The following information on COLA was provided by the Defense Travel Management Office (DTMO).

Each year, to coincide with the beginning of the new fiscal year, we update the Spendable Income pay table used by the pay centers to compute COLA pay. As a result of this year's update, service members will soon see a reduction in their Overseas Cost of Living Allowance (COLA) payments due to a decrease in the annual spendable income index. FY 2012 spendable income adjustments go into effect on October 1, 2011, with the change reflected in paychecks issued on October 16, 2011. Additionally, currency adjustments can occur once per pay period. Members stationed in locations using the Euro can expect their COLA payments to decrease due to the declining value of the Euro against the US dollar during this same pay period.

It is important to stress to Service members that COLA is not pay, it is a supplement to their pay. It is not a fixed amount and can fluctuate from pay period to pay period. Because of the fluctuation, fixed expenses, such as rent and car payments, should be based on what Service members can afford without COLA. Changes in spendable income, shopping patterns, prices of goods and services, and currency fluctuations can all cause COLA to increase or decrease.

COLA payments can be calculated by using the COLA calculator located at: http://www.defensetravel.dod.mil/site/colaCalc.cfm.

For more information on this decrease, please refer to the attached information paper, COLA FY11-FY12 COLA comparison chart, COLA fact sheet, and Talking Points that be used to communicate this change to your members.

Additional information on COLA and how it is calculated is available through the COLA Communication Toolkit available on the DTMO website at: http://www.defensetravel.dod.mil/site/colaToolkit.cfm.

Please share this information with your chain of command and interested communities. Request you emphasize that this a normal update to one of the COLA components that is effective each 1 October to coincide with the new fiscal year.

Overseas Cost of Living Allowance
Overseas Cost of Living Allowance Talking Points - Final
Overseas Cost of Living Allowance Talking Points (Sept 2011)