Observations on the Method of Annually Adjusting Military Pay

Gao ID: FPCD-78-45 June 2, 1978

In 1967, the principle of providing automatic adjustments in military pay based on increases in federal civilian salaries was established. Since that time, automatic increases in military pay have been indexed to the average percentage increase in General Schedule salaries.

In the military, the automatic adjustment mechanisms result in: (1) understatement of regular military compensation costs in the Department of Defense (DOD) budget; (2) increasing portions of regular military compensation taking the form of tax advantages such as housing, potentially further increasing the visibility of pay to military members; and (3) increasing pay inequalities due to marital status. Portions of regular military compensation are not reflected in the DOD budget, and this absence impedes identification and evaluation of military compensation costs. Because the forms of military compensation are difficult to identify, members often undervalue their regular military compensation. Regular military salary, considered equivalent to civilian salaries, is greater for members with dependents than for single members of the same grade and length of service.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Kenneth J. Coffey Team: General Accounting Office: Federal Personnel and Compensation Division Phone: (202) 275-5140


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