Page 1 GAO-05-638R Military Personnel

United States Government Accountability Office

Washington, D.C. 20548

A

May 11, 2005

The Honorable Richard J. Durbin

United States Senate

Subject: Military Personnel: DOD Comments on GAO’s Report on More 

DOD Actions Needed to Address Servicemembers’ Personal Financial 

Management Issues

Dear Senator Durbin:

In response to your request, we issued a report in April 2005 on the 

Department of Defense’s (DOD) efforts to address personal financial 

management (PFM) issues encountered by its servicemembers and their 

families.1

 In that report, we made recommendations to the Secretary of 

Defense to enhance servicemembers’ financial conditions and the 

effectiveness of DOD’s PFM programs and training. On March 17, 2005, we 

provided a draft of that report to DOD for review and comment. DOD did 

not provide comments in time to incorporate them in the final GAO report 

that went to printing on April 22, 2005. To present DOD’s comments and 

provide our perspective on them, this report briefly summarizes our 

April 2005 report’s objectives, results, and recommendations, along with 

DOD’s comments and our evaluation of the comments. DOD’s comments, 

which were provided by the Under Secretary of Defense for Personnel and 

Readiness, are included as an enclosure to this report.

Summary of 

Objectives, Results, 

and Recommendations

We answered three questions in our April 2005 report: (1) To what extent 

does deployment impact the financial conditions of active duty 

servicemembers and their families? (2) Does DOD have an oversight 

framework for evaluating military programs that assist both deployed and 

non-deployed servicemembers in managing their personal finances? And 

(3) To what extent are junior enlisted servicemembers receiving required 

personal financial management training?

1

 See GAO, Military Personnel: More DOD Actions Needed to Address Servicemembers’ 

Personal Financial Management Issues, GAO-05-348 (Washington, D.C.: Apr. 26, 2005).
Page 2 GAO-05-638R Military Personnel

We found that the financial conditions of deployed and non-deployed 

servicemembers and their families are similar, but deployed 

servicemembers and their families may face additional financial problems 

related to pay. In both a 2003 DOD-wide survey and non-generalizable focus 

groups that GAO conducted on 13 military installations in the United States 

and Germany, servicemembers who were deployed reported similar 

financial conditions as those who were not deployed. Some of GAO’s focus 

group participants also noted that they—like Army reservists in GAO’s 2004 

report2

—had not received their $250 family separation allowance each 

month during their deployment. Pay record data showed that almost 6,000 

deployed servicemembers had received more than the prescribed $250 for 

January 2005, and 11 of them received a $3,000 catch-up, lump sum 

payment—the equivalent of 12 months of the allowance. This pay problem 

was due, in part, to service procedures being confusing and not always 

followed. Families who do not receive this allowance each month may 

experience financial strain caused by additional expenses, such as extra 

childcare. In addition, DOD and installation officials as well as 

servicemembers told us that problems communicating with creditors 

during deployment can cause other financial difficulties. Servicemembers 

told us that limited Internet access, the high cost of calling from overseas, 

and delays in the delivery of mail often prevented them from promptly 

contacting creditors. Failure to avoid or promptly correct serious financial 

problems can result in negative consequences, such as bad credit ratings 

for these servicemembers and decreased morale and readiness for the 

servicemembers’ units.

We also found that DOD lacks an oversight framework—one with resultsoriented performance measures and reporting requirements—for 

evaluating the effectiveness of PFM programs across the services. 

Although DOD’s 2002 human capital strategic plan stated that a 

standardized evaluation system for PFM programs is a desired goal, DOD 

does not currently have such a system. In 2003, GAO reported that DOD 

had included evaluative reporting measures in a draft of its PFM instruction 

to the services. However, the final PFM instruction, issued by DOD in 2004, 

2

 See GAO, Military Pay: Army Reserve Soldiers Mobilized to Active Duty Experienced 

Significant Pay Problems, GAO-04-911 (Washington, D.C.: Aug. 20, 2004). We found that the 

procedures to determine entitlement and to process family separation allowance were not 

well understood by either pay technicians or soldiers themselves. We recommended that the 

Secretary of the Army, in conjunction with the Under Secretary of Defense (Comptroller), 

clarify and simplify procedures and forms implementing family separation allowance 

entitlement policy.
Page 3 GAO-05-638R Military Personnel

did not address outcome measures or contain a requirement that the 

services report program results to DOD. When asked why the evaluation 

and reporting requirements had been dropped, DOD officials indicated that 

the services objected to these additional requirements. Without a policy 

requiring evaluation and a reporting relationship between DOD and the 

services, DOD and Congress do not have the visibility or oversight needed 

to address issues related to the PFM programs.

Some junior enlisted servicemembers are not receiving PFM training that is 

required by service regulations. While each of the services implements 

PFM training differently to take into account service-specific constraints, 

all of the services have policies requiring that PFM training be provided to 

junior enlisted servicemembers. The extent to which the PFM training is 

received is unknown because most of the services do not track the 

completion of PFM training at the service level. Only the Army collected 

installation-level data and could provide a service-wide estimate of PFM 

training completed by junior enlisted servicemembers. Senior Army 

officers at most of the Army installations we visited acknowledged the 

need for PFM training but noted that current deployment schedules limit 

the time available to prepare soldiers for their warfighting mission. Toplevel DOD officials have repeatedly stated that financial issues directly 

affect servicemembers’ mission readiness and should be addressed. 

Therefore, units whose servicemembers do not receive required PFM 

training risk jeopardizing their ability to meet mission requirements.

To address issues related to servicemembers’ financial management, we 

recommended in our April 2005 report that the Secretary of Defense direct 

the Under Secretary of Defense for Personnel and Readiness to take the 

following four actions:

• Take the necessary steps, in conjunction with the Defense Finance and 

Accounting Service and the services, to ensure servicemembers receive 

family separation allowances on a monthly basis during deployments. 

These steps might include those recommended in our prior review of 

Army Reserve pay,3

 such as clarifying and simplifying procedures and 

forms implementing family separation allowance entitlements or having 

DOD and the operational components of the services to work together 

to ensure the family separation allowance entitlement eligibility form is 

3

 See GAO-04-911.
Page 4 GAO-05-638R Military Personnel

received by the Defense Finance and Accounting Service to start the 

allowance when the servicemember is entitled to it.

• Identify and implement, with the services, steps that can be taken to 

allow deployed servicemembers better communications with creditors. 

These steps may include increasing Internet access and providing tollfree telephone access for deployed servicemembers when they need to 

address personal financial issues.

• Develop and implement, in conjunction with the services, a DOD-wide 

oversight framework with a results-oriented evaluation plan for the PFM 

programs and formalize DOD’s oversight role by including evaluation 

and reporting requirements in the PFM instruction.

• Require the services to develop and implement a tactical plan with timebased milestones to show how the appropriate service policy office will 

monitor financial management training and thereby ensure that junior 

enlisted servicemembers receive the required training.

Agency Comments and 

Our Evaluation

DOD’s comments on a draft of our April 2005 report are summarized below 

and reproduced in the enclosure. Regarding our four recommendations, 

DOD concurred with one and partially concurred with the remaining three.

DOD concurred with our recommendation to take the necessary steps, in 

conjunction with the Defense Finance and Accounting Service and the 

services, to ensure servicemembers receive family separation allowances 

on a monthly basis during deployments.

DOD partially concurred with our recommendation to identify and 

implement, with the services, steps (such as increasing Internet access and 

providing toll-free telephone access) to allow deployed servicemembers 

better communications with creditors. DOD stated that servicemembers 

are to establish extended absence plans for their personal finances to 

ensure that their obligations are covered. It also noted that the 

Servicemembers Civil Relief Act was established to allow servicemembers 

in training and on a deployment, the opportunity to set aside certain 

personal financial concerns and focus on the mission at hand. It further 

noted that, in all situations, additional capability to communicate, 

particularly with creditors, may not be appropriate due to operational 

requirements and that deployed units maintain a rear echelon to assist 

servicemembers in working out unforeseen financial issues that may arise 
Page 5 GAO-05-638R Military Personnel

during deployment. We agree that operational constraints need to be 

considered in any effort to enhance servicemembers’ abilities to 

communicate with creditors and that servicemembers should be 

responsible for maintaining their financial affairs by developing extended 

absence plans and using appropriate laws. Those points notwithstanding, 

we reported that some servicemembers nevertheless encountered financial 

problems because of emergencies and possibly lack of planning. 

Additionally, we recognize that the rear echelon may be able to provide 

assistance when such emergencies arise, but we also noted in our report 

that some servicemembers are reluctant to let their chain of command 

know of their financial troubles and therefore may not use militaryprovided support for private matters, such as financial problems. Our 

recommendation seeks a way to proactively address financial issues before 

the issues resulted in the negative consequences for servicemembers and 

we continue to believe it should be implemented by DOD.

DOD also partially concurred with our recommendation to develop and 

implement, with the services, a DOD-wide oversight framework with a 

results-oriented evaluation plan for PFM programs and to formalize DOD’s 

oversight role by including evaluation and reporting requirements in the 

PFM instruction. DOD noted that the department is pursuing management 

information that includes personal finance and has developed an 

information model that supports mission accomplishment and includes 

monitoring force management risk. It further stated that personal finance is 

seen as an important part of this model and that a key aspect of assessing 

personal finances will be the policies established in the November 2004 

DOD Instruction 1342.17, Personal Financial Management Programs for 

Servicemembers. We agree with DOD’s response that personal finance is an 

important part of any information model to support mission 

accomplishment. However, as we stated in our report, the current DOD 

PFM instruction does not contain program evaluation requirements or 

reports that the services should routinely provide to DOD for its PFM 

oversight role. The total absence of evaluative and reporting requirements 

in the PFM instruction is particularly notable given that DOD 

acknowledged the importance of the requirements in two earlier 

documents: (1) the 2002 human capital strategic plan, which stated that a 

standardized evaluation system for PFM programs is a desirable goal, and 

(2) an earlier draft of the instruction that contained evaluative and 

reporting requirements. Moreover, DOD did not provide us with 

documentation for how the information model would be used to address 

deficiencies in the current PFM instruction. We continue to believe, as we 

have recommended, that this instruction should make explicit DOD’s 
Page 6 GAO-05-638R Military Personnel

requirements for (1) results-oriented evaluation of the PFM programs and 

(2) the services to provide reports to DOD on their PFM programs.

Additionally, DOD partially concurred with our recommendation to require 

the services to develop and implement a tactical plan with time-based 

milestones to show how the appropriate service policy office will monitor 

whether servicemembers receive required financial management training. 

DOD noted that it had established sufficient procedures within its 

November 2004 PFM instruction to allow the military departments 

flexibility in their approach to having servicemembers “demonstrate a 

basic understanding” of important personal financial topics. We agree that 

the services may need some flexibility in the delivery of required PFM 

training. However, DOD’s response does not address the services’ lack of 

monitoring to determine whether required PFM training is actually 

received by the servicemembers. While DOD notes that the military 

services are delegated responsibility for achieving the requirements listed 

in the November 2004 instruction and that the services are responsible for 

monitoring fulfillment of the policy, we still believe, as we have 

recommended, that a service-level tactical plan with time-based milestones 

is needed to show how the appropriate service policy office will ensure that 

junior enlisted servicemembers receive required PFM training. DOD also 

stated that it would continue to monitor the behavior of servicemembers as 

the outcome of the training and evaluation accomplished by the services. 

At this point, DOD and the services do not monitor training completion—

an output. Therefore, it will be impossible to determine whether the 

desired outcome of training—improved financial behavior—is being 

achieved.

We continue to believe that our recommendations have merit and will 

strengthen the department’s oversight and the effectiveness of the PFM 

programs and training; consequently, we are not revising them. DOD also 

provided two technical comments on our draft report. We corrected one 

before receiving the DOD comments, and the other was an editorial change 

we did not believe was needed.

As agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days after its 

issue date. At that time, we will provide copies of this report to interested 

congressional committees and the Secretary of Defense. We will also make 

copies available to others upon request. This report will be available at no 

charge on GAO’s Web site at http://www.gao.gov.
Page 7 GAO-05-638R Military Personnel

If you or your staff have any questions regarding this report, please 

contact me at (202) 512-5559 (stewartd@gao.gov) or Jack E. Edwards at 

(202) 512-8246 (edwardsj@gao.gov). Other key contributors to this report 

were Marion A. Gatling, David A. Mayfield, and Terry L. Richardson.

Sincerely yours,

Derek B. Stewart

Director, Defense Capabilities

and Management

Enclosure
Page 8 GAO-05-638R Military Personnel

Enclosure I

Comments from the Department of Defense EncolsureI
Enclosure I

Comments from the Department of Defense

Page 9 GAO-05-638R Military Personnel

3
Enclosure I

Comments from the Department of Defense

(350705) Page 10 GAO-05-638R Military Personnel
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