Military Personnel: Observations Related to Reserve Compensation, Selective Reenlistment Bonuses, and Mail Delivery to Deployed Troops
Published: 2004-03-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since the terrorist attacks of September 11, 2001, the U.S. military has deployed high numbers of active duty and reserve troops to fight the global war on terrorism and for Operation Iraqi Freedom. Ensuring that U.S. military forces are adequately compensated and that the morale of deployed troops remains high have been priorities for the Congress and the Department of Defense (DOD). In response to congressional mandates, GAO has reviewed a number of issues concerning military personnel. For this hearing, GAO was asked to provide the results of its work on military compensation for National Guard and Reserve personnel and on the Selective Reenlistment Bonus (SRB) program, a tool DOD can use to enhance retention of military personnel in critical occupational specialties. In addition, GAO was asked to provide its preliminary views, based on ongoing work, concerning mail delivery to troops stationed in the Middle East.
section_title: What GAO Found
paragraphs: Reservists who are called to active duty to support a contingency operation are eligible to receive the same pay and benefits as members of the active component. Moreover, in constant dollars, basic military compensation has increased in recent years. For instance, an enlisted reservist in pay grade E-4 who is married with no other dependents and who is called to active duty experienced a 19 percent increase in basic military compensation between fiscal years 1999 and 2003. Despite these increases, income loss is a concern to many reservists, although DOD has lacked timely, sufficient information to assess the full scope and nature of this problem. Benefits for reserve personnel have also improved, notably in the area of health care. As GAO has previously reported, given the federal government's growing deficits, it is critical that the Congress give adequate consideration to the longer term costs and implications of legislative proposals to further enhance military pay and benefits before they are enacted into law. For example, proposals to enhance reserve retirement should be considered in this context. Although GAO has not specifically reviewed the use of SRBs to enhance reserve retention, GAO has noted shortcomings in DOD's management and oversight of the SRB program for active duty personnel. GAO's observations of this program may be helpful in making decisions for the use of SRBs for reservists. Concerned about missing their overall retention goals in the late 1990s, all the services expanded their use of SRBs to help retain more active duty enlisted personnel in a broader range of military specialties, even though the program was intended to help the services meet retention problems in selected critical specialties. As a result, the cost of the program more than doubled in just 5 years--from $308 million in fiscal year 1997 to $791 million in fiscal year 2002. However, the effectiveness and efficiency of SRBs in targeting bonuses to improve retention in selected critical occupations is unknown. DOD has not conducted a rigorous review of the SRB program. DOD concurred with GAO's recommendations to institute more effective controls to assess the progress of the SRB program, but has not taken action as yet. Mail can be a morale booster for troops fighting overseas and for their families at home. GAO has been reviewing mail delivery to deployed troops and expects to issue a report soon. GAO's preliminary findings show that mail delivery continues to be hampered by many of the same problems encountered during the first Gulf War. First, DOD does not have a reliable accurate system in place to measure timeliness. Second, despite differences in operational theaters and efforts by DOD postal planners to incorporate lessons learned into planning for Operation Iraqi Freedom, postal operations faced many of the same problems, such as inadequate postal facilities, equipment, and transportation. Third, DOD has not officially tasked any entity to resolve the long-standing postal problems experienced during contingency operations. GAO plans to make several recommendations to improve DOD's mail delivery to deployed troops.

section_title: Letter
paragraphs: We are pleased to be here today to discuss our work on military  compensation for National Guard and Reserve personnel and on the  Selective Reenlistment Bonus (SRB) program, as well as our preliminary  observations concerning mail delivery to troops stationed in the Middle  East. Since the terrorist attacks of September 11, 2001, the U.S. military  has deployed high numbers of active duty and reserve troops to fight the  global war on terrorism and for Operation Iraqi Freedom. Ensuring that  U.S. military forces are adequately compensated and that the morale of  deployed troops remains high have been priorities for the Congress and  the Department of Defense (DOD).
subsections: section_title: Reserve Compensation
paragraphs: One of DOD’s guiding principles for military compensation is that  servicemembers, in both the reserve and active components, be treated  fairly. Military compensation for reservists is affected by the type of  military duty performed. In peacetime—when a reservist is training or  performing 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 of the active  component. For example, a reservist is not entitled to a housing allowance  when on inactive duty training (weekend drills). If a reservist is on active  duty orders that specify a period of 140 days or more, then he or she  becomes entitled to the full basic housing allowance. For contingency  operations, these thresholds do not apply. Thus, reservists activated for  Operation Iraqi Freedom and other contingencies are eligible to receive  the same compensation as active component personnel.
Basic military compensation, in constant dollars, remained fairly  steady during the 1990s but has increased in recent years. As a result,  reservists—enlisted personnel and officers—activated today are earning  more in the military than they did just a few years ago, as shown in figure  1. For example, an enlisted member in pay grade E-4 who is married with  no other dependents (family size 2) earned $3,156 per month in basic  military compensation in fiscal year 2003, compared with $2,656 per month  in fiscal year 1999, or a 19 percent increase. These figures are calculated in  constant 2003 dollars to account for the effects of inflation.
In addition to increases in basic military compensation, other pay policies  and protections may help to mitigate reservists’ financial hardship during  deployment. For example:    By statute, debt interest rates are capped at 6 percent annually for debts  incurred prior to activation. The Servicemembers Civil Relief Act, passed  in December 2003, enhanced certain other protections. For example, the  act prohibits a landlord, except by court order, from evicting a  servicemember or the dependents of a servicemember, during a period of  military service of the servicemember, from a residence for which the  monthly rent does not exceed $2,400. The act increased the monthly rental  limit from $1,200 and required the rental limit to be adjusted annually  based on changes to a national housing consumer price index.
Some or all of the income that servicemembers earn while serving in  combat zones is tax-free.
For certain contingencies, including Operation Iraqi Freedom, DOD  authorizes reservists to receive both a housing allowance and per diem for  their entire period of activation, up to 2 years.
Emergency loans are available through the Small Business Administration  to help small businesses meet necessary operating expenses and debt  payments.
An issue of concern that is closely tied with military compensation is  income loss experienced by many reservists activated for a military  operation. In a recent report, we evaluated information on income  change. We found that DOD lacked sufficient information on the  magnitude, the causes, and the effects of income change to determine the  need for compensation programs targeting reservists who meet three  criteria: (1) fill critical wartime specialties, (2) experience high degrees of  income loss when on extended periods of active duty, and (3) demonstrate  that income loss is a significant factor in their retention decisions. Such  data are critical for assessing the full nature and scope of income change  problems and in developing cost-effective solutions. DOD data on income  change has been derived from self-reported survey data collected from  reservists and their spouses. A 2000 DOD survey of reservists showed that  of those who served in military operations from 1991 to 2000, an estimated  59 percent of drilling unit members had no change or gain in family  income when they were mobilized or deployed for a military operation,  and about 41 percent lost income. This survey was conducted before the  mobilizations occurring after September 11, 2001. A 2002 DOD survey of  spouses of activated reservists showed that an estimated 70 percent of  families experienced a gain or no change in monthly income and  30 percent experienced a decrease in monthly income. The survey data are  questionable primarily because it is unclear what survey respondents  considered as income loss or gain in determining their financial status. We  recommended that DOD take steps to obtain more complete information  in order to take a targeted approach to addressing income change  problems. DOD concurred with this recommendation. In May and  September of 2003, DOD implemented two web-based surveys of  reservists to collect data on mobilization issues, such as income change.  DOD has tabulated the survey results and expects to issue a report with its  analysis of the results by July 2004. These surveys should be insightful for  this issue.
Benefits are another important component of military compensation for  reservists and help to alleviate some of the hardships of military life. DOD  offers a wide range of benefits, including such core benefits as health care,  paid time off, life insurance, and retirement. Notable improvements have  been made to the health care benefits for reservists and their families. For  example, under authorities granted to DOD in the National Defense  Authorization Acts for fiscal years 2000 and 2001, DOD instituted several  health care demonstration programs to provide financial assistance to  reservists and family members. For example, DOD instituted the TRICARE  Reserve Component Family Member Demonstration Project for family  members of reservists mobilized for Operations Noble Eagle and Enduring  Freedom to reduce TRICARE costs and assist dependents of reservists in  maintaining relationships with their current health care providers. 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. Legislation passed in  December 2002 made family members of reservists activated for more  than 30 days eligible for TRICARE Prime if they reside more than  50 miles, or an hour’s driving time, from a military treatment facility. Last  year, the Congress passed legislation for a 1-year program to extend  TRICARE to reservists who are unemployed or whose employer does not  offer health care benefits.
As we have previously reported, given the federal government’s growing  deficits, it is critical that the Congress give adequate consideration to the  longer term costs and implications of legislative proposals to further  enhance military pay and benefits before they are enacted into law. For  example, proposals to enhance reserve retirement should be considered in  this context. We have ongoing work looking at proposals to change the  reserve retirement system. The key questions we are addressing include:    What are the objectives of the reserve retirement system?   Is DOD meeting its reserve retirement objectives?    What changes to the current reserve retirement system that DOD and  others have proposed could help DOD better meet its objectives?
What factors should DOD consider before making changes to its reserve  retirement system?
We anticipate issuing a report addressing these questions in  September 2004.
section_title: Selective Reenlistment Bonus Program
paragraphs: While we have not specifically reviewed the use of reenlistment bonuses  for reservists, our work has shown that DOD could improve the  management and oversight of the SRB program with more  methodologically rigorous evaluations. The SRB program is intended to  help the services retain enlisted personnel in critical occupational  specialties, such as linguists and information technology specialists.  Concerned about missing their overall retention goals in the late 1990s, all  the services expanded their use of SRBs to help retain more active duty  enlisted personnel. There were increases in the number of specialties  that the services made eligible for the bonuses and in the number of  bonus recipients. The Air Force, for example, awarded bonuses to 158  specialties (80 percent of total specialties) in fiscal year 2001, up from  68 specialties (35 percent of total specialties) in fiscal year 1997. During  this time period, the number of active duty Air Force reenlistees receiving  bonuses increased from 3,612 (8 percent of total reenlistees) to  17,336 (42 percent of total reenlistees). As a result of the services’  expanded use of SRBs for active duty personnel, the cost of the program  more than doubled—from $308 million in fiscal year 1997 to $791 million  in fiscal year 2002. The SRB budget was expected to rise to over  $800 million in fiscal year 2005. About 44 percent of the SRB budget  growth over the 1997 to 2005 period is attributable to increases in the Air  Force SRB budget. Despite increased use of the SRB program, DOD has  cited continued retention problems in specialized occupations such as air  traffic controller, linguist, and information technology specialist.
In November 2003, we reviewed a congressionally directed DOD report to  the Congress on the program and found that DOD had not thoroughly  addressed four of the five concerns raised by the Congress. As a result, the  Congress did not have sufficient information to determine if the program  was being managed effectively and efficiently. More specifically,    DOD did not directly address the SRB program’s effectiveness or  efficiency in correcting shortfalls in critical occupations.
DOD had not issued replacement program guidance for ensuring that the  program targets only critical specialties that impact readiness. DOD did  not address an important change—the potential elimination of the  requirement for conducting annual reviews. We were told that the new  guidance will require periodic reviews, but neither the frequency nor the  details of how these reviews would be conducted was explained.
DOD did not describe the steps it would take to match program execution  with appropriated funding. Our analysis showed that in fiscal years 1999- 2002, the services spent a combined total of $259 million more than the  Congress appropriated for the SRB program.
DOD provided only a limited assessment of how each service administers  its SRB program.
DOD identified the most salient advantages and disadvantages that could  result from implementing a lump sum payment option for paying retention  bonuses, and we generally concurred with DOD’s observations.
On the basis of our work, we recommended that the Secretary of Defense  direct the Under Secretary of Defense for Personnel and Readiness to  (1) retain the requirement for an annual review of the SRB program and  (2) develop a consistent set of methodologically sound procedures and  metrics for reviewing the effectiveness and efficiency of all aspects of  each service’s SRB program administration. DOD concurred with the  recommendations but has not yet taken actions to address them.
section_title: Mail Delivery
paragraphs: Mail can be a morale booster for troops fighting overseas and for their  families at home. During Operation Iraqi Freedom, problems with prompt  and reliable mail delivery surfaced early in the conflict and continued  throughout. More than 65 million pounds of letters and parcels were  delivered to troops serving in theater during 2003. Between February and  November 2003, the Congress and the White House forwarded more than  300 inquiries about mail delivery problems to military postal officials. We  are reviewing mail delivery to troops stationed overseas and plan to issue  our report next month. In the report, we will assess (1) the timeliness of  mail delivery to troops stationed in the Gulf Region, (2) how mail delivery  issues and problems experienced during Operation Iraqi Freedom  compare to those during Operations Desert Shield/Storm, and (3) efforts  to identify actions to resolve problems for future contingencies.
subsections: section_title: Timeliness
paragraphs: The timeliness of the mail delivery to troops serving in Operation Iraqi  Freedom cannot be accurately determined because DOD does not have a  reliable, accurate system in place to measure timeliness. Transit time data  reported by the Transit Time Information Standard System for Military  Mail shows that average transit times for letters and parcels into the  theater consistently fell within the 11 to 14-day range—well within the  current wartime standard of 12 to 18 days. However, we determined that  the method used to calculate these averages masks the actual times by  using weighted averages that result in a significant understating of transit  times. A second source of data—test letters that were sent to individual  servicemembers at military post offices by the Military Postal Service  Agency between February and September 2003—indicate that mail  delivery, on average, met the wartime standard during all but 1 month.  However, we found that a significant number of test letters were never  returned, and that test letters do not accurately measure transit time to the  individual servicemember because they are sent only to individuals  located at military post offices. It could take several more days for mail to  get to forward-deployed troops. Even though the data shows otherwise,  military postal officials acknowledge that mail delivery to troops serving in  Operation Iraqi Freedom was not timely.
section_title: Comparison With Operations Desert Shield/Storm
paragraphs: Despite differences in operational theaters and an effort by postal planners  to incorporate Operations Desert Shield/Storm experiences into the  planning for Operation Iraqi Freedom, many of the same problems were  encountered. These problems include (1) difficulty in conducting  joint-service mail operations; (2) postal personnel inadequately trained  and initially scarce in number due to late deployments; and (3) inadequate  postal facilities, material handling equipment, and transportation assets to  handle the initial mail surge. U.S. Central Command—the combatant  command for Operation Iraqi Freedom—created an operations plan for  joint mail delivery, but some of the planning assumptions were flawed and  the plan was not fully implemented. This plan included certain  assumptions that were key to its success, but some assumptions produced  unforeseen negative consequences and others were not implemented or  unrealistic. For example, the elimination of mail addressed to “Any Service  Member” increased the number of parcels because senders found ways  around the restriction. In addition, plans to restrict the size and weight of  letters and parcels until adequate postal facilities had been established  were never enacted; and the volume of mail was grossly underestimated.  The plan also directed that a Joint Postal Center comprised of postal  officials from all services manage and coordinate joint postal operations in  theater. However, this effort was never fully implemented, and joint mail  delivery suffered as a result. The Military Postal Service Agency did  implement one strategy that proved to be successful as a result of lessons  learned from Operations Desert Shield/Storm. Dedicated contractor airlift  of mail into the contingency area was employed, avoiding the necessity of  competing for military air cargo capacity, which greatly improved the  regularity of mail service to the theater.
section_title: Efforts to Resolve Postal Problems
paragraphs: No single entity has been officially tasked to resolve the long-standing  postal problems seen again during Operation Iraqi Freedom. Military  postal officials have begun to identify solutions to some of these issues.  However, despite early efforts made by the Military Postal Service Agency  to consolidate problems and identify solutions, this agency does not have  the authority to ensure that these problems are jointly addressed and  resolved before the next military contingency. During our meetings with  dozens of key military postal officials serving during Operation Iraqi  Freedom, we collected memoranda, after action reports, and their  comments regarding the postal issues and problems that should be  addressed to avoid a repetition of the same postal problems in future  contingencies. These issues include: improving joint postal planning and  ensuring joint execution of that plan; early deployment of postal troops;  preparing updated tables of organization and equipment for postal units;  improving peacetime training for postal units; and reviewing the command  and control of postal units in a joint theater. The Military Postal Service  Agency hosted a joint postal conference in October 2003 to discuss postal  problems with dozens of key postal participants in Operation Iraqi  Freedom and is currently in the process of consolidating these issues into  a single document with the intent of developing plans to resolve the issues.  In addition, the service components and the Military Postal Service Agency  have taken some initial steps in employing alternative mail delivery and  tracking systems.
In our report, we plan to make several recommendations aimed at  (1) establishing a system that will accurately track, calculate, and report  postal transit times and (2) designating responsibility and providing  sufficient authority within the Department to address and fix long-standing  postal problems identified in this report.
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.
section_title: Contacts and Acknowledgments
paragraphs: For future questions about this statement, please contact Derek B. Stewart  at (202) 512-5559 (e-mail address: stewartd@gao.gov) or Brenda S. Farrell  at (202) 512-3604 (e-mail address: farrellb@gao.gov). Also making a  significant contribution to this statement was Thomas W. Gosling.
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