Government Shutdown Could Impact Military Pay

Government Shutdown Could Delay Military Pay

Update 29 September 2016:  Congress has passed, and the president has signed, a continuing resolution to fund the federal government through 9 December 2016.   At that point, if a budget has not been decided, we will once again be at this same point.

Once again, the federal government is scrambling to pass a federal budget before the start of the new fiscal year.  Once again, it is possible that the military would not be paid on time if the situation is not resolved before the first pay period of the new fiscal year. A government shutdown can delay military pay. Are you prepared?

Do you understand HOW the government shutdown might affect your military pay?What Is Happening?

The United States federal government runs on a fiscal year that runs from 1 October to 30 September.  The 2017 fiscal year begins on 1 October 2016.  That’s this Saturday.  Each year, Congress must balances the needs and wants of the whole country and agree on how to spend money in the upcoming year.  It’s pretty normal for this to not be done by 1 October.  In most cases, if the budget isn’t signed by 1 October, Congress agrees to pass a “continuing resolution,” that keeps the government running while they continue to negotiate the actual budget.  In some years, however, Congress can’t agree on a budget or a continuing resolution.

If they do not agree, then the federal government “shuts down,” which is a very imprecise explanation of a whole series of events.

If the government shuts down because there is not an approved budget or a continuing resolution, there is no funding for military pay.

Will This Impact You?

Probably not.  There are two primary reasons why a government shutdown is unlikely to impact military pay. However, it could happen.

First, government shutdowns usually don’t last that long. Past government shutdowns have lasted one day to 21 days, with most lasting less than a week. The next military paycheck isn’t due until Friday, 14 October 2016, so a shorter government shutdown won’t affect military pay.

Keep in mind that the Defense Finance and Accounting Service (DFAS) does require a little bit of time to process those payments.  If the government remained shutdown until 12 October or 13 October, the 14 October 2016 pay could be delayed.

Second, Congress is acutely aware that military pay is a hot topic issue in government shutdowns. If a shutdown occurs, and appears that it will last long enough to impact the military’s 14 October 2016 payday, there is the possibility that Congress would pass a bill to authorize military pay despite the shutdown.  There’s no guarantee that this would happen, but it did occur in the 2013 government shutdown.

What Should You Do?

First, fully understand the situation.  Every time our country reaches these semi-emergencies, I have readers tell me that it isn’t possible for the military not to get paid on time.  It is possible, and it has happened in the past.  (Thankfully, it has been decades.  Unthankfully, that means that people forget.)

Second, formulate a loose plan.  No need to do anything drastic at this point, but consider your options.  Do you have a solid emergency fund to tide you over until pay arrives?  How are your bills structured – do you have wiggle room with amounts or due dates? If you’d like to do something more proactive, consider delaying purchases or cutting some costs for a few weeks until the dust settles.

Third, consider how you would like to be prepared if this happens again next year, or the year after that.   It is easy to become comfortable when the military pays twice a month, every month.  If you seriously knew that your pay might not happen on time each October, how would you prepare differently?  Since this is the reality of our current fiscal and political climate, take steps to be prepared for it.

What About The 30 September 2016 Pay?

Thankfully, the September end-of-month pay is not affected because it is part of the 2016 fiscal year.  This money has already been approved and the current standoff won’t impact that payment.

Government shutdowns can and do delay military paychecks. Be informed, prepare for the worst-case scenario, and encourage your legislators to get this problem solved.

Please ask questions if you don’t understand.  I love explaining this stuff!

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.