An Economic Evaluation of Variable Housing Allowances in the Colorado Springs Military Housing Area.

This study evaluates the current Department of Defense Variable Housing Allowance VHA Program for military families with dependents. It is exclusively for the Colorado Springs Military Housing Area MHA, although the methodology could easily be applied to other MHA in the continental United States. For the Colorado Springs MHA, we conclude that VHA entitlements are too low for pay grades 0-1 and E-6 and below. For 0-2, 0-3, and E-7 through E-9, the current VHA entitlement are too high. We were unable to make a determination for 0-4 and above. We also explored the implications of including homeowner imputed rents in Department of Defense VHA calculations. We conclude that if imputed rents were included, VHA would be substantially lower for all pay grades. We recommend that all military members be advised on how their VHA entitlements are calculated, and how the quality of housing they choose affects their respective entitlements. We also recommend that VHA entitlements be updated quarterly between annual VHA surveys by indexing entitlements to housing cost inflation rates. Author