HAGÅTÑA (The Guam Daily Post) — The Department of Defense will start reducing the Overseas Cost-of-Living Allowance, or OCOLA, for service members in Guam on May 15, Del. James Moylan announced in a press release.
Earlier this year, Rear Adm. Benjamin Nicholson, commander of Joint Region Marianas, announced on March 16 that the OCOLA, which is a “nontaxable allowance designed to offset higher prices on housing goods and services and to equalize purchasing power for active-duty military personnel stationed overseas with spending power stateside,” would be reduced by 66%.
The reduction was decided after two surveys were conducted: the Living Pattern Survey, conducted every three years, which determines where service members shop; and an annual survey, the Retail Price Schedule, which gathers prices of nonhousing goods and services.
After the announcement was made, however, Nicholson stated on Joint Region Marianas social media accounts he would appeal the decision. Moylan then questioned Secretary of Defense Lloyd Austin on the matter at a hearing held by the U.S. House of Representatives Armed Services Committee.
Austin responded he would have to take a closer look at the issue and find out “what’s in the realm of the possible,” before placing a temporary moratorium on the decrease.
But a month and a half later, DOD announced it would go through with the reduction, despite the delegate’s request for reconsideration, Moylan stated Thursday in a press release. The delegate further explained the reduction will be done in two increments – the first on May 15 and the second on Nov. 15.
Moylan stated, however, that “many service members will experience a pay increase in 2023, along with other benefits, which would offset the reduction in OCOLA.”
According to Guam’s only member of Congress, the reduction is still “deeply” concerning.
“While we recognize that the DOD has their formulas which dictate the OCOLA, and that many service members shall experience salary increments, the reality is that the cost of living for those residing inside and outside the fence is relatively high in Guam,” Moylan said. “This decision will also impact our economy.”
The delegate reiterated his opposition to the decision and is looking at proposing an amendment that would prevent further reductions in the next fiscal year.
“Our office is finalizing language on an amendment to include in the National Defense Authorization Act (NDAA) which would prevent any OCOLA reductions in (fiscal year 2024), for those service members residing in Guam, and we hope to secure some support in the process,” he said.
Net increases
On Thursday morning, JRM also announced the reduction on social media and included information for service members to prepare for the change, though it also explained that some members of the military will see an overall increase in pay, given a 4.6% bump in base pay from 2022.
One graph in particular showed the pay for a service member stationed in Oahu, Hawaii, with a rank of E-4, who has three years of service and two dependents, as an example. A service member with the rank of E-4 is a petty officer third class in the Navy, a senior airman in the Air Force or a corporal in the Army or Marine Corps.
The graph shows the enlisted service member received $5,775.47 in net monthly income, accounting for deductions. According to the information published by JRM, the same person, even with the OCOLA reduction in May, would earn $488.69 more than in 2022. This net increase will drop to $359.69, once the second round of reductions is implemented in November.
JRM also published several “key facts” about OCOLA, including that it does not consider a spouse’s income, that it can fluctuate based on the exchange rate, and that it can increase or decrease based on economic conditions.
The local military command further recommended members and families review their budgets and plans, and use an online calculator to verify the amount of OCOLA they would receive based on the changes.
Guam National Guard spokesperson Mark Scott also told The Guam Daily Post the Guard has started informing its service members to prepare them as much as possible.
“We continue to encourage them to communicate any financial hardships to their support channels, or visit our financial and family programs counselors for help, if needed,” Scott said.
The Guam Army National Guard Readiness Center in Barrigada is shown Monday, April 24, 2023.
