How Government Shutdowns Can Affect Military Pay

Whenever we start talking about a government shutdown, there is a lot of confusion.  It’s understandable – these things are confusing.   Heck, I have to re-learn it every single time it comes up, just to be sure I’m not messing something up, and this is my job.  There are a lot of little details, and it’s often unclear how the parts fit together.

What Is A Government Shutdown?

A government shutdown is when the federal government ceases operations.  It typically happens for one of two reasons:  either Congress has failed to authorize spending (budget), or we have run out of ability to borrow (debt ceiling). This time around, a possible shutdown would be caused because there is no budget passed, and the president is threatening to veto any budget that doesn’t contain funding for a border wall.

How The Budget Process Works

Our federal government spending is organized by a two-part process.  The two parts are called appropriations and authorizations.  The two parts work together.

To relate them to your personal budget:  Appropriations is like deciding how much you will spend on travel this year.  Authorization is like deciding where you are going to go, how you are going to get there, and whether you are sleeping in a tent or a five-star hotel.

The part that relates to shutdowns is appropriations.  We’re not worried about authorization right now: The 2019 National Defense Authorization Act was signed into law in August.

Appropriations, often called “the budget,”  is when the federal government sets a broad spending plan for the fiscal year.  Our constitution requires that all money spent by the federal government be pre-approved:

“No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.” – Article one, Section nine, Clause seven of the U.S. Constitution

By law, the budget is supposed to be finalized by the start of the fiscal year, which runs from 1 October to 30 September, with the 2019 fiscal year running from 1 October 2018 to 30 September 2018.  Unfortunately, setting a budget that big is hard, so it is pretty normal (in the last couple of decades) for Congress to fail to approve the budget by the 1 October deadline.  If we don’t have a budget, Congress can choose to pass a continuing resolution that permits the government to keep running until a budget can be passed.  These continuing resolutions have expiration dates, and sometimes a series of continuing resolutions are passed before the actual budget is done.

However, if Congress can not agree to pass either a budget or a continuing resolution, or the president doesn’t sign the budget into law, then the federal government has no authority to spend money.  Without the authority to spend money, the government can’t do anything, because having employees work = spend money.

The problem being anticipated this year is that the President has the authority to veto the budget, and he’s threatening to veto the budget if it doesn’t contain money to fund a border wall.

How A Government Shutdown Affects Military Pay

Government shutdowns can affect military pay. Anyone who tells you that military pay will not be affected by a government shutdown is either a) very optimistic, or b) not very knowledgeable. It’s true that it has been years since a government shutdown affected military pay, but that doesn’t mean that it can not happen. And frankly, it seems like anything is possible right now.

Talking about budget-related shutdowns, the Defense Finance and Accounting Service (DFAS) – you know, the people who pay you – says,

“the Department of Defense has no legal authority to pay any personnel – military or civilian – for the days during which the government is shut down.”

Thankfully, a number of different things come together to reduce the likelihood of a government shutdown delaying service member’s pay.  Notice I said reduce, not eliminate.

First, government shutdowns are usually short – one to 21 days.  Most last less than a week.  Because military members are paid twice a month, most shutdowns fall in between pay periods.  Legislation to end the shutdown usually specifies that some or all federal workers will be paid for the time of the shutdown.

Second, Congress understands that military pay is a politically sensitive topic, and typically tries to find a way to pay the military.  In the 2013 government shutdown, Congress passed the Pay Our Military Act, which guaranteed that service members would continue to be paid for any shutdown during the 2014 fiscal year.  In the event of another government shutdown, it is possible that Congress would pass a similar bill. Note that I said possible, not probable or likely or guaranteed. Don’t make your plans based on the fact that this happened once in the past.

However, please remember that just because things have unfolded this way in the past does not guarantee that they will happen the same way in the future.  There is no guarantee that military pay will not be affected by a government shutdown, regardless of what your buddy or your neighbor or your Facebook friend tells you.

What Should You Do?

For starters, become informed.  These issues are important, and not just because they could hold up your paycheck.  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, or even picking up that part-time job that you’ve been considering.

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.  See also: 12 Ways To Prepare For The Next Government Shutdown

What About The 30 September 2018 Pay?

Thankfully, the September end-of-month pay is not affected because it is part of the 2018 fiscal year.  This money has already been approved and any shutdown won’t impact that payment. The earliest military pay that could be impacted is 15 October 2018.

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!