Military Update
Off-base housing allowances in U.S. to increase an average of 10 percent

By Tom Philpott

Service members living off base in the United States will see their monthly housing allowances jump an average of 10 percent effective Jan. 1.

Rate increases for the tax-exempt Basic Allowance for Housing will exceed growth in rental costs for the second straight year, part of a five-year plan to end routine out-of-pocket housing costs for stateside military people by 2005.

BAH rates in 2001 were set to cover all but 15 percent of rental costs for adequate housing in military assignment areas. In 2002, that "absorption rate" will be pared to 11.3 percent and should disappear altogether in three more years.

Typical increases next month will range from 6 percent to 17 percent. No members will see their BAH fall, thanks to rate protection provisions set in law. But a fraction of 750,000 recipients, perhaps one-tenth, won't see an increase either. That's because local rents actually declined or stayed low enough during the year so average out-of-pocket costs remained below the absorption rate of 11.3 percent.

Congress had considered accelerating the BAH improvement plan this year. In the end, they had other budget priorities. As it is, BAH payments will rise by $700 million in 2002. The size of individual raises will vary by rank, family status and assignment area.

(You can check rates on line at www.dtic.mil/perdiem. Under "BAH rates" click on "query" under Menu.)

On average, nationwide, BAH for a married E-5 will rise from $746 a month to $822, a gain of 10.2 percent. BAH for a married O-4 will climb, on average, to $1,349 from $1,210, an increase of 11.6 percent.

The most expensive stateside housing area is San Francisco. An E-6 there will draw $2,656 a month in BAH and an O-4, $3,162. Other "most expensive" areas are Santa Clara County, Calif; Boston; and Long Island and Westchester County, N.Y.

The cheapest housing is in Minot, N.D. There a married E-6 will draw $515 a month in BAH and an O-4 $770. Other least expensive areas include Fort Rucker, Ala.; Tupelo, Miss; Salina, Kan.; and Clovis, N.M.

Environmental worries sparked the biggest jump in BAH for 2002, an average hike of 36.1 percent for Fallon Naval Air Station in Nevada. A cluster of leukemia cases there has Navy families looking for housing nearer to Reno and Carson City, more expensive housing markets. To accommodate that shift, BAH for Fallon assignments have risen substantially.

Other areas seeing significant jumps in BAH include Vallejo/Travis Air Force Base, Calif., (33.8 percent); Beale Air Force Base, Calif. (20.4); San Diego (19.5); Washington, D.C. (19.1); and Riverside, Calif., (18.7).

Housing allowances for years were adjusted based on member surveys of what they paid in rent. This caused distortions, officials said. Members assigned to high-cost areas often settled for inadequate housing, which in turn dampened costs reported on the annual survey, leading to a cycle of lower allowances. Members in low-cost areas received relatively generous allowances, rented bigger homes than they normally would and this distorted survey data in a different way.

Defense officials say they are comfortable with the rate-setting procedure. Early in the year, base housing offices are told to use census data, available on line, to identify nearby housing tracts unsuitable for military people because of poor schools, high crime rates, pollution or other problems. Lists of acceptable apartment complexes, townhouses and single family homes are sent to the defense contractor hired to set BAH rates. Local rents and utility costs are verified by telephone — the contractor in 2001 made 250,000 calls — and resulting rental data are used to determine average costs, by house type, in each area.

BAH rates are set based on local rental costs for the type of housing deemed appropriate for a member's rank and family status. For example, a married E-5 is considered adequately housed in a two-bedroom townhouse and a married O-5 in a four-bedroom single-family home.

With only six housing types used for 26 pay grades, officials must interpolate the rental cost data. For example, BAH for married E-1s through E-4s are set halfway between average local rental costs for a two-bedroom apartment and for a two-bedroom townhouse — less the nationally standardized out-of-pocket cost of 11.3 percent set for 2002.

In 2003, officials said, the absorption rate will fall to 7.5 percent.

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