Written by William & Mary Law Student Stephen Beaty
Over the last few years, Congress has implemented numerous cost cutting measures that dramatically affect military personnel. What may be missing from the conversation is the way that these cuts affect Veterans as well as their active-duty counterparts.
Since 2005, the Basic Allowance for Housing, or BAH, has been calculated to cover the entire cost of a service member’s housing costs, based on their location, rank, and dependent status. This allowance was intended to cover rent, utilities, and insurance. In 2014, however, Congress and the President approved a plan to reduce the BAH levels starting in January 2015. The calculations no longer include insurance, and the calculations are being redesigned to only cover 95% of the rent and utility costs. The reduction is being phased in over five years at a rate of 1% per year.
This BAH reduction will directly impact Veterans in two distinct ways. The first is that the lower rates will result in an increased out-of-pocket expense for service members before their exit from the military. Every service member treats their monthly pay a little bit differently, but when there is less money coming in to the household, one of the first areas to be cut will be savings.
In our local area, an E-5 with dependents will receive $1395 per month for their housing in 2016. Last year, the rate was $1557. The reduction does not affect personnel already living in the Hampton Roads area, but newly promoted or newly arrived troops will see a significant difference in their monthly paychecks. Part of the reduction may relate to less expensive housing, but the fact remains that a new E-5 will receive $182 less each month than his counterpart who promoted or arrived a few months ago. For a new Non-Commissioned Officer (NCO), that is a significant difference. Over the course of twenty years, saving $182 per month with an interest rate of just 7% would result in over $95,000. That is a significant difference for a retiree.
The second, and perhaps more visible way that reduced housing rates affect Veterans is through the GI Bill. The Post-9/11 GI Bill allows Veterans or their family members (through a transfer of the benefit) to receive money to pay for college, along with a housing allowance at the local rate for an E-5. As we saw in the numbers above, a new Veteran just lost $2,184 each year compared to the Veteran who started school in 2015. This reduction could place a heavy burden on Veterans who are trying to reintegrate into civilian life.
Currently making its way through Congress is the Veterans Employment, Education and Healthcare Act. This act is not the law, but as currently written, it includes provisions to further cut the BAH allowance for children of Veterans who are using transferred benefits by one-half (114 H.R. 3016, § 301 (c)).
I am fully in favor of cutting unnecessary expenses and trying to get the United States back to a responsible fiscal position. But requiring our service members and Veterans to continue to bear the brunt of the changes is not right. There are numerous other ways to reduce military spending without adding to the difficulties of a post-military life.
The tragedy of these changes is that many service members have made plans to transition out of the military that depend on these housing allowances while they further their higher education. Other service members have made plans to help fund their children’s college education with these benefits. Still others will have reduced savings for their retirement years because of the changes.
Changing the rules in the middle of the game is not fair, and may leave some Veterans unable to complete their transition with distinction. Our Veterans have carried the heavy burden of protecting our nation. We owe it to them to give them the benefits they have expected and have earned.