DoD needs to improve the way it calculates troops’ BAH rates, auditors say


A new report on Basic Allowance for Housing supports some service members’ suspicions that they may be getting the short end of the stick when it comes to how much of their rent is covered by the military, says one advocate.

The report, released by the Government Accountability Office, says defense officials need to do a better job collecting and monitoring the data used to set rates for Basic Allowance for Housing, to make sure the rates accurately reflect the cost of suitable housing for service members.

“If DoD does not assess its process for collecting sample units, the department will continue to be limited in its ability to set accurate BAH rates,” stated the Jan. 26 GAO report.

The report “supports service members’ suspicions that BAH rates haven’t been correctly calculated in some instances,” said Sarah Kline, an Army spouse who is a housing advocate in the Military Housing Advocacy Network. She has wondered, she said, why the BAH rates for those in the rank of her husband with dependents in the Fort Sill, Okla., area have been reduced by 17 percent — nearly $300 a month — since 2016. Rental costs in the local area have gone up, she said.

“Military families are often told to just move off base when homes are inhabitable. This confirms that’s not always possible,” she said, because BAH rates may be too low for some families to afford suitable housing.

About two-thirds of service members and military families live in the local community. About one-third live in privatized housing projects or government-owned housing.

DoD spent $20 billion on BAH in 2019. BAH is designed to cover, on average, 95 percent of service members’ housing rental and utility costs in the private sector, and varies by location, rank and whether there are dependents. Those living in the local community have varying costs that may be more or less than their BAH; for those living in privatized housing, their rent is equal to their BAH, paid to their privatized housing landlord.

DoD’s policy is to make sure active duty and their families have access to affordable housing that reflects community living standards of good quality, the GAO auditors noted. The law requires that BAH rates must be based on the costs of adequate housing for civilians with comparable income in the same local area.

The Military Compensation Policy directorate develops the policy for the housing allowance program, and annually sets the housing allowance rates. Over the course of a year, the process involves many steps to collect housing cost data from the local private sector housing market in 301 military housing areas throughout the U.S. To collect the data about local housing costs in these areas, officials rely on hundreds of officials from installations’ military housing offices and a contractor.

Multiple DoD officials involved in the process told the GAO auditors that the BAH process to set rates isn’t completely transparent. One officials told the auditors that “the lack of transparency in the BAH rate-setting process contributes to concerns and questions about the BAH, such as the variance in BAH rates that can occur across different geographic locations and across time by pay grade and dependency status,” according to the report.

Kline said she is concerned that the process seems subjective, and may differ from base to another in how neighborhoods are chosen for rent comparisons in the BAH calculation process.

While DoD has taken some steps to improve its collection and monitoring of data used to set the rates, auditors said, GAO found issues with the sample sizes used to set BAH rates, noting that “DoD has not always collected rental data on the minimum number of rental units needed to estimate the total housing cost for certain locations and housing types,” auditors reported. Their analysis found that 44 percent of locations and housing types had fewer than the minimum sample-size target. In some cases, they used previous years’ data to calculate a weighted average for the BAH rate.

“Until DoD develops ways to increase its sample size, it will risk providing housing cost compensation that does not accurately represent the cost of suitable housing for service members,” the report stated.

DoD officials agreed that the sample sizes are below targets for certain housing types in certain military housing areas, and said they are evaluating ways every aspect of data collection to increase the sample sizes where possible.

“While we strive to meet these targets, due to the housing demographics in certain locations, this is not always possible to do so,” stated DoD’s Jan. 5 response to the GAO report, signed by Virginia Penrod, acting assistant secretary of defense for manpower and reserve affairs.

DoD officials disagreed that sample size targets have to be met in every case, because low sample sizes “often reflect the limited availability of housing stock of a particular housing type” within an area, not a failure of data collection. For example, in areas where there are few or no existing adequate two-bedroom townhouses, collecting information on 30 to 75 units “is clearly an unachievable goal. This by no means represents a flaw in the data collection, but rather an idiosyncrasy of the local housing market,” according to the DoD response.

Noting that DoD has developed alternative methods, officials said that trying to inflate sample sizes could result in including substandard housing units in the BAH sample, and less accurate BAH rates.

DoD did agree with GAO’s recommendation to review and update its BAH guidance to make sure that the rate setting process is accurately and fully reflected.





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