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Congress is targeting military housing stipends, and it could cost troops thousands

May 28, 2016 (Photo Credit: Cpl. Isaac Lamberth/Marine Corps)

Senate lawmakers want to radically overhaul how military housing stipends are awarded and end the practice of troops pocketing extra cash from the payouts.

The plan is tucked into the Senate’s pending draft of the annual defense authorization measure, and hasn’t received the same attention as major military health care and acquisition reforms also included in the legislation. 

But it has the potential to change housing stipend totals for nearly every service member in coming years, with some potentially losing hundreds of dollars a month. And it comes after a series of pay and benefits trims in recent years that have left advocates frustrated about increased financial strain on military families.

 

Instead of the current Basic Allowance for Housing system, which assigns flat-rate stipends for zip codes across the country based on troops’ rank and family status, the new proposal would move closer to the military’s Overseas Housing Allowance. That system sets maximum payable stipends but awards troops only for their actual expenses, making recipients provide proof of what they pay in rent and utilities costs.

Dual military couples and service members who room with friends would not be able to game the system either. They’d see their individual stipend cut in half, adjusted to cover just their actual costs and nothing more.

Today, for example, an Army specialist living off-base near Fort Hood in Texas gets about $950 for rental costs. If he or she finds an apartment for $750, the soldier can use the remaining $200 to pay for water service, electric and phone bills — or spend it on other needs. If two specialists room together at an apartment that costs $1,500 a month, they can pool their separate stipends and use the leftover $400 for whatever they want.

Under the Senate proposal, that stipend flexibility would end. Troops would document exactly what their rent and utilities costs total and receive only that amount.

The move stems from senators’ belief that the military housing stipend, what troops and their families call BAH, has grown bloated and ripe for abuse. In report language connected to the authorization bill, they argued the benefit today “far exceeds the actual cost of housing borne by some service members” and needs to be brought under control.

“BAH, and the iterations of the benefit that came before, was intended to provide a housing benefit for service members in recognition of the transient nature of military service, and in further recognition of the reality that civilian spouses are often unemployed and sacrifice careers of their own,” lawmakers wrote. “That the housing allowance was and is intended as primarily a housing benefit is demonstrated by its tax-free nature, the differentiation based on dependency status, and the fact that service members occupying government quarters ... are ineligible to receive BAH.”

Military officials must still work out many of the plan's details, including establishing the bureaucracy to oversee the system and clarifying how new payments will be calculated.  

Exact savings from the move are unclear, although the committee estimates that housing entitlements paid to married service members alone exceeded local housing costs by more than $200 million in fiscal 2014.

The proposal will draw opposition from outside advocates who for years have argued that the housing allowance is a critical component of military families’ quality of life, and makes up for other pay and benefits shortfalls.

 

House lawmakers did not include any housing stipend provisions in their draft of the annual authorization bill, approved earlier this month. Last year, in conference committee work, they stripped out a Senate provision limiting payouts given to dual military couples, favoring the current system for now.

Pentagon officials oppose the idea of rigidly connecting the stipend exactly to housing costs. They responded to the Senate proposal by saying housing allowance is “simply another form of compensation.”

In a report on housing allowances delivered to Congress in March, the Defense Department said it would be “inappropriate to limit a member’s compensation by tying that compensation to actual expenses.” They describe the move as a potential retention problem, and say it unfairly penalizes dual military families and troops with roommates.

“While potential savings could be achieved ... providing a degraded compensation package to one member, solely because of that member’s status of being married to another member, and co-location, stands in direct conflict with the principle that a member is paid regular military compensation in exchange for his or her service,” the report states.

Given the limited attention this has received thus far, it is unclear whether the Senate proposal is aimed enacting changes now or using the congressional negotiation process to launch a more thorough re-examination in years to come.  

Along with the dramatic changes, the Senate legislation includes a new report from the Pentagon, due next March, detailing not only how to implement a new system but also to look at “the impact of these changes on retention and overall military compensation.”

Last year, in its report to Congress, the Military Compensation and Retirement Modernization Commission argued BAH should not be dramatically altered, saying it “strikes an appropriate compromise between representing compensation to service members and assistance for their living expenses.”

Lawmakers have already targeted both military pay and housing allowances as sources of defense savings in recent years. BAH rates are scheduled to drop to 97 percent of expected area housing costs in 2017, and the proposed Senate pay raise for troops next year is below private sector wage estimates for the fourth year in a row.

If it becomes law, the new housing allowance payouts would not go into effect until January 2018, giving military officials at least a year to implement and explain the new system.

Leo Shane III covers Congress, Veterans Affairs and the White House for Military Times. He can be reached at lshane@militarytimes.com.

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