Service members and their families living overseas in certain areas will experience a reduction in their Overseas Cost of Living Allowance beginning June 1.
The extent of the reduction depends on the member’s rank, years of service, number of dependents and duty location. The approximate projected change for each service member can be calculated by visiting https://www.defensetravel.dod.mil/site/colaCalc.cfm and looking at the current Kaiserslautern Military Community rate. Enter 112 in the COLA index box, which will give you the new rate. Rates are given by pay period so they should be doubled for a one month calculation.
“The decision to adjust COLA rates is made by the Office of the Secretary of Defense, and is informed by surveys in each military community,” said Lt. Col. Micah Neece, 86th Comptroller Squadron commander. “The current COLA rate change determination was informed by a survey conducted in the fall of 2021.”
Two surveys determine the relative cost of living overseas compared with the continental U.S. Service members play a critical role in COLA determinations by participating in the Living Pattern Survey, which is conducted every three years and captures input from service members and their families to establish where and how they purchase goods and services. The Retail Price Schedule, conducted every year, collects prices for a market basket of approximately 120 goods and services. Items such as groceries, car insurance, gasoline, and day care are taken into consideration to ensure essentials for American families are well represented.
The purpose of overseas COLA is to ensure that service members have the same purchasing power at overseas duty locations as in the U.S. When the strength of the dollar increases against the euro, and as the cost of goods in the U.S. rise compared to the cost of goods in the Kaiserslautern Military Community, service members can expect COLA payments to decrease.
According to Neece, COLA index points are determined separately for each community. American presence in a community changes the dynamic of that economy. Because the KMC has a large American consumer influence, economic impact is more significant. COLA fluctuation in smaller communities not impacted by American consumers, is less significant.
Although we have seen significant increase in utility costs as a result of the conflict in Ukraine, COLA surveys also do not account for utility costs. Members receive a utility allowance to address utility costs.
“Senior leaders are aware that this is poor timing for a reduction in rate, and are working to determine a way forward,” said Neece.
Since COLA is not a fixed amount and fluctuates annually as well as from pay period to pay period, Defense Department officials continually stress that fixed expenses such as rent and car payments should be based on what a service member can afford without COLA.