Slumping dollar ups COLA for U.S. troops in Italy, U.K.
May 1, 2007
European edition, Tuesday, May 1, 2007
The slumping value of the U.S. dollar means an increase in cost-of-living allowances for U.S. troops in several Europe countries.
The COLA index, which determines how much troops collect, increases Tuesday for troops in Italy, Portugal, Spain and the United Kingdom, among others.
Exact allowance payouts vary, depending on a member’s rank, years of service, location and number of dependents. But roughly speaking, a one-point change equals about $25 for an average enlisted person. So, an index change of six points — as is the case in several Italy locations — equals a $150 increase.
“It’s about time,” Naples-based Gunnery Sgt. Carlos Flores said of the COLA increase. “The exchange rate has been really, really bad. You can’t go out into town and come back with something nice without thinking of the difference.”
The overseas cost-of-living allowance is a supplement designed to equalize the purchasing power between servicemembers living overseas and those living in the States, according to the Department of Defense’s Per Diem, Travel and Transportation Allowance Committee Web site. A location that has an index of 120, for example, means a location is about 20 percent more expensive than the average stateside location.
“This is great news. We definitely need it. The cost of living here is a lot more than it used to be,” said Petty Officer 1st Class Brian Traupman, also in Naples. “Six or seven years ago, it used to be affordable to live here. Not anymore. The extra money just means I will just maintain … and I’ll still be on a budget here.”
The increase will show up in members’ paychecks in mid-May.
In the United Kingdom, the COLA has increased at various intervals at all duty stations and bases, with most to get a four-point index jump, or about $100.
The increase comes on the heels of a recent surge in the power of the British pound, which in April, topped a 2-to-1 ratio against the dollar for the first time in more than 25 years.
Airmen said the COLA rate generally doesn’t truly offset the power of the pound, and even an increase will do little to help their purchase power off base.
“Definitely the boost will be great,” said Senior Airman Michelle Andrus from RAF Mildenhall. But even with an index increase, the level of COLA doesn’t allow airmen to really live and enjoy themselves among the local populace, she said.
“Even the little bit extra, that’s only going to offset the 2-to-1, it isn’t going to help us get out any more,” Andrus said. “If you want to go out and really enjoy the country, it’s definitely not sufficient.”
Another senior airman from Mildenhall, who declined to give his name, said simply: “It’s not enough.” The man, who has a young child, said he “couldn’t shop off base,” because of the strength of the pound, and went to dinner off base about once a year.
There was some optimism about the index increase, however. New Mildenhall addition Tech. Sgt. William Wood, from the 100th Maintenance Squadron, who has been in England about two months, said he has been thrilled with the amount of COLA he is due to get each paycheck.
“We like it so far,” Wood said. “It seems like it’s going to be pretty good.”
And more of a good thing is always an improvement, he said. “Money going up is always good. ... It’s better than getting nothing.”
The average supplement is $300 a month, and affects 320,000 individuals living at 600 locations overseas, including Alaska and Hawaii, the committee site states. The program costs the Defense Department about $1 billion a year.
COLAs are calculated based on several factors, including the dollar-to-foreign currency exchange rate, and two surveys that help the committee determine where overseas shoppers shop — economy versus exchanges — and what they pay for goods and services.
For more information, visit the per diem committee’s Web site.