Military Personnel: DOD Has Taken Steps to Address Servicemembers' Financial Needs, but Additional Effort Is Warranted
Published: 2006-05-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The finances of servicemembers and their families have been an ongoing concern of Congress and the Department of Defense (DOD), especially in light of more frequent deployments to support conflicts in Iraq and Afghanistan. Adverse effects that may result when servicemembers experience financial problems include loss of security clearances, criminal or nonjudicial sanctions, adverse personnel actions, or adverse impacts on unit readiness. To decrease the likelihood that servicemembers will experience financial problems, DOD has requested and Congress has granted annual increases in military basic pay for all active duty servicemembers and increases in special pays and allowances for deployed servicemembers. The military has also developed personal financial management (PFM) programs to help avoid or mitigate adverse effects associated with personal financial problems. However, studies published in 2002 showed that servicemembers continue to report financial problems. This testimony provides a summary of GAO's prior work examining (1) the extent to which deployments have affected the financial conditions of active duty servicemembers and their families, and (2) steps that DOD has taken to assist servicemembers with their financial needs.
section_title: What GAO Found
paragraphs: DOD data suggests that deployment status does not affect the financial condition of active duty servicemembers, although some deployed servicemembers faced certain problems. Data from a 2003 DOD-wide survey suggests that servicemembers who were deployed for at least 30 days reported similar levels of financial health or problems as those who had not deployed. For example, of junior enlisted personnel, 3 percent of the deployed group and 2 percent of the nondeployed group indicated that they were in "over their heads" financially; and 13 percent of the deployed group and 15 percent of the nondeployed group responded that they found it "tough to make ends meet but keeping your head above water" financially. However, problems receiving family separation allowance and communicating with creditors may result in financial difficulties for some deployed servicemembers. Based on DOD pay data for January 2005, almost 6,000 of 71,000 deployed servicemembers who had dependents did not obtain their family separation allowance in a timely manner. Furthermore, problems communicating with creditors--caused by limited Internet access, few telephones and high fees, and delays in receiving ground mail--can affect deployed servicemembers' abilities to resolve financial issues. Additionally, some financial products marketed to servicemembers may negatively affect their financial condition. DOD has taken a number of steps to assist servicemembers with their financial needs, although some of this assistance has been underutilized. These steps include PFM training for servicemembers, which is required by all four military services. DOD also provides free legal assistance on purchase contracts for large items and other financial documents. However, according to the attorneys and other personnel, servicemembers do not make full use of available legal services because they may not take the time to visit the attorney's office or they fear information about a financial problem would get back to the command and limit their career progression. In addition, each service has a relief or aid society designed to provide financial assistance through counseling and education as well as financial relief through grants or no-interest loans. Some servicemembers in our focus groups stated that they would not use relief from a service society because they take too long, are intrusive, require too much in-depth financial information, or may be career limiting if the command found out. Servicemembers may use non-DOD resources if they do not want the command to be aware of their financial conditions or they need products or support not offered through DOD, the services, or the installation. Although DOD has taken these steps to assist servicemembers with their financial needs, it does not have the results-oriented departmentwide data needed to assess the effectiveness of its PFM programs and provide necessary oversight. Without an oversight framework requiring evaluation and a reporting relationship between DOD and the services, DOD and Congress do not have the visibility or oversight needed to assess the effectiveness of DOD's financial management training and assistance to servicemembers.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the financial service needs of  military personnel and their families. The finances of servicemembers and  their families have been an ongoing concern of Congress and the  Department of Defense (DOD), especially in light of more frequent  deployments to support the war on terrorism and conflicts in Iraq and  Afghanistan. DOD’s Social Compact, which is part of its human capital  strategic plan, notes that mission readiness and quality of life depend on  whether servicemembers use their financial resources responsibly. Some  adverse effects that may result when servicemembers experience serious  financial problems include loss of security clearances, criminal or  nonjudicial sanctions, or adverse personnel actions including possible  discharge from the military. Servicemembers with serious financial issues  may also have an adverse impact on the readiness of the unit. For  example, servicemembers’ financial problems may take the  servicemembers and possibly their unit commanders away from their  primary duties in order to address problems with creditors. In a 2002  report to Congress, the Navy identified an estimated $250 million in  productivity and salary losses due to servicemembers’ poor personal  financial management.
Congress and DOD have taken steps to decrease the likelihood that  deployed and nondeployed servicemembers will experience financial  problems. DOD has requested and Congress has granted annual increases  in military basic pay for all active duty servicemembers and increases in  special pays and allowances for deployed servicemembers, such as the  family separation allowance and hostile fire/imminent danger pay. The  military also has developed personal financial management (PFM)  programs to provide servicemembers with financial literacy training,  financial counseling, and other assistance to avoid or mitigate the adverse  effects associated with personal financial problems.’’  Despite the added compensation and the assistance provided through the  PFM programs, studies in recent years by DOD and others show that  active duty servicemembers continue to report financial problems. For  example, a 2002 study noted that 20 percent of junior enlisted  servicemembers reported that they struggled to make ends meet  financially and another 4 percent regarded themselves as “in over their  heads” with respect to their finances.
In this context, my testimony today will summarize our prior work  examining (1) the extent to which deployments have affected the financial  conditions of active duty servicemembers and their families and (2) steps  that DOD has taken to assist servicemembers with their financial needs.
My statement is based primarily on our work completed in April 2005 and  our institutional knowledge from prior reviews examining financial issues  of servicemembers and their families (see GAO Related Products at the  end of this testimony statement). Other information, such as the current  status of our recommendations to DOD that were pending at the time  when the reports were issued, will also be discussed. We conducted our  work in accordance with generally accepted government auditing  standards during May 2006.
subsections: section_title: Background
paragraphs: Because large numbers of Americans lack knowledge about basic personal  economics and financial planning, U.S. policymakers and others have  focused on financial literacy, i.e., the ability to make informed judgments  and to take effective actions regarding the current and future use and  management of money. While informed consumers can choose  appropriate financial investments, products, and services, those who  exercise poor money management and financial decision making can  lower their family’s standard of living and interfere with their crucial long- term goals.
One vehicle for promoting the financial literacy of Americans is the  congressionally created Financial Literacy and Education Commission.  Created in 2003, the Commission is charged with (1) developing a national  strategy to promote financial literacy and education for all Americans;   (2) coordinating financial education efforts among federal agencies and  among the federal, state, and local governments; nonprofit organizations;  and private enterprises; and (3) identifying areas of overlap and  duplication among federal financial literacy activities.
Since at least the 1980s, the military services have offered PFM programs  to help servicemembers address their financial conditions. Among other  things, the PFM programs provide financial literacy training to  servicemembers, particularly to junior enlisted personnel during their first  months in the military. The group-provided financial literacy training is  supplemented with other types of financial management assistance, often  on a one-on-one basis. For example, servicemembers might obtain one-on- one counseling from staff in their unit or legal assistance attorneys at the  installation.
In May 2003, the Office of the Under Secretary of Defense for Personnel  and Readiness, DOD’s policy office for the PFM programs, established its  Financial Readiness Campaign, with objectives that include increasing  personal readiness by, among other things, (1) increasing financial  awareness and abilities and (2) increasing savings and reducing  dependence on credit. The campaign attempted to accomplish these  objectives largely by providing on-installation PFM program providers  with access to national-level programs, products, and support.
To minimize financial burdens on servicemembers, DOD has requested  and Congress has increased cash compensation for active duty military  personnel. For example, the average increases in military basic pay  exceeded the average increases in private-sector wages for each of the 5  years prior to when we issued our April 2005 report. Also, in April 2003,  Congress increased the family separation allowance from $100 per month  to $250 per month and hostile fire/imminent danger pay from $150 per  month to $225 per month for eligible deployed servicemembers. The  family separation allowance is designed to provide compensation to  servicemembers with dependents for the added expenses (e.g., extra  childcare costs, automobile maintenance, or home repairs) incurred  because of involuntary separations such as deployments in support of  contingency operations like Operation Iraqi Freedom. Hostile  fire/imminent danger pay provides special pay for “duty subject to hostile  fire or imminent danger” and is designed to compensate servicemembers  for physical danger. Iraq, Afghanistan, Kuwait, Saudi Arabia, and many  other nearby countries have been declared imminent danger zones. In  addition to these special pays, some or all income that active duty  servicemembers earn in a combat zone is tax free.
section_title: Financial Conditions Similar for Deployed and Nondeployed Servicemembers, but Pay Administration and Communication Problems Existed for Deployed Members
paragraphs: Data from DOD suggest that the financial conditions for deployed and  nondeployed servicemembers and their families were similar. However,  deployed servicemembers faced problems with the administration of an  allowance as well as an inability to communicate with creditors.  Additionally, some financial products marketed to servicemembers may  negatively affect their financial condition.
subsections: section_title: Data Suggest Financial Conditions of Deployed Servicemembers and Their Families Similar to Nondeployed Servicemembers and Their Families
paragraphs: In a 2003 DOD-wide survey, servicemembers who were deployed for at  least 30 days reported similar levels of financial health or problems as  those who had not deployed. For example, an analysis of the responses for  only junior enlisted personnel showed that 3 percent of the deployed  group and 2 percent of the nondeployed group indicated that they were in  “over their heads” financially; and 13 percent of the deployed group and 15  percent of the nondeployed group responded that they found it “tough to  make ends meet but keeping your head above water” financially. Figure 1  shows estimates of financial conditions for all servicemembers based on  their responses to this survey.
These responses are consistent with the findings that we obtained in a  survey of all PFM program managers and during our 13 site visits. In the  survey of PFM program managers, about 21 percent indicated that they  believed servicemembers are better off financially after a deployment;  about 54 percent indicated that the servicemembers are about the same  financially after a deployment; and about 25 percent believed the  servicemembers are worse off financially after a deployment. Also, 90  percent of the 232 recently deployed servicemembers surveyed in our  focus groups said that their financial situations either improved or  remained about the same after a deployment.
The 2003 DOD survey also asked servicemembers whether they had  experienced three types of negative financial events: pressure by creditors,  falling behind in paying bills, and bouncing two or more checks. Again, the  findings for deployed and nondeployed servicemembers were similar. For  example, 19 percent of the deployed group and 17 percent of the  nondeployed group said they were pressured by creditors; 21 percent of  the deployed group and 17 percent of the nondeployed group said they fell  behind in paying bills; and 16 percent of the deployed group and 13  percent of the nondeployed group said they had bounced two or more  checks.
The special pays and allowances that some servicemembers receive when  deployed, particularly to dangerous locations, may be one reason for the  similar findings for the deployed and nondeployed groups. Deployment- related special pays and allowances can increase servicemembers’ total  cash compensation by hundreds of dollars per month. Moreover, some or  all income that servicemembers earn while serving in a combat zone is tax  free.
section_title: Deployed Servicemembers Faced Problems Receiving Family Separation Allowance and Communicating with Creditors
paragraphs: Deployed servicemembers experienced problems receiving their family’s  separation allowance promptly and communicating with creditors and  families. Regarding family separation allowance, DOD pay data for  January 2005 showed that almost 6,000 of 71,000 deployed  servicemembers who have dependents did not receive their family  separation allowance in a timely manner. The family separation allowance  of $250 per month is designed to compensate servicemembers for extra  expenses (e.g., childcare costs) that result when they are involuntarily  separated from their families. Delays in obtaining this allowance could  cause undue hardship for some families faced with such extra expenses.  We previously reported similar findings for the administration of family  separation allowance to Army Reserve soldiers and recommended that the  Secretary of the Army, in conjunction with the DOD Comptroller, clarify  and simplify procedures and forms for implementing the family separation  allowance entitlement policy.
The services had different, sometimes confusing, procedures that  servicemembers performed to obtain their family separation allowance.  DOD officials suggested other factors to explain why some eligible  servicemembers had not received their family separation allowance on a  monthly basis. These factors included servicemembers might not have  been aware of the benefit, they may not have filed the required eligibility  form, or errors or delays might have occurred when their unit entered data  into the pay system. In response to our recommendation that DOD take  steps to correct the delayed payment of this allowance, DOD notified  finance offices that they should emphasize the prompt processing of such  transactions so that payment for the entitlement would begin within 30  days of deployment.
Servicemembers may also experience financial difficulties as a result of  communication constraints while deployed. For example, individuals in  the focus groups for our April 2005 report suggested that deployed junior  enlisted personnel sometimes had less access to the Internet than did  senior deployed personnel, making it difficult for the former to keep up  with their bills. In addition, some Army servicemembers told us that they  (1) could not call stateside toll-free numbers because the numbers were  inaccessible from overseas or (2) incurred substantial costs—sometimes  $1 per minute—to call stateside creditors. Furthermore, in our March 2004  testimony, we documented some of the problems associated with mail  delivery to deployed troops.
Failure to avoid or promptly correct financial problems can result in  negative consequences for servicemembers. These include increased debt  for servicemembers, bad credit histories, and poor performance of their  duties when distracted by financial problems. In our April 2005 report, we  recommended and DOD partially concurred that DOD identify and  implement steps to allow deployed servicemembers better  communications with creditors. In their comments, DOD cited operational  requirements as a reason that communications with creditors may not be  appropriate. In addition, DOD noted that servicemembers should have  extended absence plans for their personal finances to ensure that their  obligations are covered.
section_title: Some Financial Products May Negatively Affect Servicemembers’ Financial Conditions
paragraphs: Some financial products may also negatively affect servicemembers’  financial conditions. For example, although servicemembers already  receive substantial, low-cost government-sponsored life insurance, we  found that a small group of companies sold products that combine life  insurance with a savings fund. These products promised high returns but  included provisions that reduced the likelihood that military purchasers  would benefit. These products usually provided a small amount of  additional death benefits and had much higher premiums than those for  the government insurance. These products also had provisions to use  accumulated savings to pay the insurance premiums if the  servicemembers stopped making payments. Moreover, servicemembers  were being marketed a securities product, known as a mutual fund  contractual plan, which features higher up-front sales charges than other  mutual fund products and has largely disappeared from the civilian  marketplace. For both types of products, the servicemembers who  stopped making regular payments in the early years paid higher sales  charges and likely received lower returns than if they had invested in other  products.
Our November 2005 report made recommendations that included asking  Congress to consider banning contractual plans and direct regulators to  work cooperatively with DOD to develop appropriateness or suitability  standards for financial products sold to servicemembers. We also  recommended that regulators ensure that products being sold to  servicemembers meet existing insurance requirements and that DOD and  financial regulators take steps to improve information sharing between  them. In response to the concerns over the products being marketed to  servicemembers, securities and insurance regulators have begun  cooperating with DOD to expand financial literacy.
section_title: DOD Has Taken Steps to Assist Servicemembers with Financial Concerns, but Some Assistance Is Underutilized
paragraphs: DOD has taken a number of steps to assist servicemembers with their  financial concerns, including providing military-sponsored PFM training,  establishing a Financial Readiness Campaign, providing command  financial specialists, and using Armed Forces Disciplinary Control Boards.  Servicemembers can also access resources available outside of DOD (see  fig. 2). However, servicemembers and DOD are not fully utilizing some of  this assistance. In addition, DOD does not have an oversight framework to  assess the effectiveness of the steps taken to assist servicemembers.
subsections: section_title: Services Require Financial Management Training
paragraphs: All four military services require PFM training for servicemembers, and  the timing and location of the training varies by service. The Army begins  this training at initial military, or basic, where soldiers receive 2 hours of  PFM training. The training continues at Advanced Individual Training  schools, where soldiers receive an additional 2 hours of training and at the  soldiers’ first duty station, where they are to receive an additional 8 hours  of PFM training. In contrast, Navy personnel receive 16 hours of PFM  training during Advanced Individual Training; while, the Marine Corps and  the Air Force begin training servicemembers on financial issues at their  first duty stations.
Events, such as deployments or permanent changes of station, can trigger  additional financial management training for servicemembers. The length  of this additional training and the topics covered can vary by installation  and command. Unit leadership also may refer a servicemember for  financial management training or counseling if the command is aware of  an individual’s financial problems (e.g., abusing check-cashing privileges).
Despite these policies, some servicemembers have not received the  required training, but the extent to which the training is not received is  unknown because servicewide totals are not always collected. The Army,  which is the only service that collected installation-level PFM data,  estimated that about 82 percent of its junior enlisted soldiers completed  PFM training in fiscal year 2003. Some senior Army officers at visited  installations acknowledged the need to provide PFM training to junior  enlisted servicemembers, but also noted that deployment schedules  limited the time available to prepare soldiers for their warfighting mission  (e.g., firing a weapon). While some services reported taking steps to  improve their monitoring of PFM training completion—an important  output—they still do not address the larger issue of training outcomes,  such as whether PFM training helps servicemembers manage their  finances better.
section_title: DOD’s Financial Readiness Campaign Provides Resources Developed with Assistance from External Organizations
paragraphs: DOD’s Financial Readiness Campaign, which was launched in May 2003,  supplements PFM programs offered by the individual services through  Web-based sources developed with assistance from external organizations.  The Under Secretary of Defense for Personnel and Readiness stated that  the department initiated the campaign to improve the financial  management resources available to servicemembers and their families and  to stimulate a culture that values financial health and savings. The  campaign allows installation-level providers of PFM programs to access  national programs and services developed by federal agencies and  nonprofit organizations.
The primary tool of the Financial Readiness Campaign has been a Web site  designed to assist PFM program managers in developing installation-level  campaigns to meet the financial management needs of their local military  community. This Web site is linked to the campaign’s 27 partner  organizations (e.g., federal agencies, Consumer Federation of America,  and service relief/aid societies) that have pledged to support DOD in  implementing the Financial Readiness Campaign. DOD’s May 2004  assessment of the campaign noted, however, that installation-level PFM  staffs had made minimal use of the campaign’s Web site. DOD campaign  officials stated that it was early in implementation of campaign efforts and  that they had been brainstorming ideas to repackage information given to  PFM program managers, as well as servicemembers and their families.
section_title: Command Financial Specialists and PFM Program Staff Are Available for Financial Education and Counseling
paragraphs: At the installation level, the military services provide command financial  specialists, who are usually senior enlisted personnel trained by PFM  program managers, to assist servicemembers with financial issues. These  noncommissioned officers may perform the education and counseling role  of the command financial specialist as a collateral or full-time duty. The  Navy, Marine Corps, and Army use command financial specialists to  provide unit assistance to servicemembers in financial difficulties. The Air  Force does not use command financial specialists within the unit, but has  the squadron First Sergeant provide first-level counseling.
Individual servicemembers who require counseling beyond the capability  of the command financial specialists or First Sergeants in the Air Force  can see the installation’s PFM program manager or PFM staff. The PFM  program manager is a professional staff member designated and trained to  organize and execute financial planning and counseling programs for the  military community. PFM program managers and staff offer individual  financial counseling as well as group classes on financial issues.
section_title: Free Legal Assistance Offered, but Servicemembers Do Not Make Full Use of This Assistance
paragraphs: DOD provides free legal assistance on contracts and other financial  documents at installations, but servicemembers do not make full use this  assistance. For example, legal assistance attorneys may review purchase  contracts for large items such as homes and cars. In addition, the legal  assistance attorneys offer classes on varying financial issues including  powers of attorney, wills, and divorces. However, legal assistance  attorneys at the 13 installations we visited for our April 2005 report stated  that servicemembers rarely seek their assistance before entering into  financial contracts for goods or services such as purchasing cars or  lifetime film developing.
Instead, according to the attorneys, servicemembers are more likely to  seek their assistance after encountering problems. For example, used car  dealers offered low interest rates for financing a vehicle, but the contract  stated that the interest rate could be converted to a higher rate later if the  lender did not approve the loan. Servicemembers were later called to sign  a new contract with a higher rate. By that time, some servicemembers  found it difficult to terminate the transaction because their trade-in  vehicles had been sold.
Legal assistance attorneys, as well as other personnel in our interviews  and focus groups, noted reasons why servicemembers might not take  greater advantage of the free legal assistance before entering into business  agreements. They stated that junior enlisted servicemembers who want  their purchases or loans immediately may not take the time to visit the  attorney’s office for such a review. Additionally, the legal assistance  attorneys noted that some servicemembers feared information about their  financial problems would get back to the command and limit their career  progression.
section_title: Service Relief/Aid Societies Provide Financial Assistance
paragraphs: Each service has a relief or aid society designed to provide financial  assistance to servicemembers. The Army Emergency Relief Society, Navy- Marine Corps Relief Society, and the Air Force Aid Society are all private,  nonprofit organizations. These societies provide counseling and education  as well as financial relief through grants or no-interest loans to eligible  servicemembers experiencing emergencies. Emergencies include funds  needed to attend the funeral of a family member, repair a primary vehicle,  or buy food. For example, in 2003, the Navy-Marine Corps Relief Society  provided $26.6 million in interest-free loans and $4.8 million in grants to  servicemembers for emergencies.
Some servicemembers in our focus groups stated that they would not use  grants or no-interest loans from a service society because they take too  long, are intrusive because the financial institution or relief/aid society  requires in-depth financial information in the loan or grant application, or  could be career limiting if the command found out the servicemembers  were having financial problems. The Army Emergency Relief Society  attempted to address the time and intrusiveness concerns with its test  program, Commander’s Referral, for active duty soldiers lacking funds to  meet monthly obligations of $500 or less. After the commander approves  the loans, the servicemembers can expect to receive funds quickly.  However, noncommissioned officers in our individual interviews and  focus groups said the program still did not address servicemembers’ fears  that revealing financial problems to the command could jeopardize their  careers.
section_title: Non-DOD Resources May Be Used When Sevicemembers Need Additional Financial Support or Confidentiality
paragraphs: Servicemembers may choose to use non-DOD resources if they do not  want the command to be aware of their financial conditions or they need  financial products or support not offered through DOD, the services, or  the installation. In such cases, servicemembers may use other financial  resources outside of DOD, which are available to the general public. These  can include banks or credit unions for competitive rates on home or  automobile loans, commercial Web sites for interest rate quotes on other  consumer loans, consumer counseling for debt restructuring, and financial  planners for advice on issues such as retirement planning.
section_title: Armed Forces Disciplinary Control Boards Can Help Curb Predatory Lending Practices
paragraphs: DOD has used Armed Forces Disciplinary Control Boards to help curb  predatory lending practices and minimize their effects. These boards and  the recommendations that they make to an installation commander to  place businesses off-limits to servicemembers can be effective tools for  avoiding or correcting unfair practices. However, data gathered during  some of our site visits to the various installations revealed few times when  the boards were used to address predatory lending practices. For example,  the board at Fort Drum, New York, had not met in about 4 years, and the  board’s director was unaware of two lawsuits filed by the New York  Attorney General that involved Fort Drum servicemembers.
The Attorney General settled a lawsuit in 2004 on behalf of 177 plaintiffs— most of whom were Fort Drum servicemembers—involving a furniture  store that had improperly garnished wages pursuant to unlawful  agreements it had required customers to sign at the time of purchase.
The Attorney General filed a lawsuit in 2004 involving catalog sales stores.
He characterized the stores as payday-lending firms that charged  excessive interest rates on loans disguised as payments toward catalog  purchases. Some servicemembers and family members at Fort Drum fell  prey to this practice. The Attorney General stated that he found it  particularly troubling that two of the catalog stores were located near the  Fort Drum gate.
In contrast to the Fort Drum situations, businesses near two other  installations we visited changed their lending practices after boards  recommended that commanders place or threaten to place the businesses  on off-limits lists. Despite such successes, boards might not be used as a  tool for dealing with predatory lenders for a variety of reasons. For  example, as a result of high deployments, commanders may minimize  some administrative duties, such as convening the boards, to use their  personnel for other purposes. In addition, the boards may have little basis  to recommend placing or threatening to place businesses on the list if the  lenders operate within state laws. Furthermore, significant effort may be  required to put businesses on off-limits lists. While recognizing these  limitations, in our April 2005 report we nonetheless recommended that all  Armed Forces Disciplinary Control Boards be required to meet twice a  year. In responding to our recommendation, DOD indicated that it  intended to establish a requirement for the boards to meet even more  frequently—four times a year—and direct that businesses on the off-limits  list for one service be off-limits for all services.
section_title: DOD Lacks Oversight Framework for Assessing and Monitoring PFM Program Effectiveness
paragraphs: Although DOD has made resources available to assist servicemembers, it  lacks the results-oriented, departmentwide data needed to assess the  effectiveness of its PFM programs and provide necessary oversight. The  November 2004 DOD instruction that provides guidance to the services on  servicemembers’ financial management does not address program  evaluation or the reports that services should supply to DOD for its   oversight role. In our 2003 report, we noted that an earlier draft of the  instruction emphasized evaluating the programs and cited metrics such as  the number of servicemembers with wages garnished. DOD officials said  that these metrics were eliminated because the services did not want the  additional reporting requirements.
The only DOD-wide evaluative data available for assessing the PFM  programs and servicemembers’ financial conditions were obtained from a  general-purpose annual survey that focuses on the financial conditions of  servicemembers as well as a range of other unrelated issues. The data  were limited because (1) DOD policy officials for the PFM programs can  only include a few financial-related items to this general purpose survey,  (2) a response rate of 35 percent on a March 2003 active duty survey leads  to questions about the generalizability of the findings, and (3) DOD has no  means for confirming the self-reported information for survey items that  ask about objective events such as filing for bankruptcy. Without an  oversight framework requiring common evaluation DOD-wide and  reporting relationships among DOD and the services, DOD and Congress  do not have the visibility or oversight they need to assess the effectiveness  of DOD’s financial management training and assistance to  servicemembers. In response to a recommendation in our April 2005  report for DOD to develop a DOD-wide oversight framework and formalize  its oversight role for the PFM programs, the department indicated that it is  pursuing management information that includes personal finances to  support its implementation of the President’s Management Agenda and to  comply with the Government Performance Results Act.
section_title: Concluding Observations
paragraphs: In summary, as mentioned earlier in my testimony, Congress and DOD  have taken steps to decrease the likelihood that deployed and  nondeployed servicemembers will experience financial problems. The  prior increases in compensation, efforts to increase the financial literacy  of servicemembers, and fuller utilization of the tools that DOD has  provided for addressing the use of predatory lenders should positively  affect the financial conditions of military personnel. While additional  efforts are warranted to implement our recommendations on issues such  as improving DOD’s oversight framework for assessing its PFM programs,  some of these efforts to address the personal financial conditions of  servicemembers and correct past programmatic shortcomings are well  underway. Sustaining this momentum will be key to minimizing the  adverse effects that personal financial management problems can have on  the servicemember, unit, and service.
Madam Chairwoman and Members of the Subcommittee, this concludes  my prepared statement. I would be happy to respond to any questions you  may have.
section_title: Staff Contact and Acknowledgments
paragraphs: For further information regarding this testimony, please contact me at 202- 512-6304 or melvinv@gao.gov. Individuals making key contributions to this  testimony include Jack E. Edwards, Assistant Director; Renee S. Brown;  Marion A. Gatling; Cody Goebel; Barry Kirby; Marie A. Mak; Terry  Richardson; and John Van Schaik.
section_title: Related GAO Products
paragraphs: Financial Product Sales: Actions Needed to Protect Military Members.  GAO-06-245T. Washington, D.C.: November 17, 2005.
Financial Product Sales: Actions Needed to Better Protect Military  Members. GAO-06-23. Washington, D.C.: November 2, 2005.
Military Personnel: DOD Needs Better Controls over Supplemental Life  Insurance Solicitation Policies Involving Servicemembers. GAO-05-696.  Washington, D.C.: June 29, 2005.
Military Personnel: DOD’s Comments on GAO’s Report on More DOD  Actions Needed to Address Servicemembers’ Personal Financial  Management Issues. GAO-05-638R. Washington D.C.: May 11, 2005.
Military Personnel: More DOD Actions Needed to Address  Servicemembers’ Personal Financial Management Issues. GAO-05-348.  Washington, D.C.: April 26, 2005.
Military Personnel: DOD Tools for Curbing the Use and Effects of  Predatory Lending Not Fully Utilized. GAO-05-349. Washington, D.C.:  April 26, 2005.
Credit Reporting Literacy: Consumers Understood the Basics but Could  Benefit from Targeted Educational Efforts. GAO-05-223. Washington,  D.C.: March 16, 2005.
DOD Systems Modernization: Management of Integrated Military  Human Capital Program Needs Additional Improvements. GAO-05-189.  Washington, D.C.: February 11, 2005.
Highlights of a GAO Forum: The Federal Government’s Role in  Improving Financial Literacy. GAO-05-93SP. Washington, D.C.:  November 15, 2004.
Military Personnel: DOD Needs More Data Before It Can Determine if  Costly Changes to the Reserve Retirement System Are Warranted. GAO- 04-1005. Washington, D.C.: September 15, 2004.
Military Pay: Army Reserve Soldiers Mobilized to Active Duty  Experienced Significant Pay Problems. GAO-04-911. Washington, D. C.:  August 20, 2004.
Military Pay: Army Reserve Soldiers Mobilized to Active Duty  Experienced Significant Pay Problems. GAO-04-990T. Washington, D.C.:  July 20, 2004.
Military Personnel: Survivor Benefits for Servicemembers and Federal,  State, and City Government Employees. GAO-04-814. Washington, D.C.:  July 15, 2004.
Military Personnel: DOD Has Not Implemented the High Deployment  Allowance That Could Compensate Servicemembers Deployed Frequently  for Short Periods. GAO-04-805. Washington, D.C.: June 25, 2004.
Military Personnel: Active Duty Compensation and Its Tax Treatment.  GAO-04-721R. Washington, D.C.: May 7, 2004.
Military Personnel: Observations Related to Reserve Compensation,  Selective Reenlistment Bonuses, and Mail Delivery to Deployed Troops.  GAO-04-582T. Washington, D.C.: March 24, 2004.
Military Personnel: Bankruptcy Filings among Active Duty Service  Members. GAO-04-465R. Washington, D.C.: February 27, 2004.
Military Pay: Army National Guard Personnel Mobilized to Active Duty  Experienced Significant Pay Problems. GAO-04-413T. Washington, D.C.:  January 28, 2004.
Military Personnel: DOD Needs More Effective Controls to Better Assess  the Progress of the Selective Reenlistment Bonus Program. GAO-04-86.  Washington, D.C.: November 13, 2003.
Military Pay: Army National Guard Personnel Mobilized to Active Duty  Experienced Significant Pay Problems. GAO-04-89. Washington, D.C.:  November 13, 2003.
Military Personnel: DFAS Has Not Met All Information Technology  Requirements for Its New Pay System. GAO-04-149R. Washington, D.C.:  October 20, 2003.
Military Personnel: DOD Needs More Data to Address Financial and  Health Care Issues Affecting Reservists. GAO-03-1004. Washington, D.C.:  September 10, 2003.
Military Personnel: DOD Needs to Assess Certain Factors in  Determining Whether Hazardous Duty Pay Is Warranted for Duty in the  Polar Regions. GAO-03-554. Washington, D.C.: April 29, 2003.
Military Personnel: Management and Oversight of Selective  Reenlistment Bonus Program Needs Improvement. GAO-03-149.  Washington, D.C.: November 25, 2002.
Military Personnel: Active Duty Benefits Reflect Changing  Demographics, but Opportunities Exist to Improve. GAO-02-935.  Washington, D.C.: September 18, 2002.
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