Military Personnel: Preliminary Observations Related to Income, Benefits, and Employer Support for Reservists During Mobilizations
Published: 2003-03-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since the end of the Cold War, there has been a shift in the way reserve forces have been used. Previously, reservists were viewed primarily as an expansion force that would supplement active forces during a major war. Today, reservists not only supplement but also replace active forces in military operations worldwide. Citing the increased use of the reserves to support military operations, House Report 107-436 accompanying the Fiscal Year 2003 National Defense Authorization Act directed GAO to review compensation and benefits for reservists. In response, GAO is reviewing (1) income protection for reservists called to active duty, (2) family support programs, and (3) health care access. For this testimony, GAO was asked to discuss its preliminary observations. GAO also was asked to discuss the results of its recently completed review concerning employer support for reservists.
section_title: What GAO Found
paragraphs: The preliminary results of our review indicate that reservists experience widely varying degrees of income loss or gain when they are called up for a contingency operation. While income loss data for current operations Noble Eagle and Enduring Freedom were not available, data for past military operations show that 41 percent of drilling unit members reported income loss, while 30 percent reported no change and 29 percent reported an increase in income. This information is based on self-reported survey data for mobilizations or deployments of varying lengths of time. As would be expected, the data indicate that certain groups, such as medical professionals in private practice, tend to report much greater income loss than the average estimated for all reservists. Although reservists called up to support a contingency operation are generally eligible for the same family support and health care benefits as active component personnel, reservists and their families face challenges in understanding and accessing their benefits. Among the challenges, reservists typically live farther from military installations than their active duty counterparts, are not part of the day-to-day military culture, and may change benefit eligibility status many times throughout their career. Some of these challenges are unique to reservists; others are also experienced by active component members but may be magnified for reservists. Outreach to reservists and their families is likely to remain a continuing challenge for DOD in the areas of family support and health care, and we expect to look at DOD's outreach efforts in more detail as we continue our study. Outreach is also a critical component of maintaining and enhancing employers' support for reservists. Although DOD has numerous outreach efforts, we found that a sizeable number of reservists and employers were unsure about their rights and responsibilities. For example, a 1999 DOD survey found that 31 percent of employers were not aware of laws protecting reservists. Several factors have hampered DOD's outreach efforts to both employers and reservists. However, DOD is taking positive actions in this area, such as moving ahead with plans to collect employer data from all reserve personnel.

section_title: Letter
paragraphs: We are pleased to be here today to discuss reserve personnel income,  benefits, and employer support. My remarks focus on the more than  870,000 “selected” reservists who generally drill and train part-time with  their military units (referred to in this testimony as drilling unit members).  These reservists may be involuntarily called to federal active duty under  various provisions of law. They may also be placed voluntarily on active  duty for training and other purposes. Since the 1991 Persian Gulf War,  reservists have been mobilized or deployed to a number of contingency  operations, including operations Noble Eagle and Enduring Freedom and  operations in Kosovo, Bosnia, Southwest Asia, and Haiti. As of early   March 2003, 193,270 reservists were supporting current contingency  operations.
Citing the increased use of the reserves to support military operations,  House Report 107-436 accompanying the Fiscal Year 2003 National  Defense Authorization Act directed us to review compensation and benefit  programs for reservists. Our review is ongoing, but today I would like to  present preliminary observations based on our review in three areas:   (1) income protection for reservists called to active duty, (2) family  support programs, and (3) health care access. All three of these issues are  potential areas of concern to a reservist called to active duty for a  contingency operation. We plan to issue a final report on these three  issues later this year. In addition, you have asked us to discuss the results  of our recently completed review concerning employer support for  reservists, another potential area of concern to mobilized or deployed  reservists. Finally, Mr. Chairman, while the legislation directed us to  review the retirement system for the reserves, we have not yet begun that  work. As discussed with your offices, we plan to review the reserve  retirement system in the future. While we have not conducted a detailed  review of this issue, I would like to offer some observations.
Before discussing these issues in more detail, I would like to note that one  of the Department of Defense’s (DOD) guiding principles for military  compensation is that servicemembers—both reservists and active  component members—be treated fairly. Military compensation for  reservists is affected by the type of military duty they perform. In  peacetime—when a reservist is on active duty for training or on military  duty not related to a contingency operation—certain thresholds are  imposed at particular points in service before a reservist is eligible to  receive the same compensation as a member serving full-time. For  contingency operations, these same thresholds generally do not apply.  Reservists activated for contingency operations such as Noble Eagle and  Enduring Freedom are generally eligible to receive the same compensation  and benefits as active component personnel. I should also note here that in  a recent report comparing the benefits offered by the military with those  offered in the private sector, we found no significant gaps in the benefits  available to military personnel.
To date, we have met with and gathered information from DOD officials in  the Office of the Assistant Secretary of Defense for Reserve Affairs, the  Office of Military Compensation, the Office of Family Policy, the National  Guard Bureau, the Army National Guard, the Air National Guard, the Army  Reserve, the Air Force Reserve, the Naval Reserve, the Marine Corps  Reserve, the TRICARE Management Activity, the National Committee for  Employer Support of the Guard and Reserve, and other organizations. We  obtained the results and DOD’s preliminary analysis of the 2000 Survey of  Reserve Component Personnel. We reviewed DOD proposals concerning  income loss. We also reviewed DOD’s progress in implementing  recommendations that we made in prior reports.
Let me turn now to the specific issues.
subsections: section_title: Background
paragraphs: Since the end of the Cold War, there has been a shift in the way reserve  forces have been used. Previously, reservists were viewed primarily as an  expansion force that would supplement active forces during a major war.  Today, reservists not only supplement but also replace active forces in  military operations worldwide. In fact, DOD has stated that no significant  operation can be conducted without reserve involvement. As shown in  figure 1, reserve participation in military operations spiked in fiscal   years 1991 (Desert Shield and Desert Storm) and 2002 (Noble Eagle and  Enduring Freedom).
There have been wide differences in the operational tempos of individual  reservists in certain units and occupations. Prior to the current  mobilization, personnel in the fields of aviation, special forces, security,  intelligence, psychological operations, and civil affairs were in high  demand, experiencing operational tempos that were two to seven times  higher than those of the average reservist. Since September 2001,  operational tempos have increased significantly for reservists in all of  DOD’s reserve components due to the partial mobilization in effect to  support operations Noble Eagle and Enduring Freedom.
For each year between fiscal years 1997 and 2002, the reserves on the  whole achieved at least 99 percent of their authorized end strength. In 4 of  these 6 years, they met at least 100 percent of their enlistment goals.  During this time period, enlistment rates fluctuated from component to  component. Overall attrition rates have decreased for five of DOD’s six  reserve components. Between fiscal years 1997 and 2002, only the Army  National Guard experienced a slight overall increase in attrition. The  attrition data suggest there has not been a consistent relationship between  a component’s average attrition rate for a given year and the attrition rate  for that component’s high demand capabilities (which include units and  occupations). Attrition rates for high demand capabilities were higher than  average in some cases but lower for others. Aviation in the Army National  Guard, for instance, has had higher than average attrition for 4 of the   5 years it was categorized as a high demand capability.
section_title: Reservists Have Reported Widely Varying Degrees of Income Loss Or Gain
paragraphs: Preliminary analysis of income changes reported by reservists who  mobilized or deployed for past military operations indicates that they  experienced widely varying degrees of income loss or gain. The source for  this analysis is DOD’s 2000 Survey of Reserve Component Personnel,  which predates the mobilization that began in September 2001. The data  show that 41 percent of drilling unit members reported income loss during  their most recent mobilization or deployment, while 30 percent reported  no change and 29 percent reported an increase in income (see table 1).
Based on the survey data, DOD estimated that the average total income  change for all members (including losses and gains) was almost $1,700 in  losses. This figure should be considered with caution because of the  estimating methodology that was used and because it is unclear what  survey respondents considered as income loss or gain in answering this  question. Further, reservists are mobilized or deployed for varying lengths  of time, which can affect their overall income loss or gain. About  31 percent of all reservists who had at least one mobilization or  deployment had been mobilized or deployed for less than 1 month. For the  entire population, members spent an estimated 3.6 months mobilized or  deployed for their most recent mobilization.
DOD’s preliminary analysis of the survey data show that certain groups  reported greater losses of income on average. Self-employed reservists  reported an average income loss of $6,500. Physicians/registered nurses,  on the whole, reported an average income loss of $9,000.  Physicians/registered nurses in private practice reported an average  income loss of $25,600. Income loss also varied by reserve component and  pay grade group. Average self-reported income loss ranged from $600 for  members of the Air National Guard up to $3,800 for Marine Corps  Reservists. Senior officers reported an average income loss of $5,000  compared with $700 for junior enlisted members. When asked to rank  income loss among other problems they have experienced during  mobilization or deployment, about half of drilling unit members ranked it  as one of their most serious problems. DOD’s preliminary analysis  presents little data on those groups who reported overall income gain.  Two groups who were identified as reporting a gain were clergy and those  who worked for a family business without pay.
Concerns were raised following the 1991 Gulf War that income loss would  adversely affect retention of reservists. According to a 1991 DOD survey of  reservists activated during the Gulf War, economic loss was widespread  across all pay grades and military occupations. In response to  congressional direction, DOD in 1996 established the Ready Reserve  Mobilization Income Insurance Program, an optional, self-funded income  insurance program for members of the Ready Reserve ordered  involuntarily to active duty for more than 30 days. Reservists who elected  to enroll could obtain monthly coverage ranging from $500 to $5,000 for up  to 12 months within an 18-month period. Far fewer reservists than DOD  expected enrolled in the program. Many of those who enrolled were  activated for duty in Bosnia and, thus, entitled to almost immediate  benefits from the program. The program was terminated in 1997 after  going bankrupt. We reported in 1997 that private sector insurers were not  interested in underwriting a reserve income mobilization insurance  program due to concerns about actuarial soundness and unpredictability  of the frequency, duration, and size of future call-ups. Certain coverage  features would violate many of the principles that private sector insurers  usually require to protect themselves from adverse selection. These  include voluntary coverage and full self-funding by those insured, the  absence of rates that differentiated between participants based on their  likelihood of mobilization, the ability to choose coverage that could result  in full replacement of their lost income rather than those insured bearing  some loss, and the ability to obtain immediate coverage shortly before an  insured event occurred. According to DOD officials, private sector  insurers remain unsupportive of a new reserve income insurance  mobilization program and the amount of federal underwriting required for  the program is prohibitive. The Department has no plans to implement a  new mobilization insurance program.
A 1998 study by RAND found that income loss, while widespread during  the Gulf War, did not have a measurable effect on enlisted retention. The  study was cautiously optimistic that mobilizing the reserves under similar  circumstances in the future would not have adverse effects on recruiting  and retention. However, the effects of future mobilizations can depend on  the mission, the length of time reservists are deployed, the degree of  support from employers and family members, and other factors.
Certain federal protections, pay policies, and employer practices can help  to alleviate financial hardship during deployment. For example, the  Soldiers’ and Sailors’ Civil Relief Act caps debt interest rates at 6 percent  annually. Income that servicemembers earn while mobilized in certain  combat zones is tax-free. For certain operations, DOD also authorized  reservists to receive both full housing allowances and per diem for their  entire period of activation. In addition, some employers make up the  difference between civilian and military pay for their mobilized employees.  This practice varies considerably among employers. Servicemembers can  also obtain emergency assistance in the form of interest-free loans or  grants from service aid societies to pay for basic living expenses such as  food or rent during activation. DOD is exploring debt management  alternatives, such as debt restructuring and deferment of principle and  interest payments, as ways to address income loss. The Army has  proposed a new special pay targeting critical health care professionals in  the reserves who are in private practice and are deployed involuntarily  beyond the established rotational schedule.
section_title: Reservists and Their Families Face Challenges in Understanding and Accessing Family Support Services
paragraphs: Reservists who have been activated for previous contingency operations  have expressed concerns about the additional burdens placed on their  families while they are gone. More than half of all reservists are married  and about half have children or other legal dependents. According to the  2000 survey, among the most serious problems reservists said they  experienced when mobilized or deployed are the burden placed on their  spouse and problems created for their children.
The 1991 Gulf War was a milestone event that highlighted the importance  of reserve family readiness. Lessons learned showed that families of  activated reservists, like their active duty counterparts, may need  assistance preparing wills, obtaining power of attorney, establishing  emergency funds, and making child care arrangements. They may also  need information on benefits and entitlements, military support services,  and information on their reemployment rights. DOD has recognized that  family attitudes affect reserve member readiness, satisfaction with reserve  participation, and retention. Military members who are preoccupied with  family issues during deployments may not perform well on the job, which  in turn, negatively affects the mission. Research has shown that families of  reservists who use family support services and who are provided  information from the military cope better during activations. Under a   1994 DOD policy, the military services must “ensure National Guard and  Reserve members and their families are prepared and adequately served  by their services’ family care systems and organizations for the  contingencies and stresses incident to military service.”
Although activated reservists and their family members are eligible for the  same family support services as their active duty counterparts, they may  lack knowledge about or access to certain services. The 2000 DOD survey  suggests that more than half of all reservists either believe that family  support services are not available to them or do not know whether such  services are available. Table 2 shows drilling unit members’ responses on  the availability of selected programs and services.
According to DOD officials, operations Noble Eagle and Enduring  Freedom have highlighted the fact that not all reserve families are  prepared for potential mobilization and deployment. They told us that  since many families never thought their military members would be  mobilized, families had not become involved in their family readiness  networks. DOD has found that the degree to which reservists are aware of  family support programs and benefits varies according to component, unit  programs, command emphasis, reserve status, and the willingness of the  individual member to receive or seek out information. Results from the  2000 DOD survey show that about one-fourth of drilling unit members said  their arrangements for their dependents were not realistically workable  for deployments lasting longer than 30 days. Furthermore, about 4 of every  10 drilling unit members thought it was unlikely or very unlikely that they  would be mobilized or deployed in the next 5 years. Again, this survey  predates the events of September 11, 2001, and the ensuing mobilization.
Among the key challenges in providing family support are the long  distances that many reservists live from installations that offer family  support services, the difficulty in persuading reservists to share  information with their families, the unwillingness of some reservists and  their families to take the responsibility to access available information,  conflicting priorities during drill weekends that limit the time spent on  family support, and a heavy reliance on volunteers to act as liaisons  between families and units. In 2000, about 40 percent of drilling unit  members lived 50 miles or farther from their home units.
DOD has recognized the need for improved outreach and awareness. For  example, the Department has published benefit guides for reservists and  family members and has enhanced information posted on its Web sites.  DOD published a “Guide to Reserve Family Member Benefits” that informs  family members about military benefits and entitlements and a family  readiness “tool kit” to enhance communication about pre-deployment and  mobilization information among commanders, servicemembers, family  members, and family program managers. Each reserve component also  established family program representatives to provide information and  referral services, with volunteers at the unit level providing additional  assistance. The U.S. Marine Corps began offering an employee assistance  program in December 2002 to improve access to family support services  for Marine Corps servicemembers and their families who reside far from  installations. Through this program, servicemembers and their families can  obtain information and referrals on a number of family issues, including  parenting; preparing for and returning from deployment; basic tax  planning; legal issues; and stress. Notwithstanding these efforts, we  believe, based on our review to date, that outreach to reservists and their  families will likely remain a continuing challenge for DOD.
section_title: Challenges in Accessing DOD Health Care Benefits Are Magnified for Reservists
paragraphs: Reservists who are mobilized for a contingency operation are confronted  with health care choices and circumstances that are more complex than  those faced by active component personnel. Reservists’ decisions are  affected by a variety of factors—whether they or their spouses have  civilian health coverage, the amount of support civilian employers would  be willing to provide with health care premiums, and where they and their  dependents live. If dependents of reservists encounter increased future  difficulties in maintaining their civilian health insurance due to problems  associated with longer mobilizations and absence from civilian  employment, they may rely on DOD for their health care benefits to a  greater degree than they do today.
When activated for a contingency operation, reservists and their  dependents are eligible for health care benefits under TRICARE, DOD’s  managed health care program. TRICARE offers beneficiaries three health  care options: Prime, Standard, and Extra. TRICARE Prime is similar to a  private HMO plan and does not require enrollment fees or co-payments.  TRICARE Standard, a fee-for-service program, and TRICARE Extra, a  preferred provider option, require co-payments and annual deductibles.  None of these three options require reservists to pay a premium. Benefits  under TRICARE are provided at more than 500 military treatment facilities  worldwide, through a network of TRICARE-authorized civilian providers,  or through non-network physicians who will accept TRICARE  reimbursement rates.
Reservists who are activated for 30 days or less are entitled to receive  medical care for injuries and illnesses incurred while on duty. Reservists  who are placed on active duty orders for 31 days or more are  automatically enrolled in TRICARE Prime and receive most care at a  military treatment facility. Family members of reservists who are activated  for 31 days or more may obtain coverage under TRICARE Prime, Standard,  or Extra. Family members who participate in Prime obtain care at either  a military treatment facility or through a network provider. Under  Standard or Extra, beneficiaries must use either a network provider or a  non-network physician who will accept TRICARE rates.
Upon release from active duty that extended for at least 30 days, reservists  and their dependents are entitled to continue their TRICARE benefits for  60 days or 120 days, depending on the members’ cumulative active duty  service time. Reservists and their dependents may also elect to purchase  extended health care coverage for a period of at least 18, but no more than  36, months under the Continued Health Care Benefit Program.
Despite the availability of DOD health care benefits with no associated  premium, many reserve family members elect to maintain their civilian  health care insurance during mobilizations. In September 2002, we  reported that, according to DOD’s 2000 survey, nearly 80 percent of  reservists reported having health care coverage when they were not on  active duty. Of reservists with civilian coverage, about 90 percent  maintained it during their mobilization. Reservists we interviewed often  told us that they maintained this coverage to better ensure continuity of  health benefits and care for their dependents. Many reservists who did  drop their civilian insurance and whose dependents did use TRICARE  reported difficulties moving into and out of the system, finding a TRICARE  provider, establishing eligibility, understanding TRICARE benefits, and  knowing where to go for assistance when questions and problems arose.  While reserve and active component beneficiaries report similar  difficulties using the TRICARE system, these difficulties are magnified for  reservists and their dependents. For example, 75 percent of reservists live  more than 50 miles from military treatment facilities, compared with   5 percent of active component families. As a result, access to care at  military treatment facilities becomes more challenging for dependents of  reservists than their active component counterparts.
Unlike active component members, reservists may also transition into and  out of TRICARE several times throughout a career. These transitions  create additional challenges in ensuring continuity of care, reestablishing  eligibility in TRICARE, and familiarizing or re-familiarizing themselves  with the TRICARE system. Reservists are also not part of the day-to-day  military culture and, according to DOD officials, generally have less  incentive to become familiar with TRICARE because it becomes important  to them and their families only if they are mobilized. Furthermore, when  reservists are first mobilized, they must accomplish many tasks in a  compressed period. For example, they must prepare for an extended  absence from home, make arrangements to be away from their civilian  employment, obtain military examinations, and ensure their families are  properly registered in the Defense Enrollment Eligibility Reporting System  (DOD’s database system maintaining benefit eligibility status). It is not  surprising that many reservists, when placed under condensed time frames  and high stress conditions, experience difficulties when transitioning to  TRICARE.
We recommended in September 2002 that DOD (1) ensure that reservists,  as part of their ongoing readiness training, receive information and  training on health care coverage available to them and their dependents  when mobilized and (2) provide TRICARE assistance during mobilizations  targeted to the needs of reservists and their dependents. DOD has added  information targeted at reservists to its TRICARE Web site and last month,  in response to our recommendation, developed a TRICARE reserve  communications plan aimed at outreach and education of reservists and  their families.
The TRICARE Web site is a robust source of information on DOD’s health  care benefits. The Web site contains information on all TRICARE  programs, TRICARE eligibility requirements, briefing and brochure  information, location of military treatment facilities, toll free assistance  numbers, network provider locations and other general network  information, beneficiary assistance counselor information, and enrollment  information. There is also a section of the Web site devoted specifically to  reservists, with information and answers to questions that reservists are  likely to have. Results from DOD’s 2000 survey show that about 9 of every  10 reservists have access to the Internet.
The TRICARE reserve communications plan’s main goals are to educate  reservists and their family members on health care and dental benefits  available to them and to engage key communicators in the active and  reserve components. The plan identifies a number of tactics for improving  how health care information is delivered to reservists and their families.  Materials are delivered through direct mailing campaigns, fact sheets,  brochures, working groups, and briefings to leadership officials who will  brief reservists and to reservists themselves. The plan identifies target  audiences and key personnel for information delivery and receipt. The  plan identifies methods of measurement which will assist in identifying the  degree information is being requested and received. We plan to look at the  TRICARE reserve communications plan in more detail as we continue our  study.
Under DOD authorities in the National Defense Authorization Acts for  2000 and 2001, DOD instituted several demonstration programs to provide  financial assistance to reservists and family members. For example, DOD  instituted the TRICARE Reserve Component Family Member  Demonstration Project to reduce TRICARE costs and assist dependents of  reservists in maintaining relationships with their current health care  providers. Participants are limited to family members of reservists  mobilized for operations Noble Eagle and Enduring Freedom. The  demonstration project eliminates the TRICARE deductible and the  requirement that dependents obtain statements saying that inpatient care  is not available at a military treatment facility before they can obtain  nonemergency treatment from a civilian hospital. In addition, DOD may  pay a non-network physician up to 15 percent more than the current  TRICARE rate. As we continue our study, we plan to review the results of  the demonstration project and its impact on improving health care for  reservists’ family members.
section_title: DOD Actions Needed to Better Manage Relations Between Reservists and Their Employers
paragraphs: Most reservists have civilian jobs. The 2000 survey shows that 75 percent  of drilling unit members worked full-time in a civilian job. Of those with  civilian jobs, 30 percent of reservists worked for government at the  federal, state, or local level; 63 percent worked for a private sector firm;  and 7 percent were self-employed or worked without pay in their family  business or farm. The 2000 survey shows that one of the most serious  problems reported by reservists in previous mobilizations and  deployments was hostility from their supervisor. It should be noted,  however, that many employers changed company policies or added  benefits for deployed reservists after September 11, 2001. In a small  nonprojectable sample of employers, we found that more than half  provided health care benefits and over 40 percent provided pay benefits  that are not required by the Uniformed Services Employment and  Reemployment Rights Act of 1994.
Maintaining employers’ continued support for their reservist employees  will be critical if DOD is to retain experienced reservists in these times of  longer and more frequent deployments. DOD has activities aimed at  maintaining and enhancing employers’ support for reservists. The National  Committee for Employer Support of the Guard and Reserve serves as  DOD’s focal point in managing the department’s relations with reservists  and their civilian employers. Two specific functions of this organization  are to (1) educate reservists and employers concerning their rights and  responsibilities and (2) mediate disputes that may arise between reservists  and their employers.
Although DOD has numerous outreach efforts, we have found that a  sizeable number of reservists and employers were unsure about their  rights and responsibilities. For example, a 1999 DOD survey found that   31 percent of employers were not aware of laws protecting reservists. In a  recent report, we listed several factors that have hampered DOD’s  outreach efforts to both employers and reservists. DOD has lacked  complete information on who reservists’ employers are; it does not know  the full extent of problems that arise between employers and reservists;  and it has no assurance that its outreach activities are being implemented  consistently. We recommended that DOD take a number of actions to  improve the effectiveness of outreach programs and other aspects of  reservist-employer relations.
DOD concurred with most of these recommendations and has taken some  actions. Most notably, DOD is moving ahead with plans to collect  employer data from all of its reserve personnel. The data, if collected as  planned, should help DOD inform all employers of their rights and  obligations, identify employers for recognition, and implement proactive  public affairs campaigns. However, DOD has not been as responsive to our  recommendation that the services improve their compliance with DOD’s  goal of issuing orders 30 days in advance of deployments so that reservists  can notify their employees promptly. While our recommendation  acknowledged that it will not be possible to achieve the 30-day goal in all  cases, our recommendation was directed at mature, ongoing contingency  mobilization requirements, such as the requirements that have existed in  Bosnia since 1995. We believe that DOD needs to return to its 30-day goal  following the current crisis or it will risk losing employer support for its  reserve forces.
I would like to take a moment, Mr. Chairman, to address the issue of  reservists who are students. Almost one-fourth of drilling unit members  responding to DOD’s 2000 survey said they were currently in school. While  DOD has an active program to address problems that arise between  reservists and their civilian employers, there is no federal statute to  protect students. Student members of the reserves are not guaranteed  refunds of tuition and fees paid for the term they cannot complete, and  there is no federal statute for partial course credit or the right to return to  the college or university upon completion of active service. Based on our  recent work, we recommended that DOD add students as a target  population to the mission and responsibilities of the National Committee  for Employer Support of the Guard and Reserve, study in depth the  problems related to deployments that student reservists have experienced,  and determine what actions the National Committee for Employer Support  of the Guard and Reserve might take to help students and their  educational institutions. We feel DOD is giving this issue an appropriate  amount of attention given its resources. Employer Support of the Guard  and Reserve volunteers are directing students to available resources and  the Office of the Assistant Secretary of Defense for Reserve Affairs has  added student information and hyperlinks to its official Web site. One  available resource, for example, is the Servicemembers Opportunity  Colleges, which has volunteered to mediate any disputes that arise  between reservists and their schools. In addition, 12 states have enacted  laws or policies to protect student reservists since our report was issued  last June, making a current total of 15 states with such laws or polices.
section_title: Observations on Reserve Retirement Age
paragraphs: The current reserve retirement system dates back to 1948 with the  enactment of the Army and Air Force Vitalization and Retirement  Equalization Act. The act established age 60 as the age at which reserve  retirees could start drawing their retirement pay. At the time the act was  passed, age 60 was the minimum age at which federal civil service  employees could voluntarily retire. Active component retirees start  drawing their retirement pay immediately upon retirement.
Several proposals have been made to change the reserve retirement  eligibility age. In 1988, the 6th Quadrennial Review of Military  Compensation concluded that the retirement system should be changed to  improve retention of mid-career personnel and encourage reservists who  lack promotion potential or critical skills to voluntarily leave after 20 years  of service. The study recommended a two-tier system that gives reserve  retirees the option of electing to receive a reduced annuity immediately  upon retirement or waiting until age 62 to begin receiving retirement pay.  Recent legislative proposals have called for lowering the retirement pay  eligibility age from 60 to 55, establishing a graduated annuity, or  establishing an immediate annuity similar to that in the active duty military  retirement system.
Mr. Chairman, I would like to make two observations about reforming the  reserve retirement system.
First, equity between reservists and active duty personnel is one  consideration in assessing competing retirement systems, but it is not the  only one. Other important considerations are the impact of the retirement  system on the age and experience distribution of the force, its ability to  promote flexibility in personnel management decisions and to facilitate  integration between the active and reserve components, and the cost.  Changes to the retirement system could prove to be costly. Last year, the  Congressional Budget Office estimated that lowering the retirement pay  eligibility age from age 60 to 55 would cost $26.6 billion over 10 years.
Second, DOD currently lacks critical data needed to assess alternatives to  the existing retirement system. According to a 2001 study conducted for  the 9th Quadrennial Review of Military Compensation, DOD should   (1) assess whether the current skill, experience, and age composition of  the reserves is desirable and, if not, what it should look like now and in the  future and (2) develop an accession and retention model to evaluate how  successful varying combinations of compensation and personnel  management reforms would be in moving the reserves toward that  preferred composition. DOD has contracted with RAND and the Logistics  Management Institute to study military retirement. RAND will review  alternative military retirement systems recommended by past studies,  develop a model of active and reserve retirement and retention, analyze  their likely effects on the retirement benefits that individuals can expect to  receive, and identify and analyze the obstacles and issues pertaining to the  successful implementation and therefore the viability of these alternatives.  The Logistics Management Institute will assess alternative retirement  systems with a focus on portability, vesting, and equity. These studies are  looking at seven alternatives to the reserve retirement system. Preliminary  results from these studies are expected later this year. As discussed with  your offices, we plan to review the reserve retirement system in the future.
Mr. Chairman, this completes our prepared statement. We would be happy  to respond to any questions you or other members of the Subcommittee  may have at this time.