Report to Congressional Requesters

United States General Accounting Office

GAO

December 2002 DOD OVERSEAS

SCHOOLS

Compensation

Adequate for

Recruiting and

Retaining WellQualified Teachers

GAO-03-19
DOD overseas teachers’ compensation compares favorably to that of U.S.

teachers. In general, DOD overseas teachers receive a standard federal benefit

package, including health and life insurance and coverage under the Federal

Employees’ Retirement System. Many DOD overseas teachers also receive

allowances, such as a living quarters allowance, that U.S. teachers do not

receive. On average, salaries for DOD overseas teachers are higher than U.S.

teachers’ salaries. Despite the generous compensation package, there is some

dissatisfaction among overseas teachers regarding health care.

DOD has little difficulty recruiting and retaining well-qualified teachers for

overseas schools. In school year 2001-02, DOD recruiters filled over 99 percent

of vacant teacher positions. Based on certification, experience, and education,

the quality of DOD overseas teachers is high. Virtually all teachers in DOD

schools are certified in the subjects or grades they teach. DOD may have some

difficulties recruiting and retaining teachers in a few subject areas and

geographic locations, but any such difficulties do not appear to threaten the

quality of the overseas teachers workforce.

DOD has developed a process for determining and paying teachers’ salaries that

meets statutory requirements. Although this system is time-consuming and

burdensome, techniques that could address these difficulties do not meet legal

requirements. Given DOD’s success recruiting and retaining well-qualified

teachers, it is not advisable at this time to revise the law.

In School Year 2001-02, DOD Operated 155 Overseas Schools in 14 Countries.

Source: DOD.

England Germany

Iceland Netherlands Belgium

Italy

Bahrain

Portugal Spain

Greece Turkey

Korea

North

South

Japan

DOD OVERSEAS SCHOOLS

Compensation Adequate for Recruiting

and Retaining Well-Qualified Teachers

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

To view the full report, including the scope

and methodology, click on the link above.

For more information, contact Marnie Shaul,

(202) 512-7215.

Highlights of GAO-03-19, a report to the

Senate and House Armed Services

Committees.

December 2002

The Department of Defense (DOD)

overseas schools educate more

than 70,000 children of military

service members and DOD civilian

employees throughout the world.

In order to ensure the continued

success of this school system, the

National Defense Authorization Act

for Fiscal Year 2002 directed GAO

to assess whether the DOD

overseas teachers’ compensation

package is adequate to recruit and

retain qualified teachers. The act

also required GAO to determine

whether any revisions to the law

governing DOD overseas teachers’

salaries were advisable.
Page i GAO-03-19 DOD Overseas Schools

Letter 1

Results in Brief 2

Background 3

DOD Overseas Teachers’ Compensation Package Is Set by Law and

Regulations and Generally Compares Favorably with That of

U.S. Teachers 9

DOD Appears to Have Little Difficulty Recruiting and Retaining

Well-Qualified Teachers for the Overseas School System 18

The Current Process for Determining and Paying Teacher Salaries

Is Time-Consuming, but DOD Has Little Flexibility to Modify

This Process Because of Statutory Requirements 21

Conclusions 25

Agency Comments 25

Appendix I Scope and Methodology 27

Alternative Techniques for Determining and Paying Teacher

Salaries 28

Appendix II GAO Contacts and Staff Acknowledgments 35

GAO Contacts 35

Staff Acknowledgments 35

Tables

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

for Schedule C Employees: Comprehensive Schedule for

Educators and Specialists 10

Table 2: Allowances Available to DOD Civilian Employees

Stationed Overseas 12

Table 3: DOD Overseas Teachers’ Average Salary Compared to

Average Salaries of U.S. Teachers by State, School Year

2000-01 13

Table 4: DOD Overseas Bachelor of Arts Teachers’ Starting Salary

Compared to Average Starting Salaries of U.S. Teachers

with BAs by State, School Year 2000-01 15

Table 5: Number of Districts Sampled by Sample Size and Strata 29

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

95% Confidence 30

Table 7. Stability Results Across 3 Years 32

Table 8: Projections of Mean Salary for School Year 2001-2002 33

Contents
Page ii GAO-03-19 DOD Overseas Schools

Abbreviations

AFT American Federation of Teachers

DFAS Department of Defense Finance and Accounting Service

DOD Department of Defense

DODDS Department of Defense Dependents Schools

DODEA Department of Defense Education Activity

FEA Federal Education Association

FEHB Federal Employees Health Benefits

FEGLI Federal Employees Group Life Insurance

FERS Federal Employees Retirement System

NCES National Center for Education Statistics

NEA National Education Association

OEA Overseas Education Association

OFT Overseas Federation of Teachers

OPM Office of Personnel Management

TSP Thrift Savings Plan
Page 1 GAO-03-19 DOD Overseas Schools

December 12, 2002

The Honorable Carl Levin

Chairman

The Honorable John W. Warner

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Bob Stump

Chairman

The Honorable Ike Skelton

Ranking Minority Member

Committee on Armed Services

House of Representatives

Policymakers are interested in maintaining the high quality of the

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

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

DOD civilian employees in 14 foreign countries. In school year

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

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

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

Authorization Act for Fiscal Year 2002 directed us to assess whether the

DOD overseas teachers’ compensation package is adequate to recruit and

retain qualified teachers and to recommend any necessary revisions to the

law governing DOD overseas teachers’ salaries.

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

questions:

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

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

the United States?

2. To what extent do DOD overseas schools experience difficulties

recruiting and retaining well-qualified teachers?

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

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

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-03-19 DOD Overseas Schools

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

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

other federal civilian employees overseas. We also examined DOD

promotional materials, planning documents, and information provided to

DOD overseas teachers. We conducted a literature review on teacher

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

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

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

officials in several DOD offices and representatives of teachers’ unions.

We performed our work between January and November 2002 in

accordance with generally accepted government auditing standards. For

additional information on our scope and methodology, please see

appendix I.

The DOD overseas teachers’ compensation package is composed of

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

in general, compares favorably with U.S. teachers’ compensation. DOD

overseas teachers’ salaries are governed by a 1966 law, which requires that

they be equal to teacher salaries in urban school jurisdictions with

populations of 100,000 or more. As federal civilian employees, DOD

overseas teachers are eligible for a standard federal benefit package,

including benefits such as health and life insurance. Many DOD overseas

teachers are also eligible for allowances that are set by the U.S.

Department of State. For example, they may receive a living quarters

allowance for the cost of rent and utilities, among other expenses. On

average, salaries for teachers in DOD overseas schools are higher than

those for U.S. teachers, and starting salaries for DOD overseas teachers

are nearly 6 percent higher than the average starting salary for teachers in

the United States. U.S. teachers also do not receive the allowances that

many DOD overseas teachers receive. Despite the competitive

compensation package, dissatisfaction exists among DOD overseas

teachers regarding health care access and costs.

DOD appears to have little difficulty recruiting and retaining well-qualified

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

filled over 99 percent of vacant teaching positions in the overseas school

system. Statistics on common measures of teacher quality, such as

certification and educational attainment, show that the DOD overseas

school teacher workforce is highly qualified. For example, virtually all

newly hired teachers in DOD overseas schools are certified in the subjects

or grades they teach, and roughly two-thirds of DOD overseas teachers

hold advanced degrees, compared to 46 percent of public school teachers

Results in Brief
Page 3 GAO-03-19 DOD Overseas Schools

in the United States. The quality of the DOD overseas teachers may

contribute to the high student-achievement level in these schools. Studies

show that teacher quality is a strong predictor of student achievement. In

general, DOD appears to have little difficulty retaining teachers. While the

agency does not have sufficient empirical data to confirm the absence of

retention difficulties, agency officials we spoke with said that any

retention difficulties the agency has are limited to specific geographic

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

able to fill vacant positions with well-qualified teachers, any retention

difficulties that do exist do not appear to threaten the quality of the

teacher workforce.

Though the current process for determining and paying teacher salaries is

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

requirements. The law requires that salaries be equal to the average salary

for teachers in urban school jurisdictions with populations of 100,000 or

more. On the basis of this requirement, DOD collects salary data from

more than 230 school jurisdictions in incorporated places of 100,000 or

more. The agency collects these data through at least January 10 of each

school year in order to meet the requirements of an arbitration agreement

with one of the teachers’ unions. Because the courts have interpreted the

law to mean that DOD must pay overseas teachers the same amount for

the same year as the U.S. urban teachers, DOD pays teachers their salary

and benefit increases retroactively. Teachers typically receive these

increases at or near the end of the school year. The salary determination

and payment process creates some administrative burden for the agency.

We identified alternative techniques, such as projecting salaries, that could

make this process less time-consuming and less burdensome. However,

DOD cannot use these techniques because they do not meet legal

requirements. Despite any administrative inefficiencies, DOD’s success

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

immediate need to change the law.

The Department of Defense Education Activity (DODEA) oversees all

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

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

manages DOD’s overseas schools. In school year 2001-02, DODDS

Background
Page 4 GAO-03-19 DOD Overseas Schools

operated 155 schools in 14 countries1 (see figs. 1 and 2) and employed

roughly 6,200 educators, including both traditional classroom teachers and

instructional staff, such as school psychologists, nurses, and counselors.

Classroom teachers comprise over 90 percent of all DOD overseas

educators. They are represented by two different teachers’ unions: the

Federal Education Association (FEA) and the Overseas Federation of

Teachers (OFT).2

 Although classroom teachers and instructional staff are

paid on different salary schedules, both groups are subject to the same

salary determination and payment process.

 1

DODDS operates schools in Bahrain, Belgium, Cuba, England, Germany, Greece, Iceland,

Italy, Japan, Korea, The Netherlands, Portugal, Spain, and Turkey. DOD schools in Guam

and Puerto Rico are part of the Department of Defense Domestic Dependent Elementary

and Secondary Schools (DDESS).

2

The Federal Education Association is a unit of the National Education Association; the

Overseas Federation of Teachers is an affiliate of the American Federation of Teachers.
Page 5 GAO-03-19 DOD Overseas Schools

Figure 1: DOD European Area Schools

Note: DOD also operates an overseas school in Cuba.

England Germany

Iceland Netherlands Belgium

Italy

Bahrain

Portugal Spain

Greece Turkey

Izmir

Lajes

Incirlik

Ankara

Larissa, Greece

Sevilla

Rota

Manama

La Maddalena

Livorno

Aviano

Vicenza

Naples

Sigonella

Giessen

Hanau

Bamberg

Schweinfurt

Wuerzburg

Grafenwoehr

Hohenfels

Vilseck

Ansbach

Garmisch

Bad Aibling

Spangdahlem

Bitburg

Wiesbaden

Darmstadt

Bad Kreuznach

Baumholder

Ramstein

Kaiserslautern

Heidelberg

Mannheim

Stuttgart

Menwith Hill

Alconbury

Lakenheath

Croughton London

Keflavik

Brussels/Shape Afcent

Source: DOD.

Azores
Page 6 GAO-03-19 DOD Overseas Schools

Figure 2: DOD Pacific Area Schools

Korea

North

South

Seoul

Osan AFB

Pusan

Chinhae

Taegu

Yokota

Zama/Atsugi

Misawa

Yokosuka

Honshu

Kyushu

Iwakuni

Sasebo

Kadena AFB

Okinawa

Okinawa

Japan

Source: DOD.
Page 7 GAO-03-19 DOD Overseas Schools

Legal requirements and union arbitration agreements form the basis for

the DOD overseas teachers’ salary determination process. Prior to

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

General Schedule, the standard pay schedule for many federal government

employees. These salaries did not reflect teachers’ academic backgrounds

or qualifications. As a result, DOD overseas teachers’ salaries were

significantly lower than those paid to public school teachers in the United

States. Congress attempted to remedy these inequities in 1959 by passing

the Defense Department Overseas Teachers Pay and Personnel Practices

Act (Pay and Personnel Practices Act).3

 This law directed the heads of

each military department in DOD4

 to fix rates of basic compensation “in

relation to the rates of basic compensation for similar positions in the

United States.” However, these rates of compensation could not exceed

the highest rate of basic compensation for similar positions of a

comparable level of duties and responsibilities under the municipal

government of the District of Columbia.

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

with representatives of the Overseas Education Association (OEA)5

 and

the National Education Association (NEA) to develop procedures

governing its implementation. In 1960, these parties agreed to establish an

annual review of compensation schedules as compared to the rates of

compensation in urban school jurisdictions with populations of 100,000 or

more.6

 Although all parties agreed to this process, annual per-pupil

spending limitations enacted by Congress effectively lowered the

compensation paid to DOD overseas teachers below the salary schedule

devised through the annual review.7 To correct this problem, Congress

amended the Pay and Personnel Practices Act in 1966 and set into law the

 3

Pub.L. 86-91 (1959).

4

In 1959, the secretary of each branch of the military was responsible for the overseas

schools in that branch.

5

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

6

This benchmark was used for comparison “because most of the teachers were recruited

from urban areas with a population of 100,000 or more.” See Crawford v. United States,

179 Ct. Cl. 128 (1967).

7

Each year between 1961 and 1965, DOD asked for an increase in the per-pupil limitation in

order to raise teacher salaries. Congress granted an increase in full only twice during those

years. According to the historical background included in Crawford v. United States,

Congress was apparently reluctant to increase the per-pupil limit because it considered the

additional benefits that overseas teachers received as part of their compensation.
Page 8 GAO-03-19 DOD Overseas Schools

procedures that DOD and the teachers’ associations had agreed to in

1960.8

 The amendment provides that DOD fix the basic compensation for

overseas teachers at rates equal to the average of the range of rates of

basic compensation for urban school jurisdictions with populations of

100,000 or more.9

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

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

DOD’s salary determination and payment process are a class action law

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

DOD overseas teachers sued the U.S. government, claiming that DOD’s

methods for determining teacher salaries were inconsistent with the Pay

and Personnel Practices Act. Specifically, the teachers argued that DOD’s

process of determining teacher salaries based on the previous year’s

salaries in U.S. school jurisdictions resulted in salaries unequal to those

paid to teachers in the United States. The court ruled that timing was an

essential component of compensation and that, therefore, salaries used for

comparison purposes should be from the same school year.10 The result of

this court case was the establishment of the payment system that DOD

currently uses to determine and distribute salary payments to DOD

overseas teachers.

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

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

1979-80. In part, the OEA contested DOD’s use of an August 1, 1979, cut-off

date for salary data because it excluded the salary increases that many

U.S. school teachers received in the second half of the school year. The

arbitrator held that by using the August 1 date, DOD did not meet the

statutory requirement that it set salaries “equal to the average of the range

of rates” of the group of teachers identified in the statute. Subsequently,

DOD and OEA reached an arbitration agreement, which requires DOD to

 8

In responding to the committee’s request for comment, the Bureau of the Budget argued

that the amendment would result in rates above the national average for similar positions

in the United States and should include data from cities with smaller populations, which

“would provide a broader and more realistic comparison with non-Federal salaries and

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

9

Although the amendment states that DOD overseas teachers’ salaries be based on salaries

in U.S. urban school jurisdictions with populations of 100,000 or more, DOD has

interpreted this to mean school districts in urban or “incorporated” places with populations

of 100,000 or more. Pub.L. 89-391 (1966).

10March v. United States, 506 F.2d 1306 (D.C. Cir. 1974).
Page 9 GAO-03-19 DOD Overseas Schools

collect salary information for its annual survey through at least January

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

Management Service, Wage and Salary Division conducts this survey and

generates the DOD overseas teachers salary schedule each year.11

The DOD overseas teachers’ compensation package, which includes

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

generally compares favorably with U.S. teachers’ compensation. Since

1966, DOD overseas teachers’ salary schedules have been set equal to

average teacher salaries in school districts in incorporated places with

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

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

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

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

clubs. The compensation package generally compares favorably with

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

overseas teachers are higher than those of teachers in the United States.

U.S. teachers typically do not receive the allowances and services that

many DOD overseas teachers receive. While the compensation package

generally compares favorably with that of U.S. teachers, it appears that

many teachers are dissatisfied with access to health care in many overseas

locations.

The Defense Department Overseas Teachers Pay and Personnel Practices

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

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

teachers are paid on a salary schedule, which reflects both their level of

education and years of experience. (See table 1 for the school year

2001-02 salary schedule.)

 11DOD overseas teachers are schedule C federal employees. Pay schedule C applies to

elementary, middle, and high school classroom teachers and teachers of English as a

Second Language, Special Education, Reading Improvement Specialists,

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

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

substitute teachers, social workers, guidance counselors, psychologists, management and

education specialists, principals, and assistant principals.

DOD Overseas

Teachers’

Compensation

Package Is Set by Law

and Regulations and

Generally Compares

Favorably with That

of U.S. Teachers

DOD Overseas Teachers’

Salaries Set by Law, and

Benefits and Allowances

Set by Regulations
Page 10 GAO-03-19 DOD Overseas Schools

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

Educators and Specialists

Teachers’ Level of Education

Step BA BA+15 BA+30 MA MA+15 MA+30 Doctorate

1 31,775 32,840 33,905 34,970 36,035 37,100 38,165

2 32,920 34,070 35,225 36,375 37,525 38,680 39,830

3 34,065 35,300 36,545 37,780 39,015 40,260 41,495

4 35,210 36,530 37,865 39,185 40,505 41,840 43,160

5 36,355 37,760 39,185 40,590 41,995 43,420 44,825

6 37,500 38,990 40,505 41,995 43,485 45,000 46,490

7 38,645 40,220 41,825 43,400 44,975 46,580 48,155

8 39,790 41,450 43,145 44,805 46,465 48,160 49,820

9 40,935 42,680 44,465 46,210 47,955 49,740 51,485

10 42,080 43,910 45,785 47,615 49,445 51,320 53,150

11 43,225 45,140 47,105 49,020 50,935 52,900 54,815

12 44,370 46,370 48,425 50,425 52,425 54,480 56,480

13 45,515 47,600 49,745 51,830 53,915 56,060 58,145

14 46,660 48,830 51,065 53,235 55,405 57,640 59,810

15 47,830 50,045 52,325 54,540 56,755 59,035 61,250

16 49,000 51,260 53,585 55,845 58,105 60,430 62,690

17 50,170 52,475 54,845 57,150 59,455 61,825 64,130

18 51,340 53,690 56,105 58,455 60,805 63,220 65,570

Notes: “15+” means 15 graduate credit hours; “30+” means 30 graduate credit hours.

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

completion of 4 years service in steps 14, 15, 16, and 17, respectively.

Source: DOD.

As federal civilian employees, many DOD overseas teachers are eligible for

a variety of other benefits in addition to basic compensation (salary). In

general, federal civilian employees are eligible to participate in the Federal

Employees Health Benefits (FEHB) program and the Federal Employees

Group Life Insurance (FEGLI) program and are covered by the Federal

Employees’ Retirement System (FERS), which includes the Thrift Savings

Plan (TSP).12 However, not all DOD overseas educators are eligible for

these benefits. The type of appointment a teacher holds can alter the

benefit package he or she receives. For example, federal employees hired

as temporary employees with appointments not to exceed 1 year are not

 12Some employees may be covered under the Civil Service Retirement System, the Federal

retirement program prior to FERS. In general, these employees were hired by the Federal

government before FERS became effective on December 31, 1983.
Page 11 GAO-03-19 DOD Overseas Schools

eligible for health insurance.13 Although DOD overseas teachers hired in

the United States are mostly permanent employees and therefore eligible

for all benefits, local hires14 (teachers residing and hired abroad) are often

employed under time-limited appointments. However, local hires who are

on time-limited appointments can be converted to permanent

appointments once they meet all requirements, which allows them to

receive full benefits. In addition, almost all local hires are spouses of

military and DOD civilian personnel and thus receive these benefits

indirectly through their spouses.

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

receive allowances such as a living quarters allowance, a post (cost-ofliving) allowance, and the cost of shipment of household goods and an

automobile. These additional allowances are the same as those available

to other DOD civilian employees stationed overseas and similar to those

available to other federal employees stationed overseas. These allowances

are primarily governed by regulations set by the Department of State.15

DOD has some flexibility to limit these allowances, but may not exceed

the scope of the regulations set by State.16 For instance, although State

allows civilian employees overseas to receive an education allowance, the

wardrobe portion of Home Service Transfer Allowance, and the wardrobe

portion of the Foreign Transfer Allowance, DOD overseas teachers do not

receive them.17 See table 2 for an explanation of each allowance available

to DOD civilian employees stationed overseas.

 13If these employees continue in their temporary positions beyond 1 year, they become

eligible for health insurance. In this instance, the employee must pay both the employee’s

and employer’s share of the premiums.

14A local hire is an employee who was offered and appointed to a position in the same

foreign area where he or she was already residing.

15These regulations are outlined in the Department of State Standardized Regulations

(DSSR).

16DOD rules concerning these allowances can be found in the Department of Defense

Civilian Personnel Manual 1400.25-M, Subchapter 1250, “Overseas Allowances and

Differentials.”

17The wardrobe portion of these allowances is intended to offset the cost of clothes for

those employees relocating to significantly different climates.
Page 12 GAO-03-19 DOD Overseas Schools

Table 2: Allowances Available to DOD Civilian Employees Stationed Overseas

Allowance Description

Advance of pay Up to 3 months salary may be advanced when assigned to a foreign post.

Danger pay Percentage of basic compensation (15, 20, or 25%) paid for imminently dangerous

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

Difficult-to-staff incentive differential Percentage of basic compensation (15%) for serving at an agency-determined difficultto-staff post, which has a 20% or 25% post differential.

Educational travel allowance Allows for one round trip annually between schools attended in the United States and

the foreign post of assignment, which is primarily intended to reunite a full-time

undergraduate college, technical, or vocational school child with the employee/parent

serving the U.S. government in the foreign area.

Evacuation payments Paid when an employee/family member(s) are authorized or ordered to evacuate a

foreign post.

Extraordinary quarters allowance Provided when employee and family members must partially or completely vacate

permanent quarters during foreign tour due to circumstances that make the kitchen or

entire home uninhabitable.

Foreign transfer allowance Available when transferring from the United States to a foreign area or between foreign

areas to help defray the cost of moving, such as temporary lodging, meals, vehicle

registration, and a driver’s license.

Foreign travel per diem allowance Consists of lodging, meals, and incidental expenses.

Home service transfer allowance Available when transferring from a foreign area back to the U.S. as long as the

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

available to family members who relocate to the United States following the death of

the employee assigned overseas.

Living quarters allowance Provided for private leased quarters in lieu of government- provided housing intended

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

Permanent change of station (PCS) travel Paid when an employee is transferred or reassigned to another geographical locality

through a permanent change-of-station move requiring a residence relocation.

Post (“cost of living”) allowance Paid when the overall cost of goods and services at the foreign post are at least 3%

above the cost of the same goods and services in the Washington, D.C., area.

Post (“hardship”) differential Percentage of basic compensation (5, 10, 15, 20, and 25%) for environmental

conditions significantly worse than the United States.

Renewal agreement travel (RAT) Government furnished round trip transportation for the purpose of returning home to

take leave between overseas tours upon completion of prescribed tour of duty and

after entering into a new transportation agreement at an overseas post.

Separation travel allowance Government furnished return travel to the employee’s place of actual residence when

separating from Federal service; employee must meet certain requirements to receive

this allowance.

Separate maintenance allowance Paid to help maintain family member(s) at other than the foreign post of assignment.

Temporary quarters subsistence allowance Assists with “temporary” lodging, meals, laundry, and dry cleaning in the foreign area

prior to occupying permanent quarters (for up to 150 days) or upon final departure from

the foreign post after vacating permanent quarters.

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

Defense, Joint Travel Regulations (JTR), volume 2.

Generally, these allowances are available only to teachers who are

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

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

they are hired) are not considered salary supplements or entitlements.
Page 13 GAO-03-19 DOD Overseas Schools

Rather, they are intended to be recruitment incentives for U.S. citizen

employees living in the United States to accept employment in foreign

areas. In each of the last 2 years, over 90 percent of locally hired teachers

were spouses of active duty military or DOD civilian employees. Thus,

though these teachers may not be eligible for these allowances in their

own right, they do receive them through their spouses. Furthermore,

locally hired teachers may become eligible for these allowances if

transferred to a new post.

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

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

higher than the U.S. national average teacher salary.18 The average salary in

DOD overseas schools for school year 2000-01 was $47,460, while the

national average for the same year was $43,250. On a comparative basis,

the average DOD overseas teacher’s salary ranked the twelfth highest

among average teacher salaries in the 50 states and the District of

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

Table 3: DOD Overseas Teachers’ Average Salary Compared to Average Salaries of

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

Rank State Average Salary

1 Connecticut 53,507

2 California 52,480a

3 New Jersey 51,955

4 New York 51,020a,g

5 Michigan 50,515a

6 Rhode Island 50,400a

7 Pennsylvania 49,528

8 District of Columbia 48,488a

9 Alaska 48,123

10 Illinois 47,865e

11 Massachusetts 47,789c

12 DODDS 47,460

13 Delaware 47,047

14 Maryland 45,963

15 Oregon 44,988b

 18The difference in average salaries may, in part, reflect the higher level of experience and

educational attainment among DOD overseas teachers, compared to the average U.S.

teacher.

DOD Overseas Teachers’

Compensation Package

Generally Competitive

with U.S. Teachers’, but

Health Care an Issue
Page 14 GAO-03-19 DOD Overseas Schools

Rank State Average Salary

16 Nevada 44,234b

17 Indiana 43,000

18 Ohio 42,892

19 Minnesota 42,212c

20 Washington 42,143

21 Georgia 42,141

22 North Carolina 41,496

23 Wisconsin 40,939c

24 Hawaii 40,536

25 Virginia 40,247c

26 Colorado 39,184

27 Texas 38,359

28 New Hampshire 38,301

29 Vermont 38,254

30 Florida 38,230

31 South Carolina 37,938

32 Alabama 37,606a

33 Tennessee 37,413

34 Idaho 37,109

35 Kentucky 36,688c

36 Arizona 36,502

37 Iowa 36,479c

38 Utah 36,441

39 Maine 36,373

40 West Virginia 35,888

41 Kansas 35,766c

42 Missouri 35,091

43 Arkansas 34,729d

44 Wyoming 34,678a

45 Nebraska 34,258

46 Louisiana 33,615c

47 New Mexico 33,531a

48 Montana 33,249

49 Oklahoma 32,545f

50 Mississippi 31,954e

51 North Dakota 30,891

52 South Dakota 30,265

a

American Federation of Teachers estimate.

b

Includes employer portion of employee pension contribution where applicable.

c

Includes extra-duty pay.

d

Includes health care contributions where applicable.

e

Includes employer pension contribution and extra-duty pay where applicable.

f

Estimated to exclude fringe benefits at 6 percent in Oklahoma.
Page 15 GAO-03-19 DOD Overseas Schools

g

Median salary includes extra-duty pay.

Sources: American Federation of Teachers and Department of Defense.

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

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

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

BA. Furthermore, if starting salaries for DOD’s overseas teachers with a

BA in school year 2000-01 are included in the ranking of average, starting

salaries in each state and the District of Columbia, the DOD overseas

school system ranked twelfth highest. (See table 4.)

Table 4: DOD Overseas Bachelor of Arts Teachers’ Starting Salary Compared to

Average Starting Salaries of U.S. Teachers with BAs by State, School Year 2000-01

Rank State Average Salary

1 Alaska 36,293

2 California 33,121

3 New York 32,772a

4 Delaware 32,281

5 Connecticut 32,203a

6 District of Columbia 31,889

7 Georgia 31,314a

8 Illinois 31,222e

9 Pennsylvania 31,127

10 Massachusetts 31,115a

11 New Jersey 30,937a

12 DODDS 30,700

13 Maryland 30,321

14 Texas 29,823

15 North Carolina 29,786

16 Nevada 29,413b

17 Michigan 29,401a

18 Rhode Island 29,265

19 Hawaii 29,204

20 Alabama 28,649a

21 Virginia 28,139

22 Tennessee 28,074

23 Oregon 27,903b

24 Indiana 27,311

25 Washington 27,284

26 Missouri 27,173

27 Oklahoma 27,016f

28 Minnesota 27,003

29 Arizona 26,801a
Page 16 GAO-03-19 DOD Overseas Schools

Rank State Average Salary

30 Colorado 26,479a

31 South Carolina 26,314

32 Wisconsin 26,232

33 Vermont 26,152a

34 Louisiana 26,124a

35 Iowa 26,058

36 Kansas 26,010a

37 New Mexico 25,999a

38 Florida 25,786

39 Kentucky 25,027

40 New Hampshire 25,020a

41 Ohio 24,894

42 West Virginia 24,889

43 Wyoming 24,651a

44 Utah 24,553

45 Arkansas 24,469d

46 Nebraska 24,356

47 Maine 23,689

48 Idaho 23,386

49 Mississippi 23,292

50 South Dakota 22,457

51 Montana 21,728

52 North Dakota 20,675

a

American Federation of Teachers estimate.

b

Includes employer portion of employee pension contribution where applicable.

c

Includes extra-duty pay.

d

Includes health care contributions where applicable.

e

Includes employer pension contribution and extra-duty pay where applicable.

f

Estimated to exclude fringe benefits at 8 percent.

Sources: American Federation of Teachers and Department of Defense.

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

overseas teachers, they do not receive the allowances that overseas

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

addition to these allowances, DOD overseas teachers often have access to

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

recreational facilities on base, such as gyms and social clubs.
Page 17 GAO-03-19 DOD Overseas Schools

Although DOD overseas teachers receive the standard health care benefit

for U.S. civilian government employees,19 employees stationed overseas

face challenges with regard to health care access. Representatives of

teachers’ unions told us that there is dissatisfaction among teachers with

access to health care in many overseas locations. In addition, in July

2001, the Assistant Secretary of Defense for Force Management Policy

reported that “the availability and cost of medical care for DOD educators

employed overseas is a significant problem.”20 While civilian employees are

often allowed to use military treatment facilities, access to these facilities

for civilian employees is on a space-available basis.

Civilian employees stationed overseas, like the DOD teachers, are limited

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

organizations are available in foreign posts. Whether care is provided at

military or host nation facilities, civilian employees must pay when

services are rendered and request reimbursement by their medical

insurance. This can often mean large out-of-pocket expenses for doctor’s

visits and treatments.21 In addition, health care providers at military

medical treatment facilities are not recognized as authorized preferred

providers by the health plans available to overseas employees, so

reimbursement rates are often lower than for preferred providers in the

United States. Furthermore, when civilian employees must use host nation

medical facilities, they often face challenges, such as differences in

language, culture, and health practices. For example, a teacher may have

difficulty explaining his or her medical history to a doctor who does not

speak English. DOD is unable to change the health insurance available to

civilian DOD employees, including the DOD overseas teachers, because

their health insurance package is set by a governmentwide policy for civil

servants.

 19Employees who are spouses of active duty military personnel can receive health care

benefits through their spouses.

20Assistant Secretary of Defense, Report on Compensation, Allowance Structure, and

Access to Medical Services for DOD School Teachers in Overseas Areas (Washington, D.C.

2001).

21Military treatment facilities do bill other insurance companies for inpatient services, but

they do not have the capability to bill for outpatient services.
Page 18 GAO-03-19 DOD Overseas Schools

In general, DOD has been successful in recruiting and retaining wellqualified teachers. In school year 2001-02, DOD recruiters filled almost all

vacant teaching positions in overseas schools. The DOD overseas teacher

workforce is highly qualified, with virtually all DOD overseas teachers

certified in the subjects or grades they teach. DOD also does not appear to

have difficulty retaining teachers, although some agency officials and a

representative of a teachers’ union suggested retention difficulties exist in

a few specific geographic areas.

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

classroom teaching positions. More than one agency official we spoke

with confirmed that DOD has little difficulty recruiting teachers for

overseas schools. This year, DOD has received approximately

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

positions available. DOD’s success in filling vacancies appears consistent

across the 10 districts in which its overseas schools are located. The

lowest success rate for filling classroom teaching vacancies in school year

2001-02 was 99.77 percent (for vacancies in the Heidelberg, Germany

district), while 7 of the 10 districts filled all their vacancies for that school

year.

The availability of teachers and the attractiveness of the DOD overseas

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

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

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

military or DOD civilian employees made up 47 percent of new hires. It is

DOD policy to give them preference over teaching candidates living in the

United States when applying to the system, provided that they are

qualified. DOD overseas schools also have qualities that make them

attractive to teachers. Representatives of teachers’ unions indicated in

interviews that the excitement of living abroad combined with the

familiarity of working in an American school attracts many teachers to the

DOD overseas school system. In addition, DOD’s recruitment video cites

the system’s competitive pay and benefits as a reason for joining the

system.

DOD Appears to Have

Little Difficulty

Recruiting and

Retaining WellQualified Teachers for

the Overseas School

System

DOD Generally Successful

Recruiting Well-Qualified

Teachers
Page 19 GAO-03-19 DOD Overseas Schools

DOD’s vigorous recruitment program may also contribute to DOD’s

success attracting applicants. Recruitment activities include job fairs; a

student teaching program; advertisements in professional, military, and

on-line publications; participation in the Troops to Teachers program;22

and on-site recruitment at college campuses. In recent years, DOD

recruitment personnel have focused on enhancing the diversity of their

teacher workforce. To that end, they have established student teaching

agreements with Historically Black Colleges and Universities and the

Hispanic Association of Colleges and Universities to attract minority

applicants. As part of its recruitment efforts, DOD has also developed an

on-line application system for teaching candidates in order to facilitate the

application process. Since this system was made available, the number of

applicants to the system has more than doubled. Another important

recruitment tool is the use of advance job offers, offers made to applicants

before actual vacancies have been identified and that do not specify a job

location. The advance offers program is used to help DOD overseas

schools compete with U.S. school districts for exceptional educators

because U.S. schools tend to make job offers well in advance of the DOD

overseas schools. Advance offers are also used to recruit minority

teachers and increase the diversity of the DOD overseas teacher

workforce.

While recruitment is generally successful, agency officials and

representatives of teachers’ unions have indicated that DOD experiences

some difficulties recruiting teachers for certain subjects, such as special

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

difficulty recruiting teachers for these subjects. According to a 1996 report

by the National Center for Education Statistics (NCES), 20-29 percent of

U.S. public schools with vacancies in the subject areas of bilingual and

special education, math, science, and English-as-a-Second-Language report

difficulty filling them.

DOD officials also report challenges filling vacancies in some locations.

According to DOD officials and representatives of the teachers’ unions,

areas like Japan, Korea, and Bahrain are not as attractive to teachers

because the culture and language are significantly different from their

own. Of the 20 substitute teachers hired to fill full-time positions by DOD

 22Troops to Teachers is a federal program that helps discharged and retired military

personnel become certified and employed as teachers in public schools.
Page 20 GAO-03-19 DOD Overseas Schools

in school year 2001-02, 19 were located in schools in Japan.23 This figure

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

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

fill positions in less desired locations by sending teachers there from other

schools in the system. All teachers sign mobility agreements upon

accepting permanent employment with DOD, which allows the agency to

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

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

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

recruitment difficulties. DODEA recently received authority to pay these

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

recruit teachers for some subject areas and locations, DOD’s success

filling vacant positions with well-qualified teachers suggests that any

recruitment difficulties are relatively minor.

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

DOD schools certified in the subjects or grades they teach.24 Almost twothirds of DOD overseas teachers hold advanced degrees, compared to

46 percent of public school teachers in the United States. Further,

73 percent of DOD teachers have at least 10 years of teaching experience.

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

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

of the DOD overseas school system. Research has linked teacher quality to

student performance. Data show that students in DOD overseas schools

perform above the national average on the National Assessment of

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

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

overseas schools of eighth graders who performed at a proficient or higher

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

have made significant progress in closing the performance gap between

minority and white students. Compared to state-by-state rankings of

minority eighth graders in 2000, DOD minority eighth graders ranked

second on NAEP math scores.

 23This figure applies to classroom teachers for school year 2001-02 only, not to all

instructional staff.

24U.S. General Accounting Office, BIA and DOD Schools: Student Achievement and Other

Characteristics Often Differ from Public Schools’, GAO-01-934 (Washington, D.C.: Sept. 28,

2001).

Based on Certification,

Experience, and

Education, the Quality of

DOD Overseas Teachers Is

High
Page 21 GAO-03-19 DOD Overseas Schools

Agency officials and representatives of teachers’ unions told us that, in

general, DOD overseas schools do not have a problem retaining teachers.

While the agency does not have sufficient data to calculate retention rates

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

difficulties the agency has are limited to a few geographic areas, such as

Korea, Japan, and Bahrain. In addition, union representatives told us that

teachers who join DOD’s overseas school system generally tend to stay in

the system for many years. Because DOD is consistently able to fill vacant

positions with well-qualified teachers, any retention difficulties that exist

do not appear to threaten the quality of the teacher workforce. DODEA

recently obtained authorization to offer retention bonuses to teachers, a

tool that could be used to address these difficulties. The agency has not

yet offered any such bonuses.

DOD has developed a process for determining and paying overseas

teachers’ salaries to meet the requirements of the law and subsequent

court cases and arbitrations. DOD’s process for collecting salary

information and issuing a new salary schedule for DOD overseas teachers

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

pay teachers their annual salary increases, and some allowance increases,

retroactively. Teachers typically receive these retroactive payments near

the end of the school year. The process for recalculating the teachers’

salaries and paying them retroactively causes some administrative burden

for the agency, in terms of both workload and cost.

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

Division surveys urban school districts for salary data through at least

January 10. It identifies these urban school districts by using the Census

Bureau’s list of incorporated places with populations of 100,000 or more.

For school year 2001-02, the division surveyed 230 school districts. It

began planning in August, mailed out surveys in October, and continued

data collection—including follow-up calls—through March. The data

collection includes information on the minimum and maximum salary paid

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

teacher with a Ph.D. degree, the number of pay lanes, the number of

regular and longevity steps, and the number of days in the school year.

With these data, the Wage and Salary Division calculates a schedule of

DOD Generally Appears to

Have Little Difficulty

Retaining Teachers

The Current Process

for Determining and

Paying Teacher

Salaries Is TimeConsuming, but DOD

Has Little Flexibility

to Modify This

Process Because of

Statutory

Requirements

DOD’s Process for

Determining the Annual

Salary Schedule Results in

Retroactive Payments and

Some Administrative

Burden to the Agency
Page 22 GAO-03-19 DOD Overseas Schools

earnings for DOD overseas teachers.25 As part of the calculation for this

schedule, the Wage and Salary Division reviews the number of steps and

salary lanes in U.S. urban school jurisdictions to ensure comparability. The

survey process takes 12 people a total of 1,680 hours (or 42 workweeks) to

complete. The salary schedules for the current school year are usually

completed in April or May. (See fig. 3.)

 25As part of this process, the Wage and Salary Division also collects salary data and

computes salaries for social workers, school psychologists, guidance counselors, and

school administrators.
Page 23 GAO-03-19 DOD Overseas Schools

Figure 3: DOD Overseas Teachers Salary Calculation Process Timeline

Once the salary schedules are complete, Wage and Salary Division

personnel meet with representatives from the FEA and agency officials to

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

new salary schedule is issued.

The courts have interpreted the Pay and Personnel Practices Act as

requiring that DOD overseas teachers be paid the same salary that the U.S.

teachers in DOD’s comparison group receive for the same year. Because

School year begins:

Teachers receive pay

based on previous 

year's salary schedule

Fiscal 

year 

begins

August September October November December January February March April May June

August: 

DOD Wage & 

Salary begins 

planning to 

collect wage 

data from urban 

areas of 

population 

> 100,000 DOD Wage & 

Salary issues 

new salary 

schedule

DOD meets with 

FEA to agree on 

results of survey

DOD 

mails 

surveys 

to 

selected 

school 

districts 

in the 

urban 

areas

DOD staff 

makes 2-3 

phone calls 

to selected 

school 

districts to 

followup/request 

completed 

survey

January 10: 

Earliest 

date DOD 

completes 

data 

collection 

DOD 

analyzes 

data & 

collects 

outstanding 

data

DOD sends 

salary schedule 

to Defense 

Finance & 

Accounting 

Service for 

processing

DOD Payroll 

scans for 

errors

Retroactive 

salary 

increases 

distributed 

to teachers 

at end of 

school year

Sources: DOD, Civilian Personnel Management Service, Wage and Salary Division, and Department

of Defense Education Activity.
Page 24 GAO-03-19 DOD Overseas Schools

the salary schedule is typically issued near the end of the school year,

overseas teachers receive their pay increases retroactively. Usually, the

overseas teachers receive these increases just prior to the end of the

school year. In addition, since some allowances, such as the post

allowance, are based on salary, teachers may also receive retroactive

payments for allowance increases.

This retroactive pay process results in some administrative burden for the

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

agency’s workload. DOD spends additional time each year processing,

reviewing and entering the pay and allowance increases. The Defense

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

teacher’s new salary and retroactive payments, while the DODEA

personnel office must correct the official personnel forms26 for all affected

employees. In addition, field staff help recalculate adjustments to any

extra duty pay teachers may have received during the year.27 Once this

work is completed, the DODEA payroll office receives the data for record

keeping purposes, reviews them, and corrects any coding errors. Second,

the process can complicate DODEA’s management of its budget. Each

year, DOD officials predict how large the retroactive pay increase will be

in order to plan the budget. If this prediction is too low, DODEA personnel

must find the necessary funds to pay for the difference. Because payroll

comprises over 70 percent of DODEA’s budget, this task can be a difficult

one. A large enough difference in the predicted and actual amounts of the

pay increase can have an impact on DODEA’s budget. For instance, in

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

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

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

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

agency. DFAS charges DODEA an annual fee for determining and

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

$78,000.

 26The Notification of Personnel Action (Standard Form 50), published by the U.S. Office of

Personnel Management, is used to notify employees and payroll offices of personnel

actions and to record the action in the employee’s Official Personnel Folder.

27Extra duty pay may be due to teachers who serve as coaches for athletic teams, or

advisors for student newspapers, yearbooks, drama clubs, or other extracurricular

activities.
Page 25 GAO-03-19 DOD Overseas Schools

Alternative techniques exist, such as sampling and projection, that could

make the salary determination and payment process less time-consuming

and less burdensome; however, they cannot meet legal requirements.

Given the moderately burdensome nature of the current system, we

reviewed the current salary determination method and explored whether

alternatives could take less time. While these alternatives might be more

efficient, they would not be in compliance with the law. For instance, DOD

could project overseas teachers’ salaries each year based on the degree to

which salaries for U.S. urban teachers increased in past years. By

projecting teacher salaries the salary schedule could be completed prior to

the beginning of the school year, rather than near the end. This would

eliminate the need to pay teachers retroactively, thus saving time and

money. However, because projections would not guarantee the same

result as the survey, this method would not meet the law’s requirement

that DOD overseas teachers’ salaries be “equal to” the salaries of U.S.

urban teachers. Therefore, DOD would still have to survey the U.S.

schools, and pay any difference between the projections and the survey

results to the teachers retroactively. While alternative methods of salary

determination exist, such as sampling, they would not reduce the

workload or administrative burden. For more information on alternative

salary determination techniques, see appendix I.

DOD overseas schools play a critical role, educating more than

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

workforce. To date, agency officials have successfully recruited and

maintained a well-qualified teacher workforce for these schools. These

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

student-achievement level. While the salary determination and payment

process is time consuming and involves some administrative burden,

DOD’s success recruiting and retaining well-qualified teachers indicates

that there is no immediate need to change the law.

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

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

technical comments, which we incorporated as appropriate.

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

appropriate congressional committees, and other interested parties. We

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

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

http://www.gao.gov.

Techniques That Could

Make the System Less

Time-Consuming and Less

Burdensome Cannot Meet

Legal Requirements

Conclusions

Agency Comments
Page 26 GAO-03-19 DOD Overseas Schools

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

(202) 512-7215. Other contacts and contributors to this report are listed in

appendix II.

Marnie S. Shaul

Director, Education, Workforce and

 Income Security Issues
Appendix I: Scope and Methodology

Page 27 GAO-03-19 DOD Overseas Schools

The National Defense Authorization Act for fiscal year 2002 directed GAO

to assess whether the Department of Defense (DOD) overseas teachers’

compensation package is adequate to recruit and retain qualified teachers

and to recommend any necessary revisions to the law governing DOD

overseas teachers’ salaries.

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

questions:

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

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

United States?

2. To what extent do DOD overseas schools experience difficulties

recruiting and retaining well-qualified teachers?

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

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

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

salary, benefits, and allowances for DOD overseas teachers1

 and other

federal civilian employees overseas. We also analyzed salary data on DOD

overseas teachers and U.S. teachers and conducted a literature review on

teacher compensation in the United States. Finally, we interviewed DOD

officials to confirm our understanding of the total compensation package

and eligibility rules related to benefits and allowances.

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

(such as the number of newly hired teachers in each of the past three

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

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

 1

The Defense Department Overseas Teachers Pay and Personnel Practices Act fixes the

compensation for traditional classroom teachers, as well as other teaching positions. It

defines teaching positions as “duties and responsibilities which involve...(i) classroom or

other instruction or the supervision or direction of classroom or other instruction; or (ii)

any activity (other than teaching) which requires academic credits in educational theory

and practice equal to the academic credits in education theory and practice required for a

bachelor’s degree in education from an accredited institution of higher education; or (iii)

any activity in or related to the field of education...” In addition, the National Defense

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

definition of teaching position “[duties and responsibilities] are performed by an individual

who carried out certain teaching activities identified in regulations prescribed by the

Secretary of Defense.”

Appendix I: Scope and Methodology
Appendix I: Scope and Methodology

Page 28 GAO-03-19 DOD Overseas Schools

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

DOD promotional materials, planning documents, and information

provided to teachers in the DOD overseas school system. We also

interviewed DOD officials and representatives of the two teachers’ unions

that represent DOD overseas teachers. Finally, we conducted a literature

review on teacher quality and its relation to student performance.

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

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

determination and payment process. We also interviewed DOD officials

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

Finally, we explored alternative ways to determine and pay teacher

salaries that could potentially improve efficiency and reduce costs.

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

We explored stratified sampling as one possible way to determine DOD

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

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

money. Estimates derived from stratified random samples are typically

more precise than estimates derived from simple random samples of the

same size.2

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

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

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

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

 2

In a stratified random sample, the population is divided into a number of subpopulations,

called strata. An independent probability sample is drawn from each stratum. In a simple

random sample, the independent probability sample is drawn from the entire population.

Stratification improves the precision of the estimates because the variance within each

stratum is often lower than the variance in the overall population.

Alternative

Techniques for

Determining and

Paying Teacher

Salaries

Sampling
Appendix I: Scope and Methodology

Page 29 GAO-03-19 DOD Overseas Schools

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

strata by dividing the population, all 231 districts, into three groups, based

on salary data. We defined the low stratum as those school districts with a

BA min value of $28,533 or lower, the high stratum as those school

districts with a Ph.D. max of $62,413 or greater, and the medium stratum

as any district that did not fall into either of the other strata. This

stratification resulted in 60 school districts for the low stratum and

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

into the medium stratum.

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

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

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

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

20 percent of the districts in the high stratum. Table 5 shows the total

number of sample districts and the number in each stratum for the four

different sample sizes before any adjustment for nonresponse.3

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

Sample strata 20% sample 30% sample 40% sample 50% sample

Low stratum 12 18 24 30

Medium stratum 21 31 41 51

High stratum 14 21 28 35

Total 47 70 93 116

Source: GAO analysis.

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

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

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

salary are and refers to the fact that these estimates will differ from the

average salary calculated using the overall population.4

 These margins of

error are presented in table 6.

 3

There may be some nonresponse with the data because some school districts may not

report data for each salary/education category.

4

The margin of error reflects sampling error; it is the error that results from taking one

sample instead of examining the whole population. The smaller the margin of error, the

more precise is the estimate of the average salary.
Appendix I: Scope and Methodology

Page 30 GAO-03-19 DOD Overseas Schools

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

Salary variable

of interest

20% Sample

stratified

sample

size of 57

30% sample

stratified

sample

sze of 85

40% sample

stratified

sample

size of 113

50% sample

stratified

sample

size of 141

BA minimum +/- $793 +/- $605 +/- $486 +/- $397

BA maximum +/- $1831 +/- $1399 +/- $1122 +/- $916

Ph.D. minimum +/- $924 +/- $706 +/- $566 +/- $462

Ph.D. maximum +/- $1266 +/- $967 +/- $776 +/- $633

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

nonresponse adjustment takes into account that some of the values for the four salary variables are

missing.

Source: GAO analysis.

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

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

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

salary.5

 For both the 40 percent sample and the 50 percent sample the

margins of error were all within +/-$1,200, at a confidence level of

95 percent. This means that DOD could reduce the size of the annual

survey from roughly 230 districts to 1416

—in the case of the 50 percent

sample—with estimated margins of error ranging from +/- $397 to +/- $916,

depending on the salary variable. In other words, we would expect with a

95 percent level of confidence that the average BA min salary calculated

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

from the entire survey population.

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

subsequent years it would rely on this stratification to draw its sample.

However, DOD’s efforts to sample would be affected by the stability of the

salary strata used. If the school districts in the sample frequently changed

strata, then over the course of several years of using the original

stratification definitions, there would be increased variability in the

estimation. We tested for stability by using DOD’s actual data for 3 years,

 5

Confidence intervals are used to indicate the precision of an estimate. If we could take

repeated samples from our population and construct a confidence interval for each sample

mean, we can expect 95 percent of the resulting intervals to include the true value of the

population mean.

6

See note on table 6.
Appendix I: Scope and Methodology

Page 31 GAO-03-19 DOD Overseas Schools

and found that there was a substantial shift of schools across strata over

time.

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

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

years 1999-00, 2000-01, and 2001-02. Taking the data from the first year, we

grouped the school districts into three strata: low, medium and high. We

defined the low stratum as those school districts with a BA min value of

$27,000 or lower,7

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

greater, and the medium stratum as those that did not fall into either of the

other strata. This same stratification scheme was used for 2 additional

years of school district salary data. Thus, the strata definitions were based

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

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

stratification no longer reflected the most recent ranking of the school

districts’ salaries. As a result, the margins of error for the average salary in

each education/salary category increased. For example, the margin of

error for the BA min average salary increased from +/- $440.60 in the base

year to +/- $697.80 in the third year. In other words, there was a 26 percent

deterioration over one year and a 60 percent deterioration over 2 years for

the BA min category. Considering the four education/salary categories, the

larger the percent deterioration, the greater the movement of districts

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

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

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

 7

These strata definitions differ somewhat from those used for sample size determination.

For this stability analysis, we developed strata definitions based on salaries in school year

1999-00, and determined the extent of the deterioration of the stratification over time by

using three years of salary data, including 1999-00. However, for sample size calculations,

we used the most recent data available, school year 2001-02 salaries, to determine strata

definitions.
Appendix I: Scope and Methodology

Page 32 GAO-03-19 DOD Overseas Schools

Table 7. Stability Results Across 3 Years

Variable of Interest

Year I

1999-2000

Year II

2000-2001

Year III

2001-2002

BA Min

Estimated Margin of Error 440.6 557.0 697.8

% Deterioration over Time (Base Year) 26.4% 58.3%

Actual Mean $ 29,124 $ 30,701 $ 31,776

95% Confidence Interval $ 28,683 – $ 29,565 $ 30,143 – $ 31,258 $ 31,077 – $ 32,474

BA Max

Estimated Margin of Error 1,395.8 1,411.1 1,446.0

% Deterioration over Time (Base Year) 1.1% 3.6%

Actual Mean $ 43,490 $ 45,778 $ 46,644

95% Confidence Interval $ 42,094 – $ 44,887 $ 44,366 – $ 47,189 $ 45,198 – $ 48,091

PHD Min

Estimated Margin of Error 676.8 731.2 846.8

% Deterioration over Time (Base Year) 8.0% 25.1%

Actual Mean $ 35,227 $ 36,927 $ 38,169

95% Confidence Interval $ 34,549 – $ 35,904 $ 36,195 – $ 37,659 $ 37,322 – $ 39,016

PHD Max

Estimated Margin of Error 886.0 1,048.3 1,167.2

% Deterioration over Time (Base Year) 18.3% 31.7%

Actual Mean $ 55,259 $ 58,106 $ 59,800

95% Confidence Interval $ 54,372– $ 56,145 $ 57,057 – $ 59,155 $ 58,632 – $ 60,968

Note:

The percent deterioration was calculated as follows:

% deterioration in one year = margin of error in year I – margin of error in year II

——————————————————————————————————

margin of error in year I

% deterioration in 2 years = margin of error in year I – margin of error in year III

 ———————————————————————————————————

margin of error in year I

Thus, the percent deterioration—increase in the margin of error—can be gauged from the base year,

Year I (1999-2000), to Year III (2001-2002).

Source: GAO analysis of DOD data.

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

deterioration over time indicate that there was considerable shifting over

time of districts across strata for all salary/education categories except the

BA max. Consequently, if sampling were used, the strata would need to be

redefined and new samples selected frequently in order to minimize the
Appendix I: Scope and Methodology

Page 33 GAO-03-19 DOD Overseas Schools

variability in the salary estimates. To do this, the entire population of

urban school districts would need to be surveyed.

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

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

retroactively. Our projections and the associated margins of error are

shown in table 8.

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

Variable of interest

Projection

equation

Actual mean salary

2000-2001

Actual mean salary

2001-2002

Projected mean

salary 2001-2002

Projected mean

95% margins of

error

BA min Y = 1.0557 * X $ 30,701 $ 31,776 $32,411 +/- $2,893

BA max Y = 1.0504 * X $ 45,778 $ 46,644 $48,085 +/- $4,155

PhD min Y = 1.0472 * X $ 36,927 $ 38,169 $38,670 +/- $3,851

PhD max Y = 1.0525 * X $ 58,106 $ 59,800 $61,157 +/- $5,127

Source: GAO analysis of DOD data.

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

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

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

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

the form

Y = aX

where

a is the estimated rate of change

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

Y is the salary from school year 2000-01.

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

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

school year 2001-02.

Projection
Appendix I: Scope and Methodology

Page 34 GAO-03-19 DOD Overseas Schools

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

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

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

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

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

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

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

the same as the actual mean salary, because salary projections include an

assumption about the annual rate of growth in earnings, and this assumed

growth rate is likely to differ from the actual growth rate. In the particular

examples shown, the mean salaries we projected were similar to the actual

mean salaries.8

 However, the projections could fall anywhere between the

confidence limits, indicating the variability attached to these projections.

Table 7 shows that the 95 percent confidence interval for the BA min

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

 8

Statistical testing showed that the actual and projected mean salaries were not

significantly different.
Appendix II: GAO Contacts and Staff

Acknowledgments

Page 35 GAO-03-19 DOD Overseas Schools

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

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

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

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

Patrick DiBattista made key contributions to this report.

Appendix II: GAO Contacts and Staff

Acknowledgments

GAO Contacts

Staff

Acknowledgments

(130119)

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