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IMMEDIATE RELEASE

Release No: 761-00
December 21, 2000

SERVICEMEMBERS TO RECEIVE ONE OF THE LARGEST INCREASES IN HOUSING ALLOWANCE RATES EVER

The Department of Defense announced today the 2001 Basic Allowance for Housing (BAH) rates, giving servicemembers one of the largest increases ever. The new rates are part of the DoD initiative to eliminate servicemembers' out-of-pocket expenses by 2005 and incorporate a number of major changes to the BAH program. In total, the planned increase in housing allowance funds for fiscal 2001 above the fiscal 2000 amount is more than $700 million.

"These changes in the BAH process, resulting in one of the largest increases ever, represent our commitment to the preservation of a compensation and benefit structure. They will provide members with a suitable and secure standard of living, one that will sustain a trained, experienced, and ready force in the future," said Under Secretary of Defense for Personnel and Readiness Bernard Rostker.

Two components of the improved program are geographic rate protection and a change in the survey process. Geographic rate protection maintains BAH rates at last year's level while the planned buydown in out-of-pocket expense is phased in. Newly arrived members to an area will see BAH rates equal to those of current members' rates.

An important part of this year's BAH process was an improvement in the measurement of local housing costs. DoD asked the Services and local military housing offices to actively participate in the data collection process to ensure our personnel can live in quality neighborhoods. Additionally, improvements were made in how utility costs are estimated.

An integral part of the BAH program is the provision of individual rate protection to all members. No matter what happens to measured housing costs, a servicemember will never see his BAH rate decrease as long as he stays in the geographic area. This policy assures that member's who have made long-term commitments in the form of a lease or contract will not be penalized if the area's housing costs decrease.

Average increases in the BAH range from 12 to 17 percent by grade with the typical increase in the range of 14.5 percent. A typical married E-5's BAH will increase $100 per month. (This same E-5 received a $35 increase in 2000). A typical married E-8's pay will increase $125.

Out-of-pocket expense, the portion of the typical member's housing cost that the member is not compensated for, has been reduced from 18.8 percent last year to no more than 15 percent this year. The 2001 rates represent the first in a series of steps to bring the average member's out-of-pocket expense to zero by 2005 as Secretary of Defense William S. Cohen announced last January. Out-of-pocket expenses are to be reduced to 11.3 percent next year. BAH is not taxed, so every dollar of BAH goes directly into the servicemember's pocket.

Fiscal 2001 BAH rates can be found at http://www.dtic.mil/perdiem/bahform.html .