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IMMEDIATE RELEASE

Release No: 635-02
December 13, 2002

NEW HOUSING ALLOWANCE RATES SET

The Department of Defense released the 2003 Basic Allowance for Housing rates yesterday continuing the Department's initiative of reducing military members' out-of-pocket housing costs. In total, the planned increase in housing allowance funds for Fiscal 2003 is about $800 million above the Fiscal 2002 amount. The 2003 rates represent the third phase of the planned buy down in out-of-pocket housing expenses. Other components of the increase are geographic rate protection and housing cost inflation.

For members with dependents, average increases in BAH range from one to 27 percent by grade with the typical increase in the range of eight percent. A typical E-5 with dependents, for example, will find his/her BAH about $71 per month higher than last year. An E-8 with dependents will have about $95 more in his/her paycheck.

Out-of-pocket expenses, that portion of housing costs for which the member is responsible, have been reduced from 11.3 percent last year to 7.5 percent this year for the average servicemember. The 2003 rates represent the third in a series of steps to bring the average member's out-of-pocket expense to zero by 2005. Out-of-pocket expenses will fall to 3.5 percent next year.

An integral part of the BAH program is the provision for individual rate protection to all members. No matter what happens to measured housing costs, no member in a given location will ever see his/her BAH rate decrease. This policy ensures that members 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.

Geographic rate protection has also been provided to members. While the planned buy down in out-of-pocket expense is phased in, BAH rates for a given locality will not decrease. Geographic rate protection means that newly arrived members to an area will not see BAH rates that are substantially less than current members' rates.

"An important part of the BAH process is the cooperation from the services and especially local military housing offices in the data collection. Input from local commands is used to determine what neighborhoods to collect data from and to point us to apartment complexes and individual housing units that are appropriate for our military members," said Capt. Chris Kopang, director of military compensation.

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