B-161180, DECEMBER 11, 1967, 47 COMP. GEN. 333

B-161180, DECEMBER 11, 1967, 47 COMP. GEN. 333

STATION ALLOWANCES - MILITARY PERSONNEL - EXCESS LIVING COST OUTSIDE UNITED STATES, ETC. - COST BASIS IN PRESCRIBING A SUPPLEMENTAL HOUSING ALLOWANCE FOR MEMBERS OF THE UNIFORMED SERVICES STATIONED OUTSIDE THE UNITED STATES, 37 U.S.C. 405 MAKING NO PROVISION FOR SEPARATE HOUSING AND COST-OF-LIVING ALLOWANCES, BUT AUTHORIZING "A PER DIEM, CONSIDERING ALL ELEMENTS OF THE COST OF LIVING" HOUSING AND COST-OF-LIVING ALLOWANCES SHOULD NOT BE CONSIDERED INDEPENDENTLY IN DETERMINING THE PER DIEM RATE FOR A PARTICULAR OVERSEAS STATION AND THE SAVINGS OF OTHER THAN HOUSING ELEMENTS OF COSTS AS COMPARED WITH COSTS IN THE UNITED STATES SHOULD BE TAKEN INTO ACCOUNT. THEREFORE, THE PROPOSED SUPPLEMENTAL HOUSING ALLOWANCE REGULATION SHOULD PRESCRIBE DIFFERENT PER DIEM RATES AT A GIVEN STATION ON THE BASIS OF DIFFERENT COSTS INCURRED BY DIFFERENT GROUPS OF MILITARY PERSONNEL, INCLUDING GROUPS WHO INCUR HIGHER OR LOWER THAN AVERAGE EXCESS COSTS. HOWEVER, UNTIL THE FORMULA FOR COMPUTING HOUSING ALLOWANCES CAN BE REVISED, AND THE ALLOWANCES FOR EACH OVERSEAS LOCATION COMPUTED ON THE REVISED FORMULA, THE COMPUTATION AND PAYMENT OF THE PRESENT REGULAR HOUSING AND COST-OF-LIVING ALLOWANCES MAY CONTINUE.

TO THE SECRETARY OF THE ARMY, DECEMBER 11, 1967:

FURTHER REFERENCE IS MADE TO LETTER OF AUGUST 12, 1967, FROM THE UNDER SECRETARY OF THE ARMY REQUESTING OUR DECISION AS TO THE PROPRIETY OF THE PROCEDURES DESCRIBED THEREIN AS A BASIS FOR PROMULGATING REGULATIONS TO PROVIDE A SUPPLEMENTAL HOUSING ALLOWANCE FOR MEMBERS OF THE UNIFORMED SERVICES STATIONED OUTSIDE THE UNITED STATES IN AREAS WHERE THE WIDE VARIATION IN THE RENTALS CHARGED FOR PRIVATE QUARTERS INDICATES A NEED FOR FLEXIBILITY IN THE RANGE OF THE HOUSING ALLOWANCE. THE REQUEST WAS ASSIGNED PDTATAC CONTROL NO. 67-25 BY THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE.

THE PROPOSED SUPPLEMENTAL HOUSING ALLOWANCE WAS THE SUBJECT OF A LETTER DATED MARCH 6, 1967, FROM THE UNDER SECRETARY OF THE NAVY AND OF OUR DECISION IN RESPONSE THERETO DATED MAY 31, 1967, B-161180. THE NEED FOR A SUPPLEMENTAL HOUSING ALLOWANCE AT SOME OVERSEAS STATIONS (TO BE PAID IN ADDITION TO THE HOUSING ALLOWANCE OTHERWISE PRESCRIBED) IS EXPLAINED IN THE LETTER OF MARCH 6, 1967, WHICH IS IN PART AS FOLLOWS:

"* * * DURING RECENT YEARS, MANY INFLATIONARY TRENDS IN THE COST OF HOUSING HAVE MADE CURRENT ALLOWANCES GROSSLY INADEQUATE AT MANY OVERSEAS STATIONS. SOUTH AMERICA COMPRISES PERHAPS THE MOST IMPORTANT SUCH AREA, ALTHOUGH THE PROBLEM IS NOT NECESSARILY RESTRICTED TO THAT AREA. HOUSING COSTS RISE RAPIDLY, RENTAL CONTRACTS ARE SUBJECT TO RENEGOTIATION, ANCILLARY OR -CONDOMINIUM- COSTS ARE LEFT OPEN AS IN A COOP APARTMENT IN THE U.S.A., FIRM RENTAL CONTRACTS ARE NOT FINALIZED OR LEASES ARE MADE FOR ONLY 6 MONTHS OR 1 YEAR PERIODS. LOCAL LAWS PERMIT RENT INCREASES, AND AUTOMATIC ESCALATION HOOKED TO MINIMUM LOCAL WAGES OR LOCAL INDICES ARE COMMONLY INCLUDED IN MANY CONTRACTS. THE PROBLEM AND THE INEQUITY IS MAGNIFIED BY CURRENCY DEVALUATION. AT MANY STATIONS, RENT RANGES FROM RIDICULOUS LOWS TO OUTRAGEOUS HIGHS MAKING IT IMPRACTICABLE TO PRESCRIBE A SINGLE ALLOWANCE BY GRADE MEETING THE REQUIREMENTS OF BOTH. THE RESULT IS AN IMPOSSIBLE COMPROMISE WHICH FAILS TO MEET THE REQUIREMENTS OF THE HIGH RENTER AND GROSSLY OVERPAYS THE MEMBER IN LOW COST HOUSING. THIS UNREALISTIC FIGURE IS OUR CURRENT AVERAGE COST.'

IN OUR DECISION OF MAY 31, 1967, WE CONSIDERED SEVERAL PROPOSED METHODS FOR DETERMINING SUPPLEMENTAL HOUSING ALLOWANCES AND CONCLUDED THAT WE SHOULD NOT SANCTION ANY OF THE PROPOSED METHODS WITHOUT HAVING BEFORE US THE REGULATIONS PROPOSED TO BE ISSUED ON THE BASIS OF THAT METHOD. THE LETTER OF AUGUST 12, 1967, DID NOT INCLUDE PROPOSED REGULATIONS BUT A DRAFT OF A PROPOSED REVISION OF CERTAIN PROVISIONS OF THE JOINT TRAVEL REGULATIONS TO AUTHORIZE SUPPLEMENTAL HOUSING ALLOWANCES WAS FURNISHED US AT A CONFERENCE HELD ON NOVEMBER 1, 1967, BETWEEN REPRESENTATIVES OF THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE AND REPRESENTATIVES OF THIS OFFICE.

BASED ON THE DRAFT OF THE PROPOSED REGULATIONS AND OTHER PAPERS HANDED TO OUR REPRESENTATIVES AT THE CONFERENCE OF NOVEMBER 1, 1967, AS WELL AS THE EXPLANATIONS GIVEN AT THAT CONFERENCE, IT IS OUR UNDERSTANDING THAT PRESENT DETERMINATIONS OF RATES OF HOUSING ALLOWANCE ARE MADE AND THAT DETERMINATIONS OF RATES OF SUPPLEMENTAL HOUSING ALLOWANCE ARE PROPOSED TO BE MADE (1) BY RELATING OVERSEAS HOUSING COSTS TO BASIC ALLOWANCE FOR QUARTERS INSTEAD OF COST OF LIVING IN PRIVATE QUARTERS IN THE UNITED STATES AND (2) BY DETERMINING THE HOUSING ALLOWANCE PORTION OF "A PER DIEM, CONSIDERING ALL ELEMENTS OF COST OF LIVING" WITHOUT REGARD TO ANY ELEMENTS OF THE COST OF LIVING EXCEPT THE ELEMENTS INVOLVED IN PROCURING HOUSING.

AS POINTED OUT IN THE DECISION OF MAY 31, 1967, THE PERTINENT STATUTE, 37 U.S.C. 405, MAKES NO PROVISION FOR SEPARATE HOUSING AND COST-OF-LIVING ALLOWANCES, BUT AUTHORIZES "A PER DIEM, CONSIDERING ALL ELEMENTS OF THE COST OF LIVING.' IT IS OUR VIEW THAT UNDER SUCH PROVISIONS THE TOTAL PER DIEM RATE (HOUSING PLUS COST OF LIVING) SHOULD BE BASED UPON THE OVERALL COST OF LIVING, INCLUDING QUARTERS, SUBSISTENCE AND INCIDENTAL EXPENSES. HENCE, WHILE CUSTOMARILY THE PER DIEM HAS BEEN SEPARATED INTO HOUSING AND COST-OF-LIVING PORTIONS, THE DETERMINATION OF THE RATE OF EITHER OF THOSE PORTIONS INDEPENDENTLY OF THE OTHER IS NOT, IN OUR VIEW, A PROPER COMPLIANCE WITH THE LAW.

ALSO, AS STATED IN THE DECISION OF MAY 31, 1967, THE OBVIOUS PURPOSE OF THE STATUTE IS TO PROVIDE SOME MEASURE OF REIMBURSEMENT TO THE INDIVIDUALS CONCERNED FOR THE AVERAGE EXCESS LIVING COSTS EXPERIENCED BY MEMBERS ON PERMANENT DUTY AT PLACES OUTSIDE THE UNITED STATES.

AS INDICATED ABOVE, PRESENT DETERMINATIONS OF HOUSING ALLOWANCE RATES ARE MADE BY COMPARING THE AVERAGE OVERALL COST OF OVERSEAS PRIVATELY LEASED HOUSING AT A PARTICULAR LOCATION WITH THE BASIC ALLOWANCE FOR QUARTERS AUTHORIZED FOR THE MEMBERS ON DUTY AT THAT LOCATION. THE PRESENT RATES OF BASIC ALLOWANCE FOR QUARTERS WERE AUTHORIZED BY PUBLIC LAW 87-531, APPROVED JULY 10, 1962, 76 STAT. 152, AND THE LEGISLATIVE HISTORY OF THAT LAW INDICATES THAT THE QUARTERS ALLOWANCE RATES WERE NOT BASED UPON THE CONSUMER PRICE INDEX (WHAT CONSUMERS WERE ACTUALLY PAYING FOR HOUSING), BUT WERE BASED PRIMARILY UPON WHAT THE FEDERAL HOUSING ADMINISTRATION CONSIDERED THAT CIVILIANS, WHOSE INCOME LEVELS APPROXIMATED THE INCOME LEVELS OF THE VARIOUS MILITARY PAY GRADES, COULD AFFORD TO PAY FOR HOUSING AT THAT TIME. THE RATES ARE NOT TIED TO INCREASES IN THE COST OF LIVING IN THE UNITED STATES AND, NOTWITHSTANDING THE ENACTMENT OF SEVERAL INCREASES IN BASIC PAY SINCE 1962 TO MEET, IN PART, INCREASED LIVING COSTS, THE RATES OF BASIC ALLOWANCE FOR QUARTERS HAVE REMAINED UNCHANGED SINCE 1962. IT IS OUR VIEW, THEREFORE, THAT THE BASIC ALLOWANCE FOR QUARTERS DOES NOT REPRESENT AN ASSESSMENT OF THE OVERALL HOUSING COSTS (RENT, UTILITIES, MAINTENANCE, ETC.) WHICH WOULD BE INCURRED ON THE AVERAGE BY THE MEMBERS CONCERNED FOR OCCUPANCY OF PRIVATE QUARTERS IN THE UNITED STATES. OUR DECISION OF JULY 14, 1958, B-136516, HOLDING THAT THE OVERSEAS STATION PER DIEM ALLOWANCES COULD BE FIXED ON THE BASIS OF PAY GRADES WAS BASED UPON THE CONCEPT THAT LIVING COSTS ARE RELATED TO COMPENSATION AND NOT ON ANY PREMISE THAT THE BASIC ALLOWANCE FOR QUARTERS WAS A MEASURE OF THE HOUSING COST OF LIVING IN THE UNITED STATES.

IT IS OUR VIEW THAT THE BASIC ALLOWANCE FOR QUARTERS IS NOT A TRUE MEASURE OF THE HOUSING ELEMENTS OF COST OF LIVING IN THE UNITED STATES AND, HENCE, DOES NOT FORM A PROPER BASIS FOR COMPUTING THE DIFFERENCE IN HOUSING COST OF LIVING IN THE UNITED STATES AND IN OVERSEAS AREAS. ON THE CONTRARY, USE OF THE BASIC ALLOWANCE FOR QUARTERS WOULD APPEAR TO OPERATE TO OVERSTATE THE EXCESS COST OF LIVING IN OVERSEAS AREAS BY THE DIFFERENCE BETWEEN THE BASIC ALLOWANCE FOR QUARTERS AND THE HOUSING COST OF LIVING IN THE UNITED STATES. THIS APPARENT DISPARITY IN OVERSEAS EXCESS HOUSING COSTS WOULD SEEM TO BE FURTHER INCREASED BY THE COMMITTEE'S INDICATED POLICY, IN COMPUTING THE HOUSING INDICES, OF DISREGARDING INFORMATION WHICH REFLECTS WHAT ARE DEEMED TO BE UNUSUALLY LOW HOUSING COSTS.

SINCE THE PERTINENT STATUTE AUTHORIZES THE SECRETARIES TO PRESCRIBE "A PER DIEM, CONSIDERING ALL ELEMENTS OF THE COST OF LIVING," IT SEEMS REASONABLY CLEAR THAT IT DOES NOT AUTHORIZE A HOUSING ALLOWANCE TO BE PRESCRIBED FOR A PARTICULAR OVERSEAS STATION (BASED ON EXCESS COST OF HOUSING AS COMPARED WITH HOUSING COST IN THE UNITED STATES) WITHOUT TAKING INTO ACCOUNT AND MAKING A DOWNWARD ADJUSTMENT FOR ANY SAVINGS WHICH COULD BE MADE AT THAT STATION ON OTHER ELEMENTS OF THE COST OF LIVING AS COMPARED WITH THE COST OF SUCH OTHER ELEMENTS IN THE UNITED STATES. LIKEWISE, THE LAW IS NOT VIEWED AS CONTEMPLATING THAT A COST OF-LIVING ALLOWANCE WILL BE PRESCRIBED AND PAID ON THE BASIS OF EXCESS NON-HOUSING LIVING COSTS AT AN OVERSEAS STATION WITHOUT TAKING INTO ACCOUNT SAVINGS, IF ANY, A MEMBER MIGHT MAKE AT SUCH STATION BY REASON OF LOWER HOUSING COSTS THAN THOSE EXISTING IN THE UNITED STATES. IN OTHER WORDS, THE LANGUAGE OF THE STATUTE SEEMS TO MAKE IT CLEAR THAT A HOUSING ALLOWANCE AND A COST OF LIVING (EXCLUDING HOUSING) ALLOWANCE SHOULD NOT BE DETERMINED AT A PARTICULAR STATION INDEPENDENTLY OF EACH OTHER.

IT FOLLOWS, THEREFORE, THAT NEITHER THE BASIS FOR COMPUTING THE PRESENT HOUSING ALLOWANCES NOR THE SUGGESTED BASIS FOR CUMPUTING THE PROPOSED SUPPLEMENTAL HOUSING ALLOWANCES IS CONSISTENT WITH EITHER THE STATUTORY AUTHORIZATION OF A PER DIEM CONSIDERING ALL ELEMENTS OF COST OF LIVING OR THE PURPOSE OF THE STATUTE.

WE RECOGNIZE, HOWEVER, THAT THE PRESENT METHOD OF COMPUTING THE HOUSING ALLOWANCE HAS BEEN IN EFFECT WITHOUT QUESTION FOR A NUMBER OF YEARS AND THAT A REASONABLE PERIOD OF TIME WILL BE NECESSARY TO EFFECT THE INDICATED CHANGES IN THAT METHOD. ACCORDINGLY, UNTIL SUCH TIME AS THE FORMULA FOR COMPUTING THE ALLOWANCES CAN BE REVISED AS INDICATED AND ALLOWANCES COMPUTED ON THE BASIS OF THE REVISED FORMULA PROMULGATED FOR EACH OVERSEAS LOCATION ON AN ORDERLY BASIS, WE WILL NOT OBJECT TO COMPUTATION AND PAYMENT OF REGULAR HOUSING ALLOWANCES AND COST-OF LIVING ALLOWANCES ON THE PRESENT BASIS.

WITH REGARD TO THE AUTHORITY OF THE SECRETARIES TO PRESCRIBE A SUPPLEMENTAL HOUSING ALLOWANCE, IT IS OUR VIEW THAT 37 U.S.C. 405 MAY BE CONSIDERED AS AUTHORIZING THEM TO PRESCRIBE, ON A BASIS CONSISTENT WITH THE LANGUAGE AND INTENT OF THE STATUTE AS INDICATED ABOVE AND WITH APPROPRIATE ADMINISTRATIVE CONTROLS, DIFFERENT PER DIEM RATES AT A GIVEN STATION ON THE BASIS OF DIFFERENT COSTS INCURRED BY DIFFERENT GROUPS OF MILITARY PERSONNEL AT THAT STATION INCLUDING GROUPS WHO ARE INCURRING HIGHER THAN AVERAGE EXCESS COSTS OR LOWER THAN AVERAGE EXCESS COSTS.