Military Personnel
DOD Needs to Establish a Strategy and Improve Transparency over Reserve and National Guard Compensation to Manage Significant Growth in Cost Gao ID: GAO-07-828 June 20, 2007The Department of Defense (DOD) has increasingly relied on reserve personnel to carry out its military operations. Congress and DOD have taken steps to enhance reserve compensation, such as improving health care benefits. Concerns exist, however, that rising compensation costs may not be sustainable in the future, especially given the nation's large and growing long-range fiscal imbalance. Under the statutory authority of the Comptroller General to conduct work on his own initiative, GAO (1) reviewed how much it has cost the federal government to compensate reserve personnel since fiscal year 2000; (2) assessed the extent to which DOD's mix of cash, noncash, and deferred compensation has helped DOD meet its human capital goals; and (3) evaluated the extent to which DOD's approach to reserve compensation provides transparency over total cost to the federal government. To address these objectives, GAO analyzed budget data and relevant legislation and also interviewed appropriate officials. GAO focused this review on part-time reservists and full-time, active guard and reserve.
Using fiscal year (FY) 2006 constant dollars, the federal government's total cost to compensate part-time and full-time reserve personnel has increased 47 percent since FY 2000, rising from about $13.9 billion in FY 2000 to about $20.5 billion in FY 2006. Most reservists are part-time, and their per capita compensation costs nearly doubled from about $10,100 in FY 2000 to about $19,100 in FY 2006. Additionally, a small percentage of reservists work full-time, and their per capita costs increased about 28 percent from FY 2000 to FY 2006. Cash compensation, which servicemembers see in their "paycheck," has increased about 19 percent. However, much of the total growth in compensation is driven by the costs for deferred compensation. These costs tripled over this period, primarily attributed to enhanced health care benefits. Moreover, DOD officials anticipate significant continued growth in health care costs because of the expansion of health care coverage to reserve personnel in FY 2007. DOD does not know the extent to which its mix of pay and benefits meets its human capital goals in part because it lacks an established compensation strategy to identify the appropriate mix of reserve compensation to maintain its force. DOD and Congress have added pay and benefits using a piecemeal approach that has not been based on an established strategy and that has not adequately considered the appropriateness, affordability, and sustainability of the related costs. These additions have contributed to a shift in the mix of compensation toward more deferred benefits--that is, future compensation such as retirement pay and health care for life. Deferred benefits increased from 12 percent of total reserve compensation in FY 2000 to 28 percent of total compensation in FY 2006. This increase in deferred compensation may not be the most efficient allocation given that fewer than one in four of those who join the reserve will ultimately earn nondisability retirement pay and health care for life. Moreover, DOD does not know the efficiency and effectiveness of these changes in meeting its recruiting and retention goals because it does not have performance measures. Without performance measures, DOD cannot determine the return on its compensation investment or make fact-based choices on how its compensation resources should be allocated. DOD's approach to reserve compensation does not provide decision makers in Congress and DOD with adequate transparency over total cost for reservists--including the allocation of costs to cash, noncash, and deferred compensation, as well as the cost for mobilized reservists. Despite the fact that sound business practices require adequate transparency over investments of resources, currently costs are found in multiple budgets within three federal departments. Until total reserve compensation costs are compiled in a transparent manner--and decisions are based on established compensation strategies--decision makers will be unable to determine the affordability, cost effectiveness, and ultimately the sustainability of the reserve compensation system. Increased transparency is especially important given the growing fiscal challenges the country faces.
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Director: Team: Phone:GAO-07-828, Military Personnel: DOD Needs to Establish a Strategy and Improve Transparency over Reserve and National Guard Compensation to Manage Significant Growth in Cost
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
June 2007:
Military Personnel:
DOD Needs to Establish a Strategy and Improve Transparency over Reserve
and National Guard Compensation to Manage Significant Growth in Cost:
GAO-07-828:
GAO Highlights:
Highlights of GAO-07-828, a report to congressional committees
Why GAO Did This Study:
The Department of Defense (DOD) has increasingly relied on reserve
personnel to carry out its military operations. Congress and DOD have
taken steps to enhance reserve compensation, such as improving health
care benefits. Concerns exist, however, that rising compensation costs
may not be sustainable in the future, especially given the nation‘s
large and growing long-range fiscal imbalance. Under the statutory
authority of the Comptroller General to conduct work on his own
initiative, GAO (1) reviewed how much it has cost the federal
government to compensate reserve personnel since fiscal year 2000; (2)
assessed the extent to which DOD‘s mix of cash, noncash, and deferred
compensation has helped DOD meet its human capital goals; and (3)
evaluated the extent to which DOD‘s approach to reserve compensation
provides transparency over total cost to the federal government. To
address these objectives, GAO analyzed budget data and relevant
legislation and also interviewed appropriate officials. GAO focused
this review on part-time reservists and full-time, active guard and
reserve.
What GAO Found:
Using fiscal year (FY) 2006 constant dollars, the federal government‘s
total cost to compensate part-time and full-time reserve personnel has
increased 47 percent since FY 2000, rising from about $13.9 billion in
FY 2000 to about $20.5 billion in FY 2006. Most reservists are part-
time, and their per capita compensation costs nearly doubled from about
$10,100 in FY 2000 to about $19,100 in FY 2006. Additionally, a small
percentage of reservists work full-time, and their per capita costs
increased about 28 percent from FY 2000 to FY 2006. Cash compensation,
which servicemembers see in their ’paycheck,“ has increased about 19
percent. However, much of the total growth in compensation is driven by
the costs for deferred compensation. These costs tripled over this
period, primarily attributed to enhanced health care benefits.
Moreover, DOD officials anticipate significant continued growth in
health care costs because of the expansion of health care coverage to
reserve personnel in FY 2007.
DOD does not know the extent to which its mix of pay and benefits meets
its human capital goals in part because it lacks an established
compensation strategy to identify the appropriate mix of reserve
compensation to maintain its force. DOD and Congress have added pay and
benefits using a piecemeal approach that has not been based on an
established strategy and that has not adequately considered the
appropriateness, affordability, and sustainability of the related
costs. These additions have contributed to a shift in the mix of
compensation toward more deferred benefits”that is, future compensation
such as retirement pay and health care for life. Deferred benefits
increased from 12 percent of total reserve compensation in FY 2000 to
28 percent of total compensation in FY 2006. This increase in deferred
compensation may not be the most efficient allocation given that fewer
than one in four of those who join the reserve will ultimately earn
nondisability retirement pay and health care for life. Moreover, DOD
does not know the efficiency and effectiveness of these changes in
meeting its recruiting and retention goals because it does not have
performance measures. Without performance measures, DOD cannot
determine the return on its compensation investment or make fact-based
choices on how its compensation resources should be allocated.
DOD‘s approach to reserve compensation does not provide decision makers
in Congress and DOD with adequate transparency over total cost for
reservists”including the allocation of costs to cash, noncash, and
deferred compensation, as well as the cost for mobilized reservists.
Despite the fact that sound business practices require adequate
transparency over investments of resources, currently costs are found
in multiple budgets within three federal departments. Until total
reserve compensation costs are compiled in a transparent manner”and
decisions are based on established compensation strategies”decision
makers will be unable to determine the affordability, cost
effectiveness, and ultimately the sustainability of the reserve
compensation system. Increased transparency is especially important
given the growing fiscal challenges the country faces.
What GAO Recommends:
GAO is making recommendations to assess the appropriateness of the
reserve compensation system and to improve transparency over total
reserve compensation costs. DOD partially concurred with GAO‘s
recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-828].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact John Pendleton at (404)
679-1900 or pendletonj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Cost to Compensate Guard and Reserve Personnel Has Increased
Significantly Since Fiscal Year 2000:
DOD Does Not Know the Extent to Which Its Mix of Compensation Is
Meeting Its Human Capital Goals:
DOD Does Not Have Transparency over Total Costs of Reserve
Compensation:
Conclusions:
Recommendations for Executive Action:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Appendix I: Updated Active Duty Compensation Costs:
Appendix II: Scope and Methodology:
Appendix III: Pay and Benefits of the Selected Reserve:
Appendix IV: Comments from the Department of Defense and GAO's
Response:
GAO Response to Department of Defense's Technical Comments:
Appendix V: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Types of Compensation for Servicemembers, as of Fiscal Year
2007:
Table 2: Summary of Changes in Reserve Compensation Costs for Fiscal
Years 2000-2006:
Table 3: Summary of Changes in Active Duty Compensation Costs for
Fiscal Years 2000 and 2006:
Figures:
Figure 1: Organizational Chart of the National Guard and Reserve:
Figure 2: Total Compensation Cost of Reserve Components, Fiscal Years
2000-2006:
Figure 3: Per Capita Costs for Part-Time Reservists by Compensation
Type, Fiscal Years 2000-2006:
Figure 4: Per Capita Cost for Full-time Reservists by Compensation
Type, Fiscal Years 2000-2006:
Figure 5: DOD's Estimated Cost to the Government for TRICARE Reserve
Select, Fiscal Years 2005-2013:
Figure 6: Allocation of Reserve Compensation to Cash, Noncash, and
Deferred Categories in Fiscal Years 2000 and 2006:
Figure 7: Components of Total Reserve Compensation Costs:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 20, 2007:
Congressional Committees:
Questions about the adequacy of National Guard and reserve compensation
have been raised as the Department of Defense (DOD) increasingly relies
on reservists to carry out its military operations domestically and
abroad. In 1973, when the U.S. military first transitioned from a draft
to an all-volunteer force, decision makers recognized that military pay
needed to be increased to a level that was generally competitive with
the civilian sector.[Footnote 1] Since then, the amount of military pay
and benefits has progressively increased for both active duty and
reserve servicemembers, although the basic structure of military
compensation remains largely unchanged. DOD provides active duty,
guard, and reserve servicemembers with a compensation package made up
of cash, such as pay and allowances; noncash benefits, such as
education assistance and health care; and deferred compensation, such
as retirement pensions and benefits. Guard and reserve servicemembers
are generally eligible for the same pay and allowance system as their
active duty counterparts.[Footnote 2]
Since September 2001, the department has called more than 500,000
reservists to active duty in support of the Global War on Terrorism.
Given that there are few indications that the current use of reserve
forces will decline in the near future, DOD and Congress have taken
steps to enhance reserve compensation. For example, Congress expanded
health care benefits to all reservists and their families and
authorized regular increases in basic pay and additional education
benefits for mobilized reservists. In addition, Congress established
the Commission on National Guard and Reserves in the national defense
authorization act for fiscal year 2005[Footnote 3] to assess various
aspects of the reserves, including compensation, and this commission is
expected to address compensation in its final report due by January
2008.
DOD also recently explored the need for changing the military
compensation system when the Secretary of Defense formed an independent
advisory committee to study compensation in 2005.[Footnote 4] Of
particular concern to the department was the growth in entitlement
spending for things like health care and the appropriateness of the mix
of in-service and post service compensation. DOD leaders expressed
concern that rising compensation costs may not be sustainable in the
future and could crowd out other important investments needed to
recapitalize equipment and infrastructure. Similarly, the committee's
report stated that the current military compensation system is
inefficient, and made recommendations to modernize the compensation
system and provide greater flexibility for efficient and effective
force management. Specifically, the report made recommendations to
change the retirement system and health benefits.
Similarly, we expressed concerns about whether the country's current
spending trends are both affordable and sustainable in our 2005 report
on the challenges facing the United States in the 21st
century.[Footnote 5] Given the nation's large and growing long-range
fiscal imbalance, we believe it is time for a baseline review of all
major federal programs and policies, including military compensation,
to ensure that they are efficiently and effectively meeting their
objectives and are well adapted to 21st century realities. Many federal
programs--such as military compensation--were designed decades ago to
address challenges of prior eras related to labor markets, security
conditions, organizational structures, and compensation strategies. As
a result of the mounting concerns, in 2005 we assessed the active duty
compensation system and made a number of recommendations to improve the
transparency, reasonableness, appropriateness, affordability, and
sustainability of the active duty compensation system.[Footnote 6] We
found that the piecemeal approach to compensation resulted in a lack of
transparency that created an inability to identify total compensation
costs and assess how compensation investments are allocated to cash,
noncash, and deferred compensation. We also reported that the federal
government's total cost to provide active duty compensation was
substantial and rising, totaling about $158 billion, which was about
$112,000 per servicemember in fiscal year 2004. We recently updated
these costs and found that in fiscal year 2006 the federal government
spent about $173 billion or about $126,000 per servicemember--an
increase of about 32 percent from fiscal year 2000. See appendix I for
more detailed information on active duty compensation costs and the
allocation of those costs to cash, noncash, and deferred compensation.
We recognize that compensation is an important recruiting and retention
tool, particularly during a time of increased military operations, and
any proposed changes must be given careful consideration. In light of
the evolving 21st century realities, under the statutory authority of
the Comptroller General to conduct evaluations on his own initiative,
we (1) identified how much it has cost the federal government to
provide cash, noncash, and deferred benefits to compensate reserve
personnel since fiscal year 2000; (2) assessed the extent to which
DOD's mix of cash, noncash, and deferred compensation has helped DOD
meet its human capital goals; and (3) assessed the extent to which
DOD's approach to reserve compensation provides transparency over total
cost to the federal government.
In conducting this review, we focused our scope on part-time, drilling
reservists, and full-time reservists serving in the Active Guard and
Reserve program of the Selected Reserve[Footnote 7]. We excluded guard
and reserve members who were mobilized[Footnote 8] from our cost
estimates, because, once reservists are mobilized, their compensation
costs are paid out of the active components' budgets. Our review
included the years from fiscal year 2000 through fiscal year 2006 to
capture costs prior to the increased use of reservists and changes to
compensation policy. To identify how reservists are compensated and how
much it has cost the federal government to provide cash, noncash, and
deferred compensation, we analyzed relevant regulations, legislation,
and budget justification books, and also interviewed appropriate
officials at DOD and the Department of Veterans Affairs about costs not
presented in budgets, such as the accrued costs for non-Medicare-
eligible retirees' health care. In addition, we calculated the costs of
some types of compensation, such as the federal income tax advantage.
To determine per capita costs, we divided the total cost of the part-
time population by an adjusted average strength of the part-time
reservists--which we calculated by subtracting the average number of
mobilized reservists from the average strength for each fiscal year.
For the full-time reservists, we divided their total cost by their
average strength. To assess the extent to which DOD's mix of cash,
noncash, and deferred compensation helped DOD meet its human capital
goals, we reviewed applicable directives, policy, and guidance and
interviewed DOD officials to determine whether the current reserve
compensation system follows those directives, policy, and guidance. We
also reviewed DOD directives and guidance as well as federal government
standards such as the Government Performance and Results Act of 1993.
To assess the extent to which DOD's approach provided transparency over
total costs to the federal government, we reviewed applicable
directives, policy, and guidance and interviewed DOD officials to
determine whether the current reserve compensation system follows those
directives, policy, and guidance. We reviewed how compensation costs
are presented to decision makers. To update our previous work on the
cost to the federal government of compensating active duty
servicemembers, we (1) interviewed appropriate officials, (2) analyzed
and compiled data for fiscal years 2000 through 2006 from military
personnel and operations and maintenance budget justification books,
(3) estimated the total federal tax expenditure for military
compensation and the costs of future veterans' benefits for current
active duty servicemembers, and (4) requested estimates of accrual
health care costs for retirees and their dependents from DOD's Office
of the Actuary and health care costs for active duty servicemembers and
their dependents from DOD's Office of Health Affairs. We conducted our
review from October 2006 through May 2007 in accordance with generally
accepted government auditing standards. More detailed information on
our scope and methodology is provided in appendix II.
Results in Brief:
The total cost to the federal government to provide compensation for
part-time and full-time reservists has risen about 47 percent, from
about $13.9 billion in fiscal year 2000 to about $20.5 billion in
fiscal year 2006 in constant fiscal year 2006 dollars.[Footnote 9] Most
reservists are part time, and their per capita total cost, including
cash, noncash, and deferred compensation, almost doubled, from about
$10,100 in fiscal year 2000 to about $19,100 in fiscal year 2006. In
addition to part-time reservists, the reserve workforce includes a
small percentage of reservists who work full time, and their per capita
total compensation cost increased 28 percent, from about $90,100 in
fiscal year 2000 to about $115,200 in fiscal year 2006.[Footnote 10]
Much of this growth can be attributed to the cost to provide reservists
with deferred compensation. From fiscal year 2000 to fiscal year 2006,
deferred compensation costs more than tripled, increasing from $1.7
billion to $5.8 billion. This growth is largely attributed to
additional health care benefits that have been provided for future
reserve retirees and their families. For example, Congress enhanced
retirees' health care benefits in fiscal year 2001 by adding health
care benefits for life. These increases in cost are mainly driven by
entitlements that are unlikely to subside at the end of the ongoing
military operations in Iraq and Afghanistan. For example, DOD officials
anticipate significant future growth in the cost of noncash
compensation as a result of the recent expansion of health care
benefits for reservists and their families, which will provide
continuation of health coverage as reservists transition on and off of
active duty.
DOD does not know the extent to which its mix of cash, noncash, and
deferred compensation is meeting its human capital goals of recruiting
and retaining a high-quality force, in part, because it lacks an
established compensation strategy and performance measures to identify
the appropriate mix of reserve compensation needed to maintain its
force. The mix of reserve compensation has shifted toward more deferred
benefits, increasing from 12 percent of total reserve compensation in
fiscal year 2000 to 28 percent in fiscal year 2006. This increase in
deferred compensation may not provide the most efficient allocation or
the best return on the compensation investment. Studies indicate cash
is not only preferred to noncash and deferred compensation, but it is
also a more efficient recruiting and retention tool for active duty
servicemembers.[Footnote 11] Furthermore, fewer than one in four part-
time reservists will receive these costly deferred benefits, given that
about 24 percent of those who join the guard and reserve will
ultimately earn nondisability retirement pay and health care for life.
We have previously found that programs, such as compensation systems,
need performance measures and goals to guide decision makers and
program policy.[Footnote 12] In addition, DOD's personnel and readiness
strategic plan states the importance of identifying requirements and
tailoring compensation and other programs to achieve objectives and of
continuously reviewing personnel management.[Footnote 13] In 1979 and
again in 2005, we identified DOD's lack of a compensation strategy as a
problem in establishing a basis for evaluating changes to the total
compensation system.[Footnote 14] Moreover, the situation today is
further complicated by the frequency of mobilizations in support of the
ongoing operations and the components' recent recruiting challenges.
Congress and DOD have taken a piecemeal approach to military
compensation by adding various benefits--such as health care--and cash-
-such as bonuses and increases to basic pay--to address current
recruiting problems and to take care of servicemembers over their
lifetime. Furthermore, they have not adequately considered the
appropriateness, affordability, and sustainability of the related cost
of these additions. Determining the return on investment for
compensation and the impact of compensation on recruiting and retention
is not an easy task. However, given that reserve compensation is
becoming increasingly costly, DOD does not know if the additions to the
compensation system are appropriate to ensure that the reserve
components recruit and retain a high-quality workforce in sufficient
numbers and the federal government has the best return on investment.
DOD officials have stated during testimony before Congress that adding
deferred compensation, such as TRICARE for life, is not their
preference. However, until DOD establishes a strategy for its
compensation system and develops performance measures to evaluate the
efficiency of compensation tools, DOD and Congress will be unable to
make informed decisions about which compensation tools and mix will
provide the best return on investment, be sustainable in the long-term,
and be effective in recruiting and retaining the future reserve force.
DOD's approach to reserve compensation does not provide decision makers
in Congress and DOD with adequate transparency over total cost for
providing reserve compensation--including the allocation of costs to
cash, noncash, and deferred compensation and the total cost of
mobilized reservists. Despite the fact that sound business practices
require adequate transparency over investments of resources, there is
no single source that provides the total cost for reserve compensation.
We have also previously reported there is not a single source for
active duty compensation costs. In fact, reserve compensation costs are
found in three different federal departments--DOD, the Department of
Veterans Affairs, and the Department of Treasury. Furthermore, within
DOD, compensation costs are found in three different budgets--the
reserve components' military personnel, active components' military
personnel, and active components' operation and maintenance. For
example, specific types of compensation, such as basic pay and health
care, are located in different budgets, making it difficult for
decision makers to see the full cost of all the sources of compensation
provided to reservists. In addition, reservists who were mobilized to
support the war on terrorism have been paid out of the active
components' budgets through supplemental funding during the
mobilization, which further dilutes decision makers' ability to see the
full picture of the cost of reserve compensation to the federal
government. DOD is taking measures to address some of these problems.
For example, DOD and the services are in the process of implementing a
system, known as the Defense Integrated Military Human Resources
System, to consolidate their personnel and pay systems. This
consolidation may improve transparency by integrating all human
resource information for active, guard, and reserve personnel of all
the services; however, we have recently reported that this task is
proving to be difficult to complete because each service has unique
requirements.[Footnote 15] Nevertheless, DOD has no plans to compile
into one place, that is readily accessible, the total cost for reserve
personnel compensation, including mobilized reservists, and the
allocation of these costs among cash, noncash, and deferred
compensation. Such a compilation could enable decision makers to
accurately assess these costs and to manage the total force as well as
efficiently and effectively make fact-based human capital adjustments.
Until total cost for reserve compensation is compiled in a transparent
and easily accessible manner, decision makers will be unable to
determine the affordability and efficiency of the reserve compensation
system. This is especially important given the growing fiscal
challenges the country faces.
We are recommending that DOD take steps to assess the appropriateness
of the reserve compensation system and to improve transparency over
total reserve compensation costs. In commenting on a draft of this
report, DOD partially concurred with our recommendations. In response
to our specific recommendation to develop a compensation strategy and
performance measures, the department partially concurred and described
several steps that it had taken including chartering an independent
commission to review military compensation. In addition, the department
noted that it has primarily sought cash compensation in recent years,
and that the increases in deferred compensation were not sought by DOD.
In response to our recommendation to improve transparency, DOD felt
that the Office of Management and Budget could more appropriately
address this recommendation because it has visibility over all parts of
the budget. We continue to believe that DOD needs an explicit
compensation strategy and performance measures to better position the
department to make business case arguments for or against changes to
the compensation system, and provide fact-based evidence regarding the
efficiency of the allocation of cash, noncash, and deferred
compensation. We also continue to believe that DOD is in the best
position to exercise ownership over total compensation costs and,
accordingly, should compile and present total compensation costs as
part of its budget submission. In addition, the department provided
several technical comments which we have incorporated where
appropriate. DOD asked that we include these technical comments in our
report, and our response to them is shown in appendix IV.
Background:
DOD's National Guard and reserve personnel are assigned to the Ready
Reserve, Standby Reserve, or Retired Reserve.[Footnote 16] At the end
of fiscal year 2006, DOD had approximately 1.1 million guard and
reserve members in the Ready Reserve. The Ready Reserve is comprised of
military members of the National Guard and reserve, organized in units,
or as individuals, who are subject to recall for active duty to augment
the active component in time of war or national emergency. Figure 1
shows the three subcategories that exist within the Ready Reserve: the
Selected Reserve, the Individual Ready Reserve, and the Inactive
National Guard.
Figure 1: Organizational Chart of the National Guard and Reserve:
[See PDF for image]
Source: GAO.
[End of figure]
As of fiscal year 2006, the Selected Reserve had a total of about
826,000 members. The Selected Reserve largely consists of units and
individuals designated by their respective services that serve in an
"active drilling" status. These units and individuals are required to
maintain readiness through scheduled drilling and active duty for
training, usually 1 weekend a month and 2 weeks a year. They also have
priority for training, equipment, and personnel over all other
categories of reservists. From fiscal years 2000 through 2006, about 9
percent of the Selected Reserve average strength served in the Active
Guard and Reserve program as full-time reservists. These full-time
reservists perform duties associated with organizing, administering,
recruiting, instructing, or training the various reserve components.
The Individual Ready Reserve and the Inactive National Guard do not
currently have these drilling and training requirements according to
DOD policy and are comprised principally of individuals who have had
training, previously served in the active component or in the Selected
Reserve, or have some period of their military service obligation
remaining.[Footnote 17] These members may voluntarily participate in
training for retirement points and promotion with or without pay.
DOD's selected reservists serve in one of six reserve components: the
Army National Guard, the Army Reserve, the Navy Reserve, the Air
National Guard, the Air Force Reserve, and the Marine Corps Reserve.
The Army National Guard and the Air National Guard comprise what is
known as the National Guard. The National Guard is unique in that it
has dual missions, both federal and state; when not in federal service,
it is available for use by the governor as provided by the U.S.
Constitution and laws of the state. The National Guard is the only
military force immediately available to a governor in times of
emergency, including civil unrest and natural or manmade disasters.
Under state law, the National Guard provides protection of life and
property and preserves peace, order, and public safety.
Since the end of the Cold War, the roles and contributions of the
reserve force have changed. In the post-World War II era, DOD's reserve
operated primarily as a strategic force--a force management tool that
was rarely activated. For example, from 1945 to 1989, reservists were
called to active duty as part of a mobilization by the federal
government only four times, an average of less than once per decade.
Since 1990, reservists have been mobilized by the federal government
six times, an average of nearly once every 3 years. Additionally, since
September 11, 2001, reserve forces have been used extensively to
support the Global War on Terrorism. In fact, about 500,000 reservists
have been mobilized, primarily for contingency operations in
Afghanistan and Iraq. As a result of the change in use, reserve units
are becoming more integrated into military operations, calling for a
new relational model between the active and reserve components, which
changes the nature of reserve service to an operational role for the
reserve components and requires more frequent mobilizations as well as
incorporation into the total force.
To attract and retain sufficient numbers and quality of guard and
reserve personnel, DOD provides reserve personnel with a mix of cash,
noncash, and deferred compensation based on duty status. When in part-
time drilling status, reservists receive cash compensation or basic pay
on a prorated basis as well as other cash incentives, such as retention
bonuses or special pays for proficiency in an area.[Footnote 18] Part-
time reservists are also entitled to noncash benefits, such as
unlimited access to commissaries, a premium-based health care benefit
for reservists and their dependents, and educational benefits. Lastly,
part-time reservists who become retirement eligible qualify for
retirement benefits including a pension, health care for life, and
access to installation-based benefits such as exchanges. The key
difference in deferred benefits between active duty servicemembers and
part-time reservists is when they become eligible to receive these
benefits. For example, a part-time reservist becomes eligible for a
retirement annuity at age 60; in contrast, active duty servicemembers
become eligible for retirement benefits at any age after completing a
minimum of 20 years of service.
Reservists activated for contingency operations are eligible to receive
the same compensation and benefits as active duty personnel including
regular military compensation--basic pay, housing and subsistence
allowances, and the federal tax advantage[Footnote 19]--depending on
their pay grade and years of service--and special and incentive pays.
In addition, mobilized reservists are eligible for full health care
benefits for themselves and their dependents. Table 1 illustrates this
mix and compares it to the compensation provided to active duty
servicemembers. In addition, appendix III contains more details about
the compensation available for reserve personnel.
Table 1: Types of Compensation for Servicemembers, as of Fiscal Year
2007:
Basic pay;
Reserve part-time in drill/annual training: X;
Reserve full- time support: (AGR): X;
Active component: X.
Housing allowance;
Reserve part-time in drill/annual training: [A];
Reserve full-time support: (AGR): X;
Active component: X.
Subsistence allowance;
Reserve part-time in drill/annual training: [B];
Reserve full-time support: (AGR): X;
Active component: X.
Subsistence in kind;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Special and incentive pays;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Bonuses;
Reserve part-time in drill/annual training: X;
Reserve full- time support: (AGR): X;
Active component: X.
Clothing allowance;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Permanent change of station travel;
Reserve part-time in drill/annual training: [Empty];
Reserve full-time support: (AGR): X;
Active component: X.
Tax advantage (housing and subsistence allowances are nontaxable);
Reserve part-time in drill/annual training: [C];
Reserve full-time support: (AGR): X;
Active component: X.
TRICARE (health care);
Reserve part-time in drill/annual training: [Empty];
Reserve full-time support: (AGR): X;
Active component: X.
TRICARE Reserve Select;
Reserve part-time in drill/annual training: X[D];
Reserve full-time support: (AGR): [Empty];
Active component: [Empty].
TRICARE Dental;
Reserve part-time in drill/annual training: X[D];
Reserve full-time support: (AGR): X;
Active component: X.
Veterans Affairs life insurance;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Montgomery GI Bill (education benefit)[E];
Reserve part-time in drill/ annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Tuition assistance;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Student loan repayment;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Veterans Affairs home loan;
Reserve part-time in drill/annual training: X[F];
Reserve full-time support: (AGR): X;
Active component: X.
Commissaries and exchanges;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Morale, welfare, and recreation services;
Reserve part-time in drill/ annual training: Space available[G];
Reserve full-time support: (AGR): X;
Active component: X.
Family support centers;
Reserve part-time in drill/annual training: Space available;
Reserve full-time support: (AGR): X;
Active component: X.
Child care centers;
Reserve part-time in drill/annual training: Space available;
Reserve full-time support: (AGR): X;
Active component: X.
Legal assistance;
Reserve part-time in drill/annual training: Space available;
Reserve full-time support: (AGR): X;
Active component: X.
Retirement;
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Veterans Affairs health care[H];
Reserve part-time in drill/annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Disability retirement or separation[I];
Reserve part-time in drill/ annual training: X;
Reserve full-time support: (AGR): X;
Active component: X.
Source: GAO analysis.
[A] The member is entitled to a housing allowance for annual training,
but the rate is provided under Basic Allowance for Housing/Reserve
Component. In addition, if the annual training period is 31 days or
more, then the member would receive a housing allowance.
[B] Part-time enlisted personnel may receive rations-in-kind while
drilling. During annual training, reservists receive a subsistence
allowance.
[C] Reservists receive the tax advantage while on annual or active duty
training.
[D] Reservists are eligible to enroll for TRICARE Reserve Select and
TRICARE Dental Plan for a monthly premium; see appendix III for more
details.
[E] The Department of Veterans Affairs administers this educational
benefit; however, the services are responsible for the cost of the
benefit.
[F] Eligibility determined by 2 years of active duty service, not less
than 90 days mobilized, or 6 years of reserve service.
[G] Although eligible, the commander can set priority for active duty
servicemembers if the facilities or services can not handle the demand.
[H] Member qualifies based on service in active military or
mobilization.
[I] Servicemembers may qualify for both DOD and Veterans Affairs
disability retirement.
[End of table]
Cost to Compensate Guard and Reserve Personnel Has Increased
Significantly Since Fiscal Year 2000:
The total cost to the federal government to compensate both part-time
and full-time National Guard and reserve personnel increased
significantly, about 47 percent, from fiscal year 2000 to fiscal year
2006. The cost increased from about $13.9 billion in fiscal year 2000
to about $20.5 billion in fiscal year 2006, as shown in figure 2. This
cost includes (1) cash compensation, such as basic pay and other
allowances; (2) noncash compensation, such as education assistance and
health care; and (3) deferred compensation, that is, benefits that
promise future compensation like retirement pay and health care.
However, this cost does not include all compensation, such as accrual
costs for veterans' benefits.[Footnote 20]
Figure 2: Total Compensation Cost of Reserve Components, Fiscal Years
2000-2006:
[See PDF for image]
Source: GAO.
[End of figure]
Over this same time period, the per capita cost to the federal
government for part-time drilling reservists[Footnote 21]almost
doubled, from about $10,100 in fiscal year 2000 to about $19,100 in
fiscal year 2006, as shown in figure 3. This per capita cost is an
average of what it cost the government to compensate servicemembers; it
is not what the servicemembers "receive in their paycheck."
Servicemembers' individual cash compensation will vary significantly
depending on individual pay grade and other factors such as years of
service or if the servicemember has dependents. The compensation cost
does not include all of the cost needed to support additional
servicemembers, because it does not include those costs associated with
recruiting and training personnel.
Figure 3: Per Capita Costs for Part-Time Reservists by Compensation
Type, Fiscal Years 2000-2006:
[See PDF for image]
Source: GAO.
[End of figure]
This increase in per capita cost occurred during a time when the
average strength of part-time drilling reservists declined by about 6
percent, from about 746,400 reservists in fiscal year 2000 to 699,800
reservists in fiscal year 2006. This decline in the average number of
part-time personnel may be attributed to many factors, such as the
Navy's restructuring of its force, as part of its Active-Reserve
Integration process, which reduced the number of part-time reservists.
Moreover, Army National Guard and Army Reserve officials attributed the
decline in average strength to their recruiting difficulties.
In addition to part-time reservists, about 9 percent of reservists work
full-time, and their per capita cost to the federal government also
increased, as shown in figure 4, from about $90,100 in fiscal year 2000
to about $115,200 in fiscal year 2006, about 28 percent.[Footnote 22]
Although full-time reservists are eligible to receive the same
compensation as active duty servicemembers, the per capita cost for
compensation presented here is less than the per capita cost for an
active duty servicemember. This is because some costs were not
associated with the full-time reservists, such as accrual costs for
veterans' benefits or costs for installation-based benefits, such as
exchanges and family support programs. This increase is similar to the
trends in active duty per capita compensation cost (see app. I for
similar data on active duty servicemembers' compensation cost). Unlike
their part-time counterparts, the full-time reservists' average
strength increased by about 9 percent during this time period,
increasing from about 64,500 in fiscal year 2000 to 70,300 in fiscal
year 2006.[Footnote 23]
Figure 4: Per Capita Cost for Full-time Reservists by Compensation
Type, Fiscal Years 2000-2006:
[See PDF for image]
Source: GAO.
[End of figure]
The growth in reserve compensation overall is primarily attributed to
increases in deferred compensation, although cash and noncash
compensation also increased.
* Deferred compensation represents more of overall reserve compensation
costs in fiscal year 2006--increasing from 12 percent in fiscal year
2000 to 28 percent in fiscal year 2006. Specifically, deferred
compensation more than tripled, increasing from 1.7 billion in fiscal
year 2000 to 5.8 billion in fiscal year 2006. This increase was largely
due to the increase in new health care benefits for the Medicare-
eligible population, known as TRICARE for Life.[Footnote 24] Further,
DOD estimates that TRICARE for Life represented 48 percent of the
increase in DOD's spending on health care from fiscal years 2000
through 2005.[Footnote 25] Retirement pay accrual[Footnote 26] also
contributed to the growth in deferred compensation, and its increase
was a result of across-the-board increases in the basic pay rate.
Additionally, in fiscal year 2004 Congress enhanced disability
retirement benefits to allow concurrent receipt--simultaneous payment-
-of DOD retirement pay and Department of Veterans Affairs disability
benefits. Prior to this enhancement, retirees had to decide whether to
receive DOD's full, but generally taxable, retirement pay or receive
the nontaxable veteran's disability pay, which would reduce or offset
dollar-for-dollar DOD's retirement pay. As a result of this expansion
of benefits, the Treasury Department, through general revenues, was
required to cover the additional military retirement cost of providing
concurrent receipt, which was about $251 million in fiscal year 2006.
* Noncash benefits also increased--about 29 percent--primarily due to
increased costs for full-time reservists' health care benefits and
expanded health care benefits for part-time reservists and their
families.[Footnote 27] Since fiscal year 2000, noncash benefits have
represented about 11 percent of overall compensation costs.
* Cash compensation, including basic pay and enlistment and
reenlistment bonuses, increased about 19 percent between fiscal years
2000 and 2006. This increase is largely a result of across-the-board
increases in basic pay. In addition, the reserve components also
experienced significant growth in the reserve incentive program.
Specifically, the costs of reenlistment bonuses increased over 1000
percent, rising from about $36 million in fiscal year 2000 to almost
half a billion dollars in fiscal year 2006. Cash compensation decreased
from 76 percent of overall compensation costs in fiscal year 2000 to 61
percent of cost in fiscal year 2006.
Table 2 provides a detailed list of the components of reserve
compensation and how they have changed from fiscal year 2000 to fiscal
year 2006.
Table 2: Summary of Changes in Reserve Compensation Costs for Fiscal
Years 2000-2006:
Fiscal year 2006 constant dollars.
Cash Compensation (in billions).
Part-Time.
Annual & inactive duty training pay;
Fiscal year 2000: $4.7;
Fiscal year 2006: $4.2;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
School and special training pay;
Fiscal year 2000: 1.5;
Fiscal year 2006: 2.0;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Other special program pay[A];
Fiscal year 2000: .2;
Fiscal year 2006: .1;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Reserve incentive programs;
Fiscal year 2000: .1;
Fiscal year 2006: .9;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Full-Time.
Pay & allowance;
Fiscal year 2000: 4.5;
Fiscal year 2006: 5.7;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Subsistence allowance;
Fiscal year 2000: .04;
Fiscal year 2006: .04;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Tax expenditure;
Fiscal year 2000: .3;
Fiscal year 2006: .4;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Reserve incentive programs;
Fiscal year 2000: .002;
Fiscal year 2006: .02;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Other[B];
Fiscal year 2000: .04;
Fiscal year 2006: .02;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Total cash;
Fiscal year 2000: 10.5;
Fiscal year 2006: 12.5;
Percentage change: 18.8;
Percentage of total compensation (Fiscal year 2006): 61.
Noncash benefits (in billions).
Part-Time.
Education;
Fiscal year 2000: .2;
Fiscal year 2006: .5;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Subsistence-in-kind;
Fiscal year 2000: .1;
Fiscal year 2006: .08;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Clothing & uniforms;
Fiscal year 2000: .3;
Fiscal year 2006: .2;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Health care;
Fiscal year 2000: --;
Fiscal year 2006: .03;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Travel;
Fiscal year 2000: .5;
Fiscal year 2006: .4;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Full-Time.
Subsistence-in-kind;
Fiscal year 2000: .003;
Fiscal year 2006: .0002;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Clothing & uniforms;
Fiscal year 2000: .009;
Fiscal year 2006: .005;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Health care;
Fiscal year 2000: .5;
Fiscal year 2006: .7;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Other[C];
Fiscal year 2000: .1;
Fiscal year 2006: .2;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Total noncash;
Fiscal year 2000: 1.7;
Fiscal year 2006: 2.2;
Percentage change: 29.1;
Percentage of total compensation (Fiscal year 2006): 11.
Deferred benefits (in billions).
Part-Time.
Retired pay accrual;
Fiscal year 2000: .5;
Fiscal year 2006: .9;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Department of the Treasury;
Fiscal year 2000: --;
Fiscal year 2006: .07;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Retired health care accrual;
Fiscal year 2000: .09;
Fiscal year 2006: 2.7;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Full-Time.
Retired pay accrual;
Fiscal year 2000: .8;
Fiscal year 2006: 1.0;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Department of the Treasury;
Fiscal year 2000: --;
Fiscal year 2006: .2;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Retired health care accrual;
Fiscal year 2000: .3;
Fiscal year 2006: .8;
Percentage change: [Empty];
Percentage of total compensation (Fiscal year 2006): [Empty].
Total deferred;
Fiscal year 2000: 1.7;
Fiscal year 2006: 5.8;
Percentage change: 245.6;
Percentage of total compensation (Fiscal year 2006): 28.
Total compensation (in billions);
Fiscal year 2000: $13.9;
Fiscal year 2006: $20.5;
Percentage change: 47.0;
Percentage of total compensation (Fiscal year 2006): [Empty].
Total part-time per capita;
Fiscal year 2000: $10,100;
Fiscal year 2006: $19,100;
Percentage change: 88.5;
Percentage of total compensation (Fiscal year 2006): [Empty].
Total full-time per capita;
Fiscal year 2000: $90,100;
Fiscal year 2006: $115,200;
Percentage change: 27.8;
Percentage of total compensation (Fiscal year 2006): [Empty].
Source: GAO analysis of DOD data.
Note: Numbers may not total due to rounding.
[A] Includes Reserve Officers' Training Corps, Health Professions
Scholarship program, Medical Financial Assistance program, Platoon
Leaders Class, Branch Officers Basic Course, Nurse Candidate Bonus
Program, and Chaplain Candidate program.
[B] Includes $30,000 lump sum bonus and transition benefits.
[C] Includes travel, death gratuities, disability and hospitalization
benefits, adoption expenses, and federal workplace transportation
subsidy.
[End of table]
In addition to calculating reserve compensation cost, we also updated
our previous work on active duty compensation costs and found those
costs have also increased, rising from about $131.7 billion to $173.2
billion (32 percent) from fiscal year 2000 to fiscal year 2006. Cash
compensation accounted for 48 percent of total active duty compensation
costs, while noncash and deferred compensation accounted for 21 and 31
percent, respectively. In fiscal year 2006, it cost the federal
government more than $126,000, on average, to provide annual
compensation to active duty servicemembers.[Footnote 28] See appendix I
for more information on active duty compensation cost. When taken
together, active and reserve compensation costs have grown markedly
since 2000, and these costs may not be sustainable within the context
of DOD's total budgetary needs and the nation's increasing fiscal
imbalance. Total military compensation for the active and reserve
components increased from about $147 billion in fiscal year 2000 to
$195 billion in fiscal year 2006--about 33 percent.
Much of these increases in compensation costs are not directly driven
by ongoing operations in Iraq and Afghanistan and, as a result, it is
not anticipated that the costs will significantly recede after the
operations in Iraq and Afghanistan subside. While some of the costs are
directly related to the ongoing operations--such as the pay for
mobilized reservists and enlistment and reenlistment bonuses--most of
the significant increases were made to basic pay and deferred
compensation, such as retirement pay and health care for retirees,
which will not recede after ongoing operations are ended. An example of
a recently expanded noncash compensation benefit that will not recede
after the ongoing military operations are completed is the premium-
based health care benefit for reservists and their dependents known as
TRICARE Reserve Select. This benefit will provide a continuation of
health coverage as National Guard and reserve personnel transition on
and off of active duty. DOD officials anticipate that TRICARE Reserve
Select will result in significant future growth in the cost of noncash
compensation.[Footnote 29] According to DOD estimates, the cost for
this new health care benefit will increase dramatically in fiscal year
2008 to about $381 million, and will continue to increase to about $874
million, about $1,100 per capita, by fiscal year 2013, as shown in
figure 5. DOD estimates that it may be a few years before a significant
number of reservists enroll in the program. However, if enrollment
numbers prove higher than DOD estimated, the cost for TRICARE Reserve
Select may be higher than currently projected. In addition, DOD
predicts that the cost for health care will consume more than 12
percent of its total budget by fiscal year 2015, compared to 7.5
percent in fiscal year 2005. As a result, service officials have
commented that the only way to control personnel costs may be to reduce
the number of personnel.
Figure 5: DOD's Estimated Cost to the Government for TRICARE Reserve
Select, Fiscal Years 2005-2013:
[See PDF for image]
Source: DOD.
[End of figure]
Moreover, total compensation costs for reservists will likely increase
after contingency operations subside. According to DOD officials, after
contingency operations end, the number of drills executed is expected
to increase. Since fiscal year 2001, the number of executed drills and
training decreased for part-time reservists. This decrease is, in part,
due to the increased number of reservists called to active duty, which
has left fewer reservists and units available to do their required
drills. Although this may not have an impact on the per capita costs of
reserve compensation, it would drive up overall costs to compensate
more part-time reservists.
DOD Does Not Know the Extent to Which Its Mix of Compensation Is
Meeting Its Human Capital Goals:
DOD does not know the extent to which its mix of cash, noncash, and
deferred compensation is meeting its human capital goals of recruiting
and retaining personnel. DOD's and Congress' piecemeal approach to
reserve compensation has created a mix of compensation that has shifted
toward more deferred compensation, even though this may not be an
efficient use of resources. In addition, DOD is unable to gauge the
efficiency and effectiveness of the mix of reserve compensation and its
compensation tools because it lacks a compensation strategy and
performance measures to assess its mix of compensation.
Mix of Reserve Compensation Has Shifted to Deferred Compensation, Which
May Not Enable DOD to Meet Key Human Capital Goals of Recruiting and
Retention:
DOD and Congress have reacted to the current environment to address
recruiting and retention problems by adding compensation. However,
these efforts have been done in a piecemeal fashion that has shifted
the mix of reserve compensation toward more deferred benefits, even
though this may not be the most efficient allocation of compensation to
enable DOD to meet its recruiting and retention human capital goals.
Significant increases in the frequency and length of mobilizations to
Iraq and Afghanistan have led to reservists being separated from their
families for longer periods and potentially experiencing interruptions
in their civilian careers. In fact, a recent memorandum from the
Secretary of Defense indicates that reservists should expect to be
mobilized on a regular cycle--with a goal of 1 year mobilized followed
by 5 years nonmobilized. This change in utilization of reservists and
the components' recent recruiting and retention challenges have
corresponded with Congress and DOD adding various benefits and types of
pay to address recruiting problems in some reserve components and to
take care of servicemembers over their lifetime. For example, the cost
of the reserve incentive program, which primarily provides
discretionary cash bonuses for enlistment and reenlistment, increased
more than 1,000 percent from fiscal year 2000 to fiscal year 2006.
According to service officials, this increase was to address potential
recruiting shortfalls.
The resulting complex accumulation of pays and benefits has shifted the
mix of reserve compensation toward deferred compensation--that is, the
promise of future compensation like retirement pay and health care.
Figure 6 shows an increase in deferred compensation from 12 percent of
total reserve compensation in fiscal year 2000 to 28 percent in fiscal
year 2006. This shift to deferred compensation has also been observed
for active duty compensation costs. See appendix I for more information
on the active component's compensation costs. Deferred compensation
affects the current cost of compensation because funds must be set
aside today to provide these benefits in the future, over the
reservist's lifetime.
Figure 6: Allocation of Reserve Compensation to Cash, Noncash, and
Deferred Categories in Fiscal Years 2000 and 2006:
[See PDF for image]
Source: GAO.
[End of figure]
While DOD and Congress have added pays and benefits over the past 6
years, it is questionable whether there was consideration of the
appropriateness of the changes, including how the changes compared to
compensation in the civilian sector, what the efficiency and return of
these changes would be in terms of meeting the department's human
capital goals of recruiting and retention, or whether the compensation
changes were affordable and sustainable over the long term. DOD defines
efficiency of its compensation system as paying no higher or lower than
necessary to fulfill the basic objective of attracting, retaining, and
motivating the kinds and numbers of servicemembers needed.[Footnote 30]
However, this increase in deferred compensation is not necessarily the
most efficient allocation, nor does it provide the best return on the
compensation investment. In fact, DOD does not know the most efficient
allocation of compensation needed to meet its recruiting and retention
goals because it has not evaluated reserve compensation to determine
the appropriate mix of compensation to attract and retain sufficient
numbers of qualified personnel. Although the efficiency of noncash and
deferred compensation is difficult to assess because the value
servicemembers place on them is highly individualized, studies indicate
cash compensation is not only preferred to noncash and deferred
compensation, but it is also a more efficient recruiting and retention
tool for active duty servicemembers. In our 2005 report on active duty
compensation, we stated that it is generally accepted that some
deferred benefits, such as retirement, are not valued as highly by
servicemembers as current cash compensation.[Footnote 31] Cash pay
today is a far more efficient tool than future cash or benefits for the
recruiting and retention of active duty personnel. For example, a study
assessing the military draw down in the early 1990s found that when
active duty servicemembers were offered a choice of lump-sum cash
payments or annuities, a vast majority selected the lump-sum payment,
even though it had considerably less net present value.[Footnote 32]
This preference for cash compensation has a profound impact on the
efficiency of DOD's compensation system, especially considering that
fewer than one in four part-time reservists will receive these costly
deferred benefits.[Footnote 33] More specifically, about 24 percent of
those who join the guard and reserve will ultimately earn nondisability
retirement pay and health care for life. Typically, deferred and
noncash compensation is offered across the board, which limits the
department's flexibility to offer incentives, target personnel, or turn
on and off compensation as it is needed to recruit and retain.
Moreover, these changes may not be sustainable over the long term. Some
of the noncash and deferred compensation that have been added in
response to the department's recruiting and retention problems are
inflexible benefits and long-term costs that the department will find
difficult to stop providing, such as health care for reservists.
Concerns about the most efficient and effective allocation of
compensation to meet recruiting and retention goals are increasingly
important given the recent recruiting and retention challenges the
services have faced. In November 2005, we reported that the reserve
components were having recruiting and retention challenges,
specifically filling certain occupation specialties such as military
police.[Footnote 34] The Congressional Research Service also reported
that the reserve components missed recruiting goals by 12 to 20 percent
in fiscal year 2005.[Footnote 35] Although the Marine Corps Reserve and
Air Force Reserve met their 2006 recruiting goals, the other reserve
components missed their goals. In addition, officials expressed concern
that the services will have difficulty meeting future recruiting goals.
The Commission on the National Guard and Reserves reported that polling
data of young people suggest that the future for recruitment remains
problematic as the propensity of youth to join the military declined
from 15 percent in 2005 to 10 percent in 2006.[Footnote 36] In addition
to a decline in propensity to join the military, according to DOD,
fewer soldiers leaving active duty are transitioning to the reserves.
Moreover, the quality of recruits is declining.[Footnote 37] At a time
when the nation faces an increasing fiscal imbalance, until DOD
assesses what the appropriate compensation mix should be so that it
uses its compensation resources in the most efficient manner possible,
DOD may be unable to sustain these costs and effectively balance the
department's needs for new equipment and personnel while recruiting and
retaining the future reserve force.
DOD Does Not Have an Established Compensation Strategy and Performance
Measures to Gauge the Efficiency of Reserve Compensation:
DOD is unable to gauge the efficiency of the mix of reserve
compensation and its compensation tools because it has not established
a compensation strategy or performance measures. We have previously
found that programs, such as compensation systems, need performance
measures and goals to guide decision makers and program
policy.[Footnote 38] Moreover, DOD's Personnel and Readiness strategic
plan states the importance of DOD identifying requirements and
tailoring compensation and other programs to achieve objectives and
continuously reviewing personnel management.[Footnote 39] In addition,
we have also reported that it is necessary for an agency to monitor and
evaluate its progress toward its human capital goals and the
contribution that human capital outcomes have made toward achieving
program results.[Footnote 40]
The lack of a compensation strategy to guide compensation policy is a
long-standing problem faced by DOD. We identified the lack of explicit
compensation principles in 1979 and again in 2005 in our reports on
active duty compensation.[Footnote 41] Our past reports pointed out
that DOD lacks explicit compensation principles, which creates
challenges in making major changes to compensation. The Military
Compensation Background Papers describe six principles that the
compensation system is designed to achieve; those principles are:
managing manpower, compatibility with the level of technology
servicemembers employ, equity, effectiveness in war and peace,
flexibility, and motivation. These principles, however, do not provide
a clear strategy to guide military compensation policy, as stated in
this excerpt:
"the relationships between the individual components of compensation
and their systemic interrelationships as a coherent structure remain
largely implicit rather than explicit. Virtually every aspect of
military activity has explicit doctrines, principles, and practices
embodied in field manuals, technical manuals, and various joint
publications. Military compensation is noteworthy in its lack of such
an explicit intellectual foundation." [Footnote 42]
Moreover, DOD does not have performance measures to gauge the
efficiency of its compensation system or the various compensation
tools. Performance measures are used to evaluate how closely a
program's achievements are aligned with program objectives, and to
assess whether a program is achieving its intended outcome. DOD and
Congress have generally increased all types of compensation--adding
more benefits while increasing bonuses--making it impossible to
determine the relative value of each of these initiatives. Without
these measures DOD does not know which of its compensation tools--cash,
noncash, or deferred--works best for recruiting and retaining
personnel, and it does not know the most effective, efficient mix of
compensation.
Determining the return on investment for compensation and the impact of
compensation on recruiting and retention is not an easy task and should
be approached with caution. DOD and service officials often point to
meeting end strength or recruiting and retention goals as evidence that
compensation is appropriate or working. Although end strength is an
important indicator, we do not believe it is sufficient alone. Meeting
recruiting and retention goals does not indicate if the compensation
system is efficient or yielding the best return on the department's
investment. There are numerous other factors, such as the economy,
ongoing contingency operations, and DOD's own recruiting and
advertising program, that also influence the department's ability to
recruit and retain servicemembers.[Footnote 43] As a result, DOD does
not know if the additions to the compensation system--which are
becoming increasingly costly, rising 47 percent from fiscal year 2000
to 2006--are appropriate to ensure the reserve components recruit and
retain a high-quality workforce in sufficient numbers and that the
federal government has the best return on investment.
In DOD's response to this report, the department emphasized that it has
not sought some of the increases in deferred and noncash compensation
that Congress has recently given to servicemembers. Also, in our
discussions with DOD officials, they told us that the department has
focused on cash compensation in recent years and, in some cases, has
opposed increases in deferred compensation. For example, the Secretary
of Defense stated, in May 12, 2004, testimony before the Senate
Appropriations Defense Subcommittee that, in recent years, Congress has
often added entitlement-like changes, beyond DOD's recommendations,
which concentrated on those who have already served. The Secretary of
Defense's statement pointed out the fiscal effects of these decisions
by stating that entitlements such as TRICARE for life are increasing
substantially the permanent costs of running the department with only
modest effect on recruiting and retaining personnel. Nevertheless, DOD
has not formally assessed the appropriate mix of compensation and has
not developed a written policy or document that specifies the
department's overarching strategy for compensation. Until DOD
establishes a strategy for determining the best mix of cash, noncash,
and deferred compensation and develops performance measures to evaluate
the efficiency of compensation tools, DOD and Congress will be unable
to make informed decisions about which compensation tools will provide
the best return on investment, be sustainable in the long-term, and be
effective in recruiting and retaining the future reserve force.
DOD Does Not Have Transparency over Total Costs of Reserve
Compensation:
Decision makers in Congress and DOD do not have adequate transparency
over total costs for providing reserve compensation--including the
allocation of costs to cash, noncash, and deferred compensation--and
the cost of mobilized reservists. Good business practices require
adequate transparency over investments of resources, especially in
times of fiscal constraint. However, today there is no single source
where decision makers can go to see all the costs of reserve
compensation. In addition, the cost of mobilized reservists is also not
transparent.
Part of the lack of transparency is due to the fact that about a
quarter of the costs of reserve compensation fall outside the military
personnel appropriation for DOD. In fact, costs are located within
three federal agencies--DOD, Department of Veterans Affairs, and
Department of the Treasury--depending on the type of compensation and
the duty status of the reservists--active reserve or mobilized, as
shown in figure 7. Furthermore, within DOD, compensation costs are
found in four different budgets--the reserve components' military
personnel, active components' military personnel, active components'
operation and maintenance, and the Defense Health Program. Most of the
cash costs--such as basic pay, allowances, and special pays and
incentives--are located in either the reserve or active military
personnel budgets, depending on whether the reservist is
mobilized.[Footnote 44] In addition, the reserve military personnel
budgets combine some cash costs. For example, pays and allowances
include such costs as retired pay accrual, basic allowance for
subsistence, basic allowance for housing, and special and incentive pay
as authorized. Furthermore, some noncash costs are located in the
active operation and maintenance budget and active and reserve military
personnel budgets.[Footnote 45] Some of these noncash costs, such as
those for commissary and morale, welfare, and recreation facility use,
are not broken out by active and reserve costs because use of these
facilities is open to both components. Moreover, deferred costs for
health care for the Medicare-eligible retirees and their dependents are
found in the Defense Health Program budget, while some of the costs for
concurrent receipt of disability retirement from DOD and Veterans
Affairs are found in the Treasury budget.[Footnote 46]
Figure 7: Components of Total Reserve Compensation Costs:
[See PDF for image]
Source: GAO and Art Explosion.
[End of figure]
Furthermore, we had to calculate some costs for reserve compensation
because they were not captured in any budget documents. To do this, DOD
provided, at our request, the accrual costs for future retirees and
their dependents. Similarly, we estimated the tax expenditure for the
federal government from the nontaxable compensation provided to
servicemembers.[Footnote 47] We estimated that the cost for tax
expenditures for full-time reservists alone was $436 million in fiscal
year 2006. In addition, the Department of Veterans Affairs does not
calculate the accrual cost for veterans' benefits for reservists and we
did not attempt to calculate these costs either because reservists are
likely to be eligible for the majority of these benefits based upon
active duty service. In appendix I, we present the accrual costs for
active duty veterans' benefits that we calculated using data from the
1999 President's Budget. Comparable information for the reserve
components was not available. As a result, these costs are unknown.
This lack of information makes it difficult for decision makers to see
the full costs of all the compensation pays and benefits provided to
reservists.
Transparency over compensation costs is further limited when reservists
are mobilized because mobilized reservists are paid from active duty
budgets. Moreover, compensation costs for mobilized reservists are
difficult to determine within the active components' budgets, in part,
because they have been paid out of the supplemental funding the active
components receive for the global war on terrorism. The absence of
information about the compensation costs of mobilized reservists
further dilutes decision makers' ability to see the full picture of the
costs of reserve compensation to the federal government. In addition,
as mobilizations are expected to become a regular part of reservists'
careers, these costs will become a part of doing business for the
reserves, which increases the importance of being able to identify
them.[Footnote 48]
DOD is taking measures to address some of these problems. For example,
DOD required the services to include detailed cost estimates of
reserves called to active duty in the fiscal year 2007 and 2008
supplemental submissions. In addition, DOD is working on a system to
consolidate personnel and pay systems for all active and reserve
components, known as the Defense Integrated Military Human Resources
System. This consolidation may improve transparency of DOD costs by
integrating all human resource information for active, guard, and
reserve personnel of all the services. However, as we reported in 2005
and 2006, this task is proving to be difficult to complete.[Footnote
49] We found that the services have unique requirements that are
limiting the flexibility to consolidate to a single solution.
Furthermore, service officials told us that this system is unlikely to
improve transparency over budgeted costs.
In 2005, we recommended that DOD compile the total costs to provide
military compensation and communicate these costs to decision makers
within the administration and Congress. Despite our recommendation, DOD
has not compiled in one place, that is readily accessible, the total
costs for active or reserve personnel compensation, including mobilized
reservists, and the allocation of these costs among cash, noncash, and
deferred compensation. Such a compilation could enable decision makers
to accurately assess these costs and to manage the total force as well
as efficiently and effectively make fact-based human capital
adjustments.
Some steps have been taken to improve transparency and recognition
appears to be growing about the effect of rising compensation costs.
For example, the Office of Management and Budget appears to have
recognized the need for greater transparency over compensation costs.
For the first time, in its Analytical Perspectives for fiscal year
2008, the Office of Management and Budget described the total cost of
DOD active duty compensation and its allocation to cash, noncash, and
deferred compensation.[Footnote 50] The Analytical Perspectives
document also describes significant growth in per capita compensation
in recent years. However, this analysis is submitted separately, and is
part of a more than 400-page document that accompanies the budget but
is not part of the military budget submission. In addition, in its
February 2007 report on federal budget options, the Congressional
Budget Office discussed the option of consolidating military personnel
costs in a single appropriation.[Footnote 51] The report stated that
the consolidation of compensation costs would not only provide more
complete information about how much money is being allocated in support
of military personnel, but it would also give DOD managers a greater
incentive to use resources wisely. Until total costs for reserve
compensation are compiled in a transparent and easily accessible
manner, decision makers will be unable to determine the affordability
and efficiency of the reserve compensation system. Knowing these costs
is especially important given the growing fiscal challenges the country
faces.
Conclusions:
DOD and Congress have reacted to the dramatic shift from a strategic to
an operational reserve by adding compensation without adequate
consideration of how the additions compare with civilian sector
compensation; whether they are appropriate, affordable, and sustainable
over the long term; or their return on investment in terms of
recruiting and retention. Looking forward, DOD officials are concerned
about their ability to manage personnel costs, because so much of the
costs are in entitlements--items that managers have little to no
control over, such as retirement pay and health care. As a result, it
is highly questionable whether the increasingly costly compensation
system is affordable, sustainable, and fiscally sound over the long
term. This challenge is especially acute given the nation's
increasingly constrained fiscal environment and DOD's need to balance
its personnel costs with its desire for new equipment and
infrastructure. Without assessing what the appropriate compensation mix
should be, DOD will be unable to ensure that it uses its compensation
resources most efficiently. Moreover, until DOD establishes a
compensation strategy on which to base changes in compensation and
performance measures to gauge the efficiency of changes to the
compensation system, DOD will be unable to use its compensation
resources in the most effective and efficient manner, which ultimately
could negatively affect DOD's ability to recruit and retain a highly
qualified force in sufficient numbers.
In addition to the lack of an underpinning compensation strategy, the
lack of transparency over compensation costs makes it difficult to make
fact-based decisions about the efficiency and effectiveness of
adjustments to the compensation system, and in broader terms
adjustments to the total force. A complete picture of total
compensation cost for reserve personnel includes the costs for those
reservists who are mobilized as well as the costs for cash, noncash,
and deferred compensation. Without an inclusive display of all the
reserve compensation costs, DOD will not be able to determine the
magnitude of funding and potential for current investments and
operations to turn into long-term financial commitments, thus prompting
real questions about the affordability and sustainability of the rate
of growth in defense spending. Understanding the total cost of military
compensation can provide DOD and Congress with important information as
they make assessments on compensation matters, and it also allows
decision makers to make informed trade-offs among competing demands for
such things as force structure, equipment acquisition, and
infrastructure decisions. Moreover, as DOD embraces the change in the
use of reservists to an operational force mobilized more regularly, the
traditional use of reservists as "weekend warriors" becomes less
realistic. In today's environment reservists will likely be activated
regularly during their career--and those associated compensation costs
are likely significant. Taken together, the lack of a compensation
strategy, performance measures, and transparency limits decision
makers' ability to make fact-based decisions about the appropriateness
of the mix and level of compensation provided to reservists.
Recommendations for Executive Action:
To improve the appropriateness of the reserve compensation system and
to gain transparency over total reserve compensation costs, we
recommend that the Secretary of Defense take the following actions:
* Establish a clear compensation strategy that includes performance
measures to evaluate the efficiency of compensation in meeting
recruiting and retention goals, and use the performance measures to
monitor the performance of compensation and assess what mix of
compensation will be most efficient in the future.
* Compile the total costs to provide reserve compensation for part-
time, full-time, and mobilized reservists and communicate these costs
as well as the allocation of these costs among cash, noncash, and
deferred compensation to decision makers within the administration and
Congress--perhaps as an annual exhibit as part of the President's
budget submission to Congress.
Matter for Congressional Consideration:
As future changes are considered to pay and benefits for National Guard
and reserve personnel as well as veterans, Congress should consider the
long-term affordability and sustainability of these changes, including
the long-term implications for the deficit and military readiness.
Agency Comments and Our Evaluation:
We provided the Department of Veterans Affairs and DOD a draft of this
report for review and comment. The Department of Veterans Affairs
agreed with the statements in the report as they pertain to the
department and had no formal comments on the report. DOD's comments are
reprinted in this report as appendix IV. DOD partially concurred with
our recommendations, but had several technical comments, which we have
incorporated where appropriate.
DOD partially concurred with our first recommendation to establish a
clear compensation strategy and use performance measures to monitor and
assess the mix of compensation. DOD noted that the department has
consistently communicated its approach to Congress in Congressional
testimony and that DOD has sponsored efforts, such as the Defense
Advisory Committee on Military Compensation, to assess its overarching
compensation strategy. DOD also pointed out that it has generally not
sought increases in deferred and noncash compensation, and stated
during congressional testimony the department's preference for cash
compensation. We believe that DOD's argument that Congress has mandated
changes to compensation that it did not seek further illustrates why
the department needs to develop an explicit compensation strategy and
performance measures. As we point out in this report, a compensation
strategy could be used to underpin the department's compensation
decisions and performance measures to track their effectiveness.
Furthermore, the department would be in a better position to make
business case arguments for or against changes to its compensation
system, and provide fact-based evidence regarding the efficiency of the
allocation of cash, noncash, or deferred compensation.
DOD also partially concurred with our second recommendation to compile
total costs to provide reserve compensation for both drilling and
mobilized reservists and communicate those costs to decision makers
within the administration and Congress. In its response to this report,
DOD stated that this recommendation may be more appropriate for the
Office of Management and Budget since the costs extended to multiple
federal departments. We made a similar recommendation to the department
in our July 2005 report on active duty compensation. Since our 2005
report, the Office of Management and Budget published a compilation of
active duty compensation costs and the allocation of cost to cash,
noncash, and deferred compensation in its fiscal year 2008 Analytical
Perspectives. In addition, the department noted that it has discussed
with the Office of Management and Budget the possibility of expanding
the information to include Guard and reserve compensation costs. Such
actions represent steps in the right direction. However, placing the
information in the 400-plus page Analytical Perspectives document that
accompanies the budget may not be as effective as an annual budget
exhibit included as part of the military budget request. While we
believe OMB has taken a step in the right direction, we continue to
believe that DOD is in the best position to exercise ownership over
total compensation costs and, accordingly, should compile and present
total compensation costs as part of its budget submission. As we stated
in our report, lack of transparency over compensation costs is, in
part, due to the fact that DOD lacks a single source to illustrate
total compensation costs for drilling, full-time, and mobilized
reservists. We continue to believe that compilation of costs in a
single source is an important first step in gaining transparency over
total reserve compensation costs. This type of compilation would
provide decision makers with a resource to make fact-based decisions
about future changes to compensation.
We are sending copies of this report to the appropriate congressional
committees, the Secretary of Defense, and other interested parties. In
addition, the report will be available at no charge on GAO's Web site
at http://www.gao.gov. If you or your staff have any questions
regarding this report, please contact me at (404)679-1900 or
pendletonj@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. Other staff members who made key contributions to this report
are listed in appendix V.
Signed by:
John H. Pendleton:
Acting Director, Defense Capabilities and Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel Inouye:
Chairman:
The Honorable Ted Stevens:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Updated Active Duty Compensation Costs:
We originally reported total active duty compensation costs to the
federal government in July 2005.[Footnote 52] This appendix updates the
total compensation costs in that report. As shown in table 1, adjusted
for inflation, the total cost for providing active duty compensation
increased from about $131.7 billion to $173.2 billion (32 percent) from
fiscal year 2000 to fiscal year 2006. Cash benefits accounted for 48
percent of total compensation costs, while noncash and deferred
benefits accounted for 21 and 31 percent, respectively. In fiscal year
2006, it cost the federal government more than $126,000, on average, to
provide annual compensation to active duty servicemembers. Three things
are important to remember about our estimate. First, it is an average
of what it cost the government to compensate servicemembers, not what
the servicemembers "receive in their paycheck." Second, agencies other
than Department of Defense (DOD), such as the Department of Veterans
Affairs, Department of Education, and Department of Labor, provide
compensation to servicemembers, so our estimate includes their
appropriated costs. Third, the estimate does not include the cost of
adding servicemembers, because it does not include costs for acquiring
and training personnel.
Table 3: Summary of Changes in Active Duty Compensation Costs for
Fiscal Years 2000 and 2006:
Fiscal year 2006 constant dollars.
Cash (in billions).
Basic pay;
Fiscal year 2000: $40.8;
Fiscal year 2006: $48.2;
Percentage change: 18;
Percentage of total compensation (fiscal year 2006): [Empty].
Housing allowance;
Fiscal year 2000: 7.7;
Fiscal year 2006: 14.8;
Percentage change: 92;
Percentage of total compensation (fiscal year 2006): [Empty].
Subsistence allowance;
Fiscal year 2000: 3.3;
Fiscal year 2006: 3.5;
Percentage change: 6;
Percentage of total compensation (fiscal year 2006): [Empty].
Special and incentive pays;
Fiscal year 2000: 3.5;
Fiscal year 2006: 5.2;
Percentage change: 48;
Percentage of total compensation (fiscal year 2006): [Empty].
Allowance;
Fiscal year 2000: 2.0;
Fiscal year 2006: 3.2;
Percentage change: 60;
Percentage of total compensation (fiscal year 2006): [Empty].
Tax expenditure;
Fiscal year 2000: 6.6;
Fiscal year 2006: 8.5;
Percentage change: 30;
Percentage of total compensation (fiscal year 2006): [Empty].
Total cash (in billions);
Fiscal year 2000: $63.9;
Fiscal year 2006: 83.4;
Percentage change: 30;
Percentage of total compensation (fiscal year 2006): 48.
Total per capita cash;
Fiscal year 2000: 46,559;
Fiscal year 2006: 60,713;
Percentage change: 30;
Percentage of total compensation (fiscal year 2006): [Empty].
Noncash benefits (in billions).
Subsistence in kind;
Fiscal year 2000: 1.3;
Fiscal year 2006: 2.7;
Percentage change: 111;
Percentage of total compensation (fiscal year 2006): [Empty].
Other[A];
Fiscal year 2000: 15.6;
Fiscal year 2006: 17.4;
Percentage change: 19;
Percentage of total compensation (fiscal year 2006): [Empty].
Education[B];
Fiscal year 2000: 0.4;
Fiscal year 2006: 0.6;
Percentage change: 63;
Percentage of total compensation (fiscal year 2006): [Empty].
Health care;
Fiscal year 2000: 9.9;
Fiscal year 2006: 13.6;
Percentage change: 38;
Percentage of total compensation (fiscal year 2006): [Empty].
Family housing and barracks;
Fiscal year 2000: 2.4;
Fiscal year 2006: 2.3;
Percentage change: (5);
Percentage of total compensation (fiscal year 2006): [Empty].
Total noncash (in billions);
Fiscal year 2000: 29.6;
Fiscal year 2006: 36.6;
Percentage change: 24;
Percentage of total compensation (fiscal year 2006): 21.
Total per capita noncash;
Fiscal year 2000: 21,581;
Fiscal year 2006: 26,721;
Percentage change: 24;
Percentage of total compensation (fiscal year 2006): [Empty].
Deferred benefits (in billions).
Retired pay accrual;
Fiscal year 2000: 13.0;
Fiscal year 2006: 12.7;
Percentage change: (2);
Percentage of total compensation (fiscal year 2006): [Empty].
Veterans Affairs - health care;
Fiscal year 2000: 8.9;
Fiscal year 2006: 10.5;
Percentage change: 18;
Percentage of total compensation (fiscal year 2006): [Empty].
Veterans Affairs-compensation and pension;
Fiscal year 2000: 9.5;
Fiscal year 2006: 11.3;
Percentage change: 18;
Percentage of total compensation (fiscal year 2006): [Empty].
Veterans Affairs - other;
Fiscal year 2000: 0.9;
Fiscal year 2006: 1.1;
Percentage change: 18;
Percentage of total compensation (fiscal year 2006): [Empty].
Department of the Treasury;
Fiscal year 2000: 0.0;
Fiscal year 2006: 2.4;
Percentage change: [Empty];
Percentage of total compensation (fiscal year 2006): [Empty].
Health care accrual;
Fiscal year 2000: 5.8;
Fiscal year 2006: 15.3;
Percentage change: 162;
Percentage of total compensation (fiscal year 2006): [Empty].
Total deferred (in billions);
Fiscal year 2000: 38.1;
Fiscal year 2006: 53.3;
Percentage change: 39;
Percentage of total compensation (fiscal year 2006): 31.
Total per capita deferred;
Fiscal year 2000: 27,831;
Fiscal year 2006: 38,806;
Percentage change: 39;
Percentage of total compensation (fiscal year 2006): [Empty].
Total compensation (in billions);
Fiscal year 2000: $131.7;
Fiscal year 2006: $173.2;
Percentage change: 32;
Percentage of total compensation (fiscal year 2006): [Empty].
Total per capita;
Fiscal year 2000: $95,971;
Fiscal year 2006: $126,239;
Percentage change: 32;
Percentage of total compensation (fiscal year 2006): [Empty].
Source: GAO analysis.
Note: The numbers may not total due to rounding. According to DOD,
about 95,000 mobilized reservists were paid out of active duty cash
compensation costs in fiscal year 2006. Our active duty per capita cost
estimates do not take these mobilized reservists into account because
our per capita costs are based on active duty end strength. The per
capita costs to provide compensation would be lower if these reservists
are taken into consideration.
[A] Includes separation pay, partial dislocation allowance,
transportation subsidy, permanent change of station, DOD dependents'
education, adoption expenses, savings deposit program, death
gratuities, survivor benefits, Servicemember Group Life Insurance
hazard payments, Veterans Affairs home loan guaranty program, other
personnel support, special support, Morale Welfare and Recreation,
commissaries, Social Security tax, unemployment benefits, special
compensation, impact aid, and veterans employment and training.
[B] Includes education, off-duty voluntary education, and servicemember
GI bill and certification.
[End of table]
To calculate the cost to the federal government of compensating active
duty servicemembers, we interviewed officials from DOD, Department of
Veterans Affairs, Department of Labor, Department of Education, Office
of Management and Budget, and the Congressional Budget Office. We
analyzed and compiled data for fiscal years 2000-2006 from the Army,
Air Force, Marine Corps, and Navy's military personnel and operations
and maintenance budget justification books. We also reviewed and
compiled data from the Department of Veterans Affairs benefits and
health care budget justification books. To estimate the total federal
tax expenditure that results from the tax-exempt housing and
subsistence allowances military personnel receive, we used the National
Bureau of Economic Research's TAXSIM Model to simulate tax liabilities
under different scenarios.[Footnote 53] To estimate health care accrual
costs, we used official DOD estimates of accrual health care costs for
all retirees and their dependents. In addition, DOD's Office of Health
Affairs provided us the estimated cost of health care for active duty
servicemembers and their dependents for fiscal years 2004-2006. To
calculate the costs of future veterans' benefits for current active
duty servicemembers, including the costs for health care, compensation,
pension, and other types of benefits, we used notional costs as a
percentage of basic pay for accruing and actuarially funding Department
of Veterans Affairs benefits in the DOD budget. Lastly, we used
deflators to adjust the budget appropriations into current fiscal year
2006 dollars. For more detailed information on our methodology, see
appendix II.
[End of section]
Appendix II: Scope and Methodology:
To determine how Guard and reserve servicemembers have been
compensated, we analyzed relevant regulations and legislation since
2000, identified changes in compensation policy, and compiled a list of
pays and benefits for which reservists are currently eligible. We then
used budgetary data to assign costs to the various pays and benefits of
the reserve compensation system. This included compiling data for
fiscal years 2000-2006 from the Army National Guard, Army Reserve, Air
National Guard, Air Force Reserve, Marine Corps Reserve, and Navy
Reserve's military personnel and operation and maintenance budget
justification books. Within the operation and maintenance justification
books, we reviewed the budgets of the defense health program; the
defense commissary agency; the morale, welfare, and recreation
activities (OP-34 exhibit); and DOD dependent education activity. We
also reviewed data from the Department of Veterans Affairs benefits and
health care budget justification books. In addition, we interviewed DOD
officials in Washington, D.C., from the offices of (1) the Assistant
Secretary of Defense for Reserve Affairs; (2) the Comptroller within
the Office of Secretary of Defense; (3) each of the national guard and
reserve components, excluding the Coast Guard; (4) the Actuary; (5)
Health Affairs; and (6) the Office of Program Analysis and Evaluation.
We also interviewed officials from the Department of Veterans Affairs
in Washington, D.C., the Office of Management and Budget in Washington,
D.C., and the Congressional Budget Office in Washington D.C.
All of the associated costs for the reserves could not be found in the
budgetary exhibits. In some instances, we requested data from the
appropriate federal agency. For example, the Office of Health Affairs
provided (1) per capita TRICARE cost estimates for full-time
administration and support personnel for fiscal years 2004 through
2006; (2) cost estimates for TRICARE Reserve Select (TRS) for fiscal
year 2005 and fiscal year 2006; and (3) projected cost estimates for
TRS for fiscal year 2008 to fiscal year 2013. To calculate the health
care cost for full-time reservists for fiscal years 2000 through 2003,
we relied on our previous health care cost estimates for active duty
personnel.[Footnote 54] The Office of the Actuary provided the costs
for the retired health care accrual. Although the Department of
Veterans Affairs provided assistance, we determined that the portion of
reserve deferred or acrual cost associated with most veterans' programs
could not be identified without creating an accrual model.
In other instances, we found it necessary to estimate the cost to the
federal government. For example, we used the data from the Office of
the Actuary's Valuation Report to calculate the Department of
Treasury's contribution to disability compensation accrual. We also
estimated total federal tax expenditures that resulted from tax-exempt
housing and subsistence allowances received by military personnel in
2005 and 2006. To do this we estimated the taxes owed by an active duty
servicemember for every combination of years of service, rank, and
family size,[Footnote 55] with and without the tax exemption for
housing and subsistence. The number and pays of servicemembers were
provided by DOD's Selected Military Compensation Tables. Only military
income was used to calculate the taxes owed.[Footnote 56] We calculated
taxes owed for each group using the National Bureau of Economic
Research's TAXSIM model, which simulates tax liabilities under
different scenarios.[Footnote 57] We calculated the tax expenditure as
the difference between the taxes owed without the tax exemptions and
with the tax exemptions. We determined the average tax expenditure for
active duty servicemembers by computing an average based on the number
of servicemembers in each category. We applied these results to the
active duty compensation cost.
Next, to estimate the percentage difference in tax expenditure between
active duty and full-time reservists, we computed the ratio of average
tax expenditure in 2006 based on the distribution of years of service
and ranks for full-time reservists and active duty servicemembers. When
computing the taxes owed by reservists, we assumed that the family size
of full-time reservists was the same as active duty servicemembers of
identical rank and years of service. Data for reservists were taken
from the Official Guard and Reserve Manpower Strength and
Statistics[Footnote 58]. We applied these results to the compensation
cost of full-time reservists.
Additionally, to estimate future health care costs for the current
reserve population when they retire, we used official estimates of
health care accrual costs for servicemembers older than 65 (Medicare
eligible) and younger than 65 (non-Medicare eligible). DOD's Office of
the Actuary provided the per capita normal costs for postretirement
medical benefits, that is, the present value of the current year's
attributed portion of future benefits for active personnel and their
eligible dependents. The 2000-2002 per capita normal costs were
provided by DOD's Office of the Actuary based on data from a report
prepared by Milliman USA Consultants and Actuaries.[Footnote 59] Per
capita normal costs for 2003 and 2004 were based on data from
Milliman's spreadsheets.[Footnote 60] The 2005 and 2006 per capita
normal costs come from the DOD Office of the Actuaries' valuations as
of September 30, 2004, and September 30, 2005, respectively.
Finally, when calculating aggregate costs for the various types of
compensation, we used military personnel deflators from the National
Defense Budget Estimates for fiscal year 2007 published by the Office
of the Under Secretary of Defense (Comptroller) to adjust the budget
appropriations into current fiscal year 2006 dollars. To aid our
analysis, we classified the types of compensation into three
categories: cash, noncash, and deferred. In addition, we classified the
reserve service population into two categories: full-time and part-
time. Our analysis produced per capita costs for each category of the
population. For the full-time per capita cost, we used the average
strength identified in the military personnel budget justification
books for the administration and support population as the denominator.
The average strength, of Pay Groups A (reservists assigned to units), B
(reservists designated as Individual Mobilization Augmentees), F
(reservists completing initial entry training), and P, located in the
military personnel budget justification books was adjusted by
subtracting the average number of mobilized Select Reservists from each
fiscal year to approximate the actual number of part-time drilling or
"active" reservists. This "normalized" strength was used as the
denominator for the part-time per capita cost. The office of the
Assistant Secretary of Defense for Reserve Affairs provided assistance
with querying the Contingency Tracking System managed by DOD's Defense
Manpower Data Center to identify the monthly number of reservists
serving on active duty orders for named contingencies by reserve
component. To assess the reliability of Contingency Tracking System
data, we interviewed knowledgeable officials about the system and
related internal controls, and we reviewed our prior work on the
reliability of Contingency Tracking System data. To assess the
reliability of the analysis (monthly deployment totals) produced by the
Defense Manpower Data Center from the Contingency Tracking System, we
reviewed the SAS program that generated the results. We determined the
data we received were reliable for there intended purpose in this
engagement.
To assess the extent to which DOD's mix of cash, noncash, and deferred
compensation helped DOD meet its human capital goals, we reviewed the
requirements for establishing program objectives and outcome measures
in federal government standards such as the Government Performance and
Results Act of 1993 as well as in GAO guidance and strategies for human
capital management. We reviewed applicable DOD directives, policy, and
guidance and interviewed DOD officials from each of the reserve
components, as well as representatives from the Office of the Secretary
of Defense and Reserve Affairs in Washington, D.C., to assess whether
DOD had established any strategies for compensation or outcome measures
to determine the efficiency of its compensation tools. We interviewed
DOD recruiting and retention officials to determine the extent to which
compensation is used to attract and retain reserve personnel. These
interviews were conducted with officials in the U.S. Army Accessions
Command at Ft. Knox, Kentucky; U.S. Army Retention Command at Ft.
McPherson, Georgia; and Air National Guard Office of Recruiting and
Retention in Arlington, Virginia. We also reviewed reports done by DOD,
the Congressional Research Service, the Commission on the National
Guard and Reserves, the private sector, and others on recruiting and
retention of reserve forces as well as commonly accepted economic
theory.
To assess the extent to which DOD's approach provided transparency over
total costs to the federal government and determine whether DOD
followed those directives, policy, and guidance, we reviewed how
compensation costs are presented to decision makers by analyzing the
budget justification books and comparing them to applicable directives,
policy, and guidance, such as the DOD Financial Management Regulation.
We also interviewed knowledgeable officials at the National Guard
Bureau (for the Army and Air National Guard), the Air Force Reserve
Budget Division, the Army Reserves (Office of the Comptroller), Marine
Corps Reserves, and Navy Reserve Budget offices in Washington, D.C. to
learn more about transparency issues. We compared DOD directives and
guidance to standards such as the Government Performance and Results
Act and commonly accepted economic theory.
To calculate the cost to the federal government of compensating active
duty servicemembers, we interviewed officials from DOD including the
Office of the Secretary of Defense, Under Secretary for Personnel and
Readiness' office of compensation, the Office of the Comptroller within
the Office of the Secretary of Defense and the Services, the Office of
the Actuary, and Health Affairs all in Arlington, Virginia. In
addition, we interviewed officials from Department of Veterans Affairs,
Department of Labor, Department of Education, Office of Management and
Budget, and the Congressional Budget Office, all in Washington, D.C.
We examined and compiled data for fiscal years 2000-2006 from the Army,
Air Force, Marine Corps, and Navy's military personnel and operations
and maintenance budget justification books. Within the operations and
maintenance justification books, we reviewed the Defense Health
Program, the Defense Commissary Agency, the morale, welfare and
recreation (OP-34 exhibit), and DOD dependent education activity
budgets. We also reviewed and compiled data from the Department of
Veterans Affairs benefits and health care budget justification books.
We used deflators to adjust the budget appropriations into current
fiscal year 2006 dollars.
To calculate the costs of future veterans' benefits for current active
duty servicemembers, including the costs for health care, compensation,
pension, and other types of benefits, we used notional costs as a
percentage of basic pay of accruing and actuarially funding Veterans
Affairs benefits in the DOD budget. The notional cost percentages we
used were unofficial Office of Management and Budget estimates. These
estimates were based on the most recent official percentages shown in
table 12-2 of the 1999 President's Budget.
Lastly, all active duty compensation costs are not presented in
budgets. As a result, we estimated the total federal tax expenditure
and our methods are described as part of the reserve compensation costs
on page 39. We requested DOD's Office of the Actuary provide health
care accrual costs as described in appendix I. We also requested that
DOD's Office of Health Affairs provide health care cost estimates for
active duty servicemembers and their dependents for fiscal years 2004-
2006. We relied on our previously calculated active duty health care
costs for fiscal years 2000 through 2003.[Footnote 61] We conducted our
review from October 2006 through May 2007 in accordance with generally
accepted government auditing standards.
[End of section]
Appendix III: Pay and Benefits of the Selected Reserve:
Cash compensation.
Pay and allowances.
Basic pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): 1/30 of the monthly basic pay rate for each IDT period;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Amount is determined by the member's years of service and pay
grade;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Amount is determined by the member's
years of service and pay grade;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Amount is determined by the member's
years of service and pay grade;
Part-time Guard and reserve servicemembers: : Full-time support: Amount
is determined by the member's years of service and pay grade.
Basic Allowance for Housing;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): If ADT is 31 days or more, the servicemember is eligible. The
amount is determined by the member's pay grade, location of permanent
duty station, and dependent status;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Amount is determined by member's pay
grade, location of permanent duty station, and dependent status;
Part-time Guard and reserve servicemembers: Full-time support: Amount
is determined by member's pay grade, location of permanent duty
station, and dependent status.
Basic Allowance for Housing/Reserve Component;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Not eligible;
Part-time Guard and reserve servicemembers: Full-time support: Not
eligible.
Basic Allowance Subsistence;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
(Enlisted servicemembers may receive rations-in-kind);
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, amount depends on if the servicemember is an officer
or enlisted;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligibile, amount depends on if the
servicemember is an officer or enlisted;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, amount depends on if the
servicemember is an officer or enlisted;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, amount depends on if the servicemember is an officer or
enlisted.
Family Separation Allowance;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, limited to members with dependents during permanent
change station when family cannot accompany member or temporary duty
status (unaccompanied for 31 days or more);
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, limited to members with
dependents during permanent change of station when family cannot
accompany member or temporary duty status (unaccompanied for 31 days or
more);
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, for members with dependents, if member meets statutory and
regulatory requirements.
Tax Benefit;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Housing and subsistence allowances are nontaxable benefits. In
addition, all pay, allowances, and bonuses earned during a month while
in a combat zone and qualified hazardous duty area for 1day of the
month are nontaxable. Officers' monthly tax exclusion of military pay
earned is capped at the highest enlisted monthly basic pay plus $225
for hazardous fire and Imminent Danger Pay (IDP);
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Housing and subsistence allowances are
nontaxable benefits. In addition, all pay, allowances, and bonuses
earned during a month while in a combat zone and qualified hazardous
duty area for 1day of the month are nontaxable. Officers' monthly tax
exclusion of military pay earned is capped at the highest enlisted
monthly basic pay plus $225 for hazardous fire and Imminent Danger Pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Housing and subsistence allowances are
nontaxable benefits. In addition, all pay, allowances, and bonuses
earned during a month while in a combat zone and qualified hazardous
duty area for 1day of the month are nontaxable. Officers' monthly tax
exclusion of military pay earned is capped at the highest enlisted
monthly basic pay plus $225 for hazardous fire and Imminent Danger Pay;
Part-time Guard and reserve servicemembers: Full-time support: Housing
and subsistence allowances are nontaxable benefits. In addition, all
pay, allowances, and bonuses earned during a month while in a combat
zone and qualified hazardous duty area for 1day of the month are
nontaxable. Officers' monthly tax exclusion of military pay earned is
capped at the highest enlisted monthly basic pay plus $225 for
hazardous fire and Imminent Danger Pay.
Special and incentive pays[A].
Hostile Fire/Imminent Danger Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible; however, DOD policy states that a member shall not
perform duty in a hostile fire/imminent danger area;
Part- time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Hazardous Duty Incentive Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, at 1/30 of the authorized rate for each IDT period, if
the member meets the statutory and regulatory requirements of the pay,
except for fire fighters;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Aviation Career Incentive Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, at 1/30 of the authorized rate for each IDT period, if
the member meets the statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Career Enlisted Flyers Incentive Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, at 1/30 of the authorized rate for each IDT period;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Foreign Language Proficiency Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Submarine Duty Incentive Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, at 1/30 of the authorized rate for each IDT period, if
the member meets the statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Diving Duty Special Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, at 1/30 of the authorized rate for each IDT period, if
the member meets the statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member meets the statutory and regulatory
requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Special Duty Assignment Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, at 1/30 of the authorized rate for each IDT period, if
the member meets the statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible. However, the Secretary of the military department may
authorize payment only to those reservists on active duty in excess of
180 days;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible. However, the Secretary of the
military department may authorize payment only to those reservists on
active duty in excess of 180 days;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible. However, the Secretary of the
military department may authorize payment only to those reservists on
active duty in excess of 180 days;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Officers Holding Positions of Unusual Responsibility and of Critical
Nature;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible for officers only, for each day of duty that meets the
statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible for officers only, if the member meets the statutory
and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible for officers only, if the
member meets the statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible for officers only, if the
member meets the statutory and regulatory requirements of the pay;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
for officers only, if the member meets the statutory and regulatory
requirements of the pay.
Hardship Duty Pay (mission);
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible when assigned to a designated mission;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible when assigned to a designated
mission;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible when assigned to a designated
mission;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
for the pay.
Hardship Duty Pay (location);
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible from the first day if assigned permanently to a
designated location or if assigned temporarily to a designated location
for more than 30 consecutive days, payable from first day;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible from the first day if assigned
permanently to a designated location or if assigned temporarily to a
designated location for more than 30 consecutive days, payable from
first day;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible from the first day if assigned
permanently to a designated location or if assigned temporarily to a
designated location for more than 30 consecutive days, payable from
first day;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
if the member meets the statutory and regulatory requirements for the
pay.
Special Pay for Members of Weapons of Mass Destruction Civil Support
Teams;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible at 1/30 of the authorized rate for each duty day;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible at 1/30 of the authorized rate for each duty day;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible at 1/30 of the authorized rate
for each duty day;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible at 1/30 of the authorized rate
for each duty day;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
at 1/30 of the authorized rate for each duty day.
Medical and Dental Special Pay;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, medical officers are authorized $450/month and dental
officers $350/month;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, medical officers are
authorized $450/month and dental officers $350/month;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Other health care professions: optometrists;
psychologists and non- physician health care providers;
nurse anesthetists & veterinarians;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member meets the statutory and regulatory requirements
of the pay.
Bonuses[B].
Selected Reserve Officer Affiliation Bonus;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible for officers who agree to fill critical shortfalls;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible for officers who agree to fill critical shortfalls;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible for officers who agree to fill
critical shortfalls;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible for officers who agree to fill
critical shortfalls;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
for officers who agree to fill critical shortfalls; however, DOD policy
prohibits.
Selected Reserve Enlistment Bonus;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Limited to Selected Reserve who enlist to fill critical
shortfalls;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Limited to Selected Reserve who enlist to fill critical
shortfalls;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Limited to Selected Reserve who enlist
to fill critical shortfalls;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Limited to Selected Reserve who enlist
to fill critical shortfalls;
Part-time Guard and reserve servicemembers: Full-time support: Limited
to Selected Reserve who enlist to fill critical shortfalls; however,
DOD policy prohibits.
Selected Reserve Reenlistment Bonus;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Limited to Selected Reserve who reenlist to fill critical
shortfalls;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Limited to Selected Reserve who reenlist to fill critical
shortfalls;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Limited to Selected Reserve who reenlist
to fill critical shortfalls;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Limited to Selected Reserve who reenlist
to fill critical shortfalls;
Part-time Guard and reserve servicemembers: Full-time support: Limited
to Selected Reserve who reenlist to fill critical shortfalls; however,
DOD policy prohibits.
$30,000 Lump Sum Bonus;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Not eligible;
Part-time Guard and reserve servicemembers: Full-time support: Option
available to Active Guard and Reserves with 15 years of service who
first became a member after August 1, 1986 and elect to accept the lump
sum bonus and to remain under the Redux retirement plan.
Noncash compensation.
Medical and dental care[C].
Member Medical and Dental Benefits;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible for treatment of injury, illness or disease incurred or
aggravated in line of duty;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if 30 days or less, for treatment of injury, illness
or disease incurred or aggravated in line of duty and if 31 days or
more it is the same as active duty;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible for treatment of injury,
illness or disease incurred or aggravated in line of duty;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible for treatment; provided at a
military treatment facility;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
for treatment provided at a military treatment facility.
TRICARE Dental Program for Reserve Component members;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if ADT is 30 days or less; however, if ADT is 31 days
or more then dental care and treatment provided at a military treatment
facility;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Dental care and; treatment provided at a
military treatment facility;
Part-time Guard and reserve servicemembers: Full-time support: Dental
care and; treatment provided at military treatment facility.
Dependent Medical Benefits;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the; member is ordered to active duty for training
for 31 days; or more;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, at military facilities if
space is available or the servicemember may select from TRICARE
Standard, Extra, Prime or Prime Remote;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, at military facilities if space is available or the
servicemember may select from TRICARE Standard, Extra, Prime or Prime
Remote.
Transitional Health Care: Member and Dependents;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, for 180 days, if involuntarily separated from active
duty;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, for 180 days, if involuntarily
separated from active duty or if released from active duty while
serving in a contingency operation for a period of more than 30 days;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, for 180 days, if involuntarily separated from active duty.
TRICARE Reserve Select Tier I: Member and Dependents[D];
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if member meets eligibility requirements and enrolls,;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Not eligible;
Part-time Guard and reserve servicemembers: Full-time support: Not
eligible.
TRICARE Reserve Select Tier II: Member and Dependents;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if member meets of Mobilized requirements and enrolls;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Not eligible;
Part-time Guard and reserve servicemembers: Full-time support: Not
eligible.
TRICARE Reserve Select Tier III: Member and Dependents;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if member meets eligibility requirements and enrolls;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Not eligible;
Part-time Guard and reserve servicemembers: Full-time support: Not
eligible.
TRICARE Dental Program for Dependents;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Installation-based benefits (availability limited by geographic
location);
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): [Empty];
Part- time Guard and reserve servicemembers: Active duty for training
(ADT): [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: [Empty];
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: [Empty];
Part-time Guard and reserve servicemembers: Full- time support:
[Empty].
Commissary Privileges;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Unlimited;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Unlimited;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Unlimited;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Unlimited;
Part-time Guard and reserve servicemembers: Full-time support:
Unlimited.
Post Exchange Privileges;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Unlimited;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Unlimited;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Unlimited;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Unlimited;
Part-time Guard and reserve servicemembers: Full-time support:
Unlimited.
Morale, Welfare, Recreation Services;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, however, may have limited availability for various
services;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, however, may have limited availability for various
services;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, however, may have limited
availability for various services;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, however, may have limited
availability for various services;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, however, may have limited availability for various services.
Family Support Centers;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible for some services but not all;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part- time Guard and reserve servicemembers: Full-time support:
Eligible.
Child Care Centers;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, however, may have limited availability;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, but availability of space may be limited;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, but availability of space may
be limited;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, but availability of space may
be limited;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, but availability of space may be limited.
Space Required Travel;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible to travel between the member's home and place of
training;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Space Available Travel;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible for the member only within the continental United
States of America;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible for the member and dependents to all locations;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible for the member and dependents
to all locations;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible for the member and dependents
to all locations;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
for the member and dependents to all locations.
Legal Assistance;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Usually limited to services that are associated with military
requirements;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Subject to the availability of legal staff resources;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Subject to the availability of legal
staff resources;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Subject to the availability of legal
staff resources;
Part-time Guard and reserve servicemembers: Full-time support: Subject
to the availability of legal staff resources.
Insurance[E].
Servicemember Group Life Insurance;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Selected Reserve members are automatically enrolled and may
decline coverage;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Selected Reserve members are automatically enrolled and may
decline coverage;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Coverage continues or eligible to
enroll;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Coverage continues or eligible to
enroll;
Part-time Guard and reserve servicemembers: Full-time support: Coverage
continues or eligible to enroll.
Servicemember Group Life Insurance Family Coverage;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if the member is enrolled in Servicemember Group Life
Insurance;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the member is enrolled in Servicemember Group Life
Insurance;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the member is enrolled in
Servicemember Group Life Insurance;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the member is enrolled in
Servicemember Group Life Insurance;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the member is enrolled in Servicemember Group Life
Insurance.
Traumatic Injury Protection Program;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Selected Reservists are automatically enrolled if the reservist
has Servicemember Group Life Insurance coverage;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Selected Reservists are automatically enrolled if the reservist
has Servicemember Group Life Insurance coverage;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Selected Reservists are automatically
enrolled if the reservist has Servicemember Group Life Insurance
coverage;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Selected Reservists are automatically
enrolled if the reservist has Servicemember Group Life Insurance
coverage;
Part-time Guard and reserve servicemembers: Full-time support:
Automatically enrolled if the reservist has Servicemember Group Life
Insurance coverage.
Leave.
Accumulation of Leave;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if ADT is 31 days or more;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Payment for Unused Leave;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not applicable;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if ADT is 31 days or more. Up to 60 days in career. If
on ADT for more than 30 days but less than 365 days, may sell unused
leave in excess of the 60-day career limit;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, up to 60 days in career, but
if on active duty for more than 30 days but less than 365 days, may
sell unused leave in excess of the 60-day career limit;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, up to 60 days in career.
Education.
Montgomery GI Bill - Selected Reserve[F];
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Requires a 6-year Selected Reserve service agreement;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Requires a 6-year Selected Reserve service agreement;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Requires a 6-year Selected Reserve
service agreement;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Requires a 6-year Selected Reserve
service agreement;
Part-time Guard and reserve servicemembers: Full- time support:
Requires a 6-year Selected Reserve service agreement.
Montgomery GI Bill Kicker;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Enlisted must be or have been Montgomery GI Bill-Selected
Reserve eligible and serve in a critically undermanned skill. Member
must agree to a 6-year service obligation;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Enlisted must be or have been Montgomery GI Bill-Selected
Reserve eligible and serve in a critically undermanned skill. Member
must agree to a 6-year service obligation;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Enlisted must be or have been Montgomery
GI Bill-Selected Reserve eligible and serve in a critically undermanned
skill. Member must agree to a 6-year service obligation;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Enlisted must be or have been Montgomery
GI Bill-Selected Reserve eligible and serve in a critically undermanned
skill. Member must agree to a 6-year service obligation;
Part-time Guard and reserve servicemembers: Full-time support: Enlisted
must be or have been Montgomery GI Bill-Selected Reserve eligible and
serve in a critically undermanned skill. Member must agree to a 6-year
service obligation.
Reserve Officers Training Corps Scholarship Program;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Scholarship program for Reserve Officers Training Corps
participants;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Scholarship program for Reserve Officers Training Corps
participants;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Scholarship program for Reserve Officers
Training Corps participants;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Scholarship program for Reserve Officers
Training Corps participants;
Part-time Guard and reserve servicemembers: Full-time support: Not
eligible.
Armed Forces Health Professions Stipend Program;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Restricted to officers in designated health professions with
obligatory periods of military training;
Part- time Guard and reserve servicemembers: Active duty for training
(ADT): Restricted to officers in designated health professions with
obligatory periods of military training;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Restricted to officers in designated
health professions with obligatory periods of military training;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Restricted to officers in designated
health professions with obligatory periods of military training;
Part-time Guard and reserve servicemembers: Full-time support:
Restricted to officers in designated health professions with obligatory
periods of military training.
The Loan Repayment Program;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Enlistment incentive;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Enlistment incentive;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Enlistment incentive;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Enlistment incentive;
Part-time Guard and reserve servicemembers: Full-time support:
Enlistment incentive.
Tuition Assistance;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Available to Selected Reservist members of the Army National
Guard and Army Reserve;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, but an officer must agree to serve on active duty or
full-time National Guard duty, unless waived by the Secretary
concerned;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible , but an officer must agree to
serve on active duty or full-time National Guard duty, unless waived by
the Secretary concerned;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible , but an officer must agree to
serve on active duty or full-time National Guard duty, unless waived by
the Secretary concerned;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
, but an officer must agree to serve on active duty or full-time
National Guard duty, unless waived by the Secretary concerned.
Reserve Educational Assistance Program;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible upon completion of 90 consecutive days of active
service in support of a contingency operation;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible upon completion of 90 consecutive days of active
service in support of a contingency operation;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible upon completion of 90
consecutive days of active service in support of a contingency
operation;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible upon completion of 90
consecutive days of active service in support of a contingency
operation;
Part-time Guard and reserve servicemembers: Full-time support: Eligible
upon completion of 90 consecutive days of active service in support of
a contingency operation.
Other.
Clothing Allowance;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Initial allowance paid to enlisted who are not issued clothing
and officers at the beginning of their service;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Initial allowance paid to some enlisted and officers at the
beginning of their service;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Initial allowance paid to enlisted some
and officers at the beginning of their service;
Part- time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Some enlisted, and officers called to
active duty for more than 90 days may receive an extra clothing
allowance;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Transportation Incentive Program;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Not eligible;
Part- time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Permanent Change of Station Travel;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Not eligible;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Not eligible;
Part- time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Not eligible;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible if orders are for 20 weeks or
more;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Veterans Affairs-Home Loan [G];
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if completed 6 years of honorable reserve service;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if completed 6 years of honorable reserve service;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if completed 6 years of
honorable reserve service;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if completed 6 years of
honorable reserve service;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible.
Deferred compensation.
Reserve retirement;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Must earn 50 participation points per year for a minimum of 20
years. Eligible to receive pay and health care at age 60;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Must earn 50 participation points per year for a minimum of 20
years. Eligible to receive pay and health care at age 60;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Must earn 50 participation points per
year for a minimum of 20 years. Eligible to receive pay and health care
at age 60;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Must earn 50 participation points per
year for a minimum of 20 years. Eligible to receive pay and health care
at age 60;
Part-time Guard and reserve servicemembers: Full-time support: Must
have a minimum of 20 qualifying years to be eligible for retirement pay
and benefits.
Retirement or Separation for Disability[H];
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Eligible, if the disability was incurred or aggravated in the
line of duty while: performing inactive duty training (IDT), traveling
directly to or from the IDT site, remaining overnight immediately
before or between successive IDT periods;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Eligible, if the disability was incurred or aggravated in the
line of duty;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Eligible, if the disability was incurred
or aggravated in the line of duty;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Eligible, if the disability was incurred
or aggravated in the line of duty;
Part-time Guard and reserve servicemembers: Full-time support:
Eligible, if the disability was incurred or aggravated in the line of
duty.
Veterans Affairs-Health care;
Part-time Guard and reserve servicemembers: Inactive duty training
(IDT): Generally not eligible unless member qualifies based on service
in active military or mobilization for a contingency operation;
Part-time Guard and reserve servicemembers: Active duty for training
(ADT): Generally not eligible unless member qualifies based on service
in active military or mobilization for a contingency operation;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 30 days or less: Generally not eligible unless member
qualifies based on service in active military or mobilization for a
contingency operation;
Part-time Guard and reserve servicemembers: Active duty (other than
training) for 31 days or more: Generally not eligible unless member
qualifies based on service in active military or mobilization for a
contingency operation;
Part-time Guard and reserve servicemembers: Full-time support: A member
qualifies based on active duty status.
Source: GAO analysis.
Note: Current through fiscal year 2006.
[A] Special and incentive pays are intended to compensate members for
more hazardous conditions than usually experienced in peacetime and
provide incentives for certain career fields that would otherwise
experience manpower shortfalls.
[B] Bonuses are intended to provide services with a flexible tool for
targeting particular skills and address critical manpower shortfalls.
[C] There are a variety of programs offering varying levels of coverage
depending on duty status and enrollment.
[D] The John Warner National Defense Authorization Act for Fiscal Year
2007 authorized the enhancement of TRICARE Reserve Select by making all
Selected Reserve members and dependents eligible for the program at 28
percent of the premium. The change to the program is scheduled to take
effect by October 2007.
[E] The insurance programs listed are supervised by the Department of
Veterans Affairs. Enrollment in the programs requires the payment of a
premium. The insurance may be bought in increments of $50,000 up to a
maximum of $400,000. Children are insured at $10,000 at no additional
cost. Up to $100,000 coverage can be purchased for a spouse. Traumatic
injury insurance provides immediate financial assistance to
traumatically injured servicemembers so their families can travel to be
with them during an often extensive recovery and rehabilitation
process. Payments range from $25,000 to $100,000 depending on the type
and severity of injury.
[F] Unlike Montgomery GI Bill-Active Duty, for reservists meeting the
eligibility requirement, the benefit is automatic and the members are
not required to make a payment. The Montgomery GI Bill-Reserve
Component benefit amount is smaller than the Montgomery GI Bill -Active
Duty benefit.
[G] The majority of reservists have prior service in the active
component. Since fees for active duty applications are lower than
reserve applications, reservists with active duty prior service usually
apply based on their prior active duty service.
[H] Both DOD and Veterans Affairs provide disability compensation.
Since 2005, disabled veterans have been eligible to receive disability
compensation from Veterans Affairs and disability retirement from DOD.
[End of table]
[End of section]
Appendix IV: Comments from the Department of Defense and GAO's
Response:
Assistant Secretary Of Defense:
Washington, DC 20301-1500:
Reserve Affairs:
Jun 1 2 2001:
Mr. John H. Pendleton:
Acting Director, Defense Capabilities and Management:
U.S. Government Accountability Office,
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Pendleton:
This is the Department of Defense (DoD) response to the GAO draft
report, GAO-07-828, `Military Personnel: DoD Needs to Establish a
Strategy and Improve Transparency over Reserve and National Guard
Compensation to Manage Significant Growth in Cost,"' dated May 14, 2007
(GAO Code 350922). The Department has technical concerns and
substantive comments on the draft report, and partially concurs with
the recommendations. The Department's comments are enclosed.
The primary action officer within DOD for this report is Colonel Nilda
Urrutia. She can be reached at (703) 693-8626.
Sincerely,
Signed by:
T. F. Hall:
Enclosures:
As stated:
GAO Draft Report - Dated May 14, 2007 GAO Code 350922/GAO-07-828:
"Military Personnel: DoD Needs to Establish a Strategy and Improve
Transparency over Reserve and National Guard Compensation to Manage
Significant Growth in Cost"
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
establish a clear compensation strategy that includes performance
measures to evaluate the efficiency of compensation in meeting
recruiting and retention goals, and use the performance measures to
monitor the performance of compensation and assess what mix of
compensation will be the most efficient in the future.
DOD Response: Partially Concur. We agree with GAO in the need to
analyze the efficiency of the compensation system in meeting recruiting
goals, as well as the need to assess what mix of compensation will be
the most efficient in the future. However, the Department has been
consistent in its compensation strategy and approach to compensation,
with priority on cash compensation and emphasizing discretionary
authorities to help shape and manage the force. This strategic approach
has been consistently communicated to Congress in the form of both oral
and written Congressional testimony.
Additionally, DoD has sponsored multiple, and in some cases
simultaneous efforts to assess the overarching military personnel
compensation strategy. The Defense Advisory Committee on Military
Compensation (DACMC) was chartered in 2005 to specifically "identify
approaches to balance military pay and benefits in sustaining
recruitment and retention of high-quality people, as well as a cost-
effective and ready military force." The DACMC published its report in
April of 2006, and the recommendations were used as a point of
departure when the 10Th Quadrennial Review of Military Compensation,
began its work in April of 2006.
Recommendation 2: The GAO recommends that the Secretary of Defense
compile the total costs to provide reserve compensation for both
drilling and mobilized reservists and communicate these costs as well
as the allocation of these costs among cash, noncash, and deferred
compensation to decision makers within the administration and Congress
- perhaps as an annual exhibit as part of the President's budget
submission to Congress.
DOD Response: Partially concur. GAO's recommendation is to improve
transparency over total compensation for Reserve component members. We
agree with this goal. However, since the costs for a Reserve component
members extends to four departments, including Treasury, Veterans
Affairs, Labor and Housing and Urban Development, this may be a more
appropriate issue for the Office of Management and Budget.
Currently, the Office of Management and Budget (OMB) provides a version
of this overview for military compensation (Active Force only) in the
annual "Analytical Perspectives: Budget of the U.S. Government"
publication. This synopsis includes information provided by the
Department of Veterans Affairs and breaks down the funding into "Cash
Payments to Members", "In-Kind Payments to Members", and "Accruing Cost
of Future Benefits". Furthermore, it identifies major personnel cost
drivers, many of which were cited in this draft report.
The Department has discussed with OMB the possibility of expanding this
section to include Reserve Component compensation in the next
publication.
Comments on Data:
There are a number of issues with the presentation of the data in the
draft report. The first three issues were initially presented in the
review of GAO-05-798, "DoD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of its Military Compensation System," dated June, 2005,
which focused mainly on the Active force but which remain relevant for
this report.
1. Normalization for the Global War on Terrorism (GWOT):
2. Use of end strength vice average strength (workyears) in per capita
calculations for the active duty per capita costs:
3. Constant dollar adjustments:
4. Average strength calculations - Reserve Components:
5. Transparency of mobilized reservists costs:
1. Normalization for GWOT:
The draft report fails to normalize or even note the impact of the GWOT
on the total cost data for both the reserve components and the updated
information for the active duty. The report reference an increase from
$131.7 billion in FY 2000 to $173.2 billion in FY 2006 (about 32%) for
the active duty. However, there is no disclosure in the report that the
FY 2006 figure of $173.2 billion for the active duty includes over
$15.6 billion for supplemental funding for the GWOT. Recognition of the
supplemental impact would reduce the increase from FY 2000 to FY 2006
to 19% vice 32%.
In recognition of full disclosure, recommend that the draft report be
modified to address the impact of funding for GWOT.
2. End Strength vice Average Strength in Per Capita Calculations for
the Active Duty:
In presenting the per capita cost of a servicemember, the draft report
uses active duty end strength levels reported in the Services'
justification books instead of the average strength levels. This
distorts the per capita figures in 2 ways:
1. End strength reflects an official on-board count of personnel at a
single point during the year (September 30`H) not the actual number
paid throughout the year.
2. The official end strength figures do not include Reserves or
National Guardsmen called to active duty for a variety of reasons as
detailed in section 115(h) to Title 10, United States Code.
Due to the significant mobilization of the Reserve Components for the
GWOT, average strength levels have far exceeded end strength levels
since FY 2002. While the draft report does include a footnote in
several places stated that the average cost to provide compensation
would be lower if these mobilized reserves were considered, this
drastically understates the impact of excluding these reserves from the
per capita calculations.
3. Constant Dollar Adjustments:
Throughout the draft report, the cost data is presented as "adjusted
for inflation" or "2006 Constant Dollars". However, in speaking with
GAO, they confirmed that the military pay figures were adjusted using
the MILPAY constant dollar deflators from the OUSD (Comptroller)
"Greenbook" that is published annually. The MILPay Deflators are
designed to adjust for the annual military pay raise. By using these
deflators as opposed to another measure such as the Employment Cost
Index (ECI) or the Consumer Price Index (CPI), the total cost data is
not accounting for the fact that the military pay raises since FY 2000
have been well above the norm. The percent change in the total cost of
compensation is an even more significant figure when you consider that
it excludes the impact of pay raises averaging over 29.5% between FY
2000 and FY 2006. Over the same period, the ECI for Wages and Salaries
of Private Industry Workers increased by 18.9% and the CPI for Urban
Wage Earners and Clerical Workers increased by only 16.4%.
Recommend constant dollar adjustments for military pay items be made
using either an ECI (Compensation) or CPI (Inflation) index or be left
in current year dollars with a discussion of applicable ECI/CPI
increases.
4. Average Strength Calculations -Reserve Components:
To calculate the part-time per capita costs, GAO's calculations only
included the average strengths for Pay Group A and Pay Group B less the
average number mobilized based on DMDC CTS data. However, costs
associated with Pay Group F and Pay Group P were included in the total
costs but the average strengths for these two pay groups were not
included to calculate the per capita costs.
This methodology seems flawed in that both pieces, cost and average
strength of Pay Group F and Pay Group P, have not been recognized which
would result in an overstatement of the part-time per capita costs.
Recommend that part-time per capita calculations include the average
strength of all pay groups.
5. Transparency of Mobilized Reservists Costs:
Page 34 of the draft report states that compensation costs for
mobilized reservists are difficult to determine within the active
components budgets, in part, because they are paid out of the
supplemental funding the active components' receive for the global war
on terrorism.
The Department made a conscious decision to improve the transparency of
these costs within the Services' submission of their Supplemental
Requests to Congress. The FY 2007 and FY 2008 supplemental submissions
include detailed cost estimates of Reserves called to active duty.
Recognition of this increased transparency needs to be noted.
Consolidated Technical and Substantive Comments:
[See PDF for Table of DOD Technical and Substantive Comments]
GAO Response to Department of Defense's Technical Comments:
The Department of Defense (DOD) made comments on the presentation of
the data in our report and raised a number of technical concerns. Our
response to DOD's technical comments follows.
1. DOD commented that we did not adequately describe the impact of the
increase in funding related to the Global War on Terrorism. In its
comments, DOD stated that in fiscal year 2006 more than $15.6 billion
of the $173.2 billion in compensation costs were supplemental funding
for the Global War on Terrorism. While it is true that our estimates
include supplemental funding, we do not believe that the inclusion of
this funding changes our findings or conclusions. Costs paid from
supplemental funding represents real costs to the federal government
that we believe are appropriate to include when calculating how much
the federal government spends on compensating military servicemembers.
However, we understand DOD's concern, and footnotes in the report that
explain our approach are sufficient. Furthermore, we believe that DOD's
comment illustrates the importance of providing greater transparency
over mobilized reservists' costs. As we have previously testified, with
Global War on Terrorism costs likely to continue for the foreseeable
future, it is becoming increasingly important that DOD move those costs
into the baseline budget as the level of effort becomes better known
and is more predictable. Greater transparency over costs would provide
administration and congressional decision makers more information to
make fact-based decisions and weigh competing priorities for the
nation's resources.
2. DOD did not disagree with our overall finding that active duty
compensation costs to the government have increased since fiscal year
2000. However, DOD stated that our reliance on end strength numbers for
active duty personnel distorts active duty per capita costs
calculations because that number does not include mobilized reservists.
We did note in the report that mobilized reservists are paid out of
active duty cash compensation costs and that our active duty per capita
cost estimates do not take these mobilized reservists into account, and
acknowledge in the report that the per capita costs to provide
compensation would be lower if these mobilized reservists were taken
into consideration. DOD's concern further highlights the need for the
department to establish greater transparency over the costs of
reservists. As we state in this report, accounting for mobilized
reservists is problematic, given that they count against reserve end
strength numbers but are paid out of active duty accounts.
3. DOD raised concerns about the adjustments we made in our data to
account for inflation, and felt that the deflators, or price indices,
we chose understated the real growth in compensation costs between
fiscal years 2000 and 2006. We are aware that the price indices we used
make our growth estimates conservative and that other indices would
show similar or greater growth. We recognize that in examining the
growth of military compensation over time, the division of this growth
between real growth and growth due to inflation depends on the price
index or deflator used to adjust for inflation. For example, when
dividing total growth in compensation between real growth and growth
due to inflation, a higher rate of inflation will produce a lower real
growth rate, and vice versa. We used the deflators for military pay
that are contained in the National Defense Budget Estimates for fiscal
year 2007 that are published by the Office of the Under Secretary of
Defense of the Comptroller because they represent the official DOD
indices for military pay budget matters. This office produces several
different deflators or price indices that DOD uses officially to adjust
dollars amounts for inflation for different budgetary purposes, such as
procurement or operations and maintenance. We recognize, as DOD
suggested in its comments, that we could have used the Employment Cost
Index or the Consumer Price Index (for Urban Wage Earners and Clerical
Workers) to adjust for inflation. Although DOD suggested the Employment
Cost Index for wages and salaries would have been a more appropriate
price index, we would have used the Employment Cost Index specific for
total compensation for the private sector, because the military
compensation number we calculated included more than wages and
salaries. For example, in addition to wages and salaries we also
included such things as allowances for housing and subsistence and
retirement pay accrual. As we previously stated in our report, we used
the military pay deflator and found that reserve compensation costs
grew at a real rate of 47 percent from fiscal year 2000 to fiscal year
2006. When we redid our calculations using the Employment Cost Index,
we found that reserve compensation costs grew 48 percent from fiscal
year 2000 to fiscal year 2006. When we redid our calculations using the
Consumer Price Index, we found that reserve compensation costs grew 55
percent from fiscal year 2000 to fiscal year 2006. However, we note
that DOD does not use this index to prepare its military personnel
budgets.
4. DOD commented that the calculation of the part-time reservists
should have included pay groups for initial entry reservists in the
average strength. We agree and changed our data to include the pay
groups for the initial entry reservists in the average strength.
5. DOD commented that the department made a conscious decision to
improve the transparency of compensation costs of mobilized reservists
starting in the fiscal year 2007 supplemental submission. We agree that
the services have taken the first step of displaying these costs as
part of the supplemental request; however, we believe the department
would benefit from greater transparency over these costs, including
presenting them as part of a complete picture of compensation costs in
the military personnel justification books.
6. The sentence in question does not discuss whether or not reserve
retirement pay has changed or whether DOD sought the TRICARE Reserve
Select program; it simply provides examples of deferred compensation.
However, we altered the sentence for clarity to reflect that we were
talking about health care benefits for retirees.
7. We adjusted the language for clarification to reflect the fact that
not living in close proximity to military bases does not effect
eligibility.
8. We adjusted the language as suggested.
9. We changed the sentence to reflect the fact we are referring to
mobilized personnel only.
10. We specify in the introduction of the report that we limited our
scope to, part-time, drilling reservists, and full-time support
personnel serving in the Active Guard and Reserve program of the
Selected Reserve. We excluded reserve and guard members who were
mobilized from our cost estimates. We defined our scope based on cost
information presented by DOD in the budget justification books. These
books present the cost of part-time and Administration and Support
personnel.
11. Our Results in Brief now show that DOD has testified that adding
deferred compensation is not their preference.
12. We excluded mobilized reservists from our cost estimates because
their costs are not presented in the reserve justification books.
However, we believe that the total costs of the Guard and reserve
should include the cost for mobilized reservists and that the
department should take steps to provide greater transparency over all
compensation costs for decision makers to make fact-based decisions.
13. We added language to clarify that mobilized reservists are paid out
of supplemental funding.
14. We addressed the comment by adding a footnote to the section.
15. We reordered the presentation of the reserve components as
suggested.
16. Agency officials told us that ongoing operations had been part of
the reason for the increase in full-time reservists during the course
of the review. However, we deleted the sentence as requested in the
department's formal comments.
17. We defined our use of the term full-time reservists to mean Active
Guard and Reserve in the introduction of the report.
18. This statement is referring to reserve compensation costs as they
are currently presented to decision makers in the justification books.
However, we added "reserve" into the sentence for further
clarification.
19. The report did not state that DOD has sought increases in deferred
compensation, so no change was needed.
20. The sentence refers to the cost of the program to the government
and not to bonuses received by individuals.
21. We added a statement to acknowledge that DOD has not sought some
recent additions to deferred compensation, specifically TRICARE for
life. However, DOD has not formally assessed the appropriate mix of
compensation and has not developed a written policy or document that
specifies the departments overarching strategy for compensation.
22. While it is true that DOD has sponsored a study assessing the use
of compensation under a reserve continuum of service concept, we
continue to believe that DOD has not developed any performance measures
to regularly and systematically assess all types of compensation. The
study points out the effectiveness of targeted compensation. This is an
example of the foundation for the compensation strategy we are
recommending DOD formalize.
23. The focus of our reports in 2005 and 2007 was on the difficulties
with rolling out the Defense Integrated Military Human Resources System
rather than on any particular service system.
24. DOD provided separate enclosures, in addition to its agency
comments, that provided technical comments on tables in our report. We
made those changes as suggested.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
John Pendleton, (404) 679-1900 or pendletonj@gao.gov:
Acknowledgments:
In addition to the contact named above, David Moser, Assistant
Director; Lori Atkinson, Ben Bolitzer, Renee Brown, Linda Keefer, Susan
Langley, Julia Matta, Erin Noel, Charles Perdue, Rebecca Shea, Kathryn
Smith, and Sonja Ware made key contributions to this report.
[End of section]
Related GAO Products:
Military Personnel: DOD Needs Action Plan to Address Enlisted Personnel
Recruitment and Retention Challenges. GAO-06-134. Washington, D.C.:
November 17, 2005.
Defense Health Care: Health Insurance Stipend Program Expected to Cost
More Than TRICARE But Could Improve Continuity of Care for Dependents
of Activated Reserve Component Members. GAO-06-128R. Washington, D.C.:
October 19, 2005.
Military Personnel: DOD Needs to Improve the Transparency and Reassess
the Reasonableness, Appropriateness, Affordability, and Sustainability
of Its Military Compensation System. GAO-05-798. Washington, D.C.: July
19, 2005.
Military Personnel: Preliminary Observations on Recruiting and
Retention Issues within the U.S. Armed Forces. GAO-05-419T. Washington,
D.C.: March 16, 2005.
DOD Systems Modernization: Management of Integrated Military Human
Capital Program Needs Additional Improvements. GAO-05-189. Washington,
D.C.: February 11, 2005.
Military Personnel: A Strategic Approach Is Needed to Address Long-term
Guard and Reserve Force Availability. GAO-05-285T. Washington, D.C.:
February 2, 2005.
21st Century Challenges: Reexamining the Base of the Federal
Government. GAO-05-325SP. Washington, D.C.: February 2005.
Military Personnel: DOD Needs More Data Before It Can Determine if
Costly Changes to the Reserve Retirement System Are Warranted. GAO-04-
1005. Washington, D.C.: September 15, 2004.
Military Personnel: Survivor Benefits for Servicemembers and Federal,
State, and City Government Employees. GAO-04-814. Washington, D.C.:
July 15, 2004.
Military Personnel: Active Duty Compensation and Its Tax Treatment. GAO-
04-721R. Washington, D.C.: May 7, 2004.
Military Personnel: Observations Related to Reserve Compensation,
Selective Reenlistment Bonuses, and Mail Delivery to Deployed Troops.
GAO-04-582T. Washington, D.C.: March 24, 2004.
Military Personnel: Information on Selected National Guard Management
Issues. GAO-04-258. Washington, D.C.: December 2, 2003.
Military Personnel: DOD Needs More Effective Controls to Better Assess
the Progress of the Selective Reenlistment Bonus Program. GAO-04-86.
Washington, D.C.: November 13, 2003.
Military Personnel: DOD Needs to Assess Certain Factors in Determining
Whether Hazardous Duty Pay Is Warranted for Duty in the Polar Regions.
GAO-03-554. Washington, D.C.: April 29, 2003.
Military and Veterans' Benefits: Observations on the Concurrent Receipt
of Military Retirement and VA Disability Compensation. GAO-03-575T.
Washington, D.C.: March 27, 2003.
Military Personnel: Preliminary Observations Related to Income,
Benefits, and Employer Support for Reservists During Mobilizations. GAO-
03-573T. March 19, 2003.
Military Personnel: Management and Oversight of Selective Reenlistment
Bonus Program Needs Improvement. GAO-03-149. Washington, D.C.: November
25, 2002.
Military Personnel: Active Duty Benefits Reflect Changing Demographics,
but Opportunities Exist to Improve. GAO-02-935. Washington, D.C.:
September 18, 2002.
Military Personnel: Higher Allowances Should Increase Use of Civilian
Housing, but Not Retention. GAO-01-684. Washington, D.C.: May 31, 2001.
Defense Health Care: Observations on Proposed Benefit Expansion and
Overcoming TRICARE Obstacles. GAO/T-HEHS/NSIAD-00-129. Washington,
D.C.: March 15, 2000.
Unemployment Insurance: Millions in Benefits Overpaid to Military
Reservists. GAO/HEHS-96-101. August 5, 1996.
The Congress Should Act to Establish Military Compensation Principles.
GAO/FPCD-79-11. Washington, D.C.: May 9, 1979.
FOOTNOTES
[1] The "All-Volunteer pay raise" occurred in 1972, a year before
conscription ended. This pay raise increased enlisted and officer pay.
For example, the pay of an enlisted servicemember at the E-2 pay grade
increased about 87 percent, while pay for an officer at pay grade O-1
increased by about 10 percent.
[2] There are some differences in compensation between reserve and
active duty servicemembers. For example, reservists and their families
do not always live in close proximity to military bases, which limits
their ability to take advantage of installation-based benefits. In
addition, eligible reservists receive their retirement annuity at age
60, while eligible active duty servicemembers receive their annuity
immediately upon retirement.
[3] Ronald W. Reagan National Defense Authorization Act for Fiscal Year
2005, Pub. L. No. 108-375, § 513 (Oct. 2004).
[4] Defense Advisory Committee on Military Compensation, The Military
Compensation System: Completing the Transition to an All-Volunteer
Force (Arlington, Va.: Apr. 28, 2006).
[5] GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-352T (Washington, D.C.: February 2005).
[6] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005).
[7] DOD's Selected Reserve is made up of members from the Army Reserve,
Army National Guard, Air Force Reserve, Air National Guard, Marine
Corps Reserve, and Navy Reserve. We did not include the Coast Guard
Reserve. The Selected Reserve is the first category of the reserves
that is subject to recall to active duty to augment the active
component in time of war or national emergency. For this reason, the
Selected Reserve has priority for training, equipment, and personnel
over all other categories of reservists. The Selected Reserve consists
of units and individuals that serve on an "active reserve" status.
Unlike other categories of the reserves, part-time Selected Reservists
are required to maintain readiness through scheduled drilling and
training, usually 1 weekend a month and 2 weeks a year. Full-time
Selected Reservists serve as full-time administration and support staff
to the various reserve components.
[8] Mobilization is the process by which the armed forces are brought
into a state of readiness for war or national emergency or to support
some other operational mission. In this report, we use the term
mobilization to refer to the process of calling up reserve components
for active-duty service. We use the term mobilized reservist to refer
to a reservist who has received orders to active duty.
[9] Unless noted, all costs have been adjusted for inflation and are
presented in fiscal year 2006 constant dollars. To calculate the costs
in constant dollars, we used an official DOD source, the National
Defense Budget Estimates for fiscal year 2007, published by the Office
of the Under Secretary of Defense (Comptroller), for military pay
deflators or price indices. There are several other potential price
indices or deflators that could be used to adjust for inflation. Using
the other indices would have shown a similar or larger increase in real
spending for compensation.
[10] The per capita costs of full-time reservists are slightly lower
than the per capita costs for active duty servicemembers, as shown in
appendix I. This is because some costs are not associated with full-
time reservists, such as accrual costs for veterans' benefits or costs
for installation-based benefits, such as exchanges and family support
programs.
[11] John T. Warner and Saul Pleeter, "The Personal Discount Rate:
Evidence from Military Downsizing Programs," The American Economic
Review (Mar. 2001); Defense Advisory Committee on Military
Compensation, The Military Compensation System: Completing the
Transition to an All-Volunteer Force, (Arlington, Va.: Apr. 28, 2006);
DOD, 9th Quadrennial Review of Military Compensation vol I (Washington,
D.C.: May 17, 2002); and Commission on the National Guard and Reserves,
Strengthening America's Defenses in the New Security Environment (Mar.
1, 2007).
[12] GAO, A Model of Strategic Human Capital Management, GAO-02-373SP
(Washington, D.C.: Mar. 15, 2002).
[13] Under Secretary of Defense for Personnel and Readiness (OUSD--
P&R), Strategic Plan, FY2006-2011.
[14] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005); The Congress Should Act to Establish
Military Compensation Principles, GAO/FPCD-79-11 (Washington, D.C.: May
9, 1979).
[15] GAO, Defense Business Transformation: A Comprehensive Plan,
Integrated Efforts, and Sustained Leadership are Needed to Assure
Success, GAO-07-229T (Washington, D.C.: Nov. 16, 2006); and DOD Systems
Modernization: Management of Integrated Military Human Capital Program
Needs Additional Improvements, GAO-05-189 (Washington, D.C.: Feb. 11,
2005).
[16] We did not include the Standby or Retired Reserve in our study.
The Standby Reserve are not required to perform training, and are not
part of units, but make up a pool of trained individuals who could be
mobilized if necessary to fill needs in specific skills. These
reservists are either on active or inactive status. Active status
refers to those temporarily assigned for hardship or other cogent
reasons, those not having fulfilled their military service obligation
or those retained in active status when provided for by law, or those
members of Congress and others identified by their employers as "key
personnel" and who have been removed from the Ready Reserve because
they are critical to the national security in their civilian
employment. The Inactive Status List is comprised of those reservists
who are not required by law or regulation to remain in an active
program and who retain their reserve affiliation in a nonparticipating
status, and those who have skills which may be of possible future use.
The Retired Reserve consists of all reserve officers and enlisted
personnel who receive or are eligible for retired pay on the basis of
active duty or reserve service.
[17] Within the Inactive National Guard, Army National Guard personnel
in an inactive status not in the Selected Reserve will mobilize with
their units if they are attached to a specific National Guard unit but
do not participate in training activities. In order for these personnel
to remain members of the Inactive National Guard they must muster once
a year with their assigned unit.
[18] Part-time reservists' cash compensation--basic pay and special
pays--is based on the 1/30th rule. That is, the member is entitled to
1/30th of the monthly pay for each day of duty or period of inactive
duty.
[19] Allowances for housing and subsistence are not taxed. In addition,
servicemembers who serve 1 day in a combat zone are eligible to
exclude, for tax purposes, all of their pay and allowances earned for
the month. Officers' tax exclusion is limited to the highest amount
earned by enlisted personnel plus hostile fire and imminent danger pay.
[20] Veterans' benefits include health care, compensation and pension,
education and training, vocational rehabilitation, home loans, life
insurance, burial benefits, and dependents' and survivors' benefits.
Reservists who have served honorably on active duty establish veteran
status and may therefore be eligible for veterans' benefits including
health care and monthly compensation, depending on the length of active
military service and other eligibility factors. In addition, reservists
who are never called to active duty may qualify for some veterans'
benefits such as education, home loan guaranty, vocational
rehabilitation, disability pension, and life insurance. In the absence
of a formal actuarial model, we were unable to determine the deferred
or accrual costs for reservists' benefits provided by the Department of
Veterans Affairs. Furthermore, the Veterans Affairs budget does not
distinguish between active and reserve cost, which prevented us from
associating current noncash costs for programs such as vocational
rehabilitation and disability pension with reserve compensation. In
addition, we decided to associate all installation-based noncash
benefits (such as commissaries and morale, welfare, and recreation
centers) with the active components' compensation costs although
reservists are eligible to take advantage of those benefits. As a
result, our compensation cost for reserve and guard personnel is likely
understated.
[21] Part-time, drilling, reservists refer to reserve and National
Guard personnel who drill 1 weekend a month and participate in active
duty training for 2 weeks a year. These personnel are referred to as
pay groups A and B in the services budget justification books, and they
also may participate in special and school training, such as
operational, refresher, and proficiency training. In addition, we
included pay groups F and P in our calculations.
[22] Full-time reserve and National Guard personnel are referred to as
"Administration and Support" in the budget justification books, but are
referred to as active guard and reserve (AGR) or full-time support
(FTS) by some services. These Selected Reservists are on active duty or
full-time National Guard duty to organize, administer, recruit,
instruct, and train reserve component members.
[23] The percentage of full-time reservists varies by component. For
example, in fiscal year 2006 the Navy Reserve and the Air National
Guard had the highest percentage of full-time reservists, about 12 and
18 percent, respectively; while the Air Force Reserve and Marine Corps
Reserve had the lowest percentage, about 3 and 6 percent, respectively.
[24] In fiscal year 2001, Congress expanded retiree health care
coverage to supplement Medicare.
[25] GAO, DOD's 21st Century Health Care Spending Challenges, GAO-07-
766CG (Washington, D.C.: Apr. 18, 2007).
[26] An accrual cost is an estimated future cost for current
servicemembers to receive an entitled benefit. Accrual accounting
methods are used to calculate retirement and disability pay and
retirement health care benefits.
[27] Costs for the Reserve Officers' Training Corps and Junior Reserve
Officers' Training Corps were included in the reserve components budget
in fiscal year 2000. In fiscal year 2006, these costs were moved to the
active components budget and slightly offset the growth of noncash and
cash benefits.
[28] According to DOD, about 95,000 mobilized reservists were paid out
of active duty cash compensation costs in fiscal year 2006. Our active
duty per capita cost estimates do not take these mobilized reservists
into account, because our per capita costs are based on active duty end
strength. If you considered these reservists, the average costs to
provide compensation would be lower.
[29] In the National Defense Authorization Act for Fiscal Year 2004,
Congress established TRICARE health care coverage for unemployed
reservists or those ineligible for health care coverage from their
civilian employer. However, this provision was not implemented by DOD.
The Ronald W. Reagan National Defense Authorization Act for Fiscal Year
2005 included provisions for reservists to receive 1 year of TRICARE
standard for each period of 90 consecutive days served in a contingency
operation given that the reservists signed a commitment to serve
continuously in the Selected Reserve during the covered period. When
implemented by DOD, the program was called TRICARE Reserve Select. The
National Defense Authorization Act for Fiscal Year 2006 enhanced this
coverage by creating a three-tier system of eligibility, based on the
percentage of co-pay. See appendix III for further details. The John
Warner National Defense Authorization Act for Fiscal Year 2007 further
expanded the program to give access to the benefit to all Selected
Reservists and eliminated the tiered eligibility system. TRICARE
Reserve Select is scheduled to be implemented in October 2007.
[30] Department of Defense, Office of the Secretary of Defense,
Military Compensation Background Papers: Compensation Elements and
Related Manpower Cost Items, Their Purpose and Legislative Backgrounds,
6th ed. (Washington, D.C.: April 2005).
[31] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005).
[32] John T. Warner and Saul Pleeter, "The Personal Discount Rate:
Evidence from Military Downsizing Programs," The American Economic
Review (March 2001).
[33] GAO, Military Personnel: DOD Needs More Data Before It Can
Determine if Costly Changes to the Reserve Retirement System Are
Warranted, GAO-04-1005 (Washington, D.C.: Sept. 15, 2004).
[34] GAO, Military Personnel: DOD Needs Action Plan to Address Enlisted
Personnel Recruitment and Retention Challenges, GAO-06-134 (Washington,
D.C.: Nov. 17, 2005); Military Personnel: Preliminary Observations on
Recruiting and Retention Issues within the U.S. Armed Forces, GAO-05-
419T (Washington, D.C.: Mar. 16, 2005).
[35] CRS, Recruiting and Retention: An Overview for FY2005 and FY2006
Results for Active and Reserve Component Enlisted Personnel
(Washington, D.C.: Jan. 26, 2007).
[36] Commission on the National Guard and Reserves, Strengthening
America's Defense in the New Security Environment (Washington, D.C.:
March 1, 2007).
[37] DOD measures enlisted recruits quality based on two criteria--
graduation from high school and score on the Armed Forces Qualification
Test (AFQT). Since fiscal year 1993, DOD's goals for recruit quality
have been that at least 90 percent of new recruits must be high school
graduates and at least 60 percent must score above average on the AFQT.
CRS reported that three of the six reserve components--Army National
Guard, Army Reserve, and Navy Reserve--each missed one of their quality
goals in 2006. An increase in waivers for past offenses also raises
concerns about the quality of new recruits.
[38] GAO, A Model of Strategic Human Capital Management, GAO-02-373SP
(Washington, D.C.: Mar. 15, 2002).
[39] Under Secretary of Defense for Personnel and Readiness (OUSD--
P&R), Strategic Plan, FY2006-2011.
[40] GAO, Human Capital: Key Principles for Effective Strategic
Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 11, 2003).
[41] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005); The Congress Should Act to Establish
Military Compensation Principles, GAO/FPCD-79-11 (Washington, D.C.: May
9, 1979).
[42] Department of Defense, Office of the Secretary of Defense,
Military Compensation Background Papers: Compensation Elements and
Related Manpower Cost Items, Their Purpose and Legislative Backgrounds,
6th ed. (Washington, D.C.: April 2005).
[43] DOD, 9th Quadrennial Review of Military Compensation vol I (May
17, 2002); Commission on the National Guard and Reserves, Strengthening
America's Defenses in the New Security Environment (Mar. 1, 2007); GAO,
Military Recruiting: DOD Needs to Establish Objectives and Measures to
Better Evaluate Advertising's Effectiveness, GAO-03-1005 (Washington,
D.C.: Sept. 19, 2003).
[44] The military personnel budgets include such things as basic pay,
allowances for housing and subsistence, special and incentive pays,
other allowances, and retired pay accrual. The pay and benefits for
mobilized reservists are located in the active military personnel
budget.
[45] The operation and maintenance budget includes costs for morale,
welfare, and recreation programs and commissaries. The Veterans Affairs
budget includes costs for the Home Loan Guaranty program and disability
compensation. The military personnel budgets include costs for noncash
items such as death gratuities and clothing and travel allowances.
[46] The Health Affairs budget includes costs for all health care
benefits except for health care for retirees younger than age 65. The
Treasury budget includes contributions to retirement pay accrual to
offset concurrent receipts.
[47] Retired reservists who are age 60 or older are eligible for the
same health care benefits as their active duty counterparts. Nontaxable
compensation refers to the Basic Allowance for Subsistence and Basic
Allowance for Housing that full-time reservists are eligible to
receive.
[48] Secretary of Defense, Memorandum for Secretaries of the Military
Departments, Chairman of the Joint Chiefs of Staff, Under Secretaries
of Defense, "Utilization of the Total Force" (Jan. 19, 2007). This
memorandum states that the planning objective for involuntary
mobilization for the Guard and reserves will remain a 1-year mobilized
to 5-year demobilized ratio. However, today's global demands will
require a number of selected National Guard and reserve units to be
remobilized sooner than this standard.
[49] GAO, Defense Business Transformation: A Comprehensive Plan,
Integrated Efforts, and Sustained Leadership are Needed to Assure
Success, GAO-07-229T (Washington, D.C.: Nov. 16, 2006); DOD Systems
Modernization: Management of Integrated Military Human Capital Program
Needs Additional Improvements, GAO-05-189 (Washington, D.C.: Feb. 11,
2005).
[50] The Office of Management and Budget, Analytical Perspectives:
Budget of the United States Government, Fiscal Year 2008 (Washington,
D.C.: 2007).
[51] Congressional Budget Office, Budget Options (Washington, D.C.:
February 2007).
[52] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005).
[53] National Bureau of Economic Research's TAXSIM Model simulates the
U.S. federal income tax rules. See Daniel Feenberg and Elisabeth Coutts
"An Introduction to the TAXSIM Model," Journal of Policy Analysis and
Management, vol. 12, no. 1, 1993, pp. 189-194.
[54] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005).
[55] The first dependent is assumed to be a spouse. Other dependents
are assumed to be children.
[56] In most cases, including additional income, such as from a spouse,
would increase the marginal tax rate and increase our estimate of the
tax expenditure. However, an exception might be servicemembers eligible
for the Earned Income Tax Credit, where more income could increase the
credit, lower the marginal tax rate, and decrease the size of the tax
expenditure.
[57] The National Bureau of Economic Research's TAXSIM Model simulates
the U.S. federal tax income tax rules. See Daniel Feenberg and
Elizabeth Coutts, "An Introduction to the TAXSIM Model," Journal of
Policy Analysis and Management, vol. 12, no. 1 (1993), pp. 189-194.
[58] Office of the Assistant Secretary of Defense (Reserve Affairs),
Official Guard and Reserve Manpower Strengths and Statistics: FY 2006
Summary.
[59] Milliman USA Consultants and Actuaries, Analysis of the U.S.
Military's Projected Retiree Medical Liabilities as of September 30,
2000 (Vienna, VA; March 21, 2002); Analysis of the U.S. Military's
Projected Retiree Medical Liabilities as of September 30, 2001 (Vienna,
VA; January 21, 2003).
[60] Milliman USA Consultants and Actuaries, Analysis of the U.S.
Military's Projected Retiree Medical Liabilities as of September 30,
1999 (Vienna, VA); Analysis of the U.S. Military's Projected Retiree
Medical Liabilities as of September 30, 2000 (Vienna, VA); Analysis of
the U.S. Military's Projected Retiree Medical Liabilities as of
September 30, 2001 (Vienna, VA).
[61] GAO, Military Personnel: DOD Needs to Improve the Transparency and
Reassess the Reasonableness, Appropriateness, Affordability, and
Sustainability of Its Military Compensation System, GAO-05-798
(Washington, D.C.: July 19, 2005).
[62] GAO, Global War on Terrorism: Observations on Funding, Costs, and
Future Commitments, GAO-06-885T (Washington, D.C.: July 18, 2006).
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