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HEARING

BEFORE THE

COMMITTEE ON ARMED SERVICES

UNITED STATES SENATE

EIGHTY-SEVENTH CONGRESS

FIRST SESSION

ON

H.R. 8773

AN ACT TO INCREASE THE LUMP-SUM READJUSTMENT

PAYMENTS TO MEMBERS OF THE RESERVE COMPONENTS

WHO ARE RELEASED FROM ACTIVE DUTY

SEPTEMBER 20, 1961

Printed for the use of the Committee on Armed Services

UNI roe

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2NOV 14 19 61

47TAN,

U.S. GOVERNMENT PRINTING OFFICE

76192 WASHINGTON : 1961
COMMITTEE ON ARMED SERVICES

RICHARD B. RUSSELL, Georgia, Chairman

HARRY FLOOD BYRD, Virginia

JOHN STENNIS, Mississippi

STUART SYMINGTON, Missouri

HENRY M. JACKSON, Washington

SAM J. ERVIN, Ja., North Carolina

STROM THURMOND, South Carolina

CLAIR ENGLE, California

E. L. BARTLETT, Alaska

HOWARD W. CANNON, Nevada

ROBERT C. BYRD, West Virginia

HARRY L.

LEVERETT SALTONSTALL, Massachusetts

STYLES BRIDGES, New Hampshire

MARGARET CHASE SMITH, Maine

FRANCIS CASE, South Dakota

PRESCOTT BUSH, Connecticut

J. GLENN BEALL, Maryland

WINGATE, Jr., Chief Clerk
CONTENTS

Statements:

Carlton, Col. John T., executive director, Reserve Officers Association of the United States 

Jackson, Stephen S., Deputy Assistant Secretary of Defense (Manpower) 

ifi

Page

9

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LUMP-SUM READJUSTMENT PAYMUTS

WEDNESDAY, SEPTEMBER 20, 196 4

Nmai,

U.S. SENATE,

COMMITTEE ON ARMED SERVICES,

Washington, D.C.

The committee met, pursuant to recess at 1:10 p.m., in room 212,

Senate Office Building.

Present: Senators Russell (chairman), Byrd of Virginia, Stennis,

Symington, Jackson, Ervin, Thurmond, Engle, Bartlett, Cannon,

Byrd of West Virginia, Saltonstall, Bridges, Smith, and Case.

Also present: William H. Darden, T. Edward Braswell, Jr., Gordon

A. Nease, professional staff; Harry L. Wingate, Jr., chief clerk; and

Herbert S. Atkinson, assistant chief clerk.

Chairman RUSSELL. We have this bill H.R. 8773 for consideration

in open session.

Senator SYMINGTON. What is this on, Mr. Chairman?

Chairman RUSSELL. This is a bill that increases the readjustment

payments to members of the Reserve components when they are

involuntarily released from active duty. We have had it up before.

(The bill referred to follows:)

[H.R. 8773, 87th Cong., 1st seas.]

AN ACT To amend section 265 of the Armed Forces Reserve Act of 1952, as amended (50 U.S.C. 1016),

relating to lump-sum readjustment payments for members of the reserve components who are involuntarily released from active duty, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of

America in Congress assembled, That section 265 of the Armed Forces Reserve

Act of 1952, as amended (50 U.S.C. 1016), is amended as follows:

(1) Subsection (a) is amended to read as follows:

`(a) A member of a reserve component who is involuntarily released from active

duty after the date of enactment of this amended subsection and after having

completed immediately prior to such release at least five years of continuous active

duty, except for breaks in service of not more than thirty days, as either an officer,

warrant officer, or enlisted person, is entitled to a lump-sum readjustment payment computed on the basis of two months' basic pay in the grade in which he is

serving at the time of release from active duty for each year of active service ending at the close of the eighteenth year. However, the readjustment payment of

a member of the Army or the Air Force who is released from active duty because

his performance of duty has fallen below standards prescribed by the appropriate

Secretary, because of moral or professional dereliction, or because his retention

is not clearly consistent with the interests of national security, shall be computed

on the basis of one month's pay. For the purposes of computing the amount of

the readjustment payment, a part of a year that is six months or more is counted

as a whole year and a part of a year that is less than six months is disregarded,

and any prior period for which readjustment pay has been received under any other

provision of law shall be excluded. No person covered by this subsection may be

paid a total of more than two years' basic pay in the grade in which he is serving

at the time of release. No person covered by the second sentence of this subsection may be paid a total of more than one year's basic pay in the grade in which he

1
2 LUMP-SUM READJUSTMENT PAYMENTS

is serving at the time of release. An officer of the Navy or the Marine Corps

who is released from active duty because a board of officers convened under section 5787 of title 10, United States Code, considers that his record indicates his

unsatisfactory performance of duty in his present grade and that he would not

satisfactorily perform the duties of a higher grade may not be paid a total of more

than one year's basic pay in the grade in which he is serving at the time of release.

There shall be deducted from any lump-sum readjustment payment under this

subsection any mustering-out pay received under the Mustering-Out Payment

Act of 1944, the Veterans' Readjustment Assistance Act of 1952, or chapter 43

of title 38, United States Code."

(2) Subsection (b) (3) is amended to read as follows:

"(3) A person who is discharged or dismissed in executing the sentence of a

court-martial or dropped from the rolls under section 1163(b) of title 10, United

States Code."

(3) The second sentence of subsection (b) (5) is amended to read as follows:

"However, such a person is entitled—

"(A) to receive readjustment pay under this section even though he is

also entitled to be paid under section 680 of title 10, United States Code; and

"(B) with respect to severance pay to which he is entitled under any provision of law other than section 680 of that title, to elect either to receive

that severance pay or to receive readjustment pay under this section, but

not both."

(4) Subsection (b) (6) is amended to read as follows:

"(6) Except as provided in this clause, a person who upon release from active

duty is eligible for disability compensation under laws administered by the

Veterans' Administration. However, such a person may receive readjustment

pay under this section in addition to disability compensation, provided that

eligibility for such monthly disability compensation payments will not begin

until after the passage of the number of months subsequent to his release that

are equal to the number of months of basic pay which he had received as readjustment pay under this section. Receipt of readjustment pay shall not

deprive a person of any part of any disability compensation to which he may

become entitled, on the basis of subsequent service, under laws administered by

the Veterans' Administration."

(5) Subsection (c) is amended to read as follows:

"(c) A member of a reserve component who has received a readjustment payment under this section after the date of enactment of this amended subsection

and who qualifies for retired pay under any provision of title 10 or title 14, United

States Code, that authorizes his retirement upon completion of 20 years of active

service, may receive that pay subject to the immediate deduction from that pay

of the amount of the readjustment payment, without interest.

(6) Subsection (e) is repealed.

SEC. 2. Section 680(a) (2) of title 10, United States Code, is amended by striking

out the word "or" before the designation "(C)" and inserting before the period

at the end the words ", or (D) released because he has been considered at least

twice and has not been recommended for promotion to the next higher grade or

because he is considered as having failed of selection for promotion to the next

higher grade and has not been recommended for promotion to that grade, under

conditions that would require the release or separation of a Reserve officer who is

not serving under such agreement".

SEC. 3. Notwithstanding an election under section 265(b) (6) of the Armed

Forces Reserve Act of 1952 (50 U.S.C. 1016(b) (6)), before the date of enactment

of this Act, to receive a readjustment payment under that section, any person

who made such an election may be awarded disability compensation to which he

is otherwise entitled, subject to deduction as provided in that section, as amended

by this Act. However, such an award may not become effective for any period

before the date of enactment of this Act.

Passed the House of Representatives August 29, 1961.

Attest:

RALPH R. ROBERTS, Clerk.

Chairman RUSSELL. Mr. Jackson, have a seat, will you please, and

tell us as briefly as possible what is involved in this bill.
9

LUMP-SUM READJUSTMENT PAYMENTS 3

STATEMENT OF STEPHEN S. JACKSON, DEPUTY ASSISTANT

SECRETARY OF DEFENSE (MANPOWER)

Mr. JACKSON. I have a prepared statement.

Chairman RUSSELL. The staff will distribute it and it will be

placed in the record. If you can ad lib, Mr. Jackson, you may do so.

(The statement referred to follows:)

Mr. Chairman, members of the committee, the Department of Defense welcomes the opportunity of presenting its views on H.R. 8773.

The bill to amend section 265 of the Armed Forces Reserve Act of 1952, as

amended (50 U.S.C. 1016), relating to lump-sum readjustment payments for

members of the Reserve components who are involuntarily released from active

duty, and for other purposes, passed the House August 28, 1961. It is the

Department of Defense proposal (introduced as H.R. 8675) as amended by the

House in the following respects: First, H.R. 8773 changes the name as recommended by this Department from "severance pay" to "readjustment pay."

Secondly, the bill deletes a phrase which would have precluded the accrual of

severance pay during periods of war or national emergency declared by the

President or the Congress after enactment. A third change in H.R. 8773 from

the departmental position is in the area of recoupment of severance pay from

members who qualify for VA compensation. Finally, H.R. 8773 eliminates any

requirement for recoupment of severance pay from reservists who qualify for

retirement at age 60. With reference to the four amendments made by the

House, the Department of Defense adheres to its original position as stated in

the report of August 4, 1961 (on H.R. 4773, 87th Cong.), with the exception of

a modification on the amount of severance pay to be recouped which I shall

discuss later.

I should now like to summarize the major provisions of this bill as to kinds

and amounts of pay, contracts, and recovery provisions.

PAY

With reference to kinds and amount of pay, the reservists would accrue severance pay at the rate of 2 months for each year of active duty, beginning with the

first year of service. This, as you know, qudruples the half month's readjustment

pay presently authorized by law. The maximum amount of severance pay would

be 2 years' basic pay. Thus, the rate of accrual and the maximum amount of

severance pay would be the same for reservists as it is for Regular officers.

Breach of contract pay in the amount of 1 month's basic pay and allowances

would be authorized for each year by which the services cut short a contract and

would be additive to any severance pay to which the Reserve officer is entitled.

CONDITIONS FOR RECEIPT OF SEVERANCE PAY

H.R. 8773 continues the provisions of present law on eligibility for receipt of

severance pay; i.e., involuntary release. This is in line with the objective of this

bill, to provide separation pay for Reserve officers equal to that now authorized

for Regular officers, and under the same conditions.

EXCEPTIONS TO 2 MONTHS' SEVERANCE PAY

Under this bill, there would be two exceptions to the general rule of 2 months'

severance pay. The first relates to disciplinary cases. The bill provides that

Reserve officers released under conditions similar to the Army and Air Force

"show cause" clauses (10 U.S.C., chs. 359, 360, 859, and 860) and the Navy and

Marine Corps "select out" provisions (10 U.S.C. 6384, 6395) will receive the same

separation pay as Regular officers released under these laws.

Severance pay for Regular officers in the Armed Forces varies among the

services as to the rate for each year of active duty, and as to the maximum amount

payable. In the Army and Air Force, a Regular officer released under the "show

cause" provision, receives 1 month's basic pay for each year of active duty, with a

maximum of 1 year's basic pay. In the Navy and Marine Corps in time of war

or national emergency, a Regular officer "selected out" receives 2 months' basic

pay for each year of active duty, with a maximum of 1 year's basic pay; in peacetime, the rate is 2 months with a maximum of 2 years.
4 LUMP-SUM READJUSTMENT PAYMENTS

Recommendations to eliminate these legally established differences have been

recognized in the report of the Department of Defense Ad Hoc Committee To

Study and Revise the Officer Personnel Act of 1947 (Bolte Committee). This

Department plans to transmit for the consideration of the Congress in its next

session a legislative proposal implementing the Bolte Committee recommendations. Pending action by the Congress on this legislative proposal, H.R. 8773

would insure the same severance pay for Regular and Reserve officers in the same

military service who are being released from active duty as the result of statutorily

constituted boards.

The second exception to the general rule of accruing 2 months' basic pay for

each year of active duty would apply to Reserve members with service during

periods of war and national emergency. Although the present law authorizes

one-half month's pay upon the completion of 5 years' service and involuntary

release and does not distinguish between wartime and peacetime service, the

draft bill submitted by this Department August 4, 1961, would have precluded

crediting of any severance pay for reservists during a war or national emergency

declared by the Congress or the President after enactment. H.R. 8773 as passed

by the House provides for no exclusion of service in either a war or a national

emergency. The circumstances that will obtain in the future under such conditions are simply too uncertain to warrant the creation of what might be an

enormous unjustified liability on the Government. Should such circumstances

justify payments during these periods, legislation can then be enacted to provide

the necessary authorization in the light of then known conditions.

CONTRACTS

The bill would make no change in existing statutory authority on contracts

being optional at the discretion of the Secretaries of the military departments.

It is apparent that with respect to the, Army and the Air Force, there will be a

continuing requirement for career Reserve officers. This is undoubtedly the

reason why these services have not resorted to the granting of contracts to Reserve

officers. On the other hand, while there is no indication that a r.i.f. will occur in

the foreseeable future, it is a fact that an absolute guarantee of tenure cannot be

afforded our Reserve officers. These _officers, of course, will continue to be released in accordance with statutory authority upon twice failing of promotion.

H.R. 8773 would provide the same degree of financial security as that authorized

for a Regular officer in the event of involuntary separation.

REDUCTION IN RETIRED PAY OF RESERVISTS WHO HAVE RECEIVED SEVERANCE PAY

H.R. 8773 authorizes no recoupment from retired pay of title III retirees (age

60) but requires full recoupment of separation pay from title II retirees before

they are eligible for any retired pay. The departmental bill required that retired pay of title III retirees be reduced by 25 percent until all severance pay had

been recovered by the Government; or in lieu of recovery, the years of service for

which severance pay was received be discounted from retired pay computations.

Since the passage of H.R. 8773 by the House, I am authorized to recommend that

recoupment of only two-thirds of the amount of severance pay, rather than the

total amount, be required from both title II and title III retirees. The forgiveness

of one-third of the severance pay is in consideration of the amount of taxes paid

on severance pay.

While it is true that the half month's readjustment pay currently authorized

for reservists is not subject to recoupment, the amounts were modest and could

in no case exceed 9 months' basic pay. This bill proposes, generally, 2 months

for each year of active duty up to a maximum of 2 years' basic pay. The Department strongly supports recoupment of two-thirds of severance pay and cites

as a precedent congressional action on the authorization of 2 months' severance

pay for Regular officers in the Navy and Marine Corps and warrant officers in

all four services who subsequently qualify for title III retirement. In the legislative history of these laws, it is pointed out that it was not fair for a Regular

Navy officer or a warrant officer of any service to receive sizable amounts in

severance pay and subsequently count that same time toward retirement pay

under the Reserve Retirement Act. The intent was specifically to preclude

dual credit for retirement purposes.

In accordance with existing procedures in the Department of Defense, a

Regular officer scheduled for involuntary release who desires to enlist in order

to qualify for retirement with 20 years' service (title II retirement) must make

his intention known prior to separation. In such cases, the officer resigns his
LUMP-SUM READJUSTMENT PAYMENTS 5

commission, and since a resignation does not constitute involuntary release, he receives no severance pay. We propose the same procedure for Reserve officers who desire to enlist in order to qualify for title II retirement. If, however, an officer accepts severance pay, and eventually qualifies for title II retirement through subsequent service, he would not under the provisions of this bill as modified by the Department of Defense proposal be eligible for any retired pay until two-thirds of severance pay had been recouped.

Likewise, under the terms of the original departmental bill, reservists who receive severance pay and who qualify for VA compensation would not draw VA. compensation until the Government had withheld an amount equal to the severance pay received. This provision liberalizes existing law which, as interpreted by the Veterans' Administration, precludes the receipt of VA compensation by

any reservist who had accepted readjustment pay. The Veterans' Administra- tion has experienced considerable difficulty with the stringent provisions of law and concurs in the proposal to permit receipt of VA compensation subject to

recoupment of severance pay. H.R. 8773, however, would bar the reservist from receipt of VA compensation only for the number of months for which severance

pay had been received. The Department modifies its original position on this

matter to authorize eligibility for VA compensation after two-thirds of the amount of severance pay received has been recovered.

ELIMINATION OF BOARD ACTION ON RESERVE OFFICERS UNDER CONTRACT WHO ARE

TWICE PASSED OVER FOR PROMOTION

H.R. 8773 would eliminate the requirement for a board hearing for a Reserve officer under contract who is twice passed over for promotion. A similar provi- sion was contained in the bill passed by the House in the last Congress, and is another step in equalizing the treatment of Regular and Reserve officers. The records of all officers, both Regular and Reserve, who have been twice passed

over for promotion have been considered by two separate selection boards. The Regular officer who is to be released due to twice failing of selection for promotion does not have recourse to a board hearing. Hence, from the standpoint of equity

as between officers in the two components, and the fact that a board hearing could

not result in the promotion of a twice-deferred officer, it is believed that the law should be amended to provide that 10 U.S.C. 680(a)(2) does not apply to a

Reserve officer if he is twice passed over for promotion.

COST AND BUDGET DATA

The enactment of this proposal would result in estimated increased budgetary requirements as follows:

Fiscal year: Fiscal year—Continued

1962 $8,347,730 1965 8,493,838

1963 8,447,531 1966 8,075,921

1964 8,554,588

The Department of Defense strongly recommends enactment of H.R. 8773 with the four exceptions noted in my introductory remarks, and with the further modification to require recoupment of only two-thirds of severance pay from. title II and title III retirees and from those reservists who qualify for VA com- pensation. We believe that enactment would provide equity to the thousands of Reserve officers now serving their country in uniform, and be of real value to the Department of Defense in maintaining the quality of our active duty forces. This concludes my statement. If there are questions, I shall be pleased to try

to answer them. Representatives of the military departments are available for questions on this bill as it relates to their individual services.

Mr. JACKSON. The main point of this bill is to equate the readjustment pay of Reserve officers who are involuntarily separated with that

of the adjustment pay or severance pay that is paid to the Regulars.

At the present time, as you know, if a Reserve officer on extended

active duty is involuntarily separated, he receives half a month's

salary for each year that he has served, provided that he has served 5

years. This bill would increase that amount to 2 months, with a

maximum of 2 years' salary. This bill is designed, in the opinion of

the Defense Department, to make an equitable provision for the re-
6 LUMP-SUM READJUSTMENT PAYMENTS

servist who may be involuntarily separated, and who, indeed, is more

vulnerable in times of a reduction in force to separation than the

Regular.

There are other features of this bill, some of which are in controversy, which are perhaps best summarized by referring to the recoupment features. The bill as submitted in the House required complete

recoupment in the event that the officer continued on as an enlisted

man for title II retirement, or if after his active duty he continued as

an inactive reservist and qualified for title III, the bill required recoupment up to 25 percent, until it was entirely paid.

At the hearing we testified that we were concerned about the fact

that a man might receive this readjustment pay which, when laid on

his salary, would cause a considerable increase in his tax, but which

nevertheless he would be required to pay back.

Let's say he got $10,000 and the tax was $3,000—he would have to

pay back the $10,000 on retirement. And we have now developed a

proposal for the consideration of the Congress that the recoupment

would be only up to two-thirds, which roughly would leave one-third

remaining to take care of the tax which he has already paid when he

received it.

There is also a deletion in the bill as originally proposed of a provision that time spent during war—during congressional emergency or

a presidential emergency—would not count as a multiplier. There

was considerable discussion of this in the House, and it was stricken.

These are the main features, sir. And I would be glad to try to

answer any questions.

Chairman RUSSELL. What is the estimated cost of this bill, Mr.

Jackson?

Mr. JACKSON. The estimated cost of the bill runs, for fiscal 1962,

$8,347,000, and approximately the same through 1966—$8,447,000,

$8,554,000, $8,493,000, and $8,075,000. I have left out the hundreds..

Chairman RUSSELL. Will that increase from year to year?

Mr. JACKSON. That is the projection through 1966, sir. And, as a

matter of fact, it decreases in 1966. And those are the only projections

we have, sir.

Senator STENNIS. It is shown on the last page.

Senator RUSSELL. I see the table there.

I noticed on page 2, line 8, of your statement that you propose to

authorize what is a reduced readjustment pay of 1 month's pay for

each year of service for members of the Army or the Air Force who are

released because their performance of duty has fallen below standards

prescribed by the Secretary or because of moral or professional

dereliction, or because their retention is not clearly consistent with

the interests of national security. It would seem to me to be a little

bit questionable as to whether the man released from active duty for

moral or professional dereliction, or for some of these other reasons,

should be entitled to any readjustment pay. What is the justification

for that?

Mr. JACKSON. The reason is that we have provided for the reservist

precisely what is prescribed in the law for the Regular. And that is

the law with respect to Regulars who are involuntarily separated.

Chairman RUSSELL. I think it is a very bad provision of the law.

Now, on page 3 you propose to limit the readjustment pay of a

Navy or Marine Corps officer released because of unsatisfactory
LUMP-SUM READJUSTMENT PAYMENTS 7

performance of duty to a total of 1 year's basic pay in the grade in

which he was serving at the time of release. What is the justification

for paying any readjustment pay under those circumstances?

Mr. JACKSON. I am not sure I follow 

Chairman RUSSELL. Look on page 3, line 1, the sentence beginning—

An officer of the Navy or Marine Corps who is released from active duty because

a board of officers convened under section 5787 of title 10, United States Code,

considers that his record indicates his unsatisfactory performance of duty in his

present grade and that he would not satisfactorily perform the duties of a higher

grade may not be paid a total of more than one year's basic pay in the grade in

which he was serving at the time of release.

Mr. JACKSON. This again is the present law for the Regulars, sir.

Chairman RUSSELL. I hope some of these days we will be able to

go back to adjusting the laws for the Regulars instead of compounding them by adding them to the Reserves.

Senator Smith.

Senator SMITH. Mr. Chairman, I would like to ask the Deputy

Assistant Secretary of Defense to justify the pay discrimination of

giving the citizen reservist less pay for his service than the long-term

reservist who is later released and receives lump-sum payments based

on his prior service. Can any distinction be made based solely on the

fact that the Regulars receive more pay for their service when they

are involuntarily released?

Mr. JACKSON. Discrimination against short-ti e:reservists?

Senator SMITH. That is right.

Mr. JACKSON. Those less than 5 years?

Senator SMITH. That is right.

Mr. JACKSON. This is the provision which is in the present law.

And the purpose of it, Senator Smith, I believe, is that the purpose

of readjustment pay is to do equity for the career reservist who has

envisioned a career but is, through no fault of his own, cut off. And

the 5-year period is a period prior to which the man has not taken on

apparently the status of a potential career officer.

Senator SMITH. It is my understanding that when the Department.

of Defense testified several years ago on the present arrangement,

based on the one-half of 1 month's basic pay formula, it was indicated

that the amount for career reservists should not be so much as to

defer them from seeking a Regular commission. How can the Department of Defense justify this previous position with the present one

of seeking identical pay for all reservists as for Regulars?

Mr. JACKSON. I am not familiar with what transpired before but

it doesn't seem to me, Senator, that the promise of a larger readjustment pay would be a deterrent for the reservist to seek, if he could

get it, a Regular commission. His readjustment pay would be the

same. And, indeed, we have thousands of reservists who, I am sure,

if they had the opportunity, in spite of this readjustment pay, would

be very happy to accept a regular commission if the doors were opened..

Senator SMITH. Would the Department of Defense object to a ceiling of $15,000 on the amount in severance pay that could be paid to

each individual?

Mr. JACKSON. We would, because it would then set up a disparity

between the Regulars which we are trying to adhere to, and the 2-year

ceiling is the one prescribed for the Regulars.
•

LUMP-SUM READJUSTMENT PAYMENTS

Senator SMITH. Would you object to an amendment which in effect

would require an officer to waive the readjustment pay if he decides

to enlist in order to acquire the 20-year service before retirement?

Mr. JACKSON. I am not prepared to give a formal position of the

Defense Department on that. I state in my statement, however,

that this we are doing with regard to the Regulars now administratively, and this we would plan to consider if a Reserve officer wanted

to resign and reenlist as an enlisted man, that he would have to tender

his resignation, and therefore would not be entitled to the severance

pay.

Senator SMITH. The present bill does not exclude periods of war

and national emergency in computing this lump-sum pay. This

means that the citizen reservist would receive less pay even for wartime service than the career reservist later involuntarily released.

Am I correct in stating that the Department of Defense opposes the

exclusion of this service?

Mr. JACKSON. Yes.

(NoTE.—Answer should be "no" in that Mr. Jackson understood

the question as, "Does DOD oppose the 'inclusion' * * *.)

Senator SMITH. Would the Department of Defense object to an

amendment which would provide that annual reporting be submitted

to the committee setting forth the number of persons by grade who

receive the severance pay?

Mr. JACKSON. I am not aware what would be involved. I am sure

that if this information were wanted by the Congress we would

provide it. We have a projection here that has been submitted to

the staff of what the numbers would be over the next few years.

Senator SMITH. Those are all the questions I have.

Chairman RUSSELL. How long do you think it would take you,

Mr. Jackson, to draw an amendment that would limit the sum total

,of payment to $15,000 both to reservists and to Regulars?

Mr. JACKSON. Well, the actual drafting wouldn't take very long.

Chairman RUSSELL. Do you think you could identify all the laws

that entitle Regulars to severance pay, so that we could pass some

-kind of limitation that would include both Regulars and Reserves?

Mr. JACKSON. I think the statutes are cited. I am just answering

your question. I am not addressing myself to the merits.

Chairman RUSSELL. I understand that you would be opposed to

the amendment; I didn't ask you about that, I asked you about

,drawing it.

Mr. JACKSON. Yes, sir. We have counsel here, and the statutes

referring to the adjustment pay for Regulars are cited here. I don't

think it would take very long.

Chairman RUSSELL. The House amended your recommendation

.on full recoupment of readjustment pay before a person could receive

a disability compensation from the Veterans' Administration. Instead of full recoupment this bill proposes a deferment of eligibility

for Veterans' Administration compensation until after the passage

of a period equal to the number of months of basic pay that the

person had received as readjustment pay.

Apparently, the present language would result in less than full

recoupment of readjustment pay for these persons. Is the Department of Defense satisfied with this provision as written now?

Mr. JACKSON. No, sir. The Department of Defense's position was

and still is as originally submitted in our bill.
LUMP-SUM READJUSTMENT PAYMENTS 9

Chairman RUSSELL. Any further questions of Mr. Jackson?

(No response.)

Chairman RUSSELL. Thank you, Mr. Jackson.

The Reserve Officers Association is represented today by Colonel

Carlton, their executive director.

Colonel Carlton.

STATEMENT OF COL. JOHN T. CARLTON, EXECUTIVE DIRECTOR,

RESERVE OFFICERS ASSOCIATION OF THE UNITED STATES

Colonel CARLTON. Mr. Chairman, this statement takes 6 minutes

to read. Would you like me to read?

Chairman RUSSELL. You may proceed.

Colonel CARLTON. It has several points which you touched upon,

and I think I should read it.

Mr. Chairman and members of the committee, for the past 4 years

this committee has been acutely 'aware of,the peculiar situation of

Reserve officers serving on extended active duty and the careei

hazards involved in their tenuous position while so serving. This is

due, of course, to the fact that they may be released at any time, with

little notice.

The time and talent which you have given to consideration of this

issue has been considerable, and we are grateful that at long last a

long step toward the solution of the major aspect of the problem

appears imminent.

In the knowledge that you are fully conversant with the issue, we

will presume upon your time only briefly.

You have before you a bill which was considered in a 2-day hearing

by the House committee. You are aware that in the last Congress,

and in the Congress preceding, the House committee, as well as the

Senate committee, considered the problem, and the proposal before

you is the result of long and deliberate study. The full House of

Representatives on August 29 considered this bill in a debate of some

length, when the issues were fully weighed. After this debate, a

record vote resulted in 394 Members of the House voting in favor of

this bill and no Member voting against it.

There are two principal aspects of this legislation, both interrelated and the one dependent upon the other—incentive and readjustment.

The incentive features of the bill have the purpose of persuading a

larger number of young officers to agree to continue service in the

military beyond their obligated tours of 2, 3, or 4 years.

To achieve a greater degree of attractiveness in the military service,

it must be demonstrated to these young officers that as the years pass,

their service will be recognized. The readjustment features are

provided in order to offset to some degree the disadvantage accruing

to them in their civilian vocations because of their absence from

that vocation by reason of their military service. They should be

helped in their problem of readjustment to civil life when involuntarily released because of reduction in the Active Forces.

The military services have found that there has been a consistent

shortage of experienced junior officers needed to officer the units and

seldom has there been any desirable degree of selectivity.
10 LUMP-SUM 'READJUSTMENT PAYMENTS

One contributing factor providing this shortage has been their

knowledge of the experiences of their seniors. In various periods

since the end of World War II, and Korea, sudden and unexpected

reductions in force have seen these reservists being sent back on short

notice to reestablish themselves in civilian life.

The bill would provide a greater and more realistic readjustment

pay program for these officers and improve the personnel practices in

the services. Additionally, by providing an equitable amount, based

upon the formula recommended by the Cordiner Committee and the

University of Michigan for the older officers who may be released

today, it would encourage the young officers to volunteer for extended

service.

In addition to the aspects of incentive, and a simple program of readjustment pay, we would like to emphasize briefly two considerations which moved the House to make the changes it made in the

Defense Department proposal. First, it is recognized that the reservist's status differs from that of the Regular; and second, that there

is a need to improve personnel practices with regard to the Reserves.

Much has been made of the effort to achieve equity between

Reserves and Regulars.

In the situation this bill is designed to meet, under our system there

cannot be true equality, nor is it intended. The Regular officer has

"tenure"; the Reserve officer does not. In an expansion of the military services such as we are experiencing today, the new personnel

must be drawn from the Reserves. In a contraction of the Armed

Forces—a reduction in force—the reservist is the one who is released.

The reservist must face the fact that his duty is temporary, that he

does not have tenure, and that as a "career reservist," he is employed

where employment is hazardous and uncertain. This has made r.i.f.

an ugly and a fearsome word. It should not be, and it need not be.

This measure was drawn initially as an "anti-r.i.f." bill. We know

that we cannot guarantee against' ra.f.'s, which will force out a number

of career reservists. We do believe this bill will end the military

practice of releasing without cause a Reserve officer when he is almost

within sight of retirement—in many cases only a few days short of

assured retirement. This measure will do much to discourage this

practice.

We suggest one simple change in the House bill, to eliminate the

recoupment requirement for readjustment pay which is proposed for

only one particular category of officers.

We consider it inconsistent and unrealistic to provide a lump sum

to an officer as a financial cushion for readjustment, either to civilian

life or to enlisted life, and then require him to give it all back. In

many ways, the shock of the adjustment to enlisted status is the

greater. In our armed services are many Reserve officers who are

called up to fill officer ranks in times of expansion, and in times of

contraction are persuaded, or allowed, to remain in the service as

noncommissioned officers. These officers are important to our national security. We need to provide an incentive for their continued

service. To offer them readjustment pay and then to require them

to pay it back, in full, including the deductions already ma,de for

income tax purposes, is too brutal a proposal to have anything but a

deterrent effect on their continuing in their important dual-status roles.
LUMP-SUM READJUSTMENT PAYMENTS 11

We are confident that this change would be acceptable to the

House.

Mr. Chairman, as you and the other members of this committee

know, there has in the past been a great deal of misinformation,

indecision, and superficial personnel philosophy advanced in connection with the long consideration of this matter. However, we believe

that this bill, with the one simple but important amendment, now

strikes directly at the problem and provides a long-sought solution.

Its enactment not only will provide a great boost to the morale of

the entire officer corps of the active duty forces today, but for obvious reasons it also should greatly advance improvement of personnel

practices in the military services.

May I express on behalf of the Reserve officers, who comprise some

60 percent of the active officer corps, a deep and abiding gratitude

for the time you and this committee have given to this subject.

Thank you for permitting us to touch briefly upon the principal

aspects of a most complex and important issue.

Chairman RUSSELL. Thank you, Colonel.

Colonel CARLTON. Might I just comment on one little thing

about it.

This wouldn't cost a great deal of money, if better and improved

personnel policies were followed. We have checked with the people

in the Pentagon in the last few days to find out how much of a r.i.f.

may be in prospect for this year, and we have been told that very

few officers will be r.i.f.'d. And if you don't r.i.f. any officers, it

doesn't cost any money.

Chairman RUSSELL. It seems to me it would be unlikely that there

would be any officers released now that we are adding to the Armed

Forces.

The committee will go into executive session.

(Whereupon, at 1:25 p.m., the committee went into executive

session.)

(Subsequently, in executive session, the committee voted to report

H.R. 8773 with an amendment, as covered by S. Rept. 1096.)

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