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Service members in the KMC can expect their wallets to feel a bit thicker this February as the Cost of Living Allowance increases for Germany.
Starting with the Feb. 15 paycheck, the overseas COLA index for Kaiserslautern will increase by eight points, from 108 to 116, resulting in a higher rate of COLA paid to service members across the community. Service members stationed in other areas of Germany will see a COLA increase as well, with the amount differing depending on the region.
“The goal of COLA is to help service members purchase the same goods and services as those stationed in the U.S.,” said Capt. Aurelio Varela, a plans officer with the 21st Theater Sustainment Command’s 266th Financial Management Support Center. “Data from recent surveys shows that the costs of items in Germany, particularly transportation and clothing costs, have increased, resulting in service members spending a larger amount of their income on these items compared to those living in the U.S. The COLA adjustment will help service members purchase the same items here without having to spend extra money out of pocket to maintain the same living standard.”
The determination of the overseas COLA rate is a complex process led by the Defense Travel Management Office with input from service members assigned to each overseas location. Two surveys, a Living Pattern Survey and Retail Price Schedule, provide data that is compared with the cost of equivalent goods and services in the U.S. If it is determined that goods and services cost more in the overseas region, COLA is paid.
The LPS asks service members where they shop and to assess what percentage of goods they buy locally versus at the commissary or exchange, Varela explained. The data collected from this survey is then used by researchers to conduct a RPS, or “market basket survey,” where the average costs of about 120 goods and services are compared to the costs of purchasing the same stateside. If the average overseas ‘basket’ cost is higher, COLA is paid.
In other words, if a gallon of milk, loaf of bread and box of cereal costs $13 at an overseas location but only $10 stateside, this indicates that the cost of living is 30 percent higher overseas. Service members receive COLA to help offset the extra cost.
“Rates are increasing because things are getting more expensive,” Varela said. “However, though your paycheck is increasing, you may not notice since things cost more. It’s not ‘extra’ money, and you may not be able to ‘save’ (with it).”
Overseas COLA is unique in that it takes into consideration the number of dependents a service member has versus stateside COLA which only considers whether or not a person has dependents. Some service members here, depending on their rank, number of dependents and years of service, may see their daily COLA rate double.
“An E6 with 10 years of service and three dependents will see COLA increase from $250 to $500 each month. Similarly, an O3 with 10 years of service and three dependents can expect their COLA to grow from about $300 to $600 per month. This is a big difference,” Varela said.
COLA is typically adjusted once a year based on data provided by overseas installations, though it can be adjusted as often as each pay day, according to the DTMO website. Slight fluctuations may also occur from paycheck to paycheck due to the dollar-euro exchange rate.
For more information and to calculate new COLA rates, visit the DTMO website at www.defensetravel.dod.mil/site/colaCalc.cfm. Additionally, starting March 1 service members can participate in the Overseas Housing Allowance Utility and Move-in Expense Allowance Survey, which will collect data on costs associated with overseas housing and move-in expenses.
