a

GAO

United States Government Accountability Office

Report to the Honorable 

Richard J. Durbin, U.S. Senate 

April 2005 MILITARY 

PERSONNEL

More DOD Actions 

Needed to Address 

Servicemembers’ 

Personal Financial 

Management Issues

GAO-05-348
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-348.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Derek Stewart 

at (202) 512-5559 or stewartd@gao.gov. 

Highlights of GAO-05-348, a report to the 

Honorable Richard J. Durbin, U.S. Senate 

April 2005

MILITARY PERSONNEL

More DOD Actions Needed to Address 

Servicemembers’ Personal Financial 

Management Issues 

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 DODwide 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 report, Military Pay: Army Reserve 

Soldiers Mobilized to Active Duty Experienced Significant Pay Problems—

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 in 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. 

DOD lacks an oversight framework—with results-oriented performance 

measures and reporting requirements—for evaluating the effectiveness of 

PFM programs across the services. DOD’s 2002 human capital strategic plan 

stated that a standardized evaluation system for PFM programs is a desired 

goal; however, 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 did not address outcome measures or contain a 

requirement that the services report program results to DOD because the 

services objected to these additional reporting 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 in service regulations. While each of the services implements PFM 

training differently, all of the services have policies requiring that PFM 

training be provided to junior enlisted servicemembers. Moreover, the 

extent to which the PFM training is not 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 said PFM training had not been a 

priority given the need to prepare for current operations. Top-level 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. 

Congress and the Department of 

Defense (DOD) are concerned 

about the financial conditions of 

servicemembers and their families, 

particularly in light of recent 

deployments to Iraq and 

Afghanistan. Serious financial 

issues can negatively affect unit 

readiness. According to DOD, 

servicemembers with severe 

financial problems risk losing 

security clearances, incurring 

administrative or criminal penalties 

or, in some cases, face discharge. 

Despite increases in compensation 

and DOD programs on personal 

financial management (PFM), 

studies show that servicemembers, 

particularly junior enlisted 

personnel, continue to report 

financial difficulties. 

GAO assessed (1) the extent 

deployment impacts the financial 

condition of active duty 

servicemembers and their families, 

(2) whether DOD has an oversight 

framework for evaluating military 

programs designed to assist 

deployed and non-deployed 

servicemembers in managing their 

finances, and (3) the extent junior 

enlisted servicemembers receive 

required PFM training. 

What GAO Recommends

GAO is making four 

recommendations to enhance 

servicemembers’ financial 

conditions and the effectiveness of 

PFM programs and training. DOD 

did not provide comments by the 

time the final report went to print. 
Page i GAO-05-348 Financial Conditions

Contents

Letter 1

Results in Brief 4

Background 6

Financial Conditions Similar for Deployed and Non-Deployed 

Servicemembers, but Pay Administration and Communication 

Problems Exist for Deployed Members 11

DOD Does Not Have the Oversight Framework Needed to Assess the 

Effectiveness of PFM Programs 19

Some Junior Enlisted Servicemembers Are Not Receiving Required 

PFM Training 21

Conclusions 24

Recommendations for Executive Actions 25

Agency Comments 25

Appendixes

Appendix I: Scope and Methodology 27

Sampling Error and Non-Sampling Error 32

Appendix II: Findings from GAO-led Focus Groups Held at 13 

Installations 34

Appendix III: Resources Available to Assist Servicemembers with Financial 

Issues 54

Financial Management Training 54

DOD’s Financial Readiness Campaign Resources 54

Military Service Resources 56

Resources Available Outside of DOD 57

Appendix IV: GAO Contact and Staff Acknowledgments 58

Related GAO Products 59

Tables Table 1: Hypothetical Examples of Monthly Cash Compensation for 

Servicemembers Deployed to Iraq 13

Table 2: January 2005 Payments of the $250 per Month Family 

Separation Allowance to Servicemembers Deployed and 

Receiving Hostile Fire Pay 15

Table 3: Characteristics of Each Service’s Required PFM Training 

for Junior Enlisted Servicemembers 22

Table 4: Installations in the United States and Germany Where GAO 

Conducted Site Visits from May to October 2004 27
Contents

Page ii GAO-05-348 Financial Conditions

Figures Figure 1: Financial Management Assistance and Training Available 

to Servicemembers 10

Figure 2: Self-Reported Financial Condition of Servicemembers 

Who Were and Were Not Deployed for at Least 30 Days at 

the Time They Completed the 2003 DOD Survey 12

Figure 3: Negative Financial Events for Servicemembers Who Were 

and Were Not Deployed for at Least 30 Days at the Time 

They Completed the 2003 DOD Survey 14

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Abbreviations

DOD Department of Defense

PFM Personal financial management
Page 1 GAO-05-348 Financial Conditions

United States Government Accountability Office

Washington, D.C. 20548

A

April 26, 2005 Letr

The Honorable Richard J. Durbin

United States Senate

Dear Senator Durbin:

The finances of servicemembers and their families have been an ongoing 

concern of Congress and the Department of Defense (DOD), especially in 

light of more frequent deployments to support the war on terrorism and 

conflicts in Iraq and Afghanistan. DOD’s Social Compact,1

 which is part of 

DOD’s human capital strategic plan, notes that mission readiness and 

quality of life depend on whether servicemembers use their financial 

resources responsibly. Some adverse effects that may result when 

servicemembers experience serious financial problems include loss of 

security clearances, criminal or non-judicial sanctions, or adverse 

personnel actions including possible discharge from the military. 

Servicemembers with serious financial issues may also adversely impact 

the readiness of the unit. For example, servicemembers’ financial 

problems may take the servicemembers and possibly their unit 

commanders away from their primary duties in order to address problems 

with creditors. In a 2002 report to Congress, the Navy identified an 

estimated $250 million in productivity and salary losses due to 

servicemembers’ poor personal financial management.2

Congress and DOD have taken steps to decrease the likelihood that 

deployed and non-deployed servicemembers will experience financial 

problems. Since 1999, DOD has requested and Congress has granted 

annual increases in military basic pay for all active duty servicemembers 

and increases in special pays and allowances for deployed 

servicemembers, such as the family separation allowance and hostile 

fire/imminent danger pay. In addition, out-of-pocket housing expenses for 

active duty military members living in private-sector housing have 

decreased since 1999. Also, the military has developed personal financial 

1

See Department of Defense, Deputy Assistant Secretary of Defense (Military Community 

and Family Policy), A New Social Compact: A Reciprocal Partnership between the 

Department of Defense, Service Members and Families (July 2002).

2

 See Department of Defense, Report on Personal and Family Financial Management 

Programs (Mar. 31, 2002) in response to a House Committee on Armed Services 

requirement in the National Defense Authorization Act for Fiscal Year 2002.
Page 2 GAO-05-348 Financial Conditions

management (PFM) programs to provide servicemembers with financial 

literacy training, financial counseling, and other assistance to avoid or 

mitigate the adverse effects associated with personal financial problems.3

Despite the added compensation and the assistance provided through the 

PFM programs, studies in recent years by DOD and others show that active 

duty servicemembers continue to report financial problems. For example, 

a 2002 study4

 noted that 20 percent of junior enlisted servicemembers 

reported that they struggled to make ends meet financially and another 4 

percent regarded themselves as “in over their heads” with respect to their 

finances. 

The information in this report supplements our February 2004 report to you 

on bankruptcies among active duty servicemembers.5

 As agreed with your 

office, this report answers three questions: (1) To what extent does 

deployment impact the financial condition 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? We also are reporting on the prevalence 

and effect of predatory lending on servicemembers to fulfill your request 

for information on the financial conditions of active duty servicemembers.6

3

 Army Regulation 608-1, Army Community Service Center (Oct. 20, 2003). Office of the 

Chief of Naval Operations Instruction 1740.5A, Personal Financial Management 

Education, Training, and Counseling Program (Jan. 30, 2002). Marine Corps Order 

P1700.24B, Marine Corps Personal Services Manual (Dec. 27, 2001), is being revised and 

will have a list of topics that each installation will be required to cover during financial 

literacy training for first-term Marines. Air Force Instruction 36-3009, Family Support 

Center Program (July 1, 1998).

4

 See RAND, Assessing the Personal Financial Problems of Junior Enlisted Personnel, MR1444-OSD (2002). This report defines junior enlisted as those enlisted servicemembers with 

less than 10 years of service. Our report defines junior enlisted as servicemembers in pay 

grades E1 to E4.

5

 See GAO, Military Personnel: Bankruptcy Filings among Active Duty Service Members, 

GAO-04-465R (Washington, D.C.: Feb. 27, 2004).

6

 See GAO, Military Personnel: DOD’s Tools for Curbing the Use and Effects of Predatory 

Lending Practices Not Fully Utilized, GAO-05-349 (Washington, D.C.: Apr. 26, 2005).
Page 3 GAO-05-348 Financial Conditions

In conducting this review, we limited the scope of our work to active duty 

servicemembers, particularly those recently returning from deployments.7

 

Emphasis was also given to junior enlisted servicemembers, since DOD 

and service officials have indicated that this subgroup is more likely to 

encounter financial problems. Numerous methods were used to gather and 

assess information for this work. We examined DOD, service, and 

installation policies on PFM program requirements, as well as management 

guidance provided in the Government Performance and Results Act of 

1993.8

 In addition, we reviewed reports by GAO, other congressional 

research offices, DOD, and other organizations. We constructed, pretested, and administered an e-mail survey to 225 installation-level PFM 

managers. During site visits to 13 military installations located in the 

United States and Germany, we requested documents pertaining to the 

implementation and evaluation of each installation’s PFM programs, and 

we used structured interviews to gather data from a variety of personnel on 

the 13 installations: command leaders, the manager of the PFM programs, 

financial counselors, DOD civilian and military attorneys in the Judge 

Advocate General corps,9

 chaplains, and staff from the relief/aid societies; 

and separate discussion groups composed of 232 officers, senior enlisted 

personnel, and junior enlisted personnel who had recently returned from 

deployment and 112 who had not deployed, as well as 76 spouses of 

servicemembers who had not deployed or had recently returned from a 

deployment to address all three questions. While information from these 

discussion groups is not generalizable to the entire DOD population of 

active duty servicemembers, it provides context for findings in the report. 

The in-depth information about the PFM programs on the 13 installations 

was supplemented with information obtained from 3 group discussions 

with a total of 50 personnel affiliated with the PFM programs while they 

attended a November 2004 conference. We obtained and reviewed other 

7

 Our work focused on active duty servicemembers and DOD surveys of the Army, Navy, 

Marine Corps, and Air Force servicemembers, excluding National Guard and Reserve 

members who (1) have at least 6 months of service when the survey is fielded and (2) are 

below flag rank when the sample is drawn 6 months prior to the survey. Information on the 

financial condition of servicemembers in the Reserves and the National Guard can be found 

in GAO, Military Personnel: DOD Needs More Data to Address Financial and Health Care 

Issues Affecting Reservists, GAO-03-1004 (Washington, D.C.: Sept. 10, 2003), and GAO, 

Military Personnel: Observations Related to Reserve Compensation, Selective 

Reenlistment Bonuses, and Mail Delivery to Deployed Troops, GAO-04-582T (Washington, 

D.C.: Mar., 24, 2004).

8

 Pub. L. No. 103-62, (Aug. 3, 1993).

9

 Hereafter referred to as legal assistance attorneys in this report.
Page 4 GAO-05-348 Financial Conditions

information such as service and installation PFM training materials and 

installation accreditation reports. We reviewed and analyzed DOD’s 2003 

active duty survey to obtain information on the impact of deployment on 

servicemembers’ finances. The March 2003 survey had a response rate of 

35 percent. DOD has conducted and reported on research to assess the 

impact of this response rate on overall estimates. They found that, among 

other characteristics, junior enlisted personnel (E1 to E4), servicemembers 

who do not have a college degree, and members in services other than the 

Air Force were more likely to be non-respondents. We have no reason to 

believe that potential non-response bias not otherwise accounted for by 

DOD’s research is substantial for the variables we studied in this report. 

Therefore, we concluded the data to be sufficiently reliable to address our 

objectives. Further details regarding our scope and methodology are 

presented in appendix I. Data obtained from our discussion groups at the 

13 installations are summarized in appendix II. We performed our work 

from March 2004 through February 2005 in accordance with generally 

accepted government auditing standards.

Results in Brief 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 in receiving their family 

separation allowance and communicating with creditors. In a 2003 DOD 

survey, responses from servicemembers who were deployed for at least 30 

days were similar to those of their non-deployed peers with regards to their 

overall financial conditions. Moreover, while not a generalizable sample, 

90 percent of the 232 recently deployed servicemembers in our focus 

groups indicated that their financial situations either improved or remained 

about the same after a deployment. Some of the recently deployed 

servicemembers in our focus groups also noted that they—like Army 

reservists in our 2004 review10—had not received their $250 family 

separation allowance on a monthly basis. Pay records showed that nearly 

6,000 servicemembers received more than the prescribed $250 for January 

2005, and 11 of those servicemembers received a $3,000 catch-up, lump 

10 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 5 GAO-05-348 Financial Conditions

sum payment—the equivalent of 12 months of the allowance. The failure to 

pay the family separation allowance each month is occurring, in part, 

because the services’ procedures for initiating the allowance are confusing 

or not always followed. For example, the Army’s regulation implies that 

soldiers will receive their allowance after returning from deployment; 

however, in practice some installations allow servicemembers to receive 

the allowance during deployment. Not receiving this compensation each 

month to help defray household costs such as extra childcare expenses can 

place a financial strain on the family when the servicemembers are 

deployed. 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 consequences for these servicemembers, such as 

bad credit ratings or adverse effects on unit readiness and morale.

DOD does not have an oversight framework that includes results-oriented 

performance measures and the reporting requirements needed to evaluate 

the effectiveness of DOD and service programs that assist servicemembers 

in managing their personal finances. The principles of the Government 

Performance and Results Act of 1993 offer federal agencies a sound 

methodology for establishing such a framework. While DOD’s 2002 human 

capital strategic plan stated that a standardized evaluation system to 

measure the effectiveness of the PFM programs is a desired goal, DOD 

does not currently have such a system. One factor contributing to the 

absence of adequate outcome measures and a standardized evaluation 

system is the lack of DOD guidance to measure or report on the programs’ 

results. Although DOD had included evaluative reporting measures in a 

draft of its PFM instruction to the services, the final instruction issued in 

2004 did not contain outcome measures or reporting requirements because 

the services objected to the additional requirements. Without a policy 

requiring the evaluation and reporting relationship between DOD and the 

services, DOD has limited visibility and oversight to make improvements in 

the program and limited ability to achieve a standardized evaluation 

system. Moreover, Congress does not have the visibility or oversight it 

needs to address issues related to DOD’s PFM programs.

Some junior enlisted servicemembers are not receiving the required PFM 

training. While each service implements PFM training differently, all of the 

services have policies requiring that PFM training must be provided to 
Page 6 GAO-05-348 Financial Conditions

junior enlisted servicemembers. Moreover, the extent to which the PFM 

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

track the completion of PFM training at the service level. The Army was 

the only service that collected installation-level data and could provide a 

servicewide 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 PFM 

training was not a priority because current deployment schedules limit the 

time available to prepare soldiers for their warfighting mission. Top-level 

DOD officials, however, have repeatedly stated that financial issues directly 

affect unit readiness and morale and should be addressed. Thus, units 

whose servicemembers do not receive required PFM training risk 

jeopardizing their ability to meet mission requirements.

We are making four recommendations to DOD to enhance the financial 

conditions of deployed servicemembers and improve the effectiveness of 

PFM programs: (1) take steps to provide deployed servicemembers with 

their family separation allowance on a monthly basis, (2) take steps to 

provide better communications access for deployed servicemembers with 

their creditors, (3) develop a DOD-wide oversight framework with an 

evaluation plan for the PFM programs and formalize DOD’s oversight role 

in the evaluation by including evaluation and reporting requirements in the 

PFM instruction, and (4) develop and implement a tactical plan with timebased milestones to show how the appropriate service policy offices will 

monitor and ensure required financial management training is provided to 

junior enlisted servicemembers. On March 17, 2005, we provided a draft of 

this report to DOD for review and comment. As of the time this report 

went to final printing, DOD had not provided comments as requested.

Background Because large numbers of Americans lack knowledge about basic personal 

economics and financial planning, U.S. policymakers and others have been 

focusing on financial literacy, i.e., the ability to make informed judgments 

and to take effective actions regarding the current and future use and 
Page 7 GAO-05-348 Financial Conditions

management of money.11 While informed consumers can choose 

appropriate financial investments, products, and services, those who 

exercise poor money management and financial decision making can lower 

their family’s standard of living and interfere with crucial long-term goals.

One vehicle for promoting the financial literacy of Americans is the 

congressionally created Financial Literacy and Education Commission.12 

Created in 2003, the Commission is charged with (1) developing a national 

strategy to promote financial literacy and education for all Americans; 

(2) coordinating financial education efforts among federal agencies and 

among the federal government, state and local governments, non-profit 

organizations, and private enterprises; and (3) identifying areas of overlap 

and duplication among federal financial literacy activities.

To minimize financial burdens on servicemembers, DOD has requested and 

Congress has increased cash compensation for active duty military 

personnel over the last 5 years. For example, the average increases in 

military basic pay have exceeded the average increases in private-sector 

wages for each of the past 5 years.13 Also, DOD has a plan to totally 

eliminate out-of-pocket expenses that servicemembers pay when living in 

private-sector housing from 19 percent in fiscal year 2000 to zero in fiscal 

year 2005.14

Furthermore, in April 2003, Congress increased the family separation 

allowance from $100 to $250 per month and hostile fire/imminent danger 

pay from $150 to $225 per month for eligible deployed servicemembers.15 

11 See GAO, Highlights of a GAO Forum: The Federal Government’s Role in Improving 

Financial Literacy, GAO-05-93SP (Washington, D.C.: Nov. 15, 2004). This report resulted 

from a July 28, 2004, forum that GAO hosted to develop recommendations on the role of the 

federal government in improving financial literacy. The forum’s participants included a 

select group of individuals with expertise in financial literacy and education. They included 

representatives of federal and state agencies, the financial industry, non-profit 

organizations, and academic institutions.

12 Pub. L. No. 108-159, Title V, (Dec. 4, 2003).

13 See GAO-04-465R.

14 See GAO-04-465R.

15 Congress in the Ronald Reagan National Defense Authorization Act for Fiscal Year 2005 

(Pub. L. 108-375, Section 623 (Oct. 28, 2004)) made this a permanent increase for 

servicemembers.
Page 8 GAO-05-348 Financial Conditions

The family separation allowance16 is designed to provide compensation for 

servicemembers with dependents for the added expenses incurred because 

of involuntary separations such as deployments in support of contingency 

operations like Operation Iraqi Freedom. The expenses include extra 

childcare costs, automobile maintenance, or home repairs the deployed 

servicemember would normally do while home. Hostile fire/imminent 

danger pay provides special pay for “duty subject to hostile fire or 

imminent danger” and is designed to compensate servicemembers for 

physical danger.17 Iraq, Afghanistan, Kuwait, Saudi Arabia, and many other 

nearby countries have been declared imminent danger zones.18 In addition 

to these special pays, some or all income that active duty servicemembers 

earn in a combat zone is tax free.19 

Since at least the 1980s, the military services have offered PFM programs to 

help servicemembers address their financial conditions. Among other 

things, the PFM programs provide financial literacy training to 

servicemembers, particularly to junior enlisted personnel during their first 

months in the military. The group-provided financial literacy training is 

supplemented with other types of financial management assistance, often 

on a one-on-one basis. For example, servicemembers might obtain one-onone counseling from staff in their unit or legal assistance attorneys at the 

installation.

16 DOD Financial Management Regulation 7000.14.R, Volume 7A, Chapter 27, Family 

Separation Allowance (FSA), (January 2005).

17 DOD Financial Management Regulation 7000.14R, Volume 7A, Chapter 10, Special PayDuty Subject to Hostile Fire or Imminent Danger (November 2004).

18 See Congressional Research Service Report for Congress, Military Pay: Controversy 

Over Hostile Fire/Imminent Danger Pay and Family Separation Allowance Rates, 

(Washington, D.C.: Oct. 8, 2003).

19 Department of the Treasury, Internal Revenue Service, Armed Forces’ Tax Guide: For Use 

in Preparing 2003 Returns, Publication 3, Cat. No. 46072M. This publication noted that all 

military pay for the month is excluded from income when an enlisted service member, 

warrant officer, or commissioned warrant officer served in a combat zone during any part of 

a month or while hospitalized as a result of service in the combat zone. The amount of the 

exclusion for a commissioned officer (other than a commissioned warrant officer) is limited 

to the highest rate of enlisted pay, plus hostile fire/imminent danger pay for each month 

during any part of which an officer served in a combat zone or while hospitalized as a result 

of service there.
Page 9 GAO-05-348 Financial Conditions

In May 2003, the Office of the Under Secretary of Defense for Personnel 

and Readiness,20 DOD’s policy office for the PFM programs, established its 

Financial Readiness Campaign, with objectives that include increasing 

personal readiness by, among other things, (1) increasing financial 

awareness and abilities and (2) increasing savings and reducing 

dependence on credit.21 The Campaign attempts to accomplish these 

objectives largely by providing on-installation PFM program providers with 

access to national-level programs, products, and support through links 

from DOD’s Web site (www.dodpfm.org) to other Web sites, tools, and 

contacts.22

Figure 1 illustrates some of the major types of financial management 

training and assistance available to servicemembers (see app. III for 

additional details). For instance, most active duty military installations 

have an on-site manager who implements the service’s PFM programs. 

Among other things, PFM program managers and others teach classes and 

offer counseling on financial issues, ranging from basic budgeting and 

checkbook management to purchasing a car. In addition, the PFM program 

managers might work closely with the services’ relief/aid societies. The 

relief/aid societies offer grants or no interest loans for emergency 

situations. Figure 1 also shows that servicemembers may choose to use 

non-DOD resources if, for example, they do not want the command to be 

20 The offices with PFM policy responsibility in the services include the Army’s Community 

and Family Support Center Directorate, Navy’s Office of the Deputy Chief of Naval 

Operations (Manpower and Personnel), Air Force’s Office of the Deputy Assistant Secretary 

of the Air Force for Force Management and Personnel’s Assistant Deputy for Family 

Programs, and the Marine Corps Community Services.

21 See Office of the Deputy Under Secretary of Defense (Military Community and Family 

Policy), Initial Assessment and Follow-on Plan for the Department of Defense Financial 

Readiness Campaign (May 27, 2004).

22 DOD’s 27 Campaign partners are Air Force Aid Society, Army Emergency Relief Society, 

Association of Military Banks of America, Better Business Bureau, Consumer Federation of 

America, Defense Credit Union Council, Department of Labor, Department of the Treasury, 

Employee Benefits Research Institute and American Savings Education Council, Federal 

Citizen’s Information Center, Federal Deposit Insurance Corporation, Federal Reserve 

Board, Federal Trade Commission, Freddie Mac, InCharge Institute of America, Jump$tart 

Coalition for Personal Financial Literacy, Moneywise with Kelvin Boston, National 

Association of Federal Credit Unions, National Endowment for Financial Education, 

National Foundation for Credit Counseling, National Military Family Association, Navy and 

Marine Corps Relief Society, North American Securities Administrators Association, 

Securities and Exchange Commission, Social Security Administration, U.S. Department of 

Agriculture Cooperative State Research Education and Extension Service, and Women’s 

Institute for Financial Education.
Page 10 GAO-05-348 Financial Conditions

aware of their financial conditions or they need products or support not 

offered through DOD, the services, or the installation.

Figure 1: Financial Management Assistance and Training Available to Servicemembers

Sources: GAO analysis of DOD data; Image Art Explosion.

Calls chain of command

(possibly a violation of

DOD instructions) when

servicemember fails to

pay debt.

Manages financial

responsibilities

appropriately (e.g.,

car loan, credit card, 

and personal loans).

Events triggering financial training

● Initial military training (e.g., basic/recruit

 training for enlisted personnel and

 training before commissioning for officers)

● First duty station

● Predeployment

Creditor

Bank or credit union (e.g., for loans)

Commercial Web sites (e.g., for rate quotes)

Consumer counseling (e.g., for debt

 restructuring)

Financial planner (e.g., debt restructuring)

Military One Source

Resources available outside DOD

Command financial specialists

 ● Financial education ● Very general advice (e.g., debt

 management, insurance, and investing)

PFM program managers and staff

● Checkbook management training ● Credit counseling and debt restructuring ● Home buying classes

Legal service

 ● Review of purchase contracts ● Assistance with creditors ● Preparation of wills and power 

 of attorney

Service relief/aid societies

 ● Grants or no interest loans ● Emergency assistance ● Deployment-related 

 assistance (e.g., calling cards for 

 deploying servicemembers and 

 preventative automobile

 maintenance for spouses)

Military service resources

DOD's Web-based resource 

Partnerships with 27 organizations

 (e.g., with Consumer Federation of

 America and InCharge Institute)

DOD Financial Readiness Campaign resources

Unit leadership

● Commander

● Senior enlisted personnel

● Supervisor

Leader referral

Provides financial training.

Self-referral

Seeks financial assistance outside of service's and DOD's resources
Page 11 GAO-05-348 Financial Conditions

Financial Conditions 

Similar for Deployed 

and Non-Deployed 

Servicemembers, but 

Pay Administration and 

Communication 

Problems Exist for 

Deployed Members

DOD-wide survey data suggest that the financial conditions of deployed 

and non-deployed personnel are similar, but problems were found with the 

administration of a special pay to deployed personnel, as well as the ability 

of deployed servicemembers to communicate with creditors. 

Servicemembers who were deployed for at least 30 days reported similar 

levels of financial health or problems as those who had not deployed when 

they responded to a 2003 DOD-wide survey. However, some deployed 

servicemembers are not obtaining their family separation allowance on a 

monthly basis while they are deployed and separated from the families. 

And, problems communicating with creditors—caused by limited Internet 

access, few telephones and high fees, and delays in receiving ground mail—

can affect deployed servicemembers’ abilities to resolve financial issues.

Data Suggest Financial 

Conditions of Deployed 

Servicemembers and Their 

Families Similar to NonDeployed Servicemembers 

and Their Families

Data from DOD suggest that the financial conditions for deployed and nondeployed servicemembers and their families are similar. Figure 2 shows 

estimates of servicemembers’ financial conditions based on their responses 

to a 2003 DOD-wide survey.23 For each of the five response options, the 

findings for servicemembers who were on a deployment for at least 30 days 

were very similar to those of servicemembers who had not deployed during 

that time. An additional analysis of the responses for only junior enlisted 

personnel showed similar responses for the two groups. For example, 3 

percent of the deployed group and 2 percent of the non-deployed group 

indicated that they were in “over their heads” financially; and 13 percent of 

the deployed group and 15 percent of non-deployed group responded that 

they found it “tough to make ends meet but keeping your head above 

water” financially. These responses are consistent with the findings that 

we obtained in a survey of all PFM program managers and during our 13 

site visits. In the survey of PFM program managers, about 21 percent 

indicated that they believed servicemembers are better off financially after 

a deployment; about 54 percent indicated that the servicemembers are 

about the same financially after a deployment; and about 25 percent 

believed the servicemembers are worse off financially after a deployment. 

Also, 90 percent of the 232 recently deployed servicemembers surveyed in 

23 DOD’s March 2003 survey sample consisted of 34,929 individuals identified by stratified 

random sampling procedures. DOD reported that completed surveys were received from 

10,828 respondents, which resulted in an overall weighted response rate for eligibles, 

corrected for non-proportional sampling of 35 percent.
Page 12 GAO-05-348 Financial Conditions

our focus groups24 said that their financial situations either improved or 

remained about the same after a deployment.

Figure 2: Self-Reported Financial Condition of Servicemembers Who Were and Were Not Deployed for at Least 30 Days at the 

Time They Completed the 2003 DOD Surveya

a

Sampling errors of estimates for servicemembers who were not deployed do not exceed +/-2 

percentage points. Sampling errors of estimates for servicemembers who were deployed do not 

exceed +/-5 percentage points. These sampling errors do not include errors due to other sources, 

such as potential bias attributable to the overall 35 percent response rate. DOD conducted research to 

assess the impact of this response rate on overall estimates. We have no reason to believe that 

potential non-response bias not otherwise accounted for by DOD’s research is substantial for the 

variables we studied in this report.

The special pays and allowances that some servicemembers receive when 

deployed, particularly to dangerous locations, may be one reason for the 

similar findings for the deployed and non-deployed groups. The 

hypothetical situations shown in table 1 demonstrate that deploymentrelated special pays and allowances can increase servicemembers’ total 

cash compensation by hundreds of dollars per month. Moreover, as we 

noted previously in the Background section of this report, some or all 

24 Findings from our focus groups do not represent the population of servicemembers and 

therefore are not generalizable.

2

1

11

26

26

43

45

18

17

0 10 20 30 40 50 60 70 80 90 100

Very comfortable and secure

Able to make ends meet

without much difficulty

Occasionally have some difficulty

making ends meet

Tough to make ends meet but

keep your head above water

In over your head

10

Percent of servicemembers with the above responses

Deployed

Not deployed

Source: GAO analysis of DOD data.
Page 13 GAO-05-348 Financial Conditions

income that servicemembers earn while serving in a combat zone is tax 

free.

Table 1: Hypothetical Examples of Monthly Cash Compensation for Servicemembers Deployed to Iraq

Source: GAO analysis of DOD data.

a

 E = enlisted servicemember, O = Officer.

Note: Some values are rounded to the nearest whole dollar. Also, housing data are for Fort Campbell, 

Kentucky.

The 2003 DOD survey also asked servicemembers whether they had 

experienced various types of negative financial events. The differences in 

percentages were small between the deployed and non-deployed groups. 

As figure 3 shows, the largest of the three differences was 4 percentage 

points and pertained to falling behind in paying bills.

Hypothetical

situation 1:

(E-3)a

Years of service: 3

No dependents

Barracks housing

Hypothetical

situation 2:

(E-3)a

Years of service: 3

Dependents 

On-installation

housing

Hypothetical

situation 3:

(E-3)a

Years of service: 3

Dependents 

Private-sector

housing

Hypothetical

situation 4:

(E-6) a

Years of

service: 10

Dependents

Private-sector

housing

Hypothetical

situation 5:

(O-3) a

Years of

service: 10

Dependents

Private-sector

housing

Base compensation $1,641 $1,641 $1,641 $2,687 $4,729

Basic allowance for housing In kind (living in

barracks)

In kind (living in onbase housing) 622 793 923

Basic allowance for subsistence In kind (eating in

mess halls) 267 267 267 175

Subtotal: Basic military 

compensation $1,641 $1,908 $2,530 $3,747 $5,827

Family separation allowance 0 250 250 250 250

Hostile fire/Imminent danger 

pay 225 225 225 225 225

Per diem 105 105 105 105 105

Hardship duty pay 100 100 100 100 100

Subtotal: Deployment related 

compensation $430 $680 $680 $680 $680

Total $2,071 $2,588 $3,210 $4,427 $6,507
Page 14 GAO-05-348 Financial Conditions

Figure 3: Negative Financial Events for Servicemembers Who Were and Were Not Deployed for at Least 30 Days at the Time 

They Completed the 2003 DOD Surveya

a

Sampling errors of estimates for Servicemembers who were not deployed do not exceed +/-2 

percentage points. Sampling errors of estimates for Servicemembers who were deployed do not 

exceed +/-5 percentage points. These sampling errors do not include errors due to other sources, 

such as potential bias attributable to the overall 35 percent response rate. DOD conducted research to 

assess the impact of this response rate on overall estimates. We have no reason to believe that 

potential non-response bias in the estimates not otherwise accounted for by DOD’s research is 

substantial for the variables we studied in this report.

Several Thousand Deployed 

Servicemembers Not 

Receiving Family 

Separation Allowance 

Promptly

Based on DOD data for January 2005, almost 6,000 of 71,000 deployed 

servicemembers who have dependents did not obtain their family 

separation allowance25 in a timely manner. The family separation 

allowance of $250 per month is designed to compensate servicemembers 

for extra expenses that result when they are involuntarily separated from 

their families. Servicemembers in our focus groups told us that the family 

separation allowance helps their families with added costs encountered 

during their absence such as childcare costs, automobile maintenance, and 

home repairs. Delays in obtaining family separation allowances could 

cause undue hardship for some families faced with such extra expenses. 

Table 2 shows the amount of family separation allowance received in 

January 2005 by servicemembers who were deployed and receiving hostile 

fire pay. No Marines received more than the prescribed $250 monthly 

allowance for January, but approximately 10 percent of the Army and Navy 

Percent of servicemembers with the above responses

Deployed

Not deployed

Source: GAO analysis of DOD data.

19

17

21

17

16

13

0 10 20 30 40 50 60 70 80 90 100

Bounced two or more checks

Fell behind in paying bills

Pressured by creditors

25 37 U.S.C. 427.
Page 15 GAO-05-348 Financial Conditions

servicemembers and nearly 5 percent of the Air Force personnel who were 

entitled to the $250 monthly allowance received more than that prescribed 

amount. This indicates that servicemembers for three of the services had 

not received the $250 allowance on a monthly basis and were given catchup, lump sum payments. In total, almost 6,000 servicemembers received 

more than the prescribed $250 monthly allowance, with 11 servicemembers 

(1.5 percent) receiving a $3,000 catch-up, lump sum payment—the 

equivalent of 12 months of family separation pay.26 We have previously 

reported similar findings for the administration of family separation 

allowance to Army Reserve soldiers and recommended that the Secretary 

of the Army, in conjunction with the DOD Comptroller, clarify and simplify 

procedures and forms for implementing the family separation allowance 

entitlement policy.27

Table 2: January 2005 Payments of the $250 per Month Family Separation Allowance to Servicemembers Deployed and 

Receiving Hostile Fire Paya

Source: GAO analysis of DOD data.

a

DOD supplied information on servicemembers who were eligible to receive family separation 

allowance while in Afghanistan, Algeria, Angola, Arabian Sea, Bahrain, Belarus, Bosnia and 

Herzegovina, Colombia, Croatia, Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, 

Georgia, Gulf of Aden, Haiti, Indonesia, Iraq, Israel, Jordan, Kenya, Kuwait, Kyrgyzstan, Lebanon, 

26 See GAO, DOD Systems Modernization: Management of Integrated Military Human 

Capital Program Needs Additional Improvement, GAO-05-189 (Washington, D.C.: Feb. 11, 

2005) and GAO, Military Pay: Army National Guard Personnel Mobilized to Active Duty 

Experienced Significant Pay Problems, GAO-04-89 (Washington, D.C.: Nov. 13, 2003). We 

have found serious problems in DOD’s systems supporting military personnel and pay, 

noting that they were error prone and required manual data reconciliation, correction, and 

entry across nonintegrated systems. While we noted that a significant system enhancement 

project is under way to improve military pay, it is likely the department will continue to 

operate with existing system constraints for several more years.

27 See GAO-04-911.

Army Navy Marine Corps Air Force Total

Amount of 

payment Numberb % Numberb % Numberb % Numberb % Numberb %

$500-$3,000c 2,479 6 545 6 0 0 28 2 3,052 4

$251-$499 c 2,335 5 401 4 0 0 43 3 2,779 4

$250d 40,120 89 8,727 90 12,672 85 1,168 94 62,687 88

$1-$249e 89 0 21 0 2,201 15 9 1 2,320 3

Total 45,023 100 9,694 100 14,873 100 1,248 100 70,838 99
Page 16 GAO-05-348 Financial Conditions

Liberia, Macedonia, Malaysia, Oman, Pakistan, Palestine, Persian Gulf, Philippines, Qatar, Red Sea, 

Saudi Arabia, Serbia, Sierra Leone, South Africa, Tajikistan, Turkey, United Arab Emirates, Uzbekistan, 

Yemen, and 30 locations that were simply identified as “other locations.”

b

The Defense Finance and Accounting Service identified the number of servicemembers who were 

receiving hostile fire and eligible to receive family separation allowance. 

c

Amounts in these rows represent the number of servicemembers who received a catch-up, lump sum 

payment that exceeded the $250 per month.

d

Amounts in this row represent the number of servicemembers who received the prescribed $250 per 

month family separation allowance.

e

Amounts in this row represent the number of servicemembers who received partial payment for the 

$250 per month family separation allowance.

The services have different procedures that servicemembers must perform 

to obtain the family separation allowance, and some of these procedures 

are confusing and are not always followed. For example, an Army 

regulation28 states that soldiers must file a DD Form 1561 (Statement to 

Substantiate Payment of Family Separation Allowance) to substantiate 

eligibility to receive the allowance, along with a copy of the travel voucher 

to indicate the period of entitlement—which implies family separation 

allowance is received after deployment because substantiating documents 

are generally provided upon completion of travel with a voucher. The 

Army’s pay manual, however, states that only a DD Form 1561 is required to 

receive family separation allowance.29 Officials at the Defense Finance and 

Accounting Service and Army Finance Office stated that, although they 

were following this regulation, they were requiring the DD Form 1561 prior 

to departure so soldiers could receive family separation allowance during 

deployment, which is contrary to the Army regulation.30 In contrast, 

Defense Finance and Accounting Service procedures for Air Force 

servicemembers31 state that servicemembers may substantiate eligibility to 

receive family separation allowance prior to departure, using the travel 

order and the DD Form 1561. By using the travel order, Air Force 

servicemembers can receive family separation allowance during 

28 Army regulation 37-104-4, Military Pay and Allowances Policy and Procedures Active 

Component (Sept. 30, 1994).

29 Military Pay Procedures Manual, January 1995, Section 4.3.32.25, Family Separation 

Allowance.

30 An Army finance official at Fort Bragg, North Carolina, provided local guidance, which 

stated that his installation was allowed to obtain substantiating documents for family 

separation allowance before the servicemember’s departure.

31 See Defense Finance and Accounting Service-DEM 7073-1, Chapter 27, Family Separation 

Allowance (Jan. 15, 1998).
Page 17 GAO-05-348 Financial Conditions

deployment. However, elsewhere in the Defense Finance and Accounting 

procedures, it notes that most Air Force members are paid family 

separation allowance upon returning from deployment. In April 2003, Air 

Force officials attempted to clear up any confusion over how Air Force 

personnel should initiate payments of family separation allowance, by 

sending a message to a Defense Finance and Accounting official stating 

that family separation allowance paperwork should be filed before 

servicemembers depart for deployment.32 Despite this subsequent change, 

Air Force servicemembers in our June 2004 focus group noted that they 

had not received the family separation allowance during their deployments. 

An August 2004 message from the Defense Finance and Accounting Service 

reminded Air Force finance officials of this policy change.

DOD officials suggested many factors other than policy-implementation 

differences to explain why some eligible servicemembers are not receiving 

their family separation allowance on a monthly basis. Officials at the 

Defense Finance and Accounting Service and at service finance offices 

suggested that servicemembers might not obtain the allowance monthly 

because they are not aware of the benefit, they do not file the required 

eligibility form, they file incorrect documentation, or errors or delays occur 

when the unit enters the information into the pay system. Others noted 

32 An April 2003 message from the Air Force Accounting and Finance Office requested the 

change in its current business practice of paying family separation allowance to 

servicemembers at the completion of a deployment or temporary duty of 30 days or more. It 

further stated that the Air Force agreed with the Army’s and Navy’s approaches as to the 

purpose of the allowance—i.e., to defray additional costs incurred because of the forced 

separation and should be paid to the servicemembers during temporary duty, which 

includes deployment.
Page 18 GAO-05-348 Financial Conditions

that servicemembers may elect to receive the allowance as a one-time lump 

sum payment.33

Problems Communicating 

with Creditors and Families 

During Deployment May 

Cause Financial Difficulties

Servicemembers may experience financial difficulties as a result of 

communication constraints while deployed. In our March 2004 testimony, 

we documented some of the problems associated with mail delivery to 

deployed troops. With regard to deployed servicemembers’ financial 

management, our focus group participants, surveyed PFM program 

managers, and interviewed installation officials noted that delays in 

receiving correspondence from creditors have resulted in late payments 

and possibly longer-term problems for servicemembers. The longer-term 

problems might include negative information about the late payments 

being entered in one’s financial credit report, which could make it more 

difficult or expensive for servicemembers to obtain credit in the future. 

Similarly, limited access to telephones or Internet can have negative 

financial effects such as (1) delaying or preventing contact with a creditor 

when a financial issue arises, (2) making it impossible to electronically 

transfer money from a financial institution to a creditor, and (3) incurring 

overdraft expenses because the spouse could not be informed in a timely 

manner about a cash advance that the servicemember requested.

Individuals in our focus groups suggested that the access to Internet and 

telephones may not be the same across the pay grades and services. For 

example, some servicemembers noted that deployed junior enlisted 

personnel sometimes had less access to Internet than did senior deployed 

personnel, making it difficult for the former to keep up with their bills. In 

addition, some Army servicemembers told us that they (1) could not call 

33 Allowing the government to keep the allowance until the end of the deployment is 

contrary to the purpose of the allowance, which is to compensate servicemembers for the 

added monthly expenses incurred due to being involuntarily separated from their families. 

In addition, allowing servicemembers to choose to wait until the end of a deployment to 

receive a catch-up, lump sum amount of family separation allowance is probably not a 

prudent financial decision because interim payments could have been invested, for 

example, in the government-sponsored Savings Deposit Program. This program guarantees 

servicemembers that they will receive a 10 percent return on money deposited in the 

program during their deployment. According to DOD’s Financial Management Regulation, 

Volume 7A, Chapter 51, members of the armed forces serving outside the United States or its 

possessions under arduous conditions (as determined by the Secretary of Defense) in 

connection with a designated contingency operation are authorized to make deposits of 

unallocated current pay and allowances and earn interest under this program. Amounts up 

to $10,000 (including accrued interest) can be deposited with interest accrual at the rate of 

10 percent per year.
Page 19 GAO-05-348 Financial Conditions

stateside toll-free numbers because the numbers were inaccessible from 

overseas or (2) incurred substantial costs—sometimes $1 per minute—to 

call stateside creditors. In contrast, Air Force servicemembers in Germany 

said that the cost of calls to stateside creditors from Iraq or Afghanistan 

was not an issue for them because the Air Force had provided telephone 

calling cards that could be used to make such calls free of charge.

Failure to avoid or promptly correct financial problems can result in 

negative consequences for servicemembers. This includes increased debt 

for servicemembers, bad credit histories, and poor performance of their 

duties when distracted by financial problems. In addition, servicemembers 

who cannot stay on top of their finances, while deployed, may require 

assistance from officials in their chain of command to address financial 

problems, which takes those officials from their normal military duties. 

This can translate into adverse effects on a unit’s readiness and morale.

DOD Does Not Have 

the Oversight 

Framework Needed to 

Assess the 

Effectiveness of PFM 

Programs

DOD lacks the results-oriented, departmentwide data needed to assess the 

effectiveness of its PFM programs and provide the necessary oversight. 

The principles of the Government Performance and Results Act of 1993 

offer federal agencies a methodology to establish a results-oriented 

framework that includes strategic plans for program activities that 

identifies, among other things, program goals, performance measures, and 

reporting on the degree to which goals are met.34 These principles would 

assist DOD in shifting the focus of accountability for its PFM program from 

outputs, such as the number of training classes provided, to outcomes, 

such as impact of training on servicemembers’ financial behavior.

The November 2004 DOD instruction that provides guidance to the services 

on servicemembers’ financial management does not address program 

evaluation or the reports that services should supply to DOD for its 

oversight role.35 However, an earlier draft of the instruction included these 

34 Pub. L. No. 103-62, (Aug. 3, 1993). See GAO, The Results Act: An Evaluator’s Guide to 

Assessing Agency Annual Performance Plans, GAO/GGD-10.1.20 (Washington, D.C.: Apr. 1, 

1998) for a discussion of key performance indicators, the means used to verify and validate 

the measured values, and other characteristics such as those GAO identified in its report on 

assessing an agency’s annual performance plans.

35 DOD Instruction 1342.17, Personal Financial Management for Service Members (Nov. 12, 

2004).
Page 20 GAO-05-348 Financial Conditions

requirements. In our 2003 report,36 we noted that the earlier draft 

instruction emphasized evaluating the programs and cited metrics such as 

the number of delinquent government credit cards, servicemembers with 

wages garnished, and administrative actions for financial indebtedness and 

irresponsibility taken under the Uniform Code of Military Justice. When 

asked what caused the evaluation and oversight reporting requirements to 

be dropped from the finalized instruction, DOD officials said that they were 

eliminated because of objections voiced by the services. The DOD officials 

told us that the services did not want the additional reporting requirements.

DOD’s 2002 Social Compact noted that the impact of efforts to improve 

financial literacy cannot be determined without effective evaluation. The 

Social Compact also stated that a systematic approach to measuring PFM 

programs is needed to identify best practices and improved program 

performance. Currently, the only DOD-wide evaluative data available for 

assessing the PFM programs and servicemembers’ financial conditions are 

obtained from a general-purpose annual survey that focuses on the 

financial conditions of servicemembers as well as a range of other nonrelated issues. The data are limited because DOD policy officials for the 

PFM programs can only include a few financial related items to this 

general-purpose survey. Additionally, a response rate of 35 percent on the 

March 2003 active duty survey leads to questions about the generalizability 

of the findings. Furthermore, DOD has no means for confirming the selfreported information for survey items that ask about objective events such 

as filing for bankruptcy. Without a policy requiring common evaluation 

DOD-wide and reporting relationships among DOD and the services, DOD 

will continue to have limited oversight to make improvements in the PFM 

programs and limited ability to achieve a standardized evaluation system. 

In addition, Congress will not have the visibility or oversight it needs to 

address issues related to DOD’s financial management training and 

assistance to servicemembers.

Currently, service-specific efforts to assess the PFM programs are largely in 

their early stages. The services told us that they are developing outcome 

measures for evaluating their PFM programs, but none was operational at 

the time of our review. In Spring 2005, the Navy plans to develop and refine 

Navy-wide metrics such as the number of sailors performing good and poor 

financial behaviors, e.g., participating in the government’s retirement plan, 

filing for bankruptcy, and bouncing checks. Similarly, in the third quarter 

36 See GAO-03-1004.
Page 21 GAO-05-348 Financial Conditions

of fiscal year 2005, Army officials said they expect to implement outcome 

measures for assessing programs such as Financial Readiness, Family 

Advocacy, and Relocation Readiness. The Marine Corps and Air Force did 

not provide details for their plans to develop results-oriented data or 

indicate when evaluation systems would be operational. Additionally, our 

visits to 13 installations in the United States and Germany revealed much 

variability with regard to the use of performance metrics. The installations 

that provided us with their metrics often used output measures such as the 

number of people trained, rather than results-oriented outcome measures.

Some Junior Enlisted 

Servicemembers Are 

Not Receiving 

Required PFM Training

Some junior enlisted servicemembers are not receiving the required PFM 

training. While each of the services implements PFM training differently, 

all of the services have policies requiring that PFM training must be 

provided to junior enlisted servicemembers. At the time of our review, the 

services’ policies varied on where and when the initial training should 

occur. For example, the Army, Marine Corps, and Air Force regulations 

required the training at the servicemembers’ first duty station; however, the 

Navy guidance required such training prior to the servicemembers’ first 

duty station.

Despite having these policies, some servicemembers have not received the 

required training, but the extent to which the training is not received is 

unknown because servicewide totals are not always collected. Table 3 

shows how each service monitors PFM training. The Marine Corps, for 

example, only tracks PFM training at the unit level and does not tabulate 

these data for a servicewide total. As shown in the table, the Army was the 

only service that collected installation-level PFM data and could provide a 

rough servicewide estimate of PFM training completed by junior enlisted 

servicemembers. Overall, the Army estimates that about 82 percent of its 

junior enlisted soldiers completed PFM training in fiscal year 2003, leaving 

18 percent who did not receive training. PFM program staff at five of the 

six Army installations we visited told us that required PFM training was not 

being provided to all first-term soldiers. Some of the senior Army officers 

at these installations acknowledged the need to provide the PFM training to 

junior enlisted servicemembers but also noted that current deployment 

schedules limited the time available to prepare soldiers for their 

warfighting mission. The officers said they believed that improving 

servicemembers’ ability to perform duties related to their mission (e.g., 

firing a weapon) was more important than improving their personal 

financial literacy.
Page 22 GAO-05-348 Financial Conditions

Table 3: Characteristics of Each Service’s Required PFM Training for Junior Enlisted Servicemembers

Source: GAO analysis of DOD data.

a

The Army oversight office stated the number of PFM training hours it requires is in a 1998 

memorandum to the Army Chief of Staff.

In addition to how the services monitor servicemembers’ completion of 

PFM training, table 3 also shows that the services’ requirements for PFM 

training for junior enlisted personnel differ on three other characteristics: 

where the requirements are documented, the length of training, and when 

the training is administered.

• The Navy is the only service that specifies in servicewide regulations the 

number of hours of PFM training that junior enlisted servicemembers 

must complete. The oversight office for the Army identified the number 

of hours of required PFM training for first-term soldiers in a 1998 

memorandum to the Army Chief of Staff.37 The Air Force and Marine 

Corps do not specify the number of hours in servicewide regulations or 

other documents.

Characteristic Army Navy Marine Corps Air Force

How does the service 

monitor whether required 

PFM training is 

completed?

Monitored at installation 

level; data then compiled 

for servicewide total

Monitored by Navy 

Education and Training 

Command; data are not 

compiled for higher-level 

total

Monitored at unit level; 

data are not compiled for 

higher-level total 

Monitored at squadron 

level; data are not 

compiled for higher-level 

total

Is the number of hours of 

required training in a 

servicewide regulation?

Noa Yes No No

How many hours of PFM 

training are required, 

according to the service’s 

PFM program oversight 

office?

12 16 No minimum requirement No minimum requirement

When is the PFM training 

provided to 

servicemembers?

2 hours during basic 

training, 2 hours during 

advanced individual 

training, and 8 hours at 

the first duty station

16 hours during 

advanced individual 

training

Within 45 days of arrival 

at first duty station

Upon arrival at first duty 

station

37 Memorandum for Army Chief of Staff regarding: Proposed Weekly Summary Item—

Financial Readiness Training for First Term Soldiers (Nov. 23, 1998).
Page 23 GAO-05-348 Financial Conditions

• The Navy’s required length of PFM training for junior enlisted 

servicemembers is 4 hours longer than the Army requirement. The Air 

Force and Marine Corps have no minimum requirement pertaining to 

the length of the PFM training provided on its installations.

• The services use different schedules for identifying when PFM training 

is to be administered. PFM managers noted that these schedules take 

into account service-specific constraints, such as the length of time 

available for PFM training at servicemembers’ first duty station.

Top-level DOD officials have stated repeatedly that financial issues have a 

direct effect on servicemembers’ mission readiness and that the lack of 

basic consumer skills and training in finances sets the stage for financial 

difficulties. For example, we reported in 2003 that a 2002 Navy report to 

Congress had identified $250 million in productivity and salary losses due 

to poor personal financial management by servicemembers.38 Therefore, 

units whose servicemembers do not receive required PFM training risk 

jeopardizing their ability to meet mission requirements. 

Some services are taking steps to improve their monitoring of PFM 

training. During the second quarter of 2005, the Army officials said they 

hope to implement Army’s Client Tracking System that will allow the 

service as well as current and future installations to track the financial 

counseling and training that servicemembers receive. The Marine Corps is 

updating its order on personal services and developing a system to track 

financial management training. While such steps may improve the 

monitoring of PFM training completion—an important output—they still 

do not address the larger issues of training outcomes such as whether or 

not PFM training helps servicemembers to manage their finances better.39

38 See GAO-03-1004.

39 The new DOD Instruction 1342.17, dated November 2004, states that “within 3 months 

after arriving at the first permanent duty station, a servicemember shall demonstrate a basic 

understanding of pay and entitlements, banking and allotments, checkbook management, 

budgeting and saving (to include the thrift savings plan), insurance, credit management, car 

buying, permanent change of station moves and information on obtaining counseling or 

assistance on financial matters.” The instruction, however, does not specify how this is to 

be measured. It simply says that such an understanding means to comprehend the 

underlying principles of a subject and apply them to everyday life situations.
Page 24 GAO-05-348 Financial Conditions

Conclusions Although DOD-wide data show that the financial conditions for deployed 

and non-deployed servicemembers and their families are similar, some 

deployed servicemembers experience delays in obtaining their monthly 

family separation allowance. Not receiving this compensation each month 

to help defray extra household costs incurred when the servicemembers 

are deployed can result in financial hardship for the servicemembers’ 

family. Without changes to the administration of the family separation 

allowance, DOD risks placing a further financial strain on servicemembers. 

In addition, problems communicating with creditors during deployment 

can cause financial difficulties for servicemembers. Limited Internet 

access, delays in ground mail, and the high cost of calling from overseas 

often prevent servicemembers from promptly contacting creditors when 

financial issues arise. Delays in responding to creditors can result in 

serious consequences, including bad credit ratings for the servicemembers 

and adverse effects on unit readiness and morale.

While DOD states in its Social Compact that a standardized evaluation 

system to measure the effectiveness of the PFM programs is a desired goal, 

the department does not have an oversight framework that includes the 

performance measures and reporting requirements needed to fully measure 

results from its programs. In addition, the absence of evaluation and 

reporting requirements in DOD’s newly issued instruction on personnel 

financial management suggests that DOD will continue to have limited 

visibility and oversight over the PFM programs and little ability to require 

standardized assessments of the PFM programs. These deficiencies, in 

turn, will limit Congress’ ability to address issues related to DOD’s PFM 

programs.

While DOD and service officials have acknowledged that the lack of PFM 

training sets the stage for servicemembers having financial difficulties 

later, high deployment levels limit the time available for some 

servicemembers to take the PFM training. The absence of servicewide 

systems for monitoring the completion of this required training could result 

in some servicemembers never being provided such training if they are 

unable to take it at the prescribed time. Moreover, the lack of a monitoring 

system also will hamper efforts to improve PFM training since it will be 

impossible to establish a measurable relationship between whether or not 

someone completed training and how well they subsequently managed 

their finances.
Page 25 GAO-05-348 Financial Conditions

Recommendations for 

Executive Actions

To address issues related to servicemembers’ financial management, we 

recommend 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,40 such as clarifying and simplifying procedures and 

forms implementing family separation allowance entitlements or having 

DOD and the operational components of the services work together to 

ensure family separation allowance entitlement eligibility form is 

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 On March 17, 2005, we provided a draft of this report to DOD for review 

and comment. As of the time this report went to final printing, DOD had 

not provided comments as requested.

40See GAO-04-911.
Page 26 GAO-05-348 Financial Conditions

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.

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 staff members who made key 

contributions to this report are listed in appendix IV.

Sincerely yours, 

Derek B. Stewart

Director, Defense Capabilities and Management
Page 27 GAO-05-348 Financial Conditions

Appendix I

Scope and Methodology ApApenednxidexiIs

In addressing the objectives of our engagement, we limited our scope to 

active duty servicemembers because we have previously issued a number 

of reports on the compensation, benefits, and pay-related problems of 

reservists.1

 Emphasis was placed on servicemembers who had returned 

from a deployment within the last year because these individuals were 

most likely to have recent personal knowledge of deployment-related 

financial issues, as well as familiarity with financial issues of 

servicemembers serving on installations in the United States. During the 

course of our work, we visited 13 installations with high deployment levels, 

as identified by service officials2

 (see table 4). During these site visits to 

installations in the United States and Germany, special emphasis was given 

to ascertaining the financial conditions of junior enlisted servicemembers 

because DOD and service officials have reported that this subgroup is more 

likely to encounter financial problems.

Table 4: Installations in the United States and Germany Where GAO Conducted Site 

Visits from May to October 2004

1

 Our work focused on active duty servicemembers, with the exception of DOD active duty 

surveys where the survey population included reservists serving on active duty assignments 

for at least 6 months. The Related GAO Products section at the end of this report lists 

several products that focus on reservists and their compensation, benefits, and pay-related 

problems that result from deployment.

2

 Bolling Air Force Base, Washington, D.C., did not have high deployment rates; however, Air 

Force officials suggested we visit this installation to quickly obtain information on the 

financial condition of junior enlisted servicemembers in an area with a high cost of living.

Service Installation

Army

Fort Bragg, North Carolina

Fort Campbell, Kentucky

Fort Drum, New York

Fort Lewis, Washington

Fort Stewart, Georgia

Ray Barracks, Friedberg, Germany

Navy

Naval Air Station Jacksonville, Florida

Naval Station San Diego, California
Appendix I

Scope and Methodology

Page 28 GAO-05-348 Financial Conditions

Source: GAO.

To address the extent to which there is a financial impact of deployment on 

active duty servicemembers and their families, we reviewed and analyzed 

laws, policies, and directives governing military pay, such as the 

Servicemembers Civil Relief Act3

 and DOD’s Financial Management 

Regulation 7000.14R, Volume 7A, as well as documents related to the tax 

treatment of military pay, including the Internal Revenue Service Armed 

Forces’ Tax Guide: For Use in Preparing 2003 Returns. We also reviewed 

and analyzed GAO reports on military compensation and deployment and 

reports from other agencies, including DOD, the Congressional Research 

Service, and the Congressional Budget Office. We contacted the Federal 

Trade Commission to ascertain what data were available through Military 

Sentinel4

 on servicemembers’ financial conditions and complaints. We 

conducted focus groups and surveyed servicemembers and spouses and 

held individual interviews with PFM program managers, noncommissioned officers, and legal assistance attorneys at installations we 

visited to obtain their perspectives on the impact of deployment on 

servicemembers. We also compared and contrasted results of our survey 

of servicemembers and spouses with data obtained through DOD-wide 

active duty surveys from 2003 for face validity and to identify trends and 

other indicators of financial impact. We assessed the reliability of survey 

data that DOD uses to obtain information on the financial conditions of 

servicemembers and their families. The March 2003 survey had a response 

rate of 35 percent. DOD has conducted and reported on research to assess 

Marine Corps

Camp Lejeune, North Carolina

Camp Pendleton, California

Air Force

Bolling Air Force Base, Washington, D.C.

Langley Air Force Base, Virginia

Ramstein Air Base, Germany

3

 50 U.S.C. App. § 501.

4

 According to the Federal Trade Commission, Military Sentinel is a joint initiative with DOD 

that aims to improve consumer protection for servicemembers. Military Sentinel is 

designed to centralize the online collection of consumer complaints from DOD and military 

communities, which is intended to, among other things, help target law enforcement 

actions.

(Continued From Previous Page)

Service Installation
Appendix I

Scope and Methodology

Page 29 GAO-05-348 Financial Conditions

the impact of this response rate on overall estimates. They found that, 

among other characteristics, junior enlisted personnel (E1 to E4), 

servicemembers who do not have a college degree, and members in 

services other than the Air Force were more likely to be non-respondents. 

We have no reason to believe that potential non-response bias not 

otherwise accounted for by DOD’s research is substantial for the variables 

we studied in this report. Therefore, we concluded the data to be 

sufficiently reliable to address our objectives. Additional perspectives 

regarding the financial impact of deployment were obtained in interviews 

with DOD and service policy officials. Still other perspectives were 

obtained from installation officials using the structured interviews and an 

e-mail survey to all PFM program managers. This information was 

supplemented with information obtained from three group discussions 

with a total of 50 personnel affiliated with the PFM programs while they 

attended a November 2004 conference. We also reviewed family separation 

allowance data from the Defense Finance and Accounting Service for 

servicemembers who were deployed and receiving imminent danger pay in 

January 2005.5

To facilitate the data gathering process for all three questions,6 we 

developed and pre-tested four types of data collection instruments. The 

content of the instruments was identified through review of policies, 

reports, and other materials, and from interviews with DOD and service 

officials.

• Structured questionnaires and focus group protocols were used to 

increase the likelihood that the questions were asked and procedures 

were conducted in a standardized manner, regardless of which GAO 

analyst conducted the interviews and focus groups during the 13 site 

visits. While the interviews and focus groups provided valuable 

5

Over the years, we found serious problems in DOD’s systems supporting military personnel 

and pay. We noted that the systems were error prone and required manual data 

reconciliation, correction, and entry across nonintegrated systems. While we noted that a 

significant system enhancement project is under way to improve military pay, it is likely the 

department will continue to operate with existing system constraints for several more years. 

See GAO-05-189 and GAO-04-89.

6

 In this engagement, we assessed (1) the extent deployment impacts the financial condition 

of active duty servicemembers and their families, (2) whether DOD has an oversight 

framework for evaluating military programs designed to assist both deployed and nondeployed servicemembers in managing their personal finances, and (3) the extent junior 

enlisted servicemembers receive required PFM training.
Appendix I

Scope and Methodology

Page 30 GAO-05-348 Financial Conditions

qualitative data to illustrate important issues, the findings were not 

generalizeable to the population of all active duty servicemembers 

because of the small non-random samples of personnel who 

participated in the data collection sessions.

• Separate structured interview protocols were created for seven types 

of officials: installation commanders, PFM program managers, senior 

non-commissioned officers (E8 to E9), legal assistance attorneys, 

chaplains, command financial specialists, and officials representing 

service relief/aid societies. While some of the questions were the 

same or very similar for some issues, the content of the structured 

interviews was tailored to the type of official interviewed.

• A single focus group protocol, with seven central questions and 

follow-up questions, was used to solicit information from each of the 

four types of homogeneous groups: junior enlisted servicemembers 

(E1 to E4), non-commissioned officers (E5 to E9), company-grade 

officers (O1 to O3), and spouses of servicemembers who had 

recently returned from deployments.

• An anonymous survey was administered at the beginning of each 

focus group to obtain specific, sensitive (e.g., financial difficulties 

experienced by the servicemembers and their families) information 

that focus group participants might not feel comfortable discussing 

with other servicemembers present. Administering the survey before 

the focus group questions were asked allowed us to quantify 

participants’ perspectives and situations, without the 

servicemembers being influenced by the subsequent discussions.

• An e-mail survey was administered to the DOD-wide population of 225 

PFM program managers identified by service officials. The response 

rate for the survey was 74 percent. Because we surveyed the population 

of PFM program managers and obtained a sufficiently high response 

rate, the findings from this survey are generalizeable to the population 

of all PFM managers.

To assess the adequacy of DOD’s oversight framework for evaluating 

military programs that assist both deployed and non-deployed 

servicemembers in managing their personal finances, we reviewed DOD’s, 

the services’, and selected installations’ PFM program policies, along with 

DOD’s strategic and tactical plans for implementing the PFM programs. In 

addition, we reviewed DOD’s 2002 report on Personal and Family Financial 
Appendix I

Scope and Methodology

Page 31 GAO-05-348 Financial Conditions

Management Programs submitted to the House of Representatives Armed 

Services Committee. The Government Performance and Results Act of 

19937

 and Standards for Internal Control in the Federal Government8

provided model criteria for determining the adequacy of the oversight 

framework. We gathered perspectives about the outcome measures to 

evaluate the PFM programs from DOD and service-level officials, along 

with responses from the previously mentioned discussion groups at the 

November 2004 conference and the DOD-wide survey of PFM managers. 

We reviewed and analyzed data related to the effectiveness of the PFM 

programs from DOD-wide active duty survey conducted in 2003. We also 

reviewed accreditation reports for installation PFM programs, where 

available, and other materials documenting the use or effectiveness of PFM 

programs. Finally, we attended a GAO-sponsored forum in November 2004, 

in which a select group of individuals with expertise in financial literacy 

and education developed recommendations on the role of the federal 

government in improving financial literacy among consumers.9

To assess the extent to which DOD and the services provide PFM training 

to junior enlisted servicemembers, we examined the regulations and other 

materials that document PFM training requirements such as the number of 

hours of training provided and when the training should occur. We 

reviewed DOD’s, the services’, and selected installations’ PFM training 

materials, and procedures for monitoring completion of the training. We 

also reviewed reports issued by GAO, DOD, and other organizations that 

addressed the PFM programs or the content and delivery of similar 

programs designed to either increase financial literacy or address financial 

problems. Additionally, we interviewed service headquarters, as well as 

installation PFM officials about required training for junior enlisted 

servicemembers and how it is administered and monitored.

7

 Pub. L. No. 103-62 (Aug. 3, 1993).

8

 See GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-0021.3.1

(Washington, D.C.: November 1999).

9

 See GAO-05-93SP.
Appendix I

Scope and Methodology

Page 32 GAO-05-348 Financial Conditions

Sampling Error and 

Non-Sampling Error 

The e-mail survey that was administered by GAO to the DOD-wide 

population of 225 PFM program managers is not subject to sampling error 

since it was sent to the universe of PFM program managers. With a 

response rate for the survey of 74 percent and no clear differences between 

respondents and non-respondents, the findings from this survey are 

generalizeable to the population of all PFM managers. Our PFM survey had 

differential response rates that were as low as 65 percent for the Air Force 

and as high as 89 percent for the Navy.

The questionnaire provided to focus group participants was to gather 

supplemental information only and is not generalizable to DOD, but rather 

to those who participated in our focus groups only.

Because DOD surveyed a sample of servicemembers in its 2003 active duty 

survey, their results are estimates and are subject to sampling errors. 

However, the practical difficulties in conducting surveys of this type may 

introduce other types of errors, commonly known as non-sampling errors. 

Non-sampling errors can include problem(s) with the list from which the 

sample was selected, non-response in obtaining data from sample 

members, and/or inadequacies in obtaining correct data from respondents. 

These errors are in addition to the sampling errors. In this survey, the 

response rate was 35 percent. The estimates obtained from the 

respondents will differ from the population value to the extent that values 

for non-respondents are different, in the aggregate, from values for 

respondents.

Non-Sampling Error and 

Data Quality

We conducted in-depth pre-testing of the PFM program manager survey, as 

well as the questionnaire disseminated to focus group participants, to 

minimize measurement error. However, the practical difficulties in 

conducting surveys of this type may introduce other types of errors, 

commonly known as non-sampling errors. For example, measurement 

errors can be introduced if (1) respondents have difficulty interpreting a 

particular question, (2) respondents have access to different amounts of 

information in answering a question, or (3) those entering raw survey data 

make key-entry errors. We took extensive steps to minimize such errors in 

developing the questionnaire, collecting the data, and editing and analyzing 

the information. For example, we edited all surveys for consistency before 

sending them for key-entry. All questionnaire responses were double keyentered into our database (that is, the entries were 100 percent verified), 

and a random sample of the questionnaires was further verified for 
Appendix I

Scope and Methodology

Page 33 GAO-05-348 Financial Conditions

completeness and accuracy. In addition, we performed computer analyses 

to identify inconsistencies and other indicators of errors.

DOD also pre-tested its questionnaire to minimize measurement error and 

performed analysis to assess non-response error.

We performed our work from March 2004 through February 2005 in 

accordance with generally accepted government auditing standards.
Page 34 GAO-05-348 Financial Conditions

Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations ApendxiI

We held focus group sessions at the 13 military installations we visited 

during the course of this engagement to obtain servicemembers’ 

perspectives on a broad range of topics, including the impact of 

deployment on servicemembers’ finances and the types of lenders military 

families use, along with the PFM training and assistance provided to 

servicemembers by DOD and service programs (see app. I for a list of 

installations visited). Servicemembers who participated in the focus 

groups were divided into three types of groups: junior enlisted personnel 

(E1 to E4), mid-grade and senior enlisted personnel (E5 to E9), and junior 

officers (O1 to O3). Although we requested to meet with servicemembers 

who had returned from a deployment within the last 12 months, some 

servicemembers who had not yet deployed also participated in the focus 

groups. At some installations, we also held separate focus groups with 

spouses of servicemembers. Typically, focus groups consisted of 6 to 12 

participants.

We developed a standard protocol, with seven central questions and 

several follow-up questions, to assist the GAO moderator in leading the 

focus group discussions. The protocol was pre-tested during our first 

installation visit and was used at the remaining 12 installations. During 

each focus group session, the GAO moderator posed questions to 

participants who, in turn, provided their perspectives on the topics 

presented. We essentially used the same questions for each focus group, 

with some slight variations to questions posed to the spouse groups.

We sorted the 2,090 summary statements resulting from the 60 focus 

groups into categories of themes through a systematic content analysis. 

First, our staff reviewed the responses and agreed on response categories. 

Then, two staff members independently placed responses into the 

appropriate response categories. A third staff member resolved any 

discrepancies.

Below, we have identified the seven questions and sample 

responses/statements associated with each question. The themes and the 

number of installations for which a statement about a theme was cited are 

provided in italics. Also, two examples of the statements categorized in the 

theme are provided. Only those themes cited at a minimum of three 

installations are presented. The number of installations—rather than the 

number of statements—is provided because (1) the focus of this 

engagement was on DOD-wide issues and (2) a lengthy discussion in a 

single focus group may have generated numerous comments.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 35 GAO-05-348 Financial Conditions

1. How has deployment affected military families financially in 

your unit?

1.a. Other reason deployment affects families financially (N=13)1

• Example: Financial problems stem from relationship problems. 

Many Marines file for divorce when they return from a deployment.

• Example: Another sailor said they have to buy a lot of supplies, such 

as stocks of deodorant and other toiletries, to take on the 

deployment. The government does not pay for those supplies.

1.b. Better financially – increased income (N=13)

• Example: A soldier stated that his family was barely making ends 

meet when he left for a deployment. However, when he returned, his 

wife had paid off all of the bills and saved some of the money. He and 

his wife look forward to deployments as a way to catch up on 

expenses and savings.

• Example: Some cited receiving additional hazardous/combat duty 

pay and attendant tax exemptions during deployment as reasons for 

the financial benefits. In addition, some servicemembers mentioned 

that they no longer had to pay rent and incur related household 

expenses such as food and other household goods while deployed. 

The additional money allowed families to pay off debts and 

outstanding bills.

1.c. Worse financially – increased needs (e.g., childcare and 

transportation) (N=12)

• Example: Deployment worsens some servicemembers’ finances 

because childcare expenses increased. In many instances, to avoid 

having childcare expenses, one parent will work during the day and 

one during the night. When the servicemember deploys, the 

remaining spouse must find suitable daycare for the children. This is 

an added expense the deployment forces on the family.

1

 N=number of installations out of a possible 13, where the theme was cited.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 36 GAO-05-348 Financial Conditions

• Example: During a deployment there are more expenses because the 

spouse has to pay for things that the servicemember would usually 

do personally, like house and car repairs.

1.d. Worse financially – other (N=11)

• Example: The military encourages soldiers to obtain a power of 

attorney before they deploy, but the power of attorney gives the 

spouse access to all of the soldier’s finances. In many cases, the 

spouse has used this power to spend all of the soldier’s money. One 

soldier returned from his deployment to find that he only had $80 left 

in his bank account.

• Example: One unmarried soldier said he was 5 months behind in 

paying his bills because he’s single and did not have anyone to help 

him while he was deployed.

1.e. No change financially because of deployment (N=11)

• Example: Overall, servicemembers are not really making more 

money when they are deployed. The additional pay and allowances 

make up for the increased spending that a family must do when the 

servicemember is not at home.

• Example: Another servicemember stated that she was a single parent 

and had to send her child back to the west coast with her parents. 

She stated she came out about even financially because the extra 

money she made was spent on the additional expenses to care for her 

son.

1.f. Effect issue – servicemember has dependents (N=11)

• Example: Single parents face an entirely different set of issues during 

a deployment. For example, in many cases, the member will be the 

only parent for a child; therefore, when that member is deployed 

long-term childcare must be arranged. In most situations, the 

member will arrange for an immediate or extended family member to 

assume the childcare responsibilities.

• Example: Some Navy servicemembers said that the status of 

personal finances during a deployment will vary based on the marital 
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 37 GAO-05-348 Financial Conditions

status of the sailor. For example, sailors with dependents will collect 

more entitlements than those who are single.

1.g. Worse financially – increased wants (N=11)

• Example: Some soldiers were buying expensive cars with their 

deployment pays. However, when the servicemembers returned 

from deployment to their regular pay they were not able to afford 

their deployment standards of living because the increase in income 

and tax free status no longer applied.

• Example: The spouse may be depressed during the deployment and 

spend the money the soldier is being paid. In these cases, they have 

no one around telling them to save it or to pay the bills. They shop to 

fight the depression and to make themselves feel better.

1.h. Better financially – other (N=10)

• Example: In some cases, the family’s finances actually improve 

because the spouse takes control of the bills during the deployment.

• Example: Another participant stated that she and her husband are 

more financially responsible now compared to when they were 

younger. Thus, they are able to benefit more from the monetary 

benefits of deployment.

1.i. Effect issue – personal ability to manage money (N=9)

• Example: Poor post-deployment spending habits (e.g., buying a new 

expensive car) of some single servicemembers caused them to lose 

extra income earned during deployment. This left them with more 

debt than before they left for the deployment.

• Example: In many cases, it is when the soldier returns from the 

deployment that families will get into financial troubles. During the 

deployment, there is a significant increase in pay and an increase in 

spending. After the deployment, the servicemember’s pay returns to 

normal and the family may have trouble dealing with the loss of 

income, which can encourage increased debt.

1.j. Effect issue – servicemember does not have dependents (N=7)
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 38 GAO-05-348 Financial Conditions

• Example: Single servicemembers seemed to fare better financially 

because they do not incur the same expenses as married couples, 

such as childcare and transportation costs. The single member is 

more likely to be living with roommates and when deployed, he/she 

only has a small amount to pay for rent. The married servicemember, 

on the other hand, still has a mortgage to pay back home, along with 

the additional expenses previously mentioned.

• Example: Single servicemembers are better off financially because 

they only have to take care of themselves financially.

1.k. Effect issue – where deployed (N=6)

• Example: The effect on finances depends on the location to which a 

servicemember is deployed. The pay and allowances that a soldier 

receives vary from location to location. In some places, soldiers can 

make a lot of money; in others, they will not.

• Example: The financial impact of deployment depends on where an 

officer was deployed. In South Korea, servicemembers pay taxes and 

do not receive extra pay, as did those who served in combat zones. In 

addition, individuals deployed to South Korea lost their Basic 

Allowance for Housing, even though they needed it while deployed. 

The officer needed to live off base because of a lack of housing on 

base there. This meant paying for two households, one on 

deployment and one for the spouse and children at home.

1.l. Worse financially – loss of income (N=5)

• Example: Some spouses mentioned that they know of some soldiers 

that had to give up their second jobs when they left on the 

deployment and the loss of this income had a big impact on the 

family’s finances.

• Example: While at their home station, sailors collect commuted 

rations, also referred to as comrats. Commuted rations are a pay 

allowance given to sailors to cover the cost of meals incurred off 

base when they are not serving on and eating aboard the ship. When 

a sailor goes out to sea, the commuted rations payments are stopped 

and sea pay is started. Also, a sailor is entitled to Career Sea special 

pay, or sea pay, at a monthly rate of up to $750. The actual amount of 

sea pay varies based on the sailor’s rank and number of years served 
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 39 GAO-05-348 Financial Conditions

and can range from $70 to $750 a month. However, younger sailors 

do not have enough time accrued on their sea pay clock to make up 

for the loss of commuted rations pay. Therefore, some families will 

actually lose money during the deployment.

1.m. Better financially – decreased expenses (N=5)

• Example: At some deployment locations, there is nowhere to spend 

the extra income. There are no bars, no daily expenses like gasoline, 

and no phone bills. Yet the Marines are being paid the additional 

entitlements and pay.

• Example: One participant said she thought her family’s finances were 

in better shape during her husband’s deployment because he was not 

able to spend the extra money he earned and the family was able to 

save more money while he was deployed.

2. Could you tell me about servicemembers you know who have 

gone through any financial difficulties such as declaring 

bankruptcy, falling behind on bills, or having a car or appliance 

repossessed?

2.a. Overspending/bad money management (N=13)

• Example: There were servicemembers who ran into severe financial 

problems after they returned from deployment due to overspending 

and overextending themselves financially while they were deployed.

• Example: Another participant said that he knew of a few junior 

enlisted servicemembers who spent all their money on expensive 

cars and other things, once they returned from deployment. They did 

not save any of the extra money they received.

2.b. Other experiences with financial difficulties (N=13)

• Example: One airman experienced a situation in which a creditor 

would not accept the automatic money transfer that was set up 

before the deployment.

• Example: One soldier’s ex-wife took him to court while he was 

deployed in an attempt to obtain additional child support money. 

Because of the additional entitlements and pay that the soldier was 
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 40 GAO-05-348 Financial Conditions

collecting, the court increased the payments to match. The soldier 

was unable to return home or communicate to prevent the action or 

mediate in the situation.

2.c. Defense Finance and Accounting Service errors (N=11)

• Example: One of the airmen had a series of late payments during a 

deployment because Defense Finance and Accounting Service did 

not process an allotment correctly and the money was not getting 

sent to the correct place.

• Example: Almost all of the airmen knew someone who did not have 

their pay entitlements stopped after returning from the deployment. 

In most instances, Defense Finance and Accounting Service was 

continuing to pay the entitlement for several months; unfortunately, 

once the problem was resolved, Defense Finance and Accounting 

Service took back the amount owed in one lump sum. This left the 

airmen with paychecks amounting to zero dollars.

2.d. Communication problems (lack of Internet/e-mail/mail/phone) 

(N=10)

• Example: A servicemember stated that a major issue with 

deployment was not being able to pay bills on time because the 

infrastructure down range (combat zone) was not immediately set up 

to deliver/send mail.

• Example: During deployments, the junior enlisted personnel do not 

have as much access to the Internet as the senior Marines. This can 

have a negative impact on their ability to access their checking and 

other financial accounts, thereby impacting their ability to manage 

their finances.

2.e. Difficulty maintaining checkbook/finances (N=10)

• Example: Many servicemembers have the mentality that because 

they earn the money it is theirs to manage. When the soldier is at 

home, he or she controls the finances; and when the soldier leaves, 

the spouse does not know how to handle the bills, finances, or 

budget.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 41 GAO-05-348 Financial Conditions

• Example: In many situations, single sailors may not have someone 

back home to take care of their bills or manage their finances.

2.f. Car repossessed (N=9)

• Example: Some soldiers spent their money quickly after they 

returned from the deployment and bought expensive cars. In a few 

instances, these cars were repossessed because the soldiers could 

not make the monthly payments.

• Example: A soldier stated that some servicemembers’ allotments 

were not processed, which resulted in their cars being repossessed. 

This also left the servicemembers with a bad credit rating.

2.g. Did not experience financial difficulties during deployment 

(N=6)

• Example: A participant stated he knew of very few soldiers who were 

negatively affected financially because of deployment.

• Example: Those who fared well with their finances had relationships 

with helpful people/spouses who were able to manage their finances 

for the servicemembers while they were deployed.

2.h. Fell behind in bills (N=6)

• Example: A servicemember said that he and his spouse had fallen 

behind on paying their bills.

• Example: A soldier said that a servicemember’s phone was 

disconnected because his spouse went to another state to visit 

relatives for 2 months and the phone bill was not paid.

2.i. Bankruptcy (N=5)

• Example: Participants stated that they had heard of very few 

servicemembers who had to file for bankruptcy as a result of 

deployment.

• Example: One of the officers was aware of a sergeant who had to file 

bankruptcy upon returning from deployment. During the 
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 42 GAO-05-348 Financial Conditions

deployment, the sergeant’s spouse spent all of the extra money and 

took out “a ton” of additional debt.

2.j. Problems with government credit card (N=4)

• Example: The government travel card causes more problems than 

other cards. Sailors are traveling back to back with several 

deployments and take out back to back debts. The Travel Processing 

Center may not process the travel claims in 10 days like they are 

supposed to, so people are running up debt on the government travel 

card that they cannot pay off.

• Example: Sometimes servicemembers have had to pay (their 

government travel card bill) with their own money while waiting for 

funds to be provided/reimbursed by the government. This takes 

money out of their household and can affect their credit rating. It can 

take up to 2 months to get their money from the Defense Finance and 

Accounting Service.

3. During your deployment, how did servicemembers in your unit 

handle situations when there were financial problems at home?

3.a. Used in-theatre resources (chain of command, e-mail, Internet) 

(N=10)

• Example: Soldiers had to go through their chain of command to take 

care of some of their financial situations and the issues were resolved 

with the assistance of the chain of command.

• Example: Most of the other participants said they had a noncommissioned officer log them onto the Internet to check on their 

bills, and this helped them.

3.b. Used resources at home (family support center, family readiness 

officer) (N=8)

• Example: There are many people on base that help spouses during 

the deployment. The key volunteers group that meets once or twice a 

week is a good resource for the families to use if they need assistance 

during the deployment.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 43 GAO-05-348 Financial Conditions

• Example: On Air Force bases, there is an abundance of assistance for 

servicemembers with financial problems. Information is provided 

through: First Term Airman Center, Personal Financial Counseling, 

Air Force Aid Society, Air Force Assistance Fund, First Sergeants, 

Finance, and the Judge Advocate General. These are some of the 

resources available to servicemembers for finance-related issues.

3.c. Other financial problems on homefront (N=5)

• Example: Sometimes a single servicemember will leave advance rent 

checks for the landlord of the apartment and the landlord will 

deposit all of the checks at once, which results in overdrafts for the 

servicemember.

• Example: There are many instances of spouses back home that spend 

all of the additional income that the Marine is making during the 

deployment. When the Marine returns, he or she will find all of their 

money gone and nothing to show for it.

3.d. Waited until they got home (N=5)

• Example: Some participants said they just waited to handle the 

problems until after they returned home if they do not have anyone 

to help them and the situation had not been brought to the 

command’s attention. They did not want the command involved in 

their finances.

• Example: In instances where the servicemember’s spouse spends all 

of the money, the member normally is not able to do anything until he 

or she returns from the deployment.

4. What kind of financial assistance does your service or the 

military need to take care of financial problems when people are 

deployed?

4.a. Pre-deployment briefs (more information or briefs before 

deployment notice received) (N=11)

• Example: More financial awareness training prior to the deployment 

would have helped alleviate many problems that individuals 

experienced. The current 2-minute brief is not enough.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 44 GAO-05-348 Financial Conditions

• Example: Even though the base legal office offers a will and power of 

attorney class every Tuesday, some Marines are unable to attend. 

The information in the classes needs to be incorporated into the predeployment briefings.

4.b. Other kinds of financial assistance needed (N=9)

• Example: Small groups, such as married servicemembers with 

children or single servicemembers, should be given specific attention 

or focus when information on finances is distributed because the 

different groups have different needs when it comes to finances.

• Example: The First Term Airmen Center should give out warnings to 

new airmen about which lenders around base are good to work with 

and which ones are not so good. 

4.c. Sustained training (provided throughout career) (N=7)

• Example: Financial training should occur upfront and be proactive—

not be reactive, like it is now. Currently, classes are required only if 

the soldier has written bad checks.

• Example: More overall financial education is needed. One soldier 

was enlisted for 5 years before he got any formal financial 

management training, and that was only because he got in trouble. 

Education is the key in improving financial management.

4.d. Early training (boot camp, Advanced Individual Training) 

(N=6)

• Example: The military needs to provide more financial training in 

basic/boot camp to include in-depth discussions of allotments, 

deductions, and leave and earnings statements. One soldier said he 

did not know what a leave and earnings statement was until he came 

to his unit.

• Example: Financial training courses should be incorporated into 

basic training or technical school. By conducting this training early, 

DOD may have an impact on initial purchase decisions made by 

servicemembers.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 45 GAO-05-348 Financial Conditions

5. What kinds of experiences have your fellow servicemembers or 

subordinates had with predatory lenders?

5.a.Other issues regarding experiences with predatory lenders 

(N=13)

• Example: Business representatives will tell young Marines that they 

can buy an item for a certain amount each month. They keep the 

Marine focused on the low monthly payments and not on the interest 

rate or the term of the loan.

• Example: Some Marines feel that a business would not take 

advantage of them because they are in the military. This leads them 

to be more trusting of the local businesses than they should be, 

which in turn, leads the businesses to take advantage of them.

5.b. Predatory lender used – car dealers (N=11)

• Example: Most of the participants stated that the car dealerships 

around the base were the worst predatory lenders because they 

charge high interest rates and often provide cars that are “lemons.” 

They said that most of the sales people at the dealerships are former 

military who know how to talk to servicemembers to obtain the 

members’ trust. The servicemember does not expect this. 

• Example: One captain had a Marine in his unit who signed a contract 

with a car dealer for a loan with 26 percent interest rate. The captain 

took the Marine to the Marine Credit Union and got him a new loan 

with 9.5 percent interest rate.

5.c. Predatory lender used – payday lenders (N=10)

• Example: A master sergeant got caught in the check-cashing cycle. 

He would write a check at one payday lender in order to cover a 

check written at another lender during a previous week.

• Example: One participant told us that when he was a younger Marine 

he got caught up with a payday lender. The problem did not resolve 

itself until he deployed and was not able to go to the lender anymore.

5.d. Reason for using predatory lender – get fast cash and no hassle 

(N=10)
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 46 GAO-05-348 Financial Conditions

• Example: People use payday lenders because they are quick and 

easy. All the soldiers have to do is to provide their leave and earnings 

statement and they get the money.

• Example: Most of the participants say they know people who have 

used a payday lender, and those soldiers use them because they have 

bad credit and can get quick cash.

5.e. Predatory lender targeting – close proximity and clustering 

around bases (N=9)

• Example: It is almost impossible to be unaware of lenders and 

dealerships because many are clustered in close proximity to the 

installation. They also distribute flyers and use pervasive advertising 

in local and installation papers.

• Example: The stores and car lots near the installation use signs that 

say “E1 and up approved” or “all military approved” to get the 

attention of the military servicemembers.

5.f. Command role when contacted by creditors (N=8)

• Example: The non-commissioned officers offer to go with the junior 

enlisted to places like car dealers; but the young soldiers do not take 

them up on these offers.

• Example: One participant said that debt collectors do call his house 

and the command. He noted that one lender called him nine times in 

one day and his Chief Petty Officer eventually asked the lender to 

stop harassing his sailor.

5.g. Predatory lender targeting – advertising in installation/local 

newspaper (N=7)

• Example: Soldiers are being targeted by predatory lenders in a 

variety of ways; for example, flyers are left on parked cars at the 

barracks, advertising is done at installation functions, and words 

such as “military” are used on every piece of advertising to make the 

servicemember believe that the company is part of or supported by 

the military. The servicemember would normally trust lenders 

associated with the military.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 47 GAO-05-348 Financial Conditions

• Example: Most predatory lenders have signs that say “military 

approved” or have commercials that say the same thing or “E1 and 

above approved.”

5.h. Reason for using predatory lender – urgent need (N=6)

• Example: Many soldiers use payday lenders because they are in a 

bind for money and they know these lenders can provide quick cash.

• Example: Soldiers will use a payday lender because they need money 

for a child, the kids, the house payment, etc. In many cases, it does 

not matter why they need it; they just need it. So, they go where they 

can get cash the fastest and the easiest way possible.

5.i. Predatory lender used – furniture/rent-to-own (N=6)

• Example: One of the participants stated that he had obtained a loan 

to purchase a new washer and dryer. The loan had a 55 percent 

interest rate and the appliances cost a lot more than they should 

have.

• Example: Rent-to-own businesses are widely used by soldiers. One 

soldier paid $3,000 for an $800 washer and dryer set.

5.j. No problem with predatory lenders (N=5)

• Example: There have not been any problems with predatory lenders 

lately. The state of Florida has been using legislation to shut them 

down.

• Example: The participants said that they had never encountered an 

officer that had to use payday lenders or predatory lenders. Most of 

the officers’ problems come when they have a bitter divorce.

5.k. Reason for using predatory lender – other reasons (N=5)

• Example: One soldier stated that his credit was so bad that he had no 

other option but to use high interest rate lenders. He stated that, “I 

have bad credit and I will always get bad credit.”

• Example: One participant said he has several friends that use payday 

lenders because they are E1s or E2s and don’t make much money.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 48 GAO-05-348 Financial Conditions

5.l. Predatory lender targeting – employing former military members 

(N=4)

• Example: The people running and working for the predatory 

businesses are usually former military servicemembers. They will 

use their knowledge of the system to take advantage of Marines.

• Example: Many times the predatory lenders are veterans, former 

Marines, or retirees. The participant said that by using these types of 

people, it gives the younger Marines a false sense of trust and then 

the lenders will take advantage of the servicemember or “stab them 

in the back.”

5.m. Reason for using predatory lender – command will not know 

financial conditions (N=3)

• Example: When a soldier needs money, a payday loan can be used 

without notifying the chain of command. Any of the Army forms of 

assistance require a soldier to obtain approval from “a dozen people” 

before they can get any money.

• Example: The most significant reason that people use payday lenders 

is privacy. The spouses stated that if you try to obtain assistance 

through the Air Force, you must use the chain of command to obtain 

approval. By doing so, everyone in the unit will know your business.

6. What types of financial services have fellow servicemembers 

and/or subordinates in your unit used?

6.a. Service relief/aid societies (N=13)

• Example: Servicemembers are often reluctant to approach Army 

Emergency Relief Society because they have to complete too much 

paperwork. Some have concerns that their superiors will find out 

that they used these services and superiors may think this is a sign of 

weakness or failure on the part of the servicemember.

• Example: One soldier stated that he used the Army Emergency Relief 

Society because he did not have good credit and needed $1,400 as a 

security deposit. He said they gave him a loan and that he is paying 

them back at $60 per month.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 49 GAO-05-348 Financial Conditions

6.b. Other types of services used/aware of (N=13)

• Example: Assistance is available for Marines with financial problems. 

For example, there is a Key Volunteers Network made up of enlisted 

and officers’ wives.

• Example: One of the sailors was having financial problems and did 

not want the command to know, so he sought help from the Federal 

Credit Union. The credit union was able to help with the $50,000 he 

had accumulated in debt. They contacted the lenders for him and 

told them not to contact anyone in the command about the problem. 

The debt was re-organized and repayment began. All of this was 

accomplished without the help of the Navy.

6.c. Community service center/family support center’s personal 

financial managers (N=13)

• Example: Some servicemembers who have problems have received 

help from Army Community Services. Army Community Services 

does not provide money or loans but does give some household items 

such as pots and pans and these items do provide some help to those 

in financial trouble.

• Example: When supervisors recognize a subordinate is having 

financial problems, most of them will refer the subordinate to the 

family support center for counseling, budget planning, and basic 

personal finance skills like balancing a checkbook.

6.d. DOD Financial Readiness Campaign/services’ Internet resources 

(N=11)

• Example: None of the participants had heard of the Financial 

Readiness Campaign.

• Example: Only one of the 11 participants was aware of the Financial 

Readiness Campaign. The servicemember that did know about it 

said that the information was difficult to sort through and may not be 

helpful to those without a basic knowledge of finances.

6.e. Servicemembers Civil Relief Act (N=9)
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 50 GAO-05-348 Financial Conditions

• Example: One airman said that he used the Servicemembers Civil 

Relief Act to reduce his total indebtedness during his deployment. In 

fact, after returning from the deployment, the credit companies kept 

the interest rates at 6 percent or less.

• Example: One of the participants talked about how he used the 

Servicemembers Civil Relief Act to get out of a lease prior to 

deployment.

6.f. No services used or not aware that any service was used (N=7)

• Example: One participant said that there are financial services 

available but because they are not very well advertised, many 

servicemembers do not know about them.

• Example: The spouse stated she was not aware of any available 

assistance programs because information about programs does not 

get communicated well at the installation.

6.g. Legal office (N=6)

• Example: There is a legal office that can review purchase contracts 

while the sailor is at home and a legal assistance attorney onboard 

ship who can provide assistance.

• Example: Sometimes the family at home cannot take care of financial 

issues, even if they have power of attorney. The best solution is to 

obtain help from the on base legal office.

6.h. Command financial specialists (N=5)

• Example: Soldiers have used the command financial specialist within 

their units to receive counseling, training, and information.

• Example: Most of the participants said that they had a command 

financial specialist in their unit but did not use these individuals, 

primarily because of a lack of trust. They said that if a 

servicemember talked about financial problems with these people, it 

would end up through the chain of command. If someone were to 

see a servicemember in the command financial specialist’s office, 

then they would know/assume the servicemember had a financial 

problem.
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 51 GAO-05-348 Financial Conditions

7. Is there additional assistance that could be provided to 

servicemembers or subordinates by the chain of command or 

DOD to improve the financial condition of military families?

7.a. Additional financial management training at installation and 

throughout career (N=13)

• Example: Some of the participants said the briefings provided to 

soldiers during base “in processing” are too quick. They normally 

last about 10 minutes and that is not enough time to discuss financial 

matters.

• Example: There should be financial management training points 

throughout a sailor’s career. For example, basic training, Advanced 

Individual Training, reenlistment, and then annual recurring training.

7.b. Other additional assistance (N=12)

• Example: A soldier stated that the offices that provide finance 

information are closed when the servicemembers get off work. Their 

hours should be longer because the soldiers’ unit will not allow them 

time off to go to the finance centers just to browse and acquire 

general financial information.

• Example: The military credit unions should be combined into one 

institution. No more Marine, Navy, or Army Federal Credit Unions, 

just one large credit union. This would lead to more lending power 

and better interest rates.

7.c. More money (N=10)

• Example: All military members should get pay raises. The pay 

increase should be significant and not just a few dollars every 

paycheck. People are dying every day for their country, so they 

should get paid well.

• Example: Servicemembers, particularly in the junior enlisted ranks, 

should be given more pay.

7.d. Improve timeliness/accuracy of Defense Finance and Accounting 

Service (N=7)
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 52 GAO-05-348 Financial Conditions

• Example: Make the finance office provide more timely 

reimbursement for vouchers. One soldier just got back from Iraq and 

said that currently, it takes the Defense Finance and Accounting 

Service about 6 months to pay the voucher.

• Example: The deployment actually messes up the servicemember’s 

paychecks. When starting the deployment, the addition of certain 

pay and allowances and the subtraction of other allowances are 

never done quickly and efficiently. Defense Finance and Accounting 

Service is always either overpaying or underpaying the Marine. 

When they overpay, they take the money back in one shot, not over a 

period of time.

7.e. Armed Forces Disciplinary Control Board/off-limits list (N=7)

• Example: When the Armed Forces Disciplinary Control Board does 

put a business on the off-limits list, the word is not put out and it is 

never enforced.

• Example: The Navy needs to blacklist places that practice predatory 

lending. One participant, who is a legal officer in her unit, does 

provide a list of places to avoid to her sailors when they check in 

even though she is not allowed to do this. She does not understand 

why the Navy is allowed to tell sailors not to go to a porn shop, but is 

not supposed to tell them not to go to predatory lenders. The Navy 

needs some type of list of businesses that have done questionable 

things. It does not necessarily have to be an “off-limits” list.

7.f. Care packages (N=6)

• Example: It is common for spouses to send care packages to soldiers 

during a deployment. The expense of shipping these packages is 

significant. In addition, they generally include items for friends of 

soldiers who do not have spouses or families sending items.

• Example: Care packages can be expensive for the family, especially 

when they have to send equipment that is not supplied by the 

military.

7.g. Improve Internet access during deployment (N=5)
Appendix II

Findings from GAO-led Focus Groups Held at 

13 Installations

Page 53 GAO-05-348 Financial Conditions

• Example: Navy should have better Internet access on the ships. They 

could provide Internet access in the library. Right now the junior 

enlisted have to ask officers to log them on.

• Example: The Navy needs to increase the number of computers on 

ships and the access to the Internet. It is not beneficial to have 

Internet-based resources if no one can access the Internet during a 

deployment. Furthermore, when the sailors are at home station, the 

work computers are used for work and not for personal use. 

Therefore, the sailors still cannot access information on the Financial 

Readiness Campaign. 
Page 54 GAO-05-348 Financial Conditions

Appendix III

Resources Available to Assist 

Servicemembers with Financial Issues ApendxiI

Several resources exist to assist servicemembers with financial issues. 

These include military-sponsored PFM training, DOD’s Financial Readiness 

Campaign, individual service resources, such as command financial 

specialists and personal financial managers, and resources outside of DOD 

such as those provided through on- and off-installation banks and credit 

unions.

Financial Management 

Training

All four military services require PFM training for servicemembers, and the 

timing and location of the training varies by service. The Army begins this 

training at initial military, or basic, where soldiers receive 2 hours of PFM 

training. Training continues at Advanced Individual Training schools, 

where soldiers receive an additional 2 hours of training and at the soldiers’ 

first duty station, where they are to receive an additional 8 hours of PFM 

training. In contrast, Navy personnel receive 16 hours of PFM training 

during Advanced Individual Training. The Marine Corps and the Air Force, 

on the other hand, begin training servicemembers on financial issues at 

their first duty stations. 

Events, such as deployment or a permanent change of station, can trigger 

additional financial management training for servicemembers. The length 

of this additional training and the topics covered can vary by installation 

and command. Also, unit leadership may refer servicemembers for 

financial management training or counseling if the unit command is made 

aware of an individual’s financial problems. For example, the Army 

requires refresher financial training for personnel who have abused checkcashing privileges.

DOD’s Financial 

Readiness Campaign 

Resources

DOD’s Financial Readiness Campaign, which was launched in May 2003, 

supplements PFM programs offered by the individual services. The Under 

Secretary of Defense for Personnel and Readiness stated that the 

department initiated the campaign to improve the financial management 

available to servicemembers and their families and to stimulate a culture 

that values financial health and savings. The campaign allows installationlevel providers of PFM programs to access national programs and services 

developed by federal agencies and non-profit organizations. The primary 

components of the campaign are the Web-based resources and 

partnerships with federal agencies and non-profit organizations.
Appendix III

Resources Available to Assist 

Servicemembers with Financial Issues

Page 55 GAO-05-348 Financial Conditions

DOD’s Web-based 

Resources

The primary tool of the Financial Readiness Campaign is a Web site1

designed to assist PFM program managers in developing installation-level 

campaigns to meet the financial management needs of their local military 

community. This Web site, which is also available to the public, contains 

important documents for the campaign as well as links to partners’ Web 

sites. For example, the DOD Web site contains the original memorandum 

announcing the start of the campaign, overall campaign objectives, as well 

as the names of, agreements with, and links to the campaign’s 27 partner 

organizations. DOD’s May 2004 assessment of the campaign2

 noted, 

however, that installation-level PFM staffs have made minimal use of the 

campaign’s Web site. DOD campaign officials stated that it was early in 

implementation of campaign efforts and that they have been brainstorming 

ideas to repackage information given to PFM program managers, as well as 

servicemembers and their families. For example, officials are considering 

distributing financial information to servicemembers and military families 

at off-installation locations, as well as implementing “financial fairs” and 

“road shows” at military communities to increase awareness and 

encourage financial education.

Partnerships with 27 

Organizations

DOD has partnered with 27 organizations that have pledged to support 

DOD in implementing its Financial Readiness Campaign. For example, the 

Association of Military Banks of America is a not-for-profit association of 

banks that operate (1) on military installations, (2) off military installations 

but serving military customers, and (3) within military banking facilities 

designated by the U.S. Treasury. That association is supporting the 

Financial Readiness Campaign by encouraging member banks to provide, 

participate in, and assist DOD with financial training events. Another 

partner, the InCharge Institute of America, is producing a quarterly 

periodical called Military Money. The periodical is aimed at promoting 

financial awareness among the spouses of servicemembers.

1

 See http://www.dodpfm.org.

2

 Office of the Deputy Under Secretary of Defense (Military Community and Family Policy), 

Initial Assessment and Follow-on Plan for the Department of Defense Financial 

Readiness Campaign (May 27, 2004).
Appendix III

Resources Available to Assist 

Servicemembers with Financial Issues

Page 56 GAO-05-348 Financial Conditions

Military Service 

Resources

Each military service has several resources available at the installation 

level to assist servicemembers with financial issues. These include 

command financial specialists, the PFM program managers and staff, legal 

services, and service relief/aid societies.

Command Financial 

Specialists

Command financial specialists are senior enlisted personnel (usually E6 

and above) who are trained by PFM program managers to assist 

servicemembers at the unit level, by providing financial education and 

counseling. These non-commissioned officers may perform the role of the 

command financial specialist as a collateral duty in some units or as a fulltime duty in others. The Navy, Marine Corps, and Army use command 

financial specialists to provide unit assistance to servicemembers in 

financial difficulties; the Air Force does not use command financial 

specialists within the unit, but has the squadron First Sergeant provide 

first-level counseling.

PFM Program Managers and 

Staff

Individual servicemembers who require counseling beyond the capability 

of the command financial specialists or First Sergeant in the Air Force can 

see the installation’s PFM program manager or PFM staff. The PFM 

program manager is a professional staff member designated and trained to 

organize and execute financial planning and counseling programs for the 

military community. PFM program managers and staff offer individual 

financial counseling as well as group classes on financial issues.

Army, Navy, and Marine Corps regulations state that each installation 

should have a manager for PFM issues. The Air Force no longer designates 

one staff member as the PFM program manager, but it uses “work life 

consultants” in its family support centers to provide PFM training and 

counseling. The DOD’s November 2004 PFM instruction3

 places certain 

requirements on staff who provide PFM training and counseling. For 

example, it states that the one staff member within a family support center 

shall be designated and trained to organize and execute financial planning 

and counseling programs for the military community. In addition, that staff 

member must receive continuing education on PFM annually and maintain 

professional certification.

3

See DOD Instruction 1342.17, Personal Financial Management for Service Members

(Nov. 12, 2004).
Appendix III

Resources Available to Assist 

Servicemembers with Financial Issues

Page 57 GAO-05-348 Financial Conditions

Legal Services Individual installation legal offices also offer financial services to 

servicemembers. For example, the legal assistance attorneys may review 

purchase contracts for large items such as homes and cars. In addition, the 

legal assistance attorneys offer classes on varying financial issues including 

powers of attorney, wills, and divorces.

Service Relief/Aid Societies Each service has a relief or aid society designed to provide financial 

assistance to servicemembers. The Army Emergency Relief, Navy-Marine 

Corps Relief Society, and the Air Force Aid Society are all private, nonprofit organizations. These societies provide counseling and education as 

well as financial relief through grants or no-interest loans to eligible 

servicemembers experiencing emergencies. Emergencies include funds 

needed to attend the funeral of a family member, repair of a primary 

vehicle, or funds for food. For example, in 2003, the Navy-Marine Corps 

Relief Society provided $26.6 million in interest-free loans and $4.8 million 

in grants to servicemembers who needed the loans for emergencies.

Resources Available 

Outside of DOD

Servicemembers may utilize financial resources outside of DOD, which are 

available to the general public. These can include banks or credit unions 

for competitive rates on home or automobile loans, commercial Web sites 

for interest rate quotes on other consumer loans, consumer counseling for 

debt restructuring, and financial planners for advice on issues such as 

retirement planning.
Page 58 GAO-05-348 Financial Conditions

Appendix IV

GAO Contact and Staff Acknowledgments ApendxiIV

GAO Contact Jack E. Edwards (202) 512-8246

Acknowledgments In addition to the individual named above, Leslie C. Bharadwaja; Alissa H. 

Czyz; Marion A. Gatling; Gregg J. Justice, III; David A. Mayfield; Brian D. 

Pegram; Terry L. Richardson; Minette D. Richardson; and Allen D. 

Westheimer made key contributions to this report.
Page 59 GAO-05-348 Financial Conditions

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GAO-04-721R. Washington, D.C.: May 7, 2004.

Military Personnel: Observations Related to Reserve Compensation, 

Selective Reenlistment Bonuses, and Mail Delivery to Deployed Troops. 

GAO-04-582T. Washington, D.C.: March 24, 2004.
Related GAO Products

Page 60 GAO-05-348 Financial Conditions

Military Personnel: Bankruptcy Filings among Active Duty Service 

Members. GAO-04-465R. Washington, D.C.: February 27, 2004.

Military Pay: Army National Guard Personnel Mobilized to Active Duty 

Experienced Significant Pay Problems. GAO-04-413T. Washington, D.C.: 

January 28, 2004.

Military Personnel: DOD Needs More Effective Controls to Better Assess 

the Progress of the Selective Reenlistment Bonus Program. GAO-04-86. 

Washington, D.C.: November 13, 2003.

Military Pay: Army National Guard Personnel Mobilized to Active Duty 

Experienced Significant Pay Problems. GAO-04-89. Washington, D.C.: 

November 13, 2003.

Military Personnel: DFAS Has Not Met All Information Technology 

Requirements for Its New Pay System. GAO-04-149R. Washington, D.C.: 

October 20, 2003.

Military Personnel: DOD Needs More Data to Address Financial and 

Health Care Issues Affecting Reservists. GAO-03-1004. Washington, D.C.: 

September 10, 2003.

Military Personnel: DOD Needs to Assess Certain Factors in Determining 

Whether Hazardous Duty Pay Is Warranted for Duty in the Polar 

Regions. GAO-03-554. Washington, D.C.: April 29, 2003.

Military Personnel: Management and Oversight of Selective Reenlistment 

Bonus Program Needs Improvement. GAO-03-149. Washington, D.C.: 

November 25, 2002.

Military Personnel: Active Duty Benefits Reflect Changing 

Demographics, but Opportunities Exist to Improve. GAO-02-935. 

Washington, D.C.: September 18, 2002. 

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