities across the country.
“It’s part of our checks and balances,” Brumbaugh said.
Servicemembers look forward each year to new BAH adjustments.
“I can tell you from experience that the first thing a member does is he looks at his new rate,” Brumbaugh said. “The second thing he does is look at the rate to adjacent [military housing area] and then wants to know why his isn’t as high as the guy in the [housing area] next door.”
Servicemembers can complain about BAH levels through their chains of command. Complaints are passed on to the service’s BAH representative; each branch has one. But the BAH program’s history is that complaints seldom result in rate changes. That’s because rental cost data are collected and compiled carefully and accurately, Brumbaugh said.
The lone exception she could recall occurred a few years ago at Fort Knox, Ky. Officials discovered after new rates had been released that data used for three-bedroom, single-family homes near Fort Knox had included two mobile homes, which by policy are not to be used in BAH calculations.
“They had taken the wheels off but they were still mobile homes,” Brumbaugh said. “So we did actually reset the rates for Fort Knox. It changed the rental amount less than $5 but it was the right thing to do.”
Military housing offices are careful not to collect data on mobile homes, making sure “it doesn’t have wheels now and it never had wheels,” Brumbaugh said. “Obviously a member can live anywhere he wants to. It’s his budget, his family and, he understands what his needs are. But we don’t want to use that data in setting the rates.”
Three factors are used for BAH computation: median current market rent; average utilities (electricity, heat, water and sewer), and average renter’s insurance. These costs are calculated for six housing profiles, based on dwelling type and number of bedrooms, in each area. BAH is then calculated for each pay grade, with and without dependents.
Brumbaugh could only speculate on broader economic forces impacting rents over the past year.
“We are, of course, very aware of what’s going on in the economy and with foreclosures” but “you never know for sure how the foreclosure market is impacting the rental market. In some areas there is no impact at all.”