Military Personnel
Observations Related to Reserve Compensation, Selective Reenlistment Bonuses, and Mail Delivery to Deployed Troops Gao ID: GAO-04-582T March 24, 2004Since the terrorist attacks of September 11, 2001, the U.S. military has deployed high numbers of active duty and reserve troops to fight the global war on terrorism and for Operation Iraqi Freedom. Ensuring that U.S. military forces are adequately compensated and that the morale of deployed troops remains high have been priorities for the Congress and the Department of Defense (DOD). In response to congressional mandates, GAO has reviewed a number of issues concerning military personnel. For this hearing, GAO was asked to provide the results of its work on military compensation for National Guard and Reserve personnel and on the Selective Reenlistment Bonus (SRB) program, a tool DOD can use to enhance retention of military personnel in critical occupational specialties. In addition, GAO was asked to provide its preliminary views, based on ongoing work, concerning mail delivery to troops stationed in the Middle East.
Reservists who are called to active duty to support a contingency operation are eligible to receive the same pay and benefits as members of the active component. Moreover, in constant dollars, basic military compensation has increased in recent years. For instance, an enlisted reservist in pay grade E-4 who is married with no other dependents and who is called to active duty experienced a 19 percent increase in basic military compensation between fiscal years 1999 and 2003. Despite these increases, income loss is a concern to many reservists, although DOD has lacked timely, sufficient information to assess the full scope and nature of this problem. Benefits for reserve personnel have also improved, notably in the area of health care. As GAO has previously reported, given the federal government's growing deficits, it is critical that the Congress give adequate consideration to the longer term costs and implications of legislative proposals to further enhance military pay and benefits before they are enacted into law. For example, proposals to enhance reserve retirement should be considered in this context. Although GAO has not specifically reviewed the use of SRBs to enhance reserve retention, GAO has noted shortcomings in DOD's management and oversight of the SRB program for active duty personnel. GAO's observations of this program may be helpful in making decisions for the use of SRBs for reservists. Concerned about missing their overall retention goals in the late 1990s, all the services expanded their use of SRBs to help retain more active duty enlisted personnel in a broader range of military specialties, even though the program was intended to help the services meet retention problems in selected critical specialties. As a result, the cost of the program more than doubled in just 5 years--from $308 million in fiscal year 1997 to $791 million in fiscal year 2002. However, the effectiveness and efficiency of SRBs in targeting bonuses to improve retention in selected critical occupations is unknown. DOD has not conducted a rigorous review of the SRB program. DOD concurred with GAO's recommendations to institute more effective controls to assess the progress of the SRB program, but has not taken action as yet. Mail can be a morale booster for troops fighting overseas and for their families at home. GAO has been reviewing mail delivery to deployed troops and expects to issue a report soon. GAO's preliminary findings show that mail delivery continues to be hampered by many of the same problems encountered during the first Gulf War. First, DOD does not have a reliable accurate system in place to measure timeliness. Second, despite differences in operational theaters and efforts by DOD postal planners to incorporate lessons learned into planning for Operation Iraqi Freedom, postal operations faced many of the same problems, such as inadequate postal facilities, equipment, and transportation. Third, DOD has not officially tasked any entity to resolve the long-standing postal problems experienced during contingency operations. GAO plans to make several recommendations to improve DOD's mail delivery to deployed troops.
GAO-04-582T, Military Personnel: Observations Related to Reserve Compensation, Selective Reenlistment Bonuses, and Mail Delivery to Deployed Troops
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Testimony:
Before the Subcommittee on Total Force, Committee on Armed Services,
House of Representatives:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 1 p.m. EST:
Wednesday, March 24, 2004:
Military Personnel:
Observations Related to Reserve Compensation, Selective Reenlistment
Bonuses, and Mail Delivery to Deployed Troops:
Statement of Derek B. Stewart, Director, Defense Capabilities and
Management:
GAO-04-582T:
GAO Highlights:
Highlights of GAO-04-582T, a testimony before the Subcommittee on Total
Force, Committee on Armed Services, House of Representatives
Why GAO Did This Study:
Since the terrorist attacks of September 11, 2001, the U.S. military
has deployed high numbers of active duty and reserve troops to fight
the global war on terrorism and for Operation Iraqi Freedom. Ensuring
that U.S. military forces are adequately compensated and that the
morale of deployed troops remains high have been priorities for the
Congress and the Department of Defense (DOD).
In response to congressional mandates, GAO has reviewed a number of
issues concerning military personnel. For this hearing, GAO was asked
to provide the results of its work on military compensation for
National Guard and Reserve personnel and on the Selective Reenlistment
Bonus (SRB) program, a tool DOD can use to enhance retention of
military personnel in critical occupational specialties. In addition,
GAO was asked to provide its preliminary views, based on ongoing work,
concerning mail delivery to troops stationed in the Middle East.
What GAO Found:
Reservists who are called to active duty to support a contingency
operation are eligible to receive the same pay and benefits as members
of the active component. Moreover, in constant dollars, basic military
compensation has increased in recent years. For instance, an enlisted
reservist in pay grade E-4 who is married with no other dependents and
who is called to active duty experienced a 19 percent increase in basic
military compensation between fiscal years 1999 and 2003. Despite these
increases, income loss is a concern to many reservists, although DOD
has lacked timely, sufficient information to assess the full scope and
nature of this problem. Benefits for reserve personnel have also
improved, notably in the area of health care. As GAO has previously
reported, given the federal government‘s growing deficits, it is
critical that the Congress give adequate consideration to the longer
term costs and implications of legislative proposals to further enhance
military pay and benefits before they are enacted into law. For
example, proposals to enhance reserve retirement should be considered
in this context.
Although GAO has not specifically reviewed the use of SRBs to enhance
reserve retention, GAO has noted shortcomings in DOD‘s management and
oversight of the SRB program for active duty personnel. GAO‘s
observations of this program may be helpful in making decisions for the
use of SRBs for reservists. Concerned about missing their overall
retention goals in the late 1990s, all the services expanded their use
of SRBs to help retain more active duty enlisted personnel in a broader
range of military specialties, even though the program was intended to
help the services meet retention problems in selected critical
specialties. As a result, the cost of the program more than doubled in
just 5 years”from $308 million in fiscal year 1997 to $791 million in
fiscal year 2002. However, the effectiveness and efficiency of SRBs in
targeting bonuses to improve retention in selected critical occupations
is unknown. DOD has not conducted a rigorous review of the SRB program.
DOD concurred with GAO‘s recommendations to institute more effective
controls to assess the progress of the SRB program, but has not taken
action as yet.
Mail can be a morale booster for troops fighting overseas and for their
families at home. GAO has been reviewing mail delivery to deployed
troops and expects to issue a report soon. GAO‘s preliminary findings
show that mail delivery continues to be hampered by many of the same
problems encountered during the first Gulf War. First, DOD does not
have a reliable accurate system in place to measure timeliness. Second,
despite differences in operational theaters and efforts by DOD postal
planners to incorporate lessons learned into planning for Operation
Iraqi Freedom, postal operations faced many of the same problems, such
as inadequate postal facilities, equipment, and transportation. Third,
DOD has not officially tasked any entity to resolve the long-standing
postal problems experienced during contingency operations. GAO plans to
make several recommendations to improve DOD‘s mail delivery to deployed
troops.
www.gao.gov/cgi-bin/getrpt?GAO-04-582T.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Derek B. Stewart at (202)
512-5559 or stewartd@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to discuss our work on military
compensation for National Guard and Reserve personnel[Footnote 1] and
on the Selective Reenlistment Bonus (SRB) program, as well as our
preliminary observations concerning mail delivery to troops stationed
in the Middle East. Since the terrorist attacks of September 11, 2001,
the U.S. military has deployed high numbers of active duty and reserve
troops to fight the global war on terrorism and for Operation Iraqi
Freedom. Ensuring that U.S. military forces are adequately compensated
and that the morale of deployed troops remains high have been
priorities for the Congress and the Department of Defense (DOD).
Summary:
Our work on reserve compensation has shown that reservists who are
called to active duty to support a contingency operation are eligible
to receive the same pay and benefits as members of the active
component. Moreover, in constant dollars, basic military compensation-
-which includes basic pay, allowances for housing and meals, and the
federal tax advantage[Footnote 2]--has increased in recent years. As a
result, reservists activated today are earning more in the military
than they did just a few years ago. Other pay policies and protections,
such as the Servicemembers Civil Relief Act, may help to mitigate
reservists' financial hardship during deployment. Income loss is a
concern to many reservists, although DOD has lacked timely, sufficient
information to assess the full scope and nature of this problem.
Benefits for reserve personnel have also improved, notably in the area
of health care where the Congress has improved benefits not only for
reservists but for their families as well. As we have previously
reported, given the federal government's growing deficits, it is
critical that the Congress give adequate consideration to the longer
term costs and implications of legislative proposals to further enhance
military pay and benefits before they are enacted into law. For
example, proposals to enhance reserve retirement should be considered
in this context. We have ongoing work looking at proposals to change
the reserve retirement system.
The SRB program is one tool DOD can use to enhance retention of both
active duty and reserve personnel. Although we have not specifically
reviewed the use of reenlistment bonuses to enhance reserve retention,
we have noted shortcomings in DOD's management and oversight of the SRB
program for active duty personnel. Our observations of this program may
be helpful in making decisions for the use of SRBs for reservists. For
example, concerned about missing their overall retention goals in the
late 1990s, all the services expanded their use of SRBs to help retain
more active duty enlisted personnel in a broader range of military
specialties, even though the program was intended to help the services
meet retention problems in selective critical specialties. The Air
Force in fiscal year 2001 awarded bonuses to approximately 80 percent
of its specialties, which were paid to 42 percent of its reenlistees.
As a result of the services' expanded use of SRBs for active duty
personnel, the cost of the program more than doubled in just 5 years--
from $308 million in fiscal year 1997 to $791 million in fiscal year
2002. The SRB budget was expected to rise to over $800 million in
fiscal year 2005. Despite increased use of the SRB program, DOD has
cited continued retention problems in specialized occupations. However,
the effectiveness and efficiency of SRBs in targeting bonuses to
improve retention in selective critical occupations is unknown. DOD has
not conducted a rigorous review of the SRB program.
Mail can be a morale booster for troops fighting overseas and for their
families at home. More than 65 million pounds of letters and parcels
were delivered to troops serving in theater during 2003. Between
February and November 2003, the Congress and the White House forwarded
more than 300 inquiries about mail delivery problems to military postal
officials. We have been reviewing mail delivery and expect to issue a
report soon. Our preliminary findings show that mail delivery continues
to be hampered by many of the same problems encountered during the
first Gulf War. First, DOD does not have a reliable accurate system in
place to measure timeliness. Second, despite differences in operational
theaters and efforts by DOD postal planners to incorporate lessons
learned into planning for Operation Iraqi Freedom, postal operations
faced many of the same problems: difficulty conducting joint mail
operations; postal personnel inadequately trained and initially scarce
in number due to late deployments; and inadequate postal facilities,
equipment, and transportation. Third, DOD has not officially tasked any
entity to resolve the long-standing postal problems experienced during
contingency operations.
Now let me turn to each of these issues in more detail.
Reserve Compensation:
One of DOD's guiding principles for military compensation is that
servicemembers, in both the reserve and active components, be treated
fairly.[Footnote 3] Military compensation for reservists is affected by
the type of military duty performed. In peacetime--when a reservist is
training or performing military duty not related to a contingency
operation--certain thresholds are imposed at particular points in
service before a reservist is eligible to receive the same compensation
as a member of the active component. For example, a reservist is not
entitled to a housing allowance when on inactive duty training (weekend
drills). If a reservist is on active duty orders that specify a period
of 140 days or more, then he or she becomes entitled to the full basic
housing allowance. For contingency operations,[Footnote 4] these
thresholds do not apply.[Footnote 5] Thus, reservists activated for
Operation Iraqi Freedom and other contingencies are eligible to receive
the same compensation as active component personnel.
Basic military compensation,[Footnote 6] in constant dollars, remained
fairly steady during the 1990s but has increased in recent years. As a
result, reservists--enlisted personnel and officers--activated today
are earning more in the military than they did just a few years ago, as
shown in figure 1. For example, an enlisted member in pay grade E-4 who
is married with no other dependents (family size 2) earned $3,156 per
month in basic military compensation in fiscal year 2003, compared with
$2,656 per month in fiscal year 1999, or a 19 percent increase. These
figures are calculated in constant 2003 dollars to account for the
effects of inflation.
Figure 1: Annual Basic Military Compensation for Selected Pay Grades
for Fiscal Years 1990-2003:
[See PDF for image]
Note: GAO analysis.
[End of figure]
In addition to increases in basic military compensation, other pay
policies and protections may help to mitigate reservists' financial
hardship during deployment. For example:
* By statute, debt interest rates are capped at 6 percent annually for
debts incurred prior to activation.[Footnote 7] The Servicemembers
Civil Relief Act, passed in December 2003,[Footnote 8] enhanced certain
other protections. For example, the act prohibits a landlord, except by
court order, from evicting a servicemember or the dependents of a
servicemember, during a period of military service of the
servicemember, from a residence for which the monthly rent does not
exceed $2,400. The act increased the monthly rental limit from $1,200
and required the rental limit to be adjusted annually based on changes
to a national housing consumer price index.
* Some or all of the income that servicemembers earn while serving in
combat zones is tax-free.[Footnote 9]
* For certain contingencies, including Operation Iraqi Freedom, DOD
authorizes reservists to receive both a housing allowance and per diem
for their entire period of activation, up to 2 years.
* Emergency loans are available through the Small Business
Administration to help small businesses meet necessary operating
expenses and debt payments.
An issue of concern that is closely tied with military compensation is
income loss experienced by many reservists activated for a military
operation. In a recent report, we evaluated information on income
change.[Footnote 10] We found that DOD lacked sufficient information on
the magnitude, the causes, and the effects of income change to
determine the need for compensation programs targeting reservists who
meet three criteria: (1) fill critical wartime specialties,
(2) experience high degrees of income loss when on extended periods of
active duty, and (3) demonstrate that income loss is a significant
factor in their retention decisions. Such data are critical for
assessing the full nature and scope of income change problems and in
developing cost-effective solutions. DOD data on income change has been
derived from self-reported survey data collected from reservists and
their spouses. A 2000 DOD survey of reservists showed that of those who
served in military operations from 1991 to 2000, an estimated
59 percent of drilling unit members had no change or gain in family
income when they were mobilized or deployed for a military operation,
and about 41 percent lost income. This survey was conducted before the
mobilizations occurring after September 11, 2001. A 2002 DOD survey of
spouses of activated reservists showed that an estimated 70 percent of
families experienced a gain or no change in monthly income and
30 percent experienced a decrease in monthly income. The survey data
are questionable primarily because it is unclear what survey
respondents considered as income loss or gain in determining their
financial status. We recommended that DOD take steps to obtain more
complete information in order to take a targeted approach to addressing
income change problems. DOD concurred with this recommendation. In May
and September of 2003, DOD implemented two web-based surveys of
reservists to collect data on mobilization issues, such as income
change. DOD has tabulated the survey results and expects to issue a
report with its analysis of the results by July 2004. These surveys
should be insightful for this issue.
Benefits are another important component of military compensation for
reservists and help to alleviate some of the hardships of military
life. DOD offers a wide range of benefits, including such core benefits
as health care, paid time off, life insurance, and retirement.[Footnote
11] Notable improvements have been made to the health care benefits for
reservists and their families. For example, under authorities granted
to DOD in the National Defense Authorization Acts for fiscal years 2000
and 2001, DOD instituted several health care demonstration programs to
provide financial assistance to reservists and family members. For
example, DOD instituted the TRICARE Reserve Component Family Member
Demonstration Project for family members of reservists mobilized for
Operations Noble Eagle and Enduring Freedom to reduce TRICARE costs and
assist dependents of reservists in maintaining relationships with their
current health care providers. The demonstration project eliminates the
TRICARE deductible and the requirement that dependents obtain
statements saying that inpatient care is not available at a military
treatment facility before they can obtain nonemergency treatment from a
civilian hospital. Legislation passed in December 2002 made family
members of reservists activated for more than 30 days eligible for
TRICARE Prime[Footnote 12] if they reside more than 50 miles, or an
hour's driving time, from a military treatment facility. Last year, the
Congress passed legislation for a 1-year program to extend TRICARE to
reservists who are unemployed or whose employer does not offer health
care benefits.[Footnote 13]
As we have previously reported, given the federal government's growing
deficits, it is critical that the Congress give adequate consideration
to the longer term costs and implications of legislative proposals to
further enhance military pay and benefits before they are enacted into
law. For example, proposals to enhance reserve retirement should be
considered in this context. We have ongoing work looking at proposals
to change the reserve retirement system. The key questions we are
addressing include:
* What are the objectives of the reserve retirement system?
* Is DOD meeting its reserve retirement objectives?
* What changes to the current reserve retirement system that DOD and
others have proposed could help DOD better meet its objectives?
* What factors should DOD consider before making changes to its reserve
retirement system?
We anticipate issuing a report addressing these questions in
September 2004.
Selective Reenlistment Bonus Program:
While we have not specifically reviewed the use of reenlistment bonuses
for reservists, our work has shown that DOD could improve the
management and oversight of the SRB program with more methodologically
rigorous evaluations. The SRB program is intended to help the services
retain enlisted personnel in critical occupational specialties, such as
linguists and information technology specialists. Concerned about
missing their overall retention goals in the late 1990s, all the
services expanded their use of SRBs to help retain more active duty
enlisted personnel. There were increases in the number of specialties
that the services made eligible for the bonuses and in the number of
bonus recipients. The Air Force, for example, awarded bonuses to 158
specialties (80 percent of total specialties) in fiscal year 2001, up
from 68 specialties (35 percent of total specialties) in fiscal year
1997. During this time period, the number of active duty Air Force
reenlistees receiving bonuses increased from 3,612 (8 percent of total
reenlistees) to 17,336 (42 percent of total reenlistees). As a result
of the services' expanded use of SRBs for active duty personnel, the
cost of the program more than doubled--from $308 million in fiscal year
1997 to $791 million in fiscal year 2002.[Footnote 14] The SRB budget
was expected to rise to over $800 million in fiscal year 2005. About
44 percent of the SRB budget growth over the 1997 to 2005 period is
attributable to increases in the Air Force SRB budget. Despite
increased use of the SRB program, DOD has cited continued retention
problems in specialized occupations such as air traffic controller,
linguist, and information technology specialist.
In November 2003,[Footnote 15] we reviewed a congressionally directed
DOD report to the Congress on the program and found that DOD had not
thoroughly addressed four of the five concerns raised by the Congress.
As a result, the Congress did not have sufficient information to
determine if the program was being managed effectively and efficiently.
More specifically,
* DOD did not directly address the SRB program's effectiveness or
efficiency in correcting shortfalls in critical occupations.
* DOD had not issued replacement program guidance for ensuring that the
program targets only critical specialties that impact readiness. DOD
did not address an important change--the potential elimination of the
requirement for conducting annual reviews. We were told that the new
guidance will require periodic reviews, but neither the frequency nor
the details of how these reviews would be conducted was explained.
* DOD did not describe the steps it would take to match program
execution with appropriated funding. Our analysis showed that in fiscal
years 1999-2002, the services spent a combined total of $259 million
more than the Congress appropriated for the SRB program.
* DOD provided only a limited assessment of how each service
administers its SRB program.
* DOD identified the most salient advantages and disadvantages that
could result from implementing a lump sum payment option for paying
retention bonuses, and we generally concurred with DOD's observations.
On the basis of our work, we recommended that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
(1) retain the requirement for an annual review of the SRB program and
(2) develop a consistent set of methodologically sound procedures and
metrics for reviewing the effectiveness and efficiency of all aspects
of each service's SRB program administration. DOD concurred with the
recommendations but has not yet taken actions to address them.
Mail Delivery:
Mail can be a morale booster for troops fighting overseas and for their
families at home. During Operation Iraqi Freedom, problems with prompt
and reliable mail delivery surfaced early in the conflict and continued
throughout. More than 65 million pounds of letters and parcels were
delivered to troops serving in theater during 2003. Between February
and November 2003, the Congress and the White House forwarded more than
300 inquiries about mail delivery problems to military postal
officials. We are reviewing mail delivery to troops stationed overseas
and plan to issue our report next month. In the report, we will assess
(1) the timeliness of mail delivery to troops stationed in the Gulf
Region, (2) how mail delivery issues and problems experienced during
Operation Iraqi Freedom compare to those during Operations Desert
Shield/Storm, and (3) efforts to identify actions to resolve problems
for future contingencies.
Although our report is not yet final, the preliminary results of our
review are as follows:
Timeliness:
The timeliness of the mail delivery to troops serving in Operation
Iraqi Freedom cannot be accurately determined because DOD does not have
a reliable, accurate system in place to measure timeliness. Transit
time data reported by the Transit Time Information Standard System for
Military Mail shows that average transit times for letters and parcels
into the theater consistently fell within the 11 to 14-day range--well
within the current wartime standard of 12 to 18 days. However, we
determined that the method used to calculate these averages masks the
actual times by using weighted averages that result in a significant
understating of transit times.[Footnote 16] A second source of data--
test letters that were sent to individual servicemembers at military
post offices by the Military Postal Service Agency between February and
September 2003--indicate that mail delivery, on average, met the
wartime standard during all but 1 month. However, we found that a
significant number of test letters were never returned, and that test
letters do not accurately measure transit time to the individual
servicemember because they are sent only to individuals located at
military post offices. It could take several more days for mail to get
to forward-deployed troops. Even though the data shows otherwise,
military postal officials acknowledge that mail delivery to troops
serving in Operation Iraqi Freedom was not timely.
Comparison With Operations Desert Shield/Storm:
Despite differences in operational theaters and an effort by postal
planners to incorporate Operations Desert Shield/Storm experiences into
the planning for Operation Iraqi Freedom, many of the same problems
were encountered. These problems include (1) difficulty in conducting
joint-service mail operations; (2) postal personnel inadequately
trained and initially scarce in number due to late deployments; and
(3) inadequate postal facilities, material handling equipment, and
transportation assets to handle the initial mail surge. U.S. Central
Command--the combatant command for Operation Iraqi Freedom--created an
operations plan for joint mail delivery, but some of the planning
assumptions were flawed and the plan was not fully implemented. This
plan included certain assumptions that were key to its success, but
some assumptions produced unforeseen negative consequences and others
were not implemented or unrealistic. For example, the elimination of
mail addressed to "Any Service Member" increased the number of parcels
because senders found ways around the restriction. In addition, plans
to restrict the size and weight of letters and parcels until adequate
postal facilities had been established were never enacted; and the
volume of mail was grossly underestimated. The plan also directed that
a Joint Postal Center comprised of postal officials from all services
manage and coordinate joint postal operations in theater. However, this
effort was never fully implemented, and joint mail delivery suffered as
a result. The Military Postal Service Agency did implement one strategy
that proved to be successful as a result of lessons learned from
Operations Desert Shield/Storm. Dedicated contractor airlift of mail
into the contingency area was employed, avoiding the necessity of
competing for military air cargo capacity, which greatly improved the
regularity of mail service to the theater.
Efforts to Resolve Postal Problems:
No single entity has been officially tasked to resolve the long-
standing postal problems seen again during Operation Iraqi Freedom.
Military postal officials have begun to identify solutions to some of
these issues. However, despite early efforts made by the Military
Postal Service Agency to consolidate problems and identify solutions,
this agency does not have the authority to ensure that these problems
are jointly addressed and resolved before the next military
contingency. During our meetings with dozens of key military postal
officials serving during Operation Iraqi Freedom, we collected
memoranda, after action reports, and their comments regarding the
postal issues and problems that should be addressed to avoid a
repetition of the same postal problems in future contingencies. These
issues include: improving joint postal planning and ensuring joint
execution of that plan; early deployment of postal troops; preparing
updated tables of organization and equipment for postal units;
improving peacetime training for postal units; and reviewing the
command and control of postal units in a joint theater. The Military
Postal Service Agency hosted a joint postal conference in October 2003
to discuss postal problems with dozens of key postal participants in
Operation Iraqi Freedom and is currently in the process of
consolidating these issues into a single document with the intent of
developing plans to resolve the issues. In addition, the service
components and the Military Postal Service Agency have taken some
initial steps in employing alternative mail delivery and tracking
systems.
In our report, we plan to make several recommendations aimed at
(1) establishing a system that will accurately track, calculate, and
report postal transit times and (2) designating responsibility and
providing sufficient authority within the Department to address and fix
long-standing postal problems identified in this report.
Mr. Chairman, this completes our prepared statement. We would be happy
to respond to any questions you or other members of the Subcommittee
may have at this time.
Contacts and Acknowledgments:
For future questions about this statement, please contact Derek B.
Stewart at (202) 512-5559 (e-mail address: stewartd@gao.gov) or Brenda
S. Farrell at (202) 512-3604 (e-mail address: farrellb@gao.gov). Also
making a significant contribution to this statement was Thomas W.
Gosling.
FOOTNOTES
[1] We use the generic term "reserves" and "reservists" throughout this
statement to refer to both National Guard and Reserve personnel.
[2] The federal tax advantage is included in basic military
compensation to account for the tax-free status of housing and
subsistence allowances. The federal tax advantage is the added amount
of taxable income that servicemembers would have to receive in cash if
housing and subsistence allowances were to become taxable in order for
them to be as well off in after-tax income as they are under the
existing system.
[3] Department of Defense, Office of the Secretary of Defense, Military
Compensation Background Papers: Compensation Elements and Related
Manpower Cost Items, Their Purposes and Legislative Backgrounds (Sept.
1996).
[4] A military operation may be designated by the Secretary of Defense
as a contingency operation or become a contingency operation as a
matter of law.
[5] Reservists who are placed on active duty orders for 31 days or more
are automatically enrolled in TRICARE Prime. Family members of
reservists who are activated for 31 days or more may obtain coverage
under TRICARE.
[6] Basic military compensation consists of basic pay, basic allowance
for housing, basic allowance for subsistence, and the federal tax
advantage. It does not include special and incentive pays, other
allowances, and the value of fringe benefits, such as health care and
retirement.
[7] 50 U.S.C. App. sec. 527.
[8] Public Law 108-189 (Dec. 19, 2003).
[9] Department of the Treasury, Internal Revenue Service, Armed Forces'
Tax Guide: For Use in Preparing 2003 Returns, Publication 3, Cat. No.
46072M. This publication noted that all military pay for the month is
excluded from income when an enlisted servicemember, warrant officer,
or commissioned warrant officer served in a combat zone during any part
of a month or while hospitalized as a result of service in the combat
zone. The amount of the exclusion for a commissioned officer (other
than a commissioned warrant officer) is limited to the highest rate of
enlisted pay, plus imminent danger/hostile fire pay, for each month
during any part of which an officer served in a combat zone or while
hospitalized as a result of service there.
[10] U.S. General Accounting Office, Military Personnel: DOD Needs More
Data to Address Financial and Health Care Issues Affecting Reservists,
GAO-03-1004 (Washington, D.C.: Sept. 10, 2003).
[11] U.S. General Accounting Office, Military Personnel: Active Duty
Benefits Reflect Changing Demographics, but Opportunities Exist to
Improve, GAO-02-935 (Washington, D.C.: Sept. 18, 2002).
[12] Public Law 107-314, sec. 702. TRICARE Prime, one of the options
under DOD's managed health care program, is similar to a private HMO
plan and does not require enrollment fees or copayments.
[13] Public Law 108-106, sec. 1115.
[14] These budget figures are expressed in constant fiscal year 2004
dollars.
[15] U.S. General Accounting Office, Military Personnel: DOD Needs More
Effective Controls to Better Assess the Progress of the Selective
Reenlistment Bonus Program, GAO-04-86 (Washington, D.C.: Nov. 13,
2003).
[16] In DOD's sampling methodology, random samples are selected from
all incoming letters and packages arriving at a military post office in
the Iraqi theater. The samples are then divided into three categories:
postmark less than 10 days old, postmark between 11 and 15 days old,
and postmark over 16 days old. Each of these three categories is given
a weight value of 10, 15, and 16, respectively, which represent the
break points of each category. The sample size in each category is then
multiplied by the weight value and averaged to get the reported transit
time. Consequently, regardless of the sample size or the actual number
of days the items spent in transit, the resulting average will always
be between 10 and 16 days.
