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The Honolulu Advertiser
Posted on: Monday, December 16, 2002

MILITARY UPDATE
New BAH rates reduce renters' out-of-pocket costs

 •  Table: Hawai'i's military monthly housing allowance for 2003

Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 50, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

By Tom Philpott

Most military personnel living off base in the United States will see their Basic Allowance for Housing rise next month, and by more than enough to keep pace with local rents.

But the new BAH rates, released last week, also show that some recipients among more than 700,000 nationwide will see no change in allowances on Jan. 1 because local rents declined in 2002.

The Department of Defense will pump an additional $710 million into BAH, sending the program's costs in 2003 above $9 billion. Monthly rates will rise by an average of 8 percent. Actual member adjustments will vary by pay grade, family status and Military Housing Area (MHA).

The accompanying chart shows new BAH rates for the Honolulu area. Rates for more than 350 MHAs across the country can be reviewed at the Defense Department's military-pay Web site, militarypay.dtic.mil.

Of the 8 percent average increase coming next year, 4.2 percentage points are to match the rise in rents nationwide. The other 3.8 percent is the third installment of a five-year initiative to eliminate out-of-pocket housing costs for military renters in stateside areas. (Service members off base overseas draw a local Overseas Housing Allowance, which is adjusted each spring and fall so that out-of-pockets costs don't exceed what service members face in stateside areas.)

The new BAH rates will cut the "absorption" rate for stateside renters from 11.3 percent of average rental costs in 2002 down to 7.5 percent next year. The January 2004 BAH adjustment will drop that out-of-pocket cost to 3.5 percent and it should disappear entirely with the 2005 raise.

Some of the 2003 rates will surprise recipients. For example, service members in San Francisco and Santa Clara, Calif., two of the highest-priced housing areas in the country, will see no increases. Local rental costs fell in the past year, perhaps because of a decline in Internet and high-tech businesses. Rents in San Francisco dropped 13 percent. Thanks to BAH rate protection features, however, no BAH recipient will see allowances fall unless they move.

"There obviously are going to be folks in the Bay area who say, 'I still have a hard time finding a place to live.' That's because BAH doesn't address vacancy rates, just housing costs," said Navy Capt. Christopher Kopang, director of military compensation for the Department of Defense.

A few areas will see spikes in BAH thanks to decisions to redraw the MHAs' boundaries to include some higher-priced housing not previously surveyed.

Military housing offices try to steer the survey away from housing areas where no service families should be expected to live, Kopang said.

"The general guideline is to avoid areas with known crime activity, drug involvement, gang activity and poor schools," he said.

The rental data are based both on information supplied by military housing offices and units but also on more than 300,000 phone calls that a defense contractor, Runzheimer International, makes to local realtors, renters, landlords, chambers of commerce and other sources of rental information. Runzheimer also reviews local classified ads for properties to rent.

TRICARE programs

The TRICARE for Life insurance supplement and the TRICARE Senior Pharmacy program, both new and important benefits for the military elderly and some disabled, cost a combined $2.54 billion in fiscal 2002. About $920 million was spent on drugs and the rest, $1.62 billion, on medical and surgical services.

Now the surprise: Those costs were $1 billion less than the $3.6 billion projected. Defense officials said first-year estimates were off by 30 percent because of "slower than expected execution" of the benefit and "no previous experience" making these kinds of benefit projections.

And what happened to that extra $1 billion?

More than $300 million went back into the Defense Health Program, mostly to service medical accounts for much needed maintenance and repairs, supplies and to optimize use of base hospitals and clinics. But $690 million was reprogrammed, with approval from Congress, to address other readiness needs including homeland security costs.

Questions, comments and suggestions are welcome. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com.

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