DOD stated in its May 1997 Report of the Quadrennial Defense Review (QDR) that a steady increase in investment in modern equipment to an annual level of $60 billion is required to fulfill the defense strategy. To achieve modernization goals, DOD plans to reduce the cost of its infrastructure, which includes central training. A focus of the QDR was to build a solid financial foundation for a modernization program that could reliably support future war-fighting capabilities. The key to that foundation was to stop the chronic diversion of procurement funds to pay for underestimated operating costs, unrealized savings, and new program demands by properly projecting and funding DOD’s operating and support activities. To address the problem of the migration of these procurement funds to other activities, the QDR redirected resources to modernization through program adjustments that streamline infrastructure as well as reduce force structure and revise modernization plans. For example, the QDR proposed reducing active military personnel by 61,700 and reserve component personnel by 54,000. These QDR actions and initiatives were reflected in the fiscal year 1999 FYDP and caused some of the net decrease in central training funding. The services consider a number of factors in formulating their central training requirements. Factors include projected authorized end strength, losses in each occupational specialty/category by grade and years in grade, accessions, promotions, and reenlistments. Therefore, a change in end strength levels may not lead to a proportional change in training requirements. For example, lower-than-expected retention rates may necessitate increased training requirements even though personnel levels are lower. The services compile “training workload” to determine resources (people, funds, material, and facilities) required to conduct training. Training workload measures the output of the services’ central training programs. DOD’s 1998 FYDP projected a 1-percent increase in funding for central training between 1999 and 2003, while the 1999 FYDP projected a 2.5-percent decrease in funding for the same period. The total decrease in funding between the two FYDPs was $8.4 billion. Figure 1 compares the annual funding levels for the two FYDPs. Army funding changes account for $7.2 billion (86 percent) of this projected decline. The Air Force projected slightly lower funding levels in the 1999 FYDP. Although Navy funding in the 1999 FYDP shows an increase for 1999 and 2000, it too fell below projected 1998 FYDP levels in 2001 through 2003. Annual funding for the Marine Corps, which accounted for less than 9 percent of central training funding in 1999, was projected to decrease by less than 3 percent annually in the 1999 FYDP from the levels projected in the 1998 FYDP. Defense-wide training, which fell each year of the 1999 FYDP, accounted for less than 6 percent of central training funding in 1999. Figure 2 shows the funding changes by component between the 1998 and 1999 FYDPs. The 1998 FYDP projected that Army central training funding would remain relatively stable over the 1999-2003 period, while the 1999 FYDP projected a decline of $7.2 billion over the same period. The most significant reductions in the Army’s budget were in four categories—training of new personnel, professional and skill training, aviation and flight training, and installation support for training. Most of the reductions were made to correct errors in the 1998 FYDP. Other contributing factors were personnel reductions as a result of the QDR, programmed reductions for planned efficiencies, shifts in programs from central training to other parts of the budget, and reduced funding for installation support and professional development training. Table 1 lists the amounts programmed for the four categories that changed the most between the two FYDPs. Funding for the training of new personnel in the 1999 FYDP was projected to be about $4.1 billion less in total than projected in the 1998 FYDP. Most of the decrease ($4 billion) was to correct an error in the Army’s allocation of military salaries. During the development of the 1999 program, Army personnel found that they had been overestimating the salaries of enlisted trainees that were allocated to new personnel training and underestimating salary costs in other programs. An Army official stated that the error had no impact on the Army’s budget requests for military personnel salaries and benefits. Moreover, there were funding reductions due to programmed personnel cuts from the QDR. According to Army training officials, instructors and training support staff will be reduced as a result of consolidating training functions and increased contractor support. According to Army training officials, the Army did not fully fund several training initiatives in the 1999 FYDP such as improvements in the Army’s human relations training. Because these are high priorities for the Army, the Army officials expect that these initiatives will be fully funded in the 2000 FYDP, probably at the expense of other major commands. Further, Army training officials stated that the funding levels in the 1999 FYDP do not fully support a projected increased workload. The Army projected that workload for the training of new personnel would increase because of increased attrition and a 1-week extension of recruit and One-Station Unit Training. As a result, the Army’s Training and Doctrine Command has already requested additional funds for the 1999 budget year and the Army will likely have to increase the funding levels for this training category in the 2000 FYDP. The 1999 FYDP programmed $1.2 billion less in total for this category than the 1998 FYDP. Several factors contributed to the lower projected funding. Programmed personnel reductions (a result of the QDR) contributed to a decrease in Army Reserve funding. In addition, as part of the implementation of the Total Army School System program, the Army Reserve reviewed its professional development training programs and cut its budget for students, instructors, and overhead. However, according to Army training officials, the Army Reserve underestimated its training requirements, and as a result, requested and received a $48-million increase in the fiscal year 1999 appropriations that offset the shortfall programmed in the 1999 FYDP. Army training officials stated that funding for Reserve professional and skill training in the 2000 FYDP will be increased. Changes in and programmed savings from the Army’s Distance Learning Program also contributed to lower programmed funding for professional and skill training. In 1998, funding for the management of this program was moved from the central training infrastructure to another infrastructure category. In addition, funding was reduced beginning in 1999 to reflect both training load decreases and projected savings through the Army’s ongoing investment in distance learning technology. These savings are to accrue as classroom training time is shortened and student travel and per diem costs are reduced. Army training officials informed us that the Army continues to fully implement its Distance Learning Program, so the service can achieve the savings planned from the program, but substantial savings are not projected to begin until 2004 because of the lengthy implementation process. The decline in Army funding would have appeared even greater if the Army had not received additional funding for its professional and skill training programs from Defense-wide central training activities. The Defense Reform Initiative directed the transfer of the National Defense University operation and maintenance funding from the Defense-wide accounts to the Army. This increased Army funding by $111 million in 1999. Total funding for aviation and flight training was projected to be about $1 billion lower in the 1999 FYDP than in the 1998 FYDP. This occurred primarily because planned procurement funding in the Army’s undergraduate pilot training program was transferred to programs that are not included in central training. Army training and budget officials stated that the funding will be allocated to line units based on Army priorities, although training programs will still receive equipment that is excess to the line units’ needs. According to Army training officials, the Army is experiencing high attrition rates for Apache helicopter pilots because of an increased pace of operations and more requirements for Apache battalions outside of the United States than inside the United States. As a result, the aviation and flight training workload will be even higher than projected in the 1999 budget to meet the increased demand for training new pilots. Increased workload may result in increased funding requirements for this training category in the 2000 FYDP. In an effort to increase pilot retention and reduce flight training requirements, the Army recently received approval for Apache pilot retention bonuses. Funding for installation support for training was projected to be about $435 million less in total in the 1999 FYDP than in the 1998 FYDP. The projected reduction is primarily due to planned efficiencies from DOD’s reinvention initiatives. The efficiencies are projected to result from such efforts as the outsourcing and privatization of installation support functions, lower lease costs, the elimination of less energy-efficient structures, and the upgrade of existing utilities. The Army has assumed some risk by making these projections because it does not know whether the savings can be achieved. The Army is also assuming risk by delaying some real property maintenance to free up additional funds for modernization and readiness. Army training officials stated that the Army knowingly underfunded some training installation support programs, adding to the existing maintenance backlog. For example, the Army reduced funding for its barracks conversion program. The training officials noted that several commanders have stated that the real property maintenance shortfall is adversely affecting morale. Although both the 1998 and 1999 FYDPs projected a net decrease in Navy central training funding, there were some substantial changes within several training categories in the 1999 FYDP. The most significant changes between the two FYDPs were in four categories—professional and skill training, aviation and flight training, command managed training, and installation support for training. These changes were primarily due to personnel reductions, planned savings from training initiatives, deferred real property maintenance, planned savings from changes in the procurement profile for trainer aircraft, higher flying-hour costs, and planned savings from competitive sourcing and regionalization initiatives. Table 2 lists the amounts programmed for the four categories that changed the most between the two FYDPs. Projected total funding for professional and skill training shows a decrease of $135 million from the 1998 FYDP to the 1999 FYDP, with increases in the earlier years and decreases beginning in 2001.