One of the most underreported but most significant changes in the Senate-passed version of the FY 2017 Defense Authorization Act (S. 2943) is the proposal to reform military housing allowances.
In justifying the proposal, Senate Armed Services Committee leaders called the current basic allowance for housing (BAH) system “bloated and ripe for abuse.”
This took MOAA by surprise, as the BAH system is the result of years of review, and the recent Military Compensation and Retirement Modernization Commission recommended keeping it as is.
It seems the committee’s perspective on abuse focuses on situations where multiple servicemembers share housing costs, including married dual-military couples and other cohabitation or roommate arrangements.
The committee’s view is the BAH amount shouldn’t exceed the amount each individual servicemember actually spends on housing (mainly rent and utilities), and sharing housing while drawing the full BAH is abusing the system.
The committee’s solution is to require dividing each servicemember’s BAH rate by the number of servicemembers occupying the housing. For a married couple, both allowances would be halved. For four roommates of different grades, each would receive one-fourth of the grade-applicable BAH rate.
MOAA doesn’t agree with defining cohabitation as allowance abuse, and neither does DoD.
DoD’s March 2016 report to Congress on this topic reiterated the long-held Pentagon stance that BAH is an essential element of Regular Military Compensation (RMC), which is the military equivalent of a civilian salary.
“While some service members qualify for bonuses and special programs and some don’t, members’ RMC is standardized based on pay grade, length of service, and dependency status,” the report stated. “The Department believes it would be inappropriate to limit a member’s compensation by tying that compensation to actual expenses incurred for members stationed in the United States.”
When locality-based housing allowances first began in the 1980s, servicemembers did have to provide proof of their housing costs, and allowances were adjusted accordingly.
But DoD stopped that practice, in part because of the paperwork nightmare and in part because the reported costs couldn’t be independently validated but mostly in recognition of the above-stated belief it’s the servicemember’s business how he or she spends the allowance set for that location.
The Senate proposal to change that raises a number of important issues and would cut some servicemembers’ compensation so dramatically as to make all other pay changes pale in comparison.
For two majors married to each other stationed at Fort Bliss, Texas, the proposal would cut the couple’s combined housing allowance by more than $17,000 a year. If they have one or more children, the loss would increase to almost $19,000. For higher-cost locations, the loss would be proportionally greater.
As Maj. (and MOAA member) Jessica Grassetti, USA, wrote us, “The insinuation that [she and her military spouse] are somehow a ‘two for one’ deal for the nation and that this should allow the government to discount our individually earned compensation is ridiculous. The proposed legislation’s message is, in effect, that my service is worth less than my unmarried counterpart’s of the same rank, simply because I happen to be married to another servicemember.”
If the servicemembers are of different grades, a new issue arises. An E-8 married to an E-5 with one child at Fort Bliss would lose a combined $15,000 a year. Further, their combined monthly BAH under this system would be $2,400 a year less than the rate payable to an E-8 with a civilian spouse.
The system would particularly penalize junior servicemembers who often room together to save money. Do we really want to penalize efforts to become more financially independent?
Let’s keep in mind, Congress just changed the military retirement system for new service entrants in a way that will depend far more on servicemembers’ own savings. Young troops don’t make that much, and one way they can save for retirement is to share housing.
The combination of the new retirement system and the Senate-proposed BAH system would require young troops to save more — and then penalize them for trying to do that.
Now let’s consider homeowners. The BAH system is based on locality rental costs and doesn’t account for homeownership. But homeowners still would have to report their actual housing costs.
Servicemembers who made large down payments or who kept a home from a previous assignment at the same locality would be penalized for having lower mortgage payments.
If a senior servicemember has managed to pay off a 15-year mortgage on a home, the new plan apparently would cut his or her BAH to a utilities-only amount. Is paying off a home really the kind of behavior we want to discourage? MOAA thinks not. And neither do DoD and service leaders.
It’s bad enough DoD and Congress already are three years into a five-year plan to cut all BAH rates by 5 percent, on top of a fourth consecutive year of capping the military pay raise below private-sector pay growth.
Adding a new proposal that would penalize large numbers of servicemembers an additional $10,000 a year or more is going several steps too far.
– See more at: http://www.moaa.org/Content/Take-Action/As-I-See-It/Why-Whack-Military-Housing-Allowances-.aspx#sthash.DDDkaAgS.dpuf
