This is the accessible text file for GAO report number GAO-03-19 
entitled 'DOD Overseas Schools: Compensation Adequate for Recruiting 
and Retaining Well-Qualified Teachers' which was released on December 
12, 2002.



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Report to Congressional Requesters:



United States General Accounting Office:



GAO:



December 2002:



DOD Overseas Schools:



Compensation Adequate for Recruiting and Retaining Well-Qualified 

Teachers:



GAO-03-19:



GAO Highlights:



Highlights of GAO-03-19, a report to the Senate and House Armed 

Services 

Committees.   



Why GAO Did This Study:



The Department of Defense (DOD) overseas schools educate more than 

70,000 

children of military service members and DOD civilian employees 

throughout 

the world.  In order to ensure the continued success of this school 

system, 

the National Defense Authorization Act for Fiscal Year 2002 

directed GAO to 

assess whether the DOD overseas teachers compensation package is 

adequate 

to recruit and retain qualified teachers.  The act also required 

GAO to 

determine whether any revisions to the law governing DOD overseas 

teachers 

salaries were advisable.



What GAO Found:



DOD overseas teachers compensation compares favorably to that 

of U.S. 

teachers.  In general, DOD overseas teachers receive a standard 

federal 

benefit package, including health and life insurance and 

coverage under the 

Federal Employees Retirement System.  Many DOD overseas teachers 

also 

receive allowances, such as a living quarters allowance, that 

U.S. teachers 

do not receive.  On average, salaries for DOD overseas teachers 

are higher 

than U.S. teachers salaries.  Despite the generous 

compensation package, 

there is some dissatisfaction among overseas teachers regarding 

health care.      



DOD has little difficulty recruiting and retaining well-

qualified teachers 

for overseas schools.  In school year 2001-02, DOD recruiters 

filled over 

99 percent of vacant teacher positions.  Based on 

certification, 

experience, and education, the quality of DOD overseas 

teachers is high.  

Virtually all teachers in DOD schools are certified in 

the subjects or 

grades they teach.  DOD may have some difficulties 

recruiting and 

retaining teachers in a few subject areas and geographic 

locations, but any 

such difficulties do not appear to threaten the quality 

of the overseas 

teachers workforce.  



DOD has developed a process for determining and paying 

teachers salaries 

that meets statutory requirements.  Although this system 

is time-consuming 

and burdensome, techniques that could address these 

difficulties do not meet 

legal requirements.  Given DODs success recruiting 

and retaining well-

qualified teachers, it is not advisable at this time 

to revise the law.



GAO Highlights Figure:



[See PDF for image]



[End of figure]



www.gao.gov/cgi-bin/getrpt?GAO-03-19.



To view the full report, including the scope and 

methodology, click on the 

link above.For more information, contact Marnie 

Shaul, (202) 512-7215.



Contents:



Letter:



Results in Brief:



Background:



DOD Overseas Teachers Compensation Package Is Set by Law and 

Regulations and Generally Compares Favorably with That of U.S. 

Teachers:



DOD Appears to Have Little Difficulty Recruiting and Retaining Well-

Qualified Teachers for the Overseas School System:



The Current Process for Determining and Paying Teacher Salaries Is 

Time-Consuming, but DOD Has Little Flexibility to Modify This Process 

Because of Statutory Requirements:



Conclusions:



Agency Comments:



Appendix I: Scope and Methodology:



Alternative Techniques for Determining and Paying Teacher Salaries:



Appendix II: GAO Contacts and Staff Acknowledgments:



GAO Contacts:



Staff Acknowledgments:



Tables:



Table 1: Overseas Educators School Year 2001-02 Salary Schedule for 

Schedule C Employees: Comprehensive Schedule for Educators and 

Specialists:



Table 2: Allowances Available to DOD Civilian Employees Stationed 

Overseas:



Table 3: DOD Overseas Teachers Average Salary Compared to Average 

Salaries of U.S. Teachers by State, School Year 2000-01:



Table 4: DOD Overseas Bachelor of Arts Teachers Starting Salary 

Compared to Average Starting Salaries of U.S. Teachers with BAs by 

State, School Year 2000-01:



Table 5: Number of Districts Sampled by Sample Size and Strata:



Table 6: Estimated Margins of Error for Selected Sample Sizes, at 95% 

Confidence:



Table 7: Stability Results Across 3 Years:



Table 8: Projections of Mean Salary for School Year 2001-2002:



Abbreviations:



AFT: American Federation of Teachers:



DFAS: Department of Defense Finance and Accounting Service:



DOD: Department of Defense:



DODDS: Department of Defense Dependents Schools:



DODEA: Department of Defense Education Activity:



FEA: Federal Education Association:



FEHB: Federal Employees Health Benefits:



FEGLI: Federal Employees Group Life Insurance:



FERS: Federal Employees Retirement System:



NCES: National Center for Education Statistics:



NEA: National Education Association:



OEA: Overseas Education Association:



OFT: Overseas Federation of Teachers:



OPM: Office of Personnel Management:



TSP: Thrift Savings Plan:



December 12, 2002:



The Honorable Carl Levin

Chairman

The Honorable John W. Warner

Ranking Minority Member

Committee on Armed Services

United States Senate:



The Honorable Bob Stump

Chairman 

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives:



Policymakers are interested in maintaining the high quality of the 

Department of Defense (DOD) overseas schools in the future. These 

schools educate over 70,000 children of military service members and 

DOD civilian employees in 14 foreign countries. In school year 

2001-02, DOD operated 155 schools overseas and employed roughly 

6,200 instructional staff. Due to congressional interest in maintaining 

the high-quality of education in these schools, the National Defense 

Authorization Act for Fiscal Year 2002 directed us to assess whether 

the DOD overseas teachers compensation package is adequate to recruit 

and retain qualified teachers and to recommend any necessary revisions 

to the law governing DOD overseas teachers salaries.



To address the issues raised in the mandate, we answered three key 

questions:



1. What is the compensation package for teachers in DOD overseas 

schools, and how does it compare with compensation for teachers in the 

United States?



2. To what extent do DOD overseas schools experience difficulties 

recruiting and retaining well-qualified teachers?



3. What is the process for determining teacher salaries and paying 

teachers, and which aspects of the process, if any, could be improved?



To answer these questions, we reviewed laws, regulations, and policies 

on salary, benefits, and allowances for DOD overseas teachers, as well 

as for other federal civilian employees overseas. We also examined DOD 

promotional materials, planning documents, and information provided to 

DOD overseas teachers. We conducted a literature review on teacher 

quality, compensation, and demographics in the United States. We 

analyzed salary data on U.S. teachers and DOD overseas teachers, as 

well as demographic data on DOD overseas teachers. Finally, we 

interviewed officials in several DOD offices and representatives of 

teachers unions. We performed our work between January and November 

2002 in accordance with generally accepted government auditing 

standards. For additional information on our scope and methodology, 

please see appendix I.



Results in Brief:



The DOD overseas teachers compensation package is composed of 

salaries, benefits, and allowances that are set by law and regulations 

and, in general, compares favorably with U.S. teachers compensation. 

DOD overseas teachers salaries are governed by a 1966 law, which 

requires that they be equal to teacher salaries in urban school 

jurisdictions with populations of 100,000 or more. As federal civilian 

employees, DOD overseas teachers are eligible for a standard federal 

benefit package, including benefits such as health and life insurance. 

Many DOD overseas teachers are also eligible for allowances that are 

set by the U.S. Department of State. For example, they may receive a 

living quarters allowance for the cost of rent and utilities, among 

other expenses. On average, salaries for teachers in DOD overseas 

schools are higher than those for U.S. teachers, and starting salaries 

for DOD overseas teachers are nearly 6 percent higher than the average 

starting salary for teachers in the United States. U.S. teachers also 

do not receive the allowances that many DOD overseas teachers receive. 

Despite the competitive compensation package, dissatisfaction exists 

among DOD overseas teachers regarding health care access and costs.



DOD appears to have little difficulty recruiting and retaining well-

qualified teachers for overseas schools. In school year 2001-02, DOD 

recruiters filled over 99 percent of vacant teaching positions in the 

overseas school system. Statistics on common measures of teacher 

quality, such as certification and educational attainment, show that 

the DOD overseas school teacher workforce is highly qualified. For 

example, virtually all newly hired teachers in DOD overseas schools are 

certified in the subjects or grades they teach, and roughly two-thirds 

of DOD overseas teachers hold advanced degrees, compared to 46 percent 

of public school teachers in the United States. The quality of the DOD 

overseas teachers may contribute to the high student-achievement level 

in these schools. Studies show that teacher quality is a strong 

predictor of student achievement. In general, DOD appears to have 

little difficulty retaining teachers. While the agency does not have 

sufficient empirical data to confirm the absence of retention 

difficulties, agency officials we spoke with said that any retention 

difficulties the agency has are limited to specific geographic 

locations, such as Japan, Korea, and Bahrain. Because DOD is 

consistently able to fill vacant positions with well-qualified 

teachers, any retention difficulties that do exist do not appear to 

threaten the quality of the teacher workforce.



Though the current process for determining and paying teacher salaries 

is time-consuming, DOD has little flexibility to modify it because of 

statutory requirements. The law requires that salaries be equal to the 

average salary for teachers in urban school jurisdictions with 

populations of 100,000 or more. On the basis of this requirement, DOD 

collects salary data from more than 230 school jurisdictions in 

incorporated places of 100,000 or more. The agency collects these data 

through at least January 10 of each school year in order to meet the 

requirements of an arbitration agreement with one of the teachers 

unions. Because the courts have interpreted the law to mean that DOD 

must pay overseas teachers the same amount for the same year as the 

U.S. urban teachers, DOD pays teachers their salary and benefit 

increases retroactively. Teachers typically receive these increases at 

or near the end of the school year. The salary determination and 

payment process creates some administrative burden for the agency. We 

identified alternative techniques, such as projecting salaries, that 

could make this process less time-consuming and less burdensome. 

However, DOD cannot use these techniques because they do not meet legal 

requirements. Despite any administrative inefficiencies, DODs success 

maintaining a high-quality teacher workforce suggests that there is no 

immediate need to change the law.



Background:



The Department of Defense Education Activity (DODEA) oversees all DOD 

schools in the United States and abroad. The Department of Defense 

Dependents School System (DODDS) is the entity within DODEA that 

manages DODs overseas schools. In school year 2001-02, DODDS operated 

155 schools in 14 countries[Footnote 1] (see figs. 1 and 2) and 

employed roughly 6,200 educators, including both traditional classroom 

teachers and instructional staff, such as school psychologists, nurses, 

and counselors. Classroom teachers comprise over 90 percent of all DOD 

overseas educators. They are represented by two different teachers 

unions: the Federal Education Association (FEA) and the Overseas 

Federation of Teachers (OFT).[Footnote 2] Although classroom teachers 

and instructional staff are paid on different salary schedules, both 

groups are subject to the same salary determination and payment 

process.



Figure 1: DOD European Area Schools:



[See PDF for image]



Note: DOD also operates an overseas school in Cuba.



[End of figure]



Figure 2: DOD Pacific Area Schools:



[See PDF for image]



[End of figure]



Legal requirements and union arbitration agreements form the basis for 

the DOD overseas teachers salary determination process. Prior to 

1959, teachers in DOD overseas schools were paid according to the 

General Schedule, the standard pay schedule for many federal government 

employees. These salaries did not reflect teachers academic 

backgrounds or qualifications. As a result, DOD overseas teachers 

salaries were significantly lower than those paid to public school 

teachers in the United States. Congress attempted to remedy these 

inequities in 1959 by passing the Defense Department Overseas Teachers 

Pay and Personnel Practices Act (Pay and Personnel Practices 

Act).[Footnote 3] This law directed the heads of each military 

department in DOD[Footnote 4] to fix rates of basic compensation in 

relation to the rates of basic compensation for similar positions in 

the United States. However, these rates of compensation could not 

exceed the highest rate of basic compensation for similar positions of 

a comparable level of duties and responsibilities under the municipal 

government of the District of Columbia.



Upon passage of the Pay and Personnel Practices Act, DOD officials met 

with representatives of the Overseas Education Association 

(OEA)[Footnote 5] and the National Education Association (NEA) to 

develop procedures governing its implementation. In 1960, these parties 

agreed to establish an annual review of compensation schedules as 

compared to the rates of compensation in urban school jurisdictions 

with populations of 100,000 or more.[Footnote 6] Although all parties 

agreed to this process, annual per-pupil spending limitations enacted 

by Congress effectively lowered the compensation paid to DOD overseas 

teachers below the salary schedule devised through the annual 

review.[Footnote 7] To correct this problem, Congress amended the Pay 

and Personnel Practices Act in 1966 and set into law the procedures 

that DOD and the teachers associations had agreed to in 

1960.[Footnote 8] The amendment provides that DOD fix the basic 

compensation for overseas teachers at rates equal to the average of the 

range of rates of basic compensation for urban school jurisdictions 

with populations of 100,000 or more.[Footnote 9]



Since 1966, the DOD overseas teachers salaries have been the subject 

of numerous legal actions. Among the most significant for their impact 

on DODs salary determination and payment process are a class action 

law suit in 1973 and an arbitration decision in the early 1980s. In 

1973, seven DOD overseas teachers sued the U.S. government, claiming 

that DODs methods for determining teacher salaries were inconsistent 

with the Pay and Personnel Practices Act. Specifically, the teachers 

argued that DODs process of determining teacher salaries based on the 

previous years salaries in U.S. school jurisdictions resulted in 

salaries unequal to those paid to teachers in the United States. The 

court ruled that timing was an essential component of compensation and 

that, therefore, salaries used for comparison purposes should be from 

the same school year.[Footnote 10] The result of this court case was 

the establishment of the payment system that DOD currently uses to 

determine and distribute salary payments to DOD overseas teachers.



In 1982, an arbitration decision was issued, which resolved a grievance 

the OEA filed relating to the salary schedule that had been set for 

school year 1979-80. In part, the OEA contested DODs use of an August 

1, 1979, cut-off date for salary data because it excluded the salary 

increases that many U.S. school teachers received in the second half of 

the school year. The arbitrator held that by using the August 1 date, 

DOD did not meet the statutory requirement that it set salaries equal 

to the average of the range of rates of the group of teachers 

identified in the statute. Subsequently, DOD and OEA reached an 

arbitration agreement, which requires DOD to collect salary information 

for its annual survey through at least January 

10 of each school year. The Department of Defense Civilian Personnel 

Management Service, Wage and Salary Division conducts this survey and 

generates the DOD overseas teachers salary schedule each year.[Footnote 

11]



DOD Overseas Teachers Compensation Package Is Set by Law and 

Regulations and Generally Compares Favorably with That of U.S. 

Teachers:



The DOD overseas teachers compensation package, which includes salary, 

benefits, and allowances, is set by law and regulations and generally 

compares favorably with U.S. teachers compensation. Since 1966, DOD 

overseas teachers salary schedules have been set equal to average 

teacher salaries in school districts in incorporated places with 

100,000 or more people. Their benefits are set by regulations published 

by the U.S. Office of Personnel and Management (OPM). DOD overseas 

teachers also may receive allowances determined by the U.S. Department 

of State and additional services, such as access to on-base gyms and 

social clubs. The compensation package generally compares favorably 

with compensation for U.S. teachers. Starting and average salaries for 

DOD overseas teachers are higher than those of teachers in the United 

States. U.S. teachers typically do not receive the allowances and 

services that many DOD overseas teachers receive. While the 

compensation package generally compares favorably with that of U.S. 

teachers, it appears that many teachers are dissatisfied with access to 

health care in many overseas locations.



DOD Overseas Teachers Salaries Set by Law, and Benefits and Allowances 

Set by Regulations:



The Defense Department Overseas Teachers Pay and Personnel Practices 

Act, as amended in 1966, requires that DOD overseas teachers salaries 

be equal to average salaries in U.S. urban school districts. DOD 

overseas teachers are paid on a salary schedule, which reflects both 

their level of education and years of experience. (See table 1 for the 

school year 2001-02 salary schedule.):



Table 1: Overseas Educators School Year 2001-02 Salary Schedule for 

Schedule C Employees: Comprehensive Schedule for Educators and 

Specialists:



Step: 1; Teachers Level of Education: BA: 31,775; Teachers Level of 

Education: BA+15: 32,840; Teachers Level of Education: BA+30: 33,905; 

Teachers Level of Education: MA: 34,970; Teachers Level of Education: 

MA+15: 36,035; Teachers Level of Education: MA+30: 37,100; Teachers 

Level of Education: Doctorate: 38,165.



Step: 2; Teachers Level of Education: BA: 32,920; Teachers Level of 

Education: BA+15: 34,070; Teachers Level of Education: BA+30: 35,225; 

Teachers Level of Education: MA: 36,375; Teachers Level of Education: 

MA+15: 37,525; Teachers Level of Education: MA+30: 38,680; Teachers 

Level of Education: Doctorate: 39,830.



Step: 3; Teachers Level of Education: BA: 34,065; Teachers Level of 

Education: BA+15: 35,300; Teachers Level of Education: BA+30: 36,545; 

Teachers Level of Education: MA: 37,780; Teachers Level of Education: 

MA+15: 39,015; Teachers Level of Education: MA+30: 40,260; Teachers 

Level of Education: Doctorate: 41,495.



Step: 4; Teachers Level of Education: BA: 35,210; Teachers Level of 

Education: BA+15: 36,530; Teachers Level of Education: BA+30: 37,865; 

Teachers Level of Education: MA: 39,185; Teachers Level of Education: 

MA+15: 40,505; Teachers Level of Education: MA+30: 41,840; Teachers 

Level of Education: Doctorate: 43,160.



Step: 5; Teachers Level of Education: BA: 36,355; Teachers Level of 

Education: BA+15: 37,760; Teachers Level of Education: BA+30: 39,185; 

Teachers Level of Education: MA: 40,590; Teachers Level of Education: 

MA+15: 41,995; Teachers Level of Education: MA+30: 43,420; Teachers 

Level of Education: Doctorate: 44,825.



Step: 6; Teachers Level of Education: BA: 37,500; Teachers Level of 

Education: BA+15: 38,990; Teachers Level of Education: BA+30: 40,505; 

Teachers Level of Education: MA: 41,995; Teachers Level of Education: 

MA+15: 43,485; Teachers Level of Education: MA+30: 45,000; Teachers 

Level of Education: Doctorate: 46,490.



Step: 7; Teachers Level of Education: BA: 38,645; Teachers Level of 

Education: BA+15: 40,220; Teachers Level of Education: BA+30: 41,825; 

Teachers Level of Education: MA: 43,400; Teachers Level of Education: 

MA+15: 44,975; Teachers Level of Education: MA+30: 46,580; Teachers 

Level of Education: Doctorate: 48,155.



Step: 8; Teachers Level of Education: BA: 39,790; Teachers Level of 

Education: BA+15: 41,450; Teachers Level of Education: BA+30: 43,145; 

Teachers Level of Education: MA: 44,805; Teachers Level of Education: 

MA+15: 46,465; Teachers Level of Education: MA+30: 48,160; Teachers 

Level of Education: Doctorate: 49,820.



Step: 9; Teachers Level of Education: BA: 40,935; Teachers Level of 

Education: BA+15: 42,680; Teachers Level of Education: BA+30: 44,465; 

Teachers Level of Education: MA: 46,210; Teachers Level of Education: 

MA+15: 47,955; Teachers Level of Education: MA+30: 49,740; Teachers 

Level of Education: Doctorate: 51,485.



Step: 10; Teachers Level of Education: BA: 42,080; Teachers Level of 

Education: BA+15: 43,910; Teachers Level of Education: BA+30: 45,785; 

Teachers Level of Education: MA: 47,615; Teachers Level of Education: 

MA+15: 49,445; Teachers Level of Education: MA+30: 51,320; Teachers 

Level of Education: Doctorate: 53,150.



Step: 11; Teachers Level of Education: BA: 43,225; Teachers Level of 

Education: BA+15: 45,140; Teachers Level of Education: BA+30: 47,105; 

Teachers Level of Education: MA: 49,020; Teachers Level of Education: 

MA+15: 50,935; Teachers Level of Education: MA+30: 52,900; Teachers 

Level of Education: Doctorate: 54,815.



Step: 12; Teachers Level of Education: BA: 44,370; Teachers Level of 

Education: BA+15: 46,370; Teachers Level of Education: BA+30: 48,425; 

Teachers Level of Education: MA: 50,425; Teachers Level of Education: 

MA+15: 52,425; Teachers Level of Education: MA+30: 54,480; Teachers 

Level of Education: Doctorate: 56,480.



Step: 13; Teachers Level of Education: BA: 45,515; Teachers Level of 

Education: BA+15: 47,600; Teachers Level of Education: BA+30: 49,745; 

Teachers Level of Education: MA: 51,830; Teachers Level of Education: 

MA+15: 53,915; Teachers Level of Education: MA+30: 56,060; Teachers 

Level of Education: Doctorate: 58,145.



Step: 14; Teachers Level of Education: BA: 46,660; Teachers Level of 

Education: BA+15: 48,830; Teachers Level of Education: BA+30: 51,065; 

Teachers Level of Education: MA: 53,235; Teachers Level of Education: 

MA+15: 55,405; Teachers Level of Education: MA+30: 57,640; Teachers 

Level of Education: Doctorate: 59,810.



Step: 15; Teachers Level of Education: BA: 47,830; Teachers Level of 

Education: BA+15: 50,045; Teachers Level of Education: BA+30: 52,325; 

Teachers Level of Education: MA: 54,540; Teachers Level of Education: 

MA+15: 56,755; Teachers Level of Education: MA+30: 59,035; Teachers 

Level of Education: Doctorate: 61,250.



Step: 16; Teachers Level of Education: BA: 49,000; Teachers Level of 

Education: BA+15: 51,260; Teachers Level of Education: BA+30: 53,585; 

Teachers Level of Education: MA: 55,845; Teachers Level of Education: 

MA+15: 58,105; Teachers Level of Education: MA+30: 60,430; Teachers 

Level of Education: Doctorate: 62,690.



Step: 17; Teachers Level of Education: BA: 50,170; Teachers Level of 

Education: BA+15: 52,475; Teachers Level of Education: BA+30: 54,845; 

Teachers Level of Education: MA: 57,150; Teachers Level of Education: 

MA+15: 59,455; Teachers Level of Education: MA+30: 61,825; Teachers 

Level of Education: Doctorate: 64,130.



Step: 18; Teachers Level of Education: BA: 51,340; Teachers Level of 

Education: BA+15: 53,690; Teachers Level of Education: BA+30: 56,105; 

Teachers Level of Education: MA: 58,455; Teachers Level of Education: 

MA+15: 60,805; Teachers Level of Education: MA+30: 63,220; Teachers 

Level of Education: Doctorate: 65,570.



Notes: 15+ means 15 graduate credit hours; 30+ means 30 graduate 

credit hours.



Steps 15, 16, 17, and 18 are not annual steps. Rather, they are 

longevity steps payable upon completion of 4 years service in steps 14, 

15, 16, and 17, respectively.



Source: DOD.



[End of table]



As federal civilian employees, many DOD overseas teachers are eligible 

for a variety of other benefits in addition to basic compensation 

(salary). In general, federal civilian employees are eligible to 

participate in the Federal Employees Health Benefits (FEHB) program and 

the Federal Employees Group Life Insurance (FEGLI) program and are 

covered by the Federal Employees Retirement System (FERS), which 

includes the Thrift Savings Plan (TSP).[Footnote 12] However, not all 

DOD overseas educators are eligible for these benefits. The type of 

appointment a teacher holds can alter the benefit package he or she 

receives. For example, federal employees hired as temporary employees 

with appointments not to exceed 1 year are not eligible for health 

insurance.[Footnote 13] Although DOD overseas teachers hired in the 

United States are mostly permanent employees and therefore eligible for 

all benefits, local hires[Footnote 14] (teachers residing and hired 

abroad) are often employed under time-limited appointments. However, 

local hires who are on time-limited appointments can be converted to 

permanent appointments once they meet all requirements, which allows 

them to receive full benefits. In addition, almost all local hires are 

spouses of military and DOD civilian personnel and thus receive these 

benefits indirectly through their spouses.



In addition to salary and benefits, some teachers are also eligible to 

receive allowances such as a living quarters allowance, a post (cost-

of-living) allowance, and the cost of shipment of household goods and 

an automobile. These additional allowances are the same as those 

available to other DOD civilian employees stationed overseas and 

similar to those available to other federal employees stationed 

overseas. These allowances are primarily governed by regulations set by 

the Department of State.[Footnote 15] DOD has some flexibility to limit 

these allowances, but may not exceed the scope of the regulations set 

by State.[Footnote 16] For instance, although State allows civilian 

employees overseas to receive an education allowance, the wardrobe 

portion of Home Service Transfer Allowance, and the wardrobe portion of 

the Foreign Transfer Allowance, DOD overseas teachers do not receive 

them.[Footnote 17] See table 2 for an explanation of each allowance 

available to DOD civilian employees stationed overseas.



Table 2: Allowances Available to DOD Civilian Employees Stationed 

Overseas:



Allowance: Advance of pay; Description: Up to 3 months salary may be 

advanced when assigned to a foreign post.



Allowance: Danger pay; Description: Percentage of basic compensation 

(15, 20, or 25%) paid for imminently dangerous conditions when the 

official U.S. community is the target of political violence..



Allowance: Difficult-to-staff incentive differential; Description: 

Percentage of basic compensation (15%) for serving at an agency-

determined difficult-to-staff post, which has a 20% or 25% post 

differential.



Allowance: Educational travel allowance; Description: Allows for one 

round trip annually between schools attended in the United States and 

the foreign post of assignment, which is primarily intended to reunite 

a full-time undergraduate college, technical, or vocational school 

child with the employee/parent serving the U.S. government in the 

foreign area.



Allowance: Evacuation payments; Description: Paid when an employee/

family member(s) are authorized or ordered to evacuate a foreign post.



Allowance: Extraordinary quarters allowance; Description: Provided 

when employee and family members must partially or completely vacate 

permanent quarters during foreign tour due to circumstances that make 

the kitchen or entire home uninhabitable.



Allowance: Foreign transfer allowance; Description: Available when 

transferring from the United States to a foreign area or between 

foreign areas to help defray the cost of moving, such as temporary 

lodging, meals, vehicle registration, and a drivers license.



Allowance: Foreign travel per diem allowance; Description: Consists of 

lodging, meals, and incidental expenses.



Allowance: Home service transfer allowance; Description: Available when 

transferring from a foreign area back to the U.S. as long as the 

employee agrees to work 12 more months for the U.S. government. This is 

also available to family members who relocate to the United States 

following the death of the employee assigned overseas.



Allowance: Living quarters allowance; Description: Provided for private 

leased quarters in lieu of government-provided housing intended to 

cover most if not all expenses for rent, utilities, and other allowable 

expenses.



Allowance: Permanent change of station (PCS) travel; Description: Paid 

when an employee is transferred or reassigned to another geographical 

locality through a permanent change-of-station move requiring a 

residence relocation.



Allowance: Post (cost of living) allowance; Description: Paid when 

the overall cost of goods and services at the foreign post are at least 

3% above the cost of the same goods and services in the Washington, 

D.C., area.



Allowance: Post (hardship) differential; Description: Percentage of 

basic compensation (5, 10, 15, 20, and 25%) for environmental 

conditions significantly worse than the United States.



Allowance: Renewal agreement travel (RAT); Description: Government 

furnished round trip transportation for the purpose of returning home 

to take leave between overseas tours upon completion of prescribed tour 

of duty and after entering into a new transportation agreement at an 

overseas post.



Allowance: Separation travel allowance; Description: Government 

furnished return travel to the employees place of actual residence 

when separating from Federal service; employee must meet certain 

requirements to receive this allowance.



Allowance: Separate maintenance allowance; Description: Paid to help 

maintain family member(s) at other than the foreign post of 

assignment.



Allowance: Temporary quarters subsistence allowance; Description: 

Assists with temporary lodging, meals, laundry, and dry cleaning in 

the foreign area prior to occupying permanent quarters (for up to 150 

days) or upon final departure from the foreign post after vacating 

permanent quarters..



Sources: Department of State, Summary of Allowances and Benefits, 2001, 

and Department of Defense, Joint Travel Regulations (JTR), volume 2.



[End of table]



Generally, these allowances are available only to teachers who are 

recruited in the United States. These allowances (except post allowance 

and danger pay, which all teachers are eligible for, regardless of 

where they are hired) are not considered salary supplements or 

entitlements. Rather, they are intended to be recruitment incentives 

for U.S. citizen employees living in the United States to accept 

employment in foreign areas. In each of the last 2 years, over 90 

percent of locally hired teachers were spouses of active duty military 

or DOD civilian employees. Thus, though these teachers may not be 

eligible for these allowances in their own right, they do receive them 

through their spouses. Furthermore, locally hired teachers may become 

eligible for these allowances if transferred to a new post.



DOD Overseas Teachers Compensation Package Generally Competitive with 

U.S. Teachers, but Health Care an Issue:



DOD overseas teachers salaries compare favorably to U.S. teachers 

salaries. On average, salaries for teachers in DOD overseas schools are 

higher than the U.S. national average teacher salary.[Footnote 18] The 

average salary in DOD overseas schools for school year 2000-01 was 

$47,460, while the national average for the same year was $43,250. On a 

comparative basis, the average DOD overseas teachers salary ranked the 

twelfth highest among average teacher salaries in the 50 states and the 

District of Columbia for school year 2000-01. (See table 3.):



Table 3: DOD Overseas Teachers Average Salary Compared to Average 

Salaries of U.S. Teachers by State, School Year 2000-01:



Rank: 1; State: Connecticut; Average Salary: 53,507.



Rank: 2; State: California; Average Salary: 52,480[A].



Rank: 3; State: New Jersey; Average Salary: 51,955.



Rank: 4; State: New York; Average Salary: 51,020[A,G].



Rank: 5; State: Michigan; Average Salary: 50,515[A].



Rank: 6; State: Rhode Island; Average Salary: 50,400[A].



Rank: 7; State: Pennsylvania; Average Salary: 49,528.



Rank: 8; State: District of Columbia; Average Salary: 48,488[A].



Rank: 9; State: Alaska; Average Salary: 48,123.



Rank: 10; State: Illinois; Average Salary: 47,865[E].



Rank: 11; State: Massachusetts; Average Salary: 47,789[C].



Rank: 12; State: DODDS; Average Salary: 47,460.



Rank: 13; State: Delaware; Average Salary: 47,047.



Rank: 14; State: Maryland; Average Salary: 45,963.



Rank: 15; State: Oregon; Average Salary: 44,988[B].



Rank: 16; State: Nevada; Average Salary: 44,234[B].



Rank: 17; State: Indiana; Average Salary: 43,000.



Rank: 18; State: Ohio; Average Salary: 42,892.



Rank: 19; State: Minnesota; Average Salary: 42,212[C].



Rank: 20; State: Washington; Average Salary: 42,143.



Rank: 21; State: Georgia; Average Salary: 42,141.



Rank: 22; State: North Carolina; Average Salary: 41,496.



Rank: 23; State: Wisconsin; Average Salary: 40,939[C].



Rank: 24; State: Hawaii; Average Salary: 40,536.



Rank: 25; State: Virginia; Average Salary: 40,247[C].



Rank: 26; State: Colorado; Average Salary: 39,184.



Rank: 27; State: Texas; Average Salary: 38,359.



Rank: 28; State: New Hampshire; Average Salary: 38,301.



Rank: 29; State: Vermont; Average Salary: 38,254.



Rank: 30; State: Florida; Average Salary: 38,230.



Rank: 31; State: South Carolina; Average Salary: 37,938.



Rank: 32; State: Alabama; Average Salary: 37,606[A].



Rank: 33; State: Tennessee; Average Salary: 37,413.



Rank: 34; State: Idaho; Average Salary: 37,109.



Rank: 35; State: Kentucky; Average Salary: 36,688[C].



Rank: 36; State: Arizona; Average Salary: 36,502.



Rank: 37; State: Iowa; Average Salary: 36,479[C].



Rank: 38; State: Utah; Average Salary: 36,441.



Rank: 39; State: Maine; Average Salary: 36,373.



Rank: 40; State: West Virginia; Average Salary: 35,888.



Rank: 41; State: Kansas; Average Salary: 35,766[C].



Rank: 42; State: Missouri; Average Salary: 35,091.



Rank: 43; State: Arkansas; Average Salary: 34,729[D].



Rank: 44; State: Wyoming; Average Salary: 34,678[A].



Rank: 45; State: Nebraska; Average Salary: 34,258.



Rank: 46; State: Louisiana; Average Salary: 33,615[C].



Rank: 47; State: New Mexico; Average Salary: 33,531[A].



Rank: 48; State: Montana; Average Salary: 33,249.



Rank: 49; State: Oklahoma; Average Salary: 32,545[F].



Rank: 50; State: Mississippi; Average Salary: 31,954[E].



Rank: 51; State: North Dakota; Average Salary: 30,891.



Rank: 52; State: South Dakota; Average Salary: 30,265.



[A] American Federation of Teachers estimate.



[B] Includes employer portion of employee pension contribution where 

applicable.



[C] Includes extra-duty pay.



[D] Includes health care contributions where applicable.



[E] Includes employer pension contribution and extra-duty pay where 

applicable.



[F] Estimated to exclude fringe benefits at 6 percent in Oklahoma.



[G] Median salary includes extra-duty pay.



Sources: American Federation of Teachers and Department of Defense.



[End of table]



In the same year, the starting salary for a DOD overseas teacher with a 

Bachelor of Arts (BA) degree ($30,700) was 6 percent higher than the 

average starting salary in the United States ($28,986) for a teacher 

with a BA. Furthermore, if starting salaries for DODs overseas 

teachers with a BA in school year 2000-01 are included in the ranking 

of average, starting salaries in each state and the District of 

Columbia, the DOD overseas school system ranked twelfth highest. (See 

table 4.):



Table 4: DOD Overseas Bachelor of Arts Teachers Starting Salary 

Compared to Average Starting Salaries of U.S. Teachers with BAs by 

State, School Year 2000-01:



Rank: 1; State: Alaska; Average Salary: 36,293.



Rank: 2; State: California; Average Salary: 33,121.



Rank: 3; State: New York; Average Salary: 32,772[A].



Rank: 4; State: Delaware; Average Salary: 32,281.



Rank: 5; State: Connecticut; Average Salary: 32,203[A].



Rank: 6; State: District of Columbia; Average Salary: 31,889.



Rank: 7; State: Georgia; Average Salary: 31,314[A].



Rank: 8; State: Illinois; Average Salary: 31,222[E].



Rank: 9; State: Pennsylvania; Average Salary: 31,127.



Rank: 10; State: Massachusetts; Average Salary: 31,115[A].



Rank: 11; State: New Jersey; Average Salary: 30,937[A].



Rank: 12; State: DODDS; Average Salary: 30,700.



Rank: 13; State: Maryland; Average Salary: 30,321.



Rank: 14; State: Texas; Average Salary: 29,823.



Rank: 15; State: North Carolina; Average Salary: 29,786.



Rank: 16; State: Nevada; Average Salary: 29,413[B].



Rank: 17; State: Michigan; Average Salary: 29,401[A].



Rank: 18; State: Rhode Island; Average Salary: 29,265.



Rank: 19; State: Hawaii; Average Salary: 29,204.



Rank: 20; State: Alabama; Average Salary: 28,649[A].



Rank: 21; State: Virginia; Average Salary: 28,139.



Rank: 22; State: Tennessee; Average Salary: 28,074.



Rank: 23; State: Oregon; Average Salary: 27,903[B].



Rank: 24; State: Indiana; Average Salary: 27,311.



Rank: 25; State: Washington; Average Salary: 27,284.



Rank: 26; State: Missouri; Average Salary: 27,173.



Rank: 27; State: Oklahoma; Average Salary: 27,016[F].



Rank: 28; State: Minnesota; Average Salary: 27,003.



Rank: 29; State: Arizona; Average Salary: 26,801[A].



Rank: 30; State: Colorado; Average Salary: 26,479[A].



Rank: 31; State: South Carolina; Average Salary: 26,314.



Rank: 32; State: Wisconsin; Average Salary: 26,232.



Rank: 33; State: Vermont; Average Salary: 26,152[A].



Rank: 34; State: Louisiana; Average Salary: 26,124[A].



Rank: 35; State: Iowa; Average Salary: 26,058.



Rank: 36; State: Kansas; Average Salary: 26,010[A].



Rank: 37; State: New Mexico; Average Salary: 25,999[A].



Rank: 38; State: Florida; Average Salary: 25,786.



Rank: 39; State: Kentucky; Average Salary: 25,027.



Rank: 40; State: New Hampshire; Average Salary: 25,020[A].



Rank: 41; State: Ohio; Average Salary: 24,894.



Rank: 42; State: West Virginia; Average Salary: 24,889.



Rank: 43; State: Wyoming; Average Salary: 24,651[A].



Rank: 44; State: Utah; Average Salary: 24,553.



Rank: 45; State: Arkansas; Average Salary: 24,469[D].



Rank: 46; State: Nebraska; Average Salary: 24,356.



Rank: 47; State: Maine; Average Salary: 23,689.



Rank: 48; State: Idaho; Average Salary: 23,386.



Rank: 49; State: Mississippi; Average Salary: 23,292.



Rank: 50; State: South Dakota; Average Salary: 22,457.



Rank: 51; State: Montana; Average Salary: 21,728.



Rank: 52; State: North Dakota; Average Salary: 20,675.



[A] American Federation of Teachers estimate.



[B] Includes employer portion of employee pension contribution where 

applicable.



[C] Includes extra-duty pay.



[D] Includes health care contributions where applicable.



[E] Includes employer pension contribution and extra-duty pay where 

applicable.



[F] Estimated to exclude fringe benefits at 8 percent.



Sources: American Federation of Teachers and Department of Defense.



[End of table]



While U.S. teachers generally receive similar benefits to those of DOD 

overseas teachers, they do not receive the allowances that overseas 

educators generally receive, such as the living quarters allowance. In 

addition to these allowances, DOD overseas teachers often have access 

to military base stores, which sell discounted and duty-free goods, and 

to recreational facilities on base, such as gyms and social clubs.



Although DOD overseas teachers receive the standard health care benefit 

for U.S. civilian government employees,[Footnote 19] employees 

stationed overseas face challenges with regard to health care access. 

Representatives of teachers unions told us that there is 

dissatisfaction among teachers with access to health care in many 

overseas locations. In addition, in July 

2001, the Assistant Secretary of Defense for Force Management Policy 

reported that the availability and cost of medical care for DOD 

educators employed overseas is a significant problem.[Footnote 20] 

While civilian employees are often allowed to use military treatment 

facilities, access to these facilities for civilian employees is on a 

space-available basis.



Civilian employees stationed overseas, like the DOD teachers, are 

limited to fee-for-service insurance plans because no health 

maintenance organizations are available in foreign posts. Whether care 

is provided at military or host nation facilities, civilian employees 

must pay when services are rendered and request reimbursement by their 

medical insurance. This can often mean large out-of-pocket expenses for 

doctors visits and treatments.[Footnote 21] In addition, health care 

providers at military medical treatment facilities are not recognized 

as authorized preferred providers by the health plans available to 

overseas employees, so reimbursement rates are often lower than for 

preferred providers in the United States. Furthermore, when civilian 

employees must use host nation medical facilities, they often face 

challenges, such as differences in language, culture, and health 

practices. For example, a teacher may have difficulty explaining his or 

her medical history to a doctor who does not speak English. DOD is 

unable to change the health insurance available to civilian DOD 

employees, including the DOD overseas teachers, because their health 

insurance package is set by a governmentwide policy for civil servants.



DOD Appears to Have Little Difficulty Recruiting and Retaining Well-

Qualified Teachers for the Overseas School System:



In general, DOD has been successful in recruiting and retaining well-

qualified teachers. In school year 2001-02, DOD recruiters filled 

almost all vacant teaching positions in overseas schools. The DOD 

overseas teacher workforce is highly qualified, with virtually all DOD 

overseas teachers certified in the subjects or grades they teach. DOD 

also does not appear to have difficulty retaining teachers, although 

some agency officials and a representative of a teachers union 

suggested retention difficulties exist in a few specific geographic 

areas.



DOD Generally Successful Recruiting Well-Qualified Teachers:



In school year 2001-02, DOD recruiters filled over 99 percent of vacant 

classroom teaching positions. More than one agency official we spoke 

with confirmed that DOD has little difficulty recruiting teachers for 

overseas schools. This year, DOD has received approximately 

8,500 teaching applications, far more than the approximately 900 

teaching positions available. DODs success in filling vacancies 

appears consistent across the 10 districts in which its overseas 

schools are located. The lowest success rate for filling classroom 

teaching vacancies in school year 2001-02 was 99.77 percent (for 

vacancies in the Heidelberg, Germany district), while 7 of the 10 

districts filled all their vacancies for that school year.



The availability of teachers and the attractiveness of the DOD overseas 

schools to potential hires may be factors that aid recruitment. DOD has 

a ready supply of potential teachers living abroad. Roughly one-third 

of DOD overseas teachers are hired locally. In school year 2001-02, 

spouses of military or DOD civilian employees made up 47 percent of new 

hires. It is DOD policy to give them preference over teaching 

candidates living in the United States when applying to the system, 

provided that they are qualified. DOD overseas schools also have 

qualities that make them attractive to teachers. Representatives of 

teachers unions indicated in interviews that the excitement of living 

abroad combined with the familiarity of working in an American school 

attracts many teachers to the DOD overseas school system. In addition, 

DODs recruitment video cites the systems competitive pay and benefits 

as a reason for joining the system.



DODs vigorous recruitment program may also contribute to DODs success 

attracting applicants. Recruitment activities include job fairs; a 

student teaching program; advertisements in professional, military, and 

on-line publications; participation in the Troops to Teachers 

program;[Footnote 22] and on-site recruitment at college campuses. In 

recent years, DOD recruitment personnel have focused on enhancing the 

diversity of their teacher workforce. To that end, they have 

established student teaching agreements with Historically Black 

Colleges and Universities and the Hispanic Association of Colleges and 

Universities to attract minority applicants. As part of its recruitment 

efforts, DOD has also developed an on-line application system for 

teaching candidates in order to facilitate the application process. 

Since this system was made available, the number of applicants to the 

system has more than doubled. Another important recruitment tool is the 

use of advance job offers, offers made to applicants before actual 

vacancies have been identified and that do not specify a job location. 

The advance offers program is used to help DOD overseas schools compete 

with U.S. school districts for exceptional educators because U.S. 

schools tend to make job offers well in advance of the DOD overseas 

schools. Advance offers are also used to recruit minority teachers and 

increase the diversity of the DOD overseas teacher workforce.



While recruitment is generally successful, agency officials and 

representatives of teachers unions have indicated that DOD experiences 

some difficulties recruiting teachers for certain subjects, such as 

special education, math, and science. It is not surprising that DOD has 

some difficulty recruiting teachers for these subjects. According to a 

1996 report by the National Center for Education Statistics (NCES), 20-

29 percent of U.S. public schools with vacancies in the subject areas 

of bilingual and special education, math, science, and English-as-a-

Second-Language report difficulty filling them.



DOD officials also report challenges filling vacancies in some 

locations. According to DOD officials and representatives of the 

teachers unions, areas like Japan, Korea, and Bahrain are not as 

attractive to teachers because the culture and language are 

significantly different from their own. Of the 20 substitute teachers 

hired to fill full-time positions by DOD in school year 2001-02, 19 

were located in schools in Japan.[Footnote 23] This figure suggests 

that while DOD may be able to fill virtually all of the vacancies in 

that country, it must use some nonpermanent teachers to do so. DOD can 

fill positions in less desired locations by sending teachers there from 

other schools in the system. All teachers sign mobility agreements upon 

accepting permanent employment with DOD, which allows the agency to 

send them wherever they are needed, though administrators seek to avoid 

compulsory reassignment. At the same time, DOD can pay teachers 

recruitment bonuses, a tool that could help the agency address any 

recruitment difficulties. DODEA recently received authority to pay 

these bonuses and has not yet offered any. While it may be more 

difficult to recruit teachers for some subject areas and locations, 

DODs success filling vacant positions with well-qualified teachers 

suggests that any recruitment difficulties are relatively minor.



Based on Certification, Experience, and Education, the Quality of DOD 

Overseas Teachers Is High:



DOD overseas teachers are well-qualified, with virtually all teachers 

in DOD schools certified in the subjects or grades they teach.[Footnote 

24] Almost two-thirds of DOD overseas teachers hold advanced degrees, 

compared to 46 percent of public school teachers in the United States. 

Further, 73 percent of DOD teachers have at least 10 years of teaching 

experience.



These well-trained teachers could be a major factor behind the schools 

high student-achievement level, an indication of the strength and 

success of the DOD overseas school system. Research has linked teacher 

quality to student performance. Data show that students in DOD overseas 

schools perform above the national average on the National Assessment 

of Educational Progress (NAEP) and the Terra Nova Achievement Test. For 

example, in 1998, only two states had a higher percentage than the DOD 

overseas schools of eighth graders who performed at a proficient or 

higher level on the writing portion of the NAEP. Notably, DOD overseas 

schools have made significant progress in closing the performance gap 

between minority and white students. Compared to state-by-state 

rankings of minority eighth graders in 2000, DOD minority eighth 

graders ranked second on NAEP math scores.



DOD Generally Appears to Have Little Difficulty Retaining Teachers:



Agency officials and representatives of teachers unions told us that, 

in general, DOD overseas schools do not have a problem retaining 

teachers. While the agency does not have sufficient data to calculate 

retention rates by location, agency officials we spoke with said that 

any retention difficulties the agency has are limited to a few 

geographic areas, such as Korea, Japan, and Bahrain. In addition, union 

representatives told us that teachers who join DODs overseas school 

system generally tend to stay in the system for many years. Because DOD 

is consistently able to fill vacant positions with well-qualified 

teachers, any retention difficulties that exist do not appear to 

threaten the quality of the teacher workforce. DODEA recently obtained 

authorization to offer retention bonuses to teachers, a tool that could 

be used to address these difficulties. The agency has not yet offered 

any such bonuses.



The Current Process for Determining and Paying Teacher Salaries Is 

Time-Consuming, but DOD Has Little Flexibility to Modify This Process 

Because of Statutory Requirements:



DOD has developed a process for determining and paying overseas 

teachers salaries to meet the requirements of the law and subsequent 

court cases and arbitrations. DODs process for collecting salary 

information and issuing a new salary schedule for DOD overseas teachers 

takes roughly 8 months. Once the new salary schedule is set, DOD must 

pay teachers their annual salary increases, and some allowance 

increases, retroactively. Teachers typically receive these retroactive 

payments near the end of the school year. The process for recalculating 

the teachers salaries and paying them retroactively causes some 

administrative burden for the agency, in terms of both workload and 

cost.



DODs Process for Determining the Annual Salary Schedule Results in 

Retroactive Payments and Some Administrative Burden to the Agency:



Each year, in order to meet legal requirements, the DOD Wage and Salary 

Division surveys urban school districts for salary data through at 

least January 10. It identifies these urban school districts by using 

the Census Bureaus list of incorporated places with populations of 

100,000 or more. For school year 2001-02, the division surveyed 230 

school districts. It began planning in August, mailed out surveys in 

October, and continued data collection--including follow-up calls--

through March. The data collection includes information on the minimum 

and maximum salary paid to a teacher with a BA degree, the minimum and 

maximum salary paid to a teacher with a Ph.D. degree, the number of pay 

lanes, the number of regular and longevity steps, and the number of 

days in the school year. With these data, the Wage and Salary Division 

calculates a schedule of earnings for DOD overseas teachers.[Footnote 

25] As part of the calculation for this schedule, the Wage and Salary 

Division reviews the number of steps and salary lanes in U.S. urban 

school jurisdictions to ensure comparability. The survey process takes 

12 people a total of 1,680 hours (or 42 workweeks) to complete. The 

salary schedules for the current school year are usually completed in 

April or May. (See fig. 3.):



Figure 3: DOD Overseas Teachers Salary Calculation Process Timeline:



[See PDF for image]



[End of figure]



Once the salary schedules are complete, Wage and Salary Division 

personnel meet with representatives from the FEA and agency officials 

to discuss the results of the survey. Once all parties agree on the 

results, the new salary schedule is issued.



The courts have interpreted the Pay and Personnel Practices Act as 

requiring that DOD overseas teachers be paid the same salary that the 

U.S. teachers in DODs comparison group receive for the same year. 

Because the salary schedule is typically issued near the end of the 

school year, overseas teachers receive their pay increases 

retroactively. Usually, the overseas teachers receive these increases 

just prior to the end of the school year. In addition, since some 

allowances, such as the post allowance, are based on salary, teachers 

may also receive retroactive payments for allowance increases.



This retroactive pay process results in some administrative burden for 

the agency in terms of workload and cost. First, the process increases 

the agencys workload. DOD spends additional time each year processing, 

reviewing and entering the pay and allowance increases. The Defense 

Finance and Accounting Service (DFAS) calculates the amount of each 

teachers new salary and retroactive payments, while the DODEA 

personnel office must correct the official personnel forms[Footnote 26] 

for all affected employees. In addition, field staff help recalculate 

adjustments to any extra duty pay teachers may have received during the 

year.[Footnote 27] Once this work is completed, the DODEA payroll 

office receives the data for record keeping purposes, reviews them, and 

corrects any coding errors. Second, the process can complicate DODEAs 

management of its budget. Each year, DOD officials predict how large 

the retroactive pay increase will be in order to plan the budget. If 

this prediction is too low, DODEA personnel must find the necessary 

funds to pay for the difference. Because payroll comprises over 70 

percent of DODEAs budget, this task can be a difficult one. A large 

enough difference in the predicted and actual amounts of the pay 

increase can have an impact on DODEAs budget. For instance, in school 

year 2001-02, DODEA officials expected the salary increase to be about 

3.6 percent, but it was actually 5.2 percent. As a result, they had to 

ask the Office of the Secretary of Defense for the necessary funds to 

address this problem. Finally, the process results in some costs to the 

agency. DFAS charges DODEA an annual fee for determining and processing 

the retroactive pay increases. Last year, this fee totaled roughly 

$78,000.



Techniques That Could Make the System Less Time-Consuming and Less 

Burdensome Cannot Meet Legal Requirements:



Alternative techniques exist, such as sampling and projection, that 

could make the salary determination and payment process less time-

consuming and less burdensome; however, they cannot meet legal 

requirements. Given the moderately burdensome nature of the current 

system, we reviewed the current salary determination method and 

explored whether alternatives could take less time. While these 

alternatives might be more efficient, they would not be in compliance 

with the law. For instance, DOD could project overseas teachers 

salaries each year based on the degree to which salaries for U.S. urban 

teachers increased in past years. By projecting teacher salaries the 

salary schedule could be completed prior to the beginning of the school 

year, rather than near the end. This would eliminate the need to pay 

teachers retroactively, thus saving time and money. However, because 

projections would not guarantee the same result as the survey, this 

method would not meet the laws requirement that DOD overseas teachers 

salaries be equal to the salaries of U.S. urban teachers. Therefore, 

DOD would still have to survey the U.S. schools, and pay any difference 

between the projections and the survey results to the teachers 

retroactively. While alternative methods of salary determination exist, 

such as sampling, they would not reduce the workload or administrative 

burden. For more information on alternative salary determination 

techniques, see appendix I.



Conclusions:



DOD overseas schools play a critical role, educating more than 

70,000 children of parents in the armed services and the federal 

civilian workforce. To date, agency officials have successfully 

recruited and maintained a well-qualified teacher workforce for these 

schools. These well-trained teachers could be a major factor behind the 

schools high student-achievement level. While the salary determination 

and payment process is time consuming and involves some administrative 

burden, DODs success recruiting and retaining well-qualified teachers 

indicates that there is no immediate need to change the law.



Agency Comments:



The Department of Defense provided oral comments on a draft of this 

report. DOD concurred with the content of the report. DOD also provided 

technical comments, which we incorporated as appropriate.



We are sending copies of this report to the Secretary of Defense, 

appropriate congressional committees, and other interested parties. We 

will also make copies available to others upon request. In addition, 

this report will be available at no charge on the GAO Web site at 

http://www.gao.gov.



If you or your staffs have any questions about this report, please call 

me at (202) 512-7215. Other contacts and contributors to this report 

are listed in appendix II.



Signed by Marnie S. Shaul:



Marnie S. Shaul

Director, Education, Workforce and 

 Income Security Issues:



[End of section]



Appendix I: Scope and Methodology:



The National Defense Authorization Act for fiscal year 2002 directed 

GAO to assess whether the Department of Defense (DOD) overseas 

teachers compensation package is adequate to recruit and retain 

qualified teachers and to recommend any necessary revisions to the law 

governing DOD overseas teachers salaries.



To address the issues raised in the mandate, we developed three key 

questions:



1. What is the compensation package for teachers in DOD overseas 

schools, and how does it compare to compensation for teachers in the 

United States?



2. To what extent do DOD overseas schools experience difficulties 

recruiting and retaining well-qualified teachers?



3. What is the process for determining teacher salaries and paying 

teachers, and which aspects of the process, if any, could be improved?



To answer question one, we reviewed laws, regulations, and policies on 

salary, benefits, and allowances for DOD overseas teachers[Footnote 28] 

and other federal civilian employees overseas. We also analyzed salary 

data on DOD overseas teachers and U.S. teachers and conducted a 

literature review on teacher compensation in the United States. 

Finally, we interviewed DOD officials to confirm our understanding of 

the total compensation package and eligibility rules related to 

benefits and allowances.



To answer question two, we analyzed data on DOD overseas teachers (such 

as the number of newly hired teachers in each of the past three years; 

the number of teachers in each school; the number of teachers hired 

from the United States; the number hired from overseas; and the number 

who are spouses of DOD military or civilian employees) and reviewed DOD 

promotional materials, planning documents, and information provided to 

teachers in the DOD overseas school system. We also interviewed DOD 

officials and representatives of the two teachers unions that 

represent DOD overseas teachers. Finally, we conducted a literature 

review on teacher quality and its relation to student performance.



To answer question three, we reviewed laws, court cases, arbitration 

documents, regulations, and policies on the DOD overseas teacher salary 

determination and payment process. We also interviewed DOD officials 

about implementation of this process and its impact on the agency. 

Finally, we explored alternative ways to determine and pay teacher 

salaries that could potentially improve efficiency and reduce costs. 

Specifically, we considered the use of sampling and salary projection.



Alternative Techniques for Determining and Paying Teacher Salaries:



Sampling:



We explored stratified sampling as one possible way to determine DOD 

overseas teachers salaries. Using a sample would allow DOD to contact 

fewer schools to obtain salary data, thus potentially saving time and 

money. Estimates derived from stratified random samples are typically 

more precise than estimates derived from simple random samples of the 

same size.[Footnote 29]



Currently, DOD surveys 231 urban school districts. DOD provided us with 

data on four salary/education categories, the BA minimum salary (BA 

min), the BA maximum salary (BA max), the Ph.D. minimum salary (Ph.D. 

min), and the Ph.D. maximum salary (Ph.D. max), for each of the 

231 urban school districts it surveyed for school year 2001-02. We 

defined strata by dividing the population, all 231 districts, into 

three groups, based on salary data. We defined the low stratum as those 

school districts with a BA min value of $28,533 or lower, the high 

stratum as those school districts with a Ph.D. max of $62,413 or 

greater, and the medium stratum as any district that did not fall into 

either of the other strata. This stratification resulted in 60 school 

districts for the low stratum and 

70 districts for the high stratum; the remaining 101 districts were 

placed into the medium stratum.



We examined four different sample sizes: a 20 percent sample, a 

30 percent sample, a 40 percent sample, and a 50 percent sample. For 

instance, for the 20 percent sample we selected 20 percent of the 

districts in the low stratum, 20 percent of the districts in the medium 

stratum, and 20 percent of the districts in the high stratum. Table 5 

shows the total number of sample districts and the number in each 

stratum for the four different sample sizes before any adjustment for 

nonresponse.[Footnote 30]



Table 5: Number of Districts Sampled by Sample Size and Strata:



Sample strata: Low stratum; 20% sample: 12; 30% sample: 18; 40% sample: 

24; 50% sample: 30.



Sample strata: Medium stratum; 20% sample: 21; 30% sample: 31; 40% 

sample: 41; 50% sample: 51.



Sample strata: High stratum; 20% sample: 14; 30% sample: 21; 40% 

sample: 28; 50% sample: 35.



Sample strata: Total; 20% sample: 47; 30% sample: 70; 40% sample: 93; 

50% sample: 116.



Source: GAO analysis.



[End of table]



For the four sample size options, we determined margins of error for 

the average salaries in each of the four education/salary categories. 

The margin of error is a measure of how precise the estimates of the 

average salary are and refers to the fact that these estimates will 

differ from the average salary calculated using the overall 

population.[Footnote 31] These margins of error are presented in table 

6.



Table 6: Estimated Margins of Error for Selected Sample Sizes, at 95% 

Confidence:



Salary variable of interest: BA minimum; 20% Sample: +/-$793; 30% 

sample: +/-$605; 40% sample: +/-$486; 50% sample: +/-$397.



Salary variable of interest: BA maximum; 20% Sample: +/-$1831; 30% 

sample: +/-$1399; 40% sample: +/-$1122; 50% sample: +/-$916.



Salary variable of interest: Ph.D. minimum; 20% Sample: +/-$924; 30% 

sample: +/-$706; 40% sample: +/-$566; 50% sample: +/-$462.



Salary variable of interest: Ph.D. maximum; 20% Sample: +/-$1266; 30% 

sample: +/-$967; 40% sample: +/-$776; 50% sample: +/-$633.



Note: The original sample sizes were increased to account for potential 

nonresponse. The nonresponse adjustment takes into account that some of 

the values for the four salary variables are missing.



Source: GAO analysis.



[End of table]



For both the 20 percent sample and the 30 percent sample, at a 

confidence level of 95 percent, the margins of error in each of the 

four education/salary categories were all within +/-$1,900 for the 

average salary.[Footnote 32] For both the 40 percent sample and the 50 

percent sample the margins of error were all within +/-$1,200, at a 

confidence level of 95 percent. This means that DOD could reduce the 

size of the annual survey from roughly 230 districts to 141[Footnote 

33]--in the case of the 50 percent sample--with estimated margins of 

error ranging from +/-$397 to +/-$916, depending on the salary 

variable. In other words, we would expect with a 95 percent level of 

confidence that the average BA min salary calculated from the sample 

would be within +/-$397 of the average salary calculated from the 

entire survey population.



Initially, DOD would have to survey all districts to define the strata 

but in subsequent years it would rely on this stratification to draw 

its sample. However, DODs efforts to sample would be affected by the 

stability of the salary strata used. If the school districts in the 

sample frequently changed strata, then over the course of several years 

of using the original stratification definitions, there would be 

increased variability in the estimation. We tested for stability by 

using DODs actual data for 3 years, and found that there was a 

substantial shift of schools across strata over time.



To examine the stability of our strata, we used the salary data DOD 

provided us for each of the urban school districts it surveyed in 

school years 1999-00, 2000-01, and 2001-02. Taking the data from the 

first year, we grouped the school districts into three strata: low, 

medium and high. We defined the low stratum as those school districts 

with a BA min value of $27,000 or lower,[Footnote 34] the high stratum 

as those with a Ph.D. max of $57,000 or greater, and the medium stratum 

as those that did not fall into either of the other strata. This same 

stratification scheme was used for 2 additional years of school 

district salary data. Thus, the strata definitions were based on the 

salary data from the first year. In subsequent years, some districts 

moved from one stratum into another. As they did so, the original 

stratification no longer reflected the most recent ranking of the 

school districts salaries. As a result, the margins of error for the 

average salary in each education/salary category increased. For 

example, the margin of error for the BA min average salary increased 

from +/-$440.60 in the base year to +/-$697.80 in the third year. In 

other words, there was a 26 percent deterioration over one year and a 

60 percent deterioration over 2 years for the BA min category. 

Considering the four education/salary categories, the larger the 

percent deterioration, the greater the movement of districts across 

strata and the less stable the strata. Table 7 shows the increased 

margin of error over time, the percent deterioration over time and the 

salary ranges for each of the four education/salary categories.



Table 7: Stability Results Across 3 Years:



[See PDF for image]



Note:



The percent deterioration was calculated as follows:



[See PDF for image]



[End of figure]



Thus, the percent deterioration--increase in the margin of error--can 

be gauged from the base year, Year I (1999-2000), to Year III (2001-

2002).



Source: GAO analysis of DOD data.



[End of figure]



[End of table]



As noted above, the estimated margin of error and the percent 

deterioration over time indicate that there was considerable shifting 

over time of districts across strata for all salary/education 

categories except the BA max. Consequently, if sampling were used, the 

strata would need to be redefined and new samples selected frequently 

in order to minimize the variability in the salary estimates. To do 

this, the entire population of urban school districts would need to be 

surveyed.



Projection:



We explored projection as a way for DOD to pay overseas teachers their 

current-year salaries from the beginning of the school year, rather 

than retroactively. Our projections and the associated margins of error 

are shown in table 8.



Table 8: Projections of Mean Salary for School Year 2001-2002:



Variable of interest: BA min; Projection equation: Y = 1.0557 * X; 

Actual mean salary 2000-2001: $ 30,701; Actual mean salary 2001-2002: $ 

31,776; Projected mean salary 2001-2002: $32,411; Projected mean 95% 

margins of error: +/-$2,893.



Variable of interest: BA max; Projection equation: Y = 1.0504 * X; 

Actual mean salary 2000-2001: $ 45,778; Actual mean salary 2001-2002: $ 

46,644; Projected mean salary 2001-2002: $48,085; Projected mean 95% 

margins of error: +/-$4,155.



Variable of interest: PhD min; Projection equation: Y = 1.0472 * X; 

Actual mean salary 2000-2001: $ 36,927; Actual mean salary 2001-2002: $ 

38,169; Projected mean salary 2001-2002: $38,670; Projected mean 95% 

margins of error: +/-$3,851.



Variable of interest: PhD max; Projection equation: Y = 1.0525 * X; 

Actual mean salary 2000-2001: $ 58,106; Actual mean salary 2001-2002: $ 

59,800; Projected mean salary 2001-2002: $61,157; Projected mean 95% 

margins of error: +/-$5,127.



Source: GAO analysis of DOD data.



[End of table]



We made our projections for 2001-02 based on DOD salary data from 

school years 1999-00 and 2000-01. We applied a rate-of-change model to 

the first two years of data to calculate estimates of the annual rate 

of change for each of our four education/salary categories. Our model 

took the form:



Y = aX:



where:



a is the estimated rate of change:



X is the salary from school year 1999-00, and:



Y is the salary from school year 2000-01.



Having calculated values for a, we then substituted in values for 

school year 2000-01 for X in order to calculate projected average 

salaries for school year 2001-02.



As an example, to calculate the projected mean salary in school year 

2001-02 for the BA min category, we used the equation in column two 

(Y=1.0557*X). For X we substituted 30,701, the value in column three, 

the actual mean salary for school year 2000-01. Multiplying this value 

times 1.0557 (the mean increase for BA min from school year 1999-00 to 

school year 2000-01) gave us the projected mean salary for school year 

2001-02 displayed in column five. This projected mean salary will not 

be the same as the actual mean salary, because salary projections 

include an assumption about the annual rate of growth in earnings, and 

this assumed growth rate is likely to differ from the actual growth 

rate. In the particular examples shown, the mean salaries we projected 

were similar to the actual mean salaries.[Footnote 35] However, the 

projections could fall anywhere between the confidence limits, 

indicating the variability attached to these projections. Table 7 shows 

that the 95 percent confidence interval for the BA min salary would 

range from $29,518 to $35,304.



[End of section]



Appendix II: GAO Contacts and Staff Acknowledgments:



GAO Contacts:



Harriet Ganson (202) 512-7042, gansonh@gao.gov

Melinda Bowman (202) 512-3542, bowmanm@gao.gov:



Staff Acknowledgments:



In addition to those named above, Elizabeth Field, Barbara Smith, 

Kris Braaten, Emily Williamson, Jon Barker, Barbara Alsip, and 

Patrick DiBattista made key contributions to this report.



FOOTNOTES



[1] DODDS operates schools in Bahrain, Belgium, Cuba, England, Germany, 

Greece, Iceland, Italy, Japan, Korea, The Netherlands, Portugal, Spain, 

and Turkey. DOD schools in Guam and Puerto Rico are part of the 

Department of Defense Domestic Dependent Elementary and Secondary 

Schools (DDESS).



[2] The Federal Education Association is a unit of the National 

Education Association; the Overseas Federation of Teachers is an 

affiliate of the American Federation of Teachers.



[3] Pub.L. 86-91 (1959).



[4] In 1959, the secretary of each branch of the military was 

responsible for the overseas schools in that branch.



[5] The OEA was later renamed the Federal Education Association (FEA).



[6] This benchmark was used for comparison because most of the 

teachers were recruited from urban areas with a population of 100,000 

or more. See Crawford v. United States, 179 Ct. Cl. 128 (1967).



[7] Each year between 1961 and 1965, DOD asked for an increase in the 

per-pupil limitation in order to raise teacher salaries. Congress 

granted an increase in full only twice during those years. According to 

the historical background included in Crawford v. United States, 

Congress was apparently reluctant to increase the per-pupil limit 

because it considered the additional benefits that overseas teachers 

received as part of their compensation. 



[8] In responding to the committees request for comment, the Bureau of 

the Budget argued that the amendment would result in rates above the 

national average for similar positions in the United States and should 

include data from cities with smaller populations, which would provide 

a broader and more realistic comparison with non-Federal salaries and 

would be more consistent with practices for other Federal white-collar 

positions. 



[9] Although the amendment states that DOD overseas teachers salaries 

be based on salaries in U.S. urban school jurisdictions with 

populations of 100,000 or more, DOD has interpreted this to mean school 

districts in urban or incorporated places with populations of 100,000 

or more. Pub.L. 89-391 (1966).



[10] March v. United States, 506 F.2d 1306 (D.C. Cir. 1974).



[11] DOD overseas teachers are schedule C federal employees. Pay 

schedule C applies to elementary, middle, and high school classroom 

teachers and teachers of English as a Second Language, Special 

Education, Reading Improvement Specialists, Vocational/Technical 

Instructors, and Nurses. In addition to the schedule C pay plan, using 

the same survey process, the Wage and Salary Division creates salary 

schedules for substitute teachers, social workers, guidance counselors, 

psychologists, management and education specialists, principals, and 

assistant principals.



[12] Some employees may be covered under the Civil Service Retirement 

System, the Federal retirement program prior to FERS. In general, these 

employees were hired by the Federal government before FERS became 

effective on December 31, 1983.



[13] If these employees continue in their temporary positions beyond 1 

year, they become eligible for health insurance. In this instance, the 

employee must pay both the employees and employers share of the 

premiums.



[14] A local hire is an employee who was offered and appointed to a 

position in the same foreign area where he or she was already residing. 





[15] These regulations are outlined in the Department of State 

Standardized Regulations (DSSR).



[16] DOD rules concerning these allowances can be found in the 

Department of Defense Civilian Personnel Manual 1400.25-M, Subchapter 

1250, Overseas Allowances and Differentials.



[17] The wardrobe portion of these allowances is intended to offset the 

cost of clothes for those employees relocating to significantly 

different climates.



[18] The difference in average salaries may, in part, reflect the 

higher level of experience and educational attainment among DOD 

overseas teachers, compared to the average U.S. teacher. 



[19] Employees who are spouses of active duty military personnel can 

receive health care benefits through their spouses.



[20] Assistant Secretary of Defense, Report on Compensation, Allowance 

Structure, and Access to Medical Services for DOD School Teachers in 

Overseas Areas (Washington, D.C. 2001). 



[21] Military treatment facilities do bill other insurance companies 

for inpatient services, but they do not have the capability to bill for 

outpatient services.



[22] Troops to Teachers is a federal program that helps discharged and 

retired military personnel become certified and employed as teachers in 

public schools. 



[23] This figure applies to classroom teachers for school year 2001-02 

only, not to all instructional staff. 



[24] U.S. General Accounting Office, BIA and DOD Schools: Student 

Achievement and Other Characteristics Often Differ from Public 

Schools, GAO-01-934 (Washington, D.C.: Sept. 28, 2001). 



[25] As part of this process, the Wage and Salary Division also 

collects salary data and computes salaries for social workers, school 

psychologists, guidance counselors, and school administrators.



[26] The Notification of Personnel Action (Standard Form 50), published 

by the U.S. Office of Personnel Management, is used to notify employees 

and payroll offices of personnel actions and to record the action in 

the employees Official Personnel Folder.



[27] Extra duty pay may be due to teachers who serve as coaches for 

athletic teams, or advisors for student newspapers, yearbooks, drama 

clubs, or other extracurricular activities. 



[28] The Defense Department Overseas Teachers Pay and Personnel 

Practices Act fixes the compensation for traditional classroom 

teachers, as well as other teaching positions. It defines teaching 

positions as duties and responsibilities which involve(i) classroom 

or other instruction or the supervision or direction of classroom or 

other instruction; or (ii) any activity (other than teaching) which 

requires academic credits in educational theory and practice equal to 

the academic credits in education theory and practice required for a 

bachelors degree in education from an accredited institution of higher 

education; or (iii) any activity in or related to the field of 

education In addition, the National Defense Authorization Act for 

Fiscal Year 1997 (Pub.L. 104-201) amended the act by adding to the 

definition of teaching position [duties and responsibilities] are 

performed by an individual who carried out certain teaching activities 

identified in regulations prescribed by the Secretary of Defense. 



[29] In a stratified random sample, the population is divided into a 

number of subpopulations, called strata. An independent probability 

sample is drawn from each stratum. In a simple random sample, the 

independent probability sample is drawn from the entire population. 

Stratification improves the precision of the estimates because the 

variance within each stratum is often lower than the variance in the 

overall population. 



[30] There may be some nonresponse with the data because some school 

districts may not report data for each salary/education category. 



[31] The margin of error reflects sampling error; it is the error that 

results from taking one sample instead of examining the whole 

population. The smaller the margin of error, the more precise is the 

estimate of the average salary.



[32] Confidence intervals are used to indicate the precision of an 

estimate. If we could take repeated samples from our population and 

construct a confidence interval for each sample mean, we can expect 95 

percent of the resulting intervals to include the true value of the 

population mean.



[33] See note on table 6.



[34] These strata definitions differ somewhat from those used for 

sample size determination. For this stability analysis, we developed 

strata definitions based on salaries in school year 1999-00, and 

determined the extent of the deterioration of the stratification over 

time by using three years of salary data, including 1999-00. However, 

for sample size calculations, we used the most recent data available, 

school year 2001-02 salaries, to determine strata definitions.



[35] Statistical testing showed that the actual and projected mean 

salaries were not significantly different.



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