Thursday, December 20, 2007

New Year brings higher housing allowance to most recipients

Most servicemembers receiving a housing allowance will see more in their 2008 paychecks. The average increase more than doubled for 2008 at 7.3 percent over last year’s 3.5 percent average increase.

The DoD will pump an additional $600 million into the housing allowance program, for a total of $17.5 billion for 2008. This is paid out to 1.2 million servicemembers receiving the allowance.

Overall, members with dependents will see an average increase of $83 a month, according to a DoD release. An E-4 with dependents will see about a $63-per-month increase, while an E-8 with dependents will pocket about $79 more.

Not all rates saw increases, though. Rates are based on average current rent, utilities and renter insurance by market. In markets where those costs decreased, allowances went down accordingly. But, a DoD rate-protection feature locks in rates for servicemembers already living in an area to protect their current rental leases. The cost of buying a home is not included in the data.

According to the DoD, total housing costs are calculated for six housing profiles (based on dwelling type and number of bedrooms) in each military housing areas. BAH rates are then calculated for each pay grade, both with and without dependents. An estimated $17.5 billion will be paid to more than 1,200,000 servicemembers in 2008.

Officials collect data on 369 military housing areas in the United States, including Hawaii and Alaska. They then calculate 48 different rates per area based on pay grade and dependant status, to come up with more than 17,000 different rates. Of those, just less than 12 percent of the allowance rates saw a decrease, according to officials.

Cities in California, New York and Hawaii took most spots on the top 10 highest allowance rates in the country. San Francisco saw the top rates for allowances with dependents at an average of $2,853 monthly.

In 2005, housing rate increases represented a final phase of a DoD plan to eliminate servicemembers’ out-of-pocket housing expenses. Out-of-pocket expenses were estimated at nearly 20 percent in 2000, according to DoD releases.

An integral part of the BAH program is the provision of individual rate protection to all members. No matter what happens to measured housing costs, an individual member in a given location will never see his/her BAH rate decrease.

More information is available from http://perdiem.hqda.pentagon.mil/perdiem/bah.html.