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Your Fiscal Year 2004 Military Pay and Benefits

The FY 2004 Military Authorization Act

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Updated January 05, 2004

On November 7th, Congress passed the Fiscal Year 2004 Military Authorization Act, and has sent it to the President to sign into law.

The act authorizes DoD to spend $401.3 billion. The fiscal 2004 Defense Appropriations Act, which actually provides the money, became law Sept. 30. President Bush is expected to sign the authorization bill into law soon. (Added: President Bush signed the bill into law on November 26th).

Below are the major provision of the new law:

Overall funding levels are $74.2 billion for procurement, $114.4 billion for operations and maintenance and $63.4 billion for research, development, testing and evaluation.

Base Pay. Section 601 of the FY 2004 Military Authorization Act gives a pay increase of at least 3.7 percent to all military members. Certain mid-level noncommissioned officers, petty officers and officers will receive targeted pay raises of up to 6.25 percent. The average pay raise is 4.15 percent. See FY 2004 Active Duty Pay Charts and FY 2004 Reserve Drill Pay Charts for the new pay rates. The raises are effective on 1 January 2004, which means servicemembers should see the increase in their 15 January paychecks.

Future Pay Raises. The bill also directs the Executive Branch that the annual military pay increases after fiscal 2006 will be equal to the increase in the Employment Cost Index (section 602 of the act). Previous law requires that the Fiscal Year 2005 and Fiscal Year 2006 raises be at least 1/2 of a percentage point above the ECI. Based on current private sector data, this means the FY 2005 pay raise should be at least 4.4 percent and the FY 2005 raise should be at least 3.9 percent. However, like the previous several years, it's expected that DOD will ask that the raises be "targeted" so that mid-level noncommissioned officers, petty offers and officers will receive the lions share of the raise.

Base Pay for Officers with Prior Enlisted Service. O-1 to O-3 with at least 1,460 reserve retirement points as prior enlisted will be paid the same as officers with more than four years of enlisted service.

Housing Allowance. The bill continues the "buy-down" of out-of-pocket expenses by increasing the Basic Allowance for Housing. In calendar year 2003, service members living "on the economy" have been paying an average of 7.5 percent of the housing costs out-of-pocket. That percentage will drop to 3.5 in fiscal 2004, and be eliminated in fiscal 2005. The new BAH rates will take effect on 1 January 2004, so servicemembers should see the first increase in their 15 January paychecks. See FY 2004 BAH Charts.

Housing Allowance for Military Couples on Sea Duty. Section 605 of the act requires the services to pay single-rate housing allowance to BOTH members, of military-married-to-military couples, without dependents, when both members are deployed at sea. Under previous law, only one member received the housing allowance.

Basic Allowance for Sustenance (BAS). In Fiscal Year 2002, Congress mandated that increases in BAS be automatic, based on the inflation rate as measured by the Agriculture Department's Food Cost Index. For FY 2004, BAS has increased 4.8 percent See FY 2004 BAS Charts.

Combat Pay. Last year, Congress authorized a temporary increase of combat pay (imminent danger pay) from $150 per month to $225 per month. That provision was set to expire on 1 October 2004, however, a temporary funding bill kept the increase alive. The FY 2004 Military Authorization Act, Section 619, keeps the temporary increase until 31 December 2004. Congress will decide whether to continue the increased amount beyond that date when they consider the FY 2005 Military Authorization Act.

Family Separation Allowance. Family Separation Allowance (Type II) is payable anytime a military member is separated from his/her dependents for longer than 30 days, by reason of military necessity. As with combat pay, last year, Congress temporarily increased the allowance from $100 per month to $250 per month. The FY 2004 Military Authorization Act, Section 606, continues this increased amount until 31 December, 2004.

Overseas Tour Extension Incentives. Section 621 of the act expands overseas tour extension incentives (members who volunteer to extend their overseas tours in certain areas can receive incentives such as a period of non-chargeable leave, round-trip leave transportation, or monthly payments), from enlisted members only, to include warrant and commissioned officers.

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