Military Housing Allowances

In response to a congressional request, GAO provided information on: (1) the variable housing allowance (VHA) rate-setting process; (2) five alternatives to the VHA program; and (3) a Department of Defense (DOD) Inspector General (IG) report on the rent-plus housing allowance program in Alaska and Hawaii.

GAO found that: (1) DOD estimated housing costs for each of 23 pay grades to determine VHA rates; (2) in cases where little or no data existed to produce reliable estimates, DOD used operations research techniques such as geographical proximity, pay grade, and year-to-year averaging to produce the estimates; and (3) the five alternatives to the VHA program included payment of actual housing costs only, a partial retention by service members of 20 percent of the payments in excess of actual costs, a flat rate for a geographical area, a constant proportion of income spent on housing that would not vary by grade and geographic area, and a combined VHA and basic allowance for quarters. GAO also found that the DOD IG report concluded that: (1) DOD improperly calculated the method used for the rent-plus program, resulting in excess program costs of 25.2 million; (2) specific provisions of the rent-plus regulations resulted in additional costs of at least $1.4 million; and (3) inadequate internal controls resulted in estimated overpayments of about $80,000 in Alaska and $1.4 million in Hawaii.