Off-base living allowance will drop in Puget Sound

By Tom Philpott Military Update

The basic housing allowance paid to nearly 1 million service members living off base in stateside areas will increase an average of 2.5 percent in January to keep up with rising rental costs.

But 158 military housing areas — 43 percent of the total nationwide — will see no change to their allowance for 2010 because local rents, on average, have fallen over the last year, said Cheryl Anne Woehr, an analyst for the Defense Department’s BAH program.

In the Puget Sound areas, the allowance went down a little as rents and home values dropped.

The allowance is adjusted annually for 364 military housing areas based on changes in local rents, utilities and renters’ insurance for the type of housing appropriate for each military pay grade.

The overall increase for 2010 is the smallest for the program since it began a decade ago, the predictable result of a distressed economy.

In areas where rental data show costs have climbed, the allowance will increase effective Jan. 1. Where costs have declined, rates will be lowered. But the lower rates only will affect service members newly assigned to these areas on or after Jan. 1. Existing housing rates will remain in effect for those already living in areas where rents have fallen from last year.

This rate protection feature ensures that members who entered into rental contracts or mortgage agreements before 2010 will not see their take-home pay crimped by a slide in the local rental market.

With the 2010 rates, the annual cost of the program will reach $19 billion, up from the $17.4 billion estimate last year. About 50,000 more members will draw the payments than did at the start of 2009. The typical married junior enlisted will see his or her monthly allowance climb an average of $25. Married senior noncommissioned officers will see, on average, a $42 a month increase. Actual rate will vary by location, pay grade and whether a member has dependents to house.

The largest average increase for members with dependents will occur in Louisville, Ky. (13.6 percent). The steepest declines for new arrivals with dependents will happen in Fallon, Nev. (down 7.3 percent). New allowances for every housing area can be viewed on line at http://tinyurl.com/PentagonPerdiem.

Woehr said the rate declines can’t be categorized by region or by high-, median- or low-rent areas. Rental cost data are collected from May through July “when the housing markets are most active,” she said.

Sixty percent of the data was gathered by local military housing offices by surveying local markets, excluding inadequate units such as mobile homes and listings in high-crime areas. The other 40 percent of rental data is gathered by Runzheimer International, a contractor hired to verify the accuracy of all the cost data used to set rates.

Rental cost data are collected for six types of housing with different numbers of bedrooms. Rates are set based on costs for the type of housing deemed appropriate for each pay grade, with and without dependents. “Without dependents” have been protected since 2008 by an artificial floor. If rental data doesn’t support rates for members without dependents equal to at least 75 percent of the local “with dependents” rate for the same pay grade, then the “without” rate is raised to meet that 75 percent benchmark.

A Pentagon pay study several years ago recommended that this 75 percent floor be a first step toward ending the disparity tied to family status, calling it antiquated and unfair. But to end the disparity for single members would cost about $600 million a year. Instead, since 2008, Defense officials have applied the 75 percent floor to protect those without dependents from losing ground.

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