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1 [1] (January 3, 2017)

handle is hein.crs/crsmthmbbyn0001 and id is 1 raw text is: D s PCongressional Research SeRice Info rmng the Iegislative debate sir ce 1914 Defense Primer: Military Pay Raise S January 3, 2017 The phrase military pay raise, frequently used in discussions of military compensation, is almost always a reference to the annual increase in basic pay for members of the uniformed services. By law, basic pay is automatically increased at the start of each calendar year by an amount linked to the change in the Employment Cost Index (ECI), although the President or Congress may override this statutory adjustment. Basic pay for all servicemembers increased by 2. 1% on January 1, 2017. What is Basic Pay? Basic pay is one component of the military compensation package, which also includes housing, subsistence, health care, and retirement benefits. For most servicemembers it is the largest element of the compensation they receive in their paycheck and typically accounts for about two-thirds of an individual's regular military compensation (RMC). RMC is the total of the following elements that a member of the uniformed services accrues or receives, directly or indirectly, in cash or in kind every payday: basic pay, basic allowance for housing, basic allowance for subsistence, and Federal tax advantage accruing to the aforementioned allowances because they are not subject to Federal income tax. (37 U.S.C. §101(25)). The rate of basic pay an individual receives varies based on his or her paygrade (rank) and years of military service. For example, a newly enlisted recruit (paygrade E-1) with four or more months of service and less than two years of service receives $1,566.90 in basic pay per month in 2016, while a more senior enlisted person (paygrade E-6) with between ten and twelve years of service receives $3,408.60 per month. A newly joined officer (paygrade 0-1) with less than two years of service receives $2,972.40 in basic pay per month in 2015, while a more senior officer (paygrade 0-4) with between ten and twelve years of service receives $6,745.80 per month. Complete pay data available at http://www.dfas.mil/militarymembers/payentitlements/milit ary-pay-charts.html. How is the Annual Increase in Basic Pay Calculated? Section 1009 (c) of Title 37 provides a permanent formula for an automatic annual increase in basic pay that is indexed to the annual increase in the ECI for wages and salaries, private industry workers. The automatic adjustment is rd equal to the increase in the ECI from the 3 quarter of the third preceding year to the 3 quarter of the second preceding year. For example, in the 12-month period between the quarter that ended in September 2010 and the quarter that ended in September 2011, the ECI increased by 1.7%. Hence the pay raise for 2013, as calculated by the statutory formula, was 1.7%. However, under subsection (e) of this statute, the President can specify an alternative pay adjustment that supersedes the automatic adjustment. Additionally, Congress may pass a law to specify the annual pay raise, overriding the automatic adjustment and/or any presidential adjustment. Pay Raise for 2016 The adjustment in basic pay for 2016 under the statutory formula was 2.3%. However, the President exercised his authority to specify an alternative adjustment, setting the increase at 1.3%. The National Defense Authorization Act (NDAA) for FY2015 (P.L. 113-291) contained no provision relating to a general increase in basic pay, leaving in place the 1.3% increase specified by the President. However, the NDAA did contain a provision stipulating that there would be no pay raise for general and flag officers. Statutory Formula for 2017 The adjustment in basic pay for 2017 under the statutory formula is 2.1% (reflecting the increase between the ECI for the 3 quarter of 2014 and the 3 quarter of 2015). Congressional and Presidential Action for 2017 The FY2017 President's Budget requested a 1.6% increase in basic pay, lower than the statutory formula of 2. 1%. This was in keeping with Department of Defense plans to limit increases in basic pay through FY2020. Section 601 of the House version of the FY17 NDAA (H.R. 4909) required the statutory formula increase (2.1%) to go into effect, notwithstanding any determination made by the President under subsection (e) of such section with respect to an alternative pay adjustment.... Section 601 of the Senate version of the FY17 NDAA (S. 2943) waived the automatic increase in basic pay under the statutory formula of 37 U.S.C. § 1009, and set the pay raise at 1.6%. On August 31, 2016, the President sent a letter to congressional leaders invoking his authority under 37 U.S.C. 1009(e) to set the pay raise at 1.6%. However, section 601 of the final version of the FY2017 NDAA set the pay raise at 2.1%, and President Obama signed this bill into law on December 23, 2016. This statutory adjustment supplanted the President's alternative pay adjustment. Therefore, basic pay for all servicemembers increased by 2.1% on January 1, 2017. www.crs.gov 1 7-5700

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