Smaller Out-of-Pocket Housing Expenses for Active Duty Military Members
Out-of-pocket housing expenses for active duty military members living in private-sector housing have decreased during the period since 1999. In fiscal year 2000, housing allowances did not cover about 19 percent of the typical active duty military member's housing and utility costs.[Footnote 13] For fiscal year 2002, DOD plans called for increasing this allowance so that the out-of-pocket costs for obtaining private-sector housing would decrease to 8 percent in 2003 and 4 percent in 2004.[Footnote 14] The 2005 budget request for DOD seeks to totally eliminate out-of-pocket expenses for housing for the average active duty military member.
The decreases in out-of-pocket expenses are equivalent to increases in total compensation. This point can be illustrated using the $910 per month that DOD identified as the January 2003 national median cost of obtaining civilian equivalent housing for the most junior level of enlisted military personnel (i.e., E1-E4) with dependents. The median monthly out-of-pocket expense in 2003 was $68 (or 7.5 percent), but it would have been about $173 (19 percent) had the out-of-pocket percentage remained at the fiscal year 2000 level. This difference of $105 per month translates into $1,260 per year being available for other needs, and the yearly housing allowance of $10,104 would have been tax exempt.
The intent of the basic allowance for housing program is to provide active duty service members with accurate and equitable housing compensation when on-base or other government housing is not provided.[Footnote 15] The legislation establishing the program required that rates be based on the cost of adequate housing for civilians with comparable incomes, and that the rates vary by a member's rank or pay grade; by dependency status--that is, either having or not having dependents; and by geographic location.[Footnote 16]
 About two-thirds of the married and one-third of the single military members in the United States live in private housing in the communities surrounding military installations. They receive a cash housing allowance to help defray the cost of renting or purchasing a home and the cost of utilities. The remaining military families live in government-owned or privatized housing. These latter families pay no out-of-pocket expenses for housing or utilities. Families in government housing receive no housing allowance, while families in privatized housing use their housing allowance to pay rent and normal utility costs.
 See U.S. General Accounting Office, Military Housing: Management Improvements Needed as the Pace of Privatization Quickens, GAO-02-624 (Washington, D.C.: June 21, 2003).
 See U.S. General Accounting Office, DOD Personnel: Improvements Made to Housing Allowance Rate Setting Process, GAO-01-508 (Washington, D.C.: Apr. 16, 2001).
 See 37 U.S.C. 403.