Military Overseas Housing Allowances Should Be More Realistic

FPCD-80-33: Published: Mar 5, 1980. Publicly Released: Mar 5, 1980.

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In 1970, Congress amended authorizing legislation to permit the station housing allowance to be set at the difference between basic allowance for quarters (BAQ) and overseas housing costs. The following year Congress also set BAQ at amounts that could be reasonably related to housing costs in the United States. Because of the large increased costs since the authorizing legislation was passed, a review of military housing allowances overseas was undertaken. The review focused on: (1) determining how BAQ rates have been affected by adjustments to military compensation since 1971; (2) reviewing the legislative history and regulations pertaining to station housing allowances; (3) identifying and comparing several indicators of housing costs in the United States with BAQ; (4) reviewing the detailed Per Diem, Travel, and Transportation Allowance Committee's calculation of station housing allowances; (5) evaluating a Committee proposal to revise station housing allowances, and (6) discussing these matters with knowledgeable Department officials.

BAQ is no longer representative of housing costs in the continental United States, and its use significantly increases station housing allowances by overcompensating members for extra housing costs. At many locations where the allowance is paid, housing costs are less than what military personnel experience in the United States. Payment of the allowance under these circumstances creates perceived windfalls for persons transferring to station allowance localities and penalties for those leaving the allowance areas. Thus, it is an unwarranted Government and taxpayers' expense. Presently, there are several sources of information on housing costs in the United States which could be used as a reasonable basis for computing the extra costs of overseas housing. Use of these standards could result in savings of about $50 million to nearly $150 million annually. Savings could be offset by a revised and more equitable method of computing the allowance. The proposed rent-plus method offers several advantages over the current procedures. It would reduce errors and inconsistencies in processing data and do away with a large and time-consuming questionnaire system. More importantly, it would remedy an inequity inherent in the current calculation procedures whereby junior officers and junior enlisted personnel are penalized relative to senior personnel. Because improvement to the overall system is being considered, now is the appropriate time to also adopt a new standard of housing cost in lieu of BAQ.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should adopt the rent-plus method for determining station housing allowances and under the rent-plus method, replace BAQ as a standard for measuring excess housing costs with one that is more realistic.

    Agency Affected:

 

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