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New Housing Allowance Rates Among Largest in History

By Jim Garamone
American Forces Press Service

WASHINGTON, Dec. 22, 2000 – Almost 90 percent of service members receiving Basic Allowance for Housing will see their rates rise significantly in 2001, DoD officials said here Dec. 21.

“The range of the rates will go up from 12 to 17 percent,” said Bernard Rostker, undersecretary of defense for personnel and readiness. “The average increase will be 14.5 percent.”

Officials said this is among the largest increase in history. The new BAH rates are at http://www.dtic.mil/perdiem/bahform.html.

While no one will see their rates decrease, some 25 percent of the BAH rates will not increase, Rostker said, but that involves only 11 percent of the BAH population. Around 748,000 service members receive the allowance.

“What this means is an E-5 will be taking an extra $100 per month home,” said Alphonso Maldon Jr., assistant defense secretary for force management policy. “That’s pretty significant in terms of putting discretionary money back in the pockets of service members.”

The raise in the rates is partly due to DoD taking a hard look at how officials set the rates and “setting them in a more equitable and responsive fashion,” Rostker said.

As part of the change, DoD has permanently provided for individual rate protection. “If you’re in an area and the survey would show the rate has gone down you will still get the old rate,” Rostker said. “We’ve also provided for geographic rate protection. This means if a new service member moves into the area they will get the same rate you get. We will not have two rates in an area at the same time.”

The 2001 allowance hike is part of Defense Secretary William S. Cohen's effort to improve service members' quality of life. The Cohen Initiative aims to eliminate service members paying for housing and utilities out-of- pocket by fiscal 2005. In fiscal 2001, service members will pay out-of-pocket 15 percent. In fiscal 2000, it was 18 percent.

The increase in the allowance will also make military housing privatization more attractive. With a greater cash flow, more contractors will be drawn to the program, Rostker said. The privatization program, started in fiscal 1996, is designed to speed up the refurbishment of existing quarters and the construction of new housing.

DoD officials have estimated the old military construction system would take 30 years to deal with the 180,000 substandard housing units DoD has today. They've estimated the privatization program can work off the backlog in 10 years.

While the Basic Allowance for Housing program is only offered stateside, there is some spillover effect overseas. The housing privatization program uses private contractor money to operate. This frees up military construction funds and some of that money has gone to projects in Germany and Korea.

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