2005 Basic Allowances For Housing Rates Announced
The Department of Defense released the 2005 Basic Allowance
for Housing (BHA) rates today, 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 2005 above the fiscal 2004 amount is about
$2.5 billion. The 2005 rates represent the final 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.
Out-of-pocket expense, the portion of the typical member's
housing cost that the member is responsible for, has been
reduced from 3.5 percent last year to zero this year. The
2005 rates represent the final phase in a series of steps
taken to bring the average member's out-of-pocket expense
to zero by 2005. However, the actual expense for an individual
may be higher or lower than that average, based on his/her
actual choice of housing.
Three components are included in the BAH computation:
Median current market rent
Average utilities (including electricity, heat, and water/sewer)
Average renter's insurance
Total housing costs are calculated for six housing profiles
(based on dwelling type and number of bedrooms) in each Military
Housing Area (MHA). BAH rates are then calculated for each
pay grade, both with and without dependents. An estimated
$12.3 billion will be paid to more than 910,000 service members
in 2005.
Data are collected annually for approximately 400 MHAs in
the United States, including Alaska and Hawaii. An important
part of the BAH process is the cooperation from the services
and local military housing offices in the data collection
effort. Input from local commands is used to determine in
what neighborhoods data is collected and to direct the data
collection effort towards adequate apartment complexes and
individual housing units.
For members with dependents, average increases in the BAH
are approximately 8 percent. A typical E-4 with dependents,
for example, will find his/her BAH about $47 per month higher
than last year. An E-8 with dependents will have about $60
more in his/her paycheck.
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, an individual member in a given location
will never see his/her BAH rate decrease. This policy assures
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.
Geographic rate protection maintains a BAH rate at last year's
level while the planned buy down in out-of-pocket expense
is phased in. Geographic rate protection means that newly
arrived members to an area will not see BAH rates that are
substantially less than current members' rates.
The continual improvement in housing allowances represent
the Defense Department's commitment to the preservation of
a compensation and benefit structure which will provide members
with a suitable and secure standard of living, that will sustain
a trained, experienced, and ready force in the future.
