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YONGSAN GARRISON, South Korea — Tracking the recent cost-of-living adjustments to servicemembers’ pay in South Korea has been much like profiling a roller coaster.

Servicemembers first were treated to a higher-than-called-for COLA starting in mid-March — which then was lowered in June to compensate for March’s extra cash.

The COLA fluctuations appear to be moderating this month, again putting a bit more money in servicemembers’ pockets. Those who received mid-month pay should see an increase in COLA in a few days, said Sidney Keyes, a staff accountant with the 175th Finance Command.

Under the new rate, a sergeant 1st class with 14 years of service and one dependent living off post will get about $542 per month, about $45 per month more than at the old rate, Keyes added.

Officials said an unexpected strengthening of the dollar threw off the estimate by the Defense Department’s Per Diem Committee, which determines allowances. The committee bases COLA on a prediction of what the exchange rate likely will be, Keyes said.

The dollar ended up buying more won than the committee thought it would after March, he said, so “for a period of time servicemembers received much more COLA than the exchange rate truly allowed them to have.”

The Per Diem Committee uses an algorithm, a formula for solving a problem, to predict currency rates. The algorithm forecast a weaker dollar.

“Well it didn’t happen,” Keyes said, “so everybody got a whole lot of money that they shouldn’t have gotten.”

So the Per Diem Committee cut the COLA index for South Korea during June.

Now, Keyes said, the COLA should be on a more even keel, and the index should follow the exchange rate more precisely.

The Per Diem Committee can adjust COLA rates every two weeks but typically waits at least 30 days before making a new adjustment. Foreign currency fluctuations are incorporated into COLA index calculations so servicemembers maintain the same amount of purchasing power.

But just because currency rates change doesn’t necessarily mean a change in COLA. A living pattern survey determines how much servicemembers in a particular locale spend on the economy, officials said, and COLA is adjusted for that amount of money spent.

The index calculates an area’s cost of living compared to the U.S. national average cost of living. The index, with a servicemembers’ rank, time in service and number of dependents, determines the actual monthly dollar amount of COLA a servicemember is to receive.

Keyes predicted the Per Diem Committee likely will adjust the COLA rate more quickly if the dollar strengthens again, “so it won’t be as drastic” a change in the index.


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