Military Pay Raise Set for 1 Percent

Service members are on track to receive a 1 percent pay increase next year, slightly less than the 1.8 percent boost that would take place automatically under the annual cost-of-living adjustment.

The House and Senate Armed Services Committees released summaries on Tuesday of the final version of the fiscal 2015 Defense authorization bill, which the House could vote on under suspension of the rules on Thursday. After the House votes, it will head to the Senate.

“At this point, there is no way that we can resolve disputes about which amendments should be debated, debate them, overcome potential filibusters, and still get the job done,” said Senate Armed Services Committee Chairman Carl Levin, D-Mich., and Ranking Member James Inhofe, R-Okla., in a Dec. 2 joint statement. “If we get nothing enacted, we would kill both the bill itself and the amendments that we’ve cleared, while providing no avenue for getting additional amendments enacted. We ask our colleagues to support us in bringing up and passing this bill without amendment as the best of a bad set of options.”

Congress also needs to pass legislation soon to keep the government open past Dec. 11. The current plan is to craft an omnibus bill containing funding through fiscal 2015 for most agencies, and another separate, short-term bill funding the Homeland Security Department and other immigration-related activities. Lawmakers traditionally have passed annual Defense authorization bills despite gridlock. This is the fifty-third consecutive National Defense Authorization Act.

Committee members hammered out some differences between the two versions, including the amount of the pay raise. The House-passed legislation tacitly supported a 1.8 percent across-the-board boost for members of the military, while the Senate bill supported a 1 percent raise – the same amount that President Obama has recommended. “The NDAA supports current law, which is intended to ensure pay for our troops keeps pace with the civilian sector, but provides the president with latitude to make exceptions,” said a Dec. 2 House Armed Services Committee fact sheet outlining the bill. “The president has notified Congress he intends to use his authority to set the military pay increase at 1 percent.” Military service members received a 1 percent pay boost in 2014.

The formula for determining service members’ annual pay increase is based on the Bureau of Labor Statistics’ Employment Cost Index and the growth in private-sector wages. But under the law (Title 37, Chapter 19, Section 1009) the president has the authority to set an alternate pay raise for military personnel, citing a national emergency or fiscal concerns, if Congress doesn’t pass legislation adjusting the amount or canceling it. The 1990 Federal Employees Pay Comparability Act allows the president through executive order to set a pay raise for federal civilian employees under the same circumstances.

Federal civilian employees are on track to receive a 1 percent raise in 2015. That’s the amount Obama has recommended, and Congress is not likely to alter that at this point.

The $585 billion fiscal 2015 Defense authorization bill also calls for a pay freeze for general and flag officers in fiscal 2015, as recommended by the Obama administration. The non-partisan Congressional Budget Office estimated that a 1 percent pay raise for most troops combined with the pay freeze for some officers in the Senate bill would save $588 million in 2015 and $3.9 billion between 2015 and 2019. 

Lawmakers also chose to move slowly on reforming other forms of compensation. The legislation includes provisions that result in a smaller increase for troops’ basic housing allowance and a limited, $3 increase in certain pharmacy co-payments but no increase in mail-order generic drug co-pays. As for changes to troops’ basic housing allowance, lawmakers settled on a 1 percent decrease, rejecting the Pentagon’s request for a 5 percent reduction. The bill postpones any further increases until the Military Compensation and Retirement Modernization Commission releases its recommendations on pay and benefits reform, which is expected in February.

“While we would have liked to do more, as the Senate bill would have done, this bill will at least preserve the option for Congress and the executive branch to achieve the full savings requested by the department by adopting modifications for future years in those years,” said Levin and Inhofe in their joint statement. “We do not relish the idea of making these changes, but we recognize that, in the absence of sequestration relief, they are needed to avoid drastic reductions in military readiness, that would potentially endanger the lives of our troops.”

The fiscal 2015 Defense authorization bill is $48 billion less than the fiscal 2014 authorization legislation.

Another important provision would grandfather those who first join the military before Jan. 1, 2016, from the reduced cost-of-living adjustments that apply to military retired pay. The current law grandfathers in those who joined the military before Jan. 1, 2014. Congress in February repealed a provision in the 2013 Bipartisan Budget Act that cut the pensions of working-age military retirees until they reach the age of 62. The reduced cost-of-living adjustment however, still applies to those who first join the military after Jan. 1, 2014.