COLA for Hawaii should be understood

| June 19, 2015 | 0 Comments

U.S. Pacific Command News Release

Uniformed service members stationed in Hawaii receive a cost of living allowance (COLA).

This nontaxable, supplemental pay allowance is intended to help offset the higher prices of non-housing goods and services experienced when living outside the continental U.S., or overseas CONUS.

The Cost of Living Allowance, or COLA, will decrease this year in Hawaii. (File photo)

The Cost of Living Allowance, or COLA, will decrease this year in Hawaii. (File photo)

COLA rates are determined by the difference between CONUS prices and Hawaii prices. If the gap between CONUS and Hawaii prices narrows, Hawaii COLA will decrease. If the gap widens, COLA will increase.

COLA rates are reviewed each year by the Defense Travel Management Office (DTMO).

Hawaii COLA rates are determined by comparing retail prices in Hawaii with average CONUS retail prices. Data is also gathered from the annual weights update coordinated with the Bureau of Labor Statistics, and from a CONUS/OCONUS comparison of per diem rates.

U.S. Pacific Command gathers Hawaii retail prices when conducting annual pricing surveys for Hawaii. Some 120 goods and services are priced at commissaries and exchanges and at civilian retail establishments used by service personnel. This data is submitted to DTMO for establishment of COLA rates for military personnel stationed in Hawaii.

DTMO makes a recommendation of COLA rates to the Military Advisory Panel (MAP). The MAP, which is comprised of senior representatives from the uniformed services, approves or disapproves these DTMO recommendations.

This year, the gap narrowed between CONUS and Hawaii prices. In other words, costs increased in CONUS for the majority of surveyed categories at a greater rate than they did in Hawaii. Thus, the MAP approved a COLA decrease for service members on Oahu, Maui and Kauai.

Uniformed personnel on the three islands will see an initial overall decrease in COLA effective July 1, and a final decrease effective Aug. 1.

The COLA rate on Aug. 1 will be in effect going forward, pending the results of the next survey. The next retail pricing survey will be conducted in March 2016.

• What you should know

It is important to understand that this supplemental allowance is designed to ensure that, for example, a Sailor at Pearl Harbor and a Soldier at Schofield Barracks have the same purchasing power as their counterparts in San Diego or Fort Hood.

This year, pricing surveys in CONUS and Hawaii showed that prices increased at a faster pace for our fellow service members in CONUS than for those of us stationed in Hawaii.

COLAs are not related to housing allowances (BAH). COLA is designed to offset the higher overseas prices of non-housing goods and services. BAH provides service members equitable housing compensation based on housing costs in local civilian housing markets.

Service members and their families need to always be prepared for COLA fluctuations. COLA fluctuations should be considered in household budgeting. Fixed expenses, such as car payments or private school costs, should be based on what a service member can afford without COLA.

In short, COLA should be “used wisely.”

• COLA

For more information on COLA, and to access the COLA calculator, visit www.defensetravel.dod.mil/site/cola.cfm.

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