Commission Could Decide Future Pay and Benefits

While Pentagon leaders tell Congress it must cut pay and benefits to maintain readiness at a time of lean budgets, the commission with the actual task of recommending changes to compensation is preparing an interim report due in June.

Military officials have proposed in the 2015 defense budget to reduce pay raises to 1 percent, raise health care fees, and shrink housing allowances by an average of 5 percent. Senators told the Pentagon on Tuesday that Congress will likely reject these proposed changes because they want to wait for the Military Compensation and Retirement Modernization Commission to issue its final report next year.

"We're having a commission that's supposed to report back to the Congress here I think next year and I'd like to hear from the committee before we make any real substantial changes," Sen. Lindsey Graham, R-S.C., told the military's leaders.

Commission officials said they would not comment on its ongoing research and a spokesman said it will not do so until it wraps up its final report next February.

But a glance at its website provides insight into what members are hearing from service members, veterans, retirees, advocacy groups and subject matter experts inside and outside the Defense Department.

The Pentagon has said for years that personnel costs are growing too fast and taking up too large a percentage of the military's overall budget. This is why compensation rates must be slowed down, Chairman of the Joint Chiefs Gen. Martin Dempsey and the other leaders said.

Military personnel costs are budgeted at $177 billion in fiscal 2015, or more than a third of the department's non-war budget of $496 billion. Including civilian personnel, the percentage rises to almost half of the spending plan.

Congress tasked the commission with studying changes to military compensation packages in order to better inform debate over changes. The commission is made up of veterans, longtime defense officials and former lawmakers to include Medal of Honor recipient Bob Kerrey of Nebraska. The group has been holding briefing sessions with subject matter experts and town hall gatherings across the country with service members, veterans and retirees.

One thing the commission is researching is a Dynamic Retention Model -- a tool for determining how changes to compensation will affect re-enlistments. Using decades of data on re-enlistment choices made by troops, the authors -- James Hosek, Beth J. Asch and Michael G. Mattock -- said the group can predict the impact of even small modifications to compensation on future retention.

The three authors spelled out the program in their 2012 book, "Should the Increase in Military Pay Be Slowed?" where they recommend a slower increase in military pay. That's something the Pentagon is advocating, arguing that the growth in personnel costs have swamped military budgets and hurting readiness rates.

The commission has also held meetings with Business Executives for National Security, the American Enterprise Institute and a range of veterans' service organizations and professional military associations.

While not every meeting was public, a number of town hall sessions are available on the commission's website, including audio and some transcripts.

Not surprisingly, the service members and their advocates turning out for the town halls have voiced support to keep military pay and benefits robust similar to the message VSO representatives have presented to Congress.

Some have said the retirement system needs tweaking since young service members don't expect to serve fewer than 20 years and leave with nothing.

Chief Master Sgt. Brian O'Mullan, command chief for the Air Force Intelligence, Surveillance and Reconnaissance Agency, said the service needs to look at a 401(k)-type plan for people who otherwise may not want to re-enlist when the only retirement option requires 20 years.

This will become even more of a concern as the economy improves, he said.

"I really worry about our senior NCOs and some of our talent at that 16-17 year mark," he said. "So, I think whatever changes are made, we need to take that into consideration because if it's not attractive, that talent walking out the door will eventually hurt the services."

At a town hall in Norfolk, Va., a Navy lieutenant identified in a transcript only by the last name Green defended additional pay for service members with dependents. It's not only about family size, but the way military life affects the family's earnings, according to Green.

"Our wives, when we move every three years, have to rebuild their resume and essentially start a new career," Green said. "There's another pilot in my squadron, her husband is a chemical engineer. And he just took a pretty sizable pay cut to move ...  with her from Alabama to Norfolk to take a job outside of his career field. And like I said, it's a sizable pay cut. It's not just wives, it's also husbands."

Commissaries also are being defended at the town halls, as they are by veterans groups testifying before Congress.

The commission is hearing a range of ideas. These include changing the law to allow for commissaries and base or post exchanges to operate and function together, and also to turn over purchase and distribution operations to the Defense Logistics Agency.

Other options before the commission include changing the business model of the system, including transferring commissary and even exchange operations -- via competitive bid -- to retail giants such as Costco, Walmart and Kroger. Or perhaps lease the commissaries to the retailers. Sen. John McCain, R-Ariz., suggested this option during the Senate Armed Services Committee hearing on pay and benefits Tuesday.

And in cases where no commercial provider could service an installation, the need would be met via a Defense Logistics Agency program.

This option would include some of the same benefits as the previous option, but in addition would largely get the Defense Department out of the retail business. For customers, it would also mean greater choices in products.

Lt. Col. Robert Brooks, who attended the town hall at Norfolk, said changes will have to be made. He pointed out that not every base or installation has the same needs for a commissary.

"You know, realistically, there's going to be some hard choices ... to be made," he said. "Around here, Hampton Roads really doesn't need all these commissaries and exchanges. We're not in a remote place, like overseas, Guam, whatever."

The idea of providing service members with a discount card for use at civilian stores has merit, he said.

"A discount at some of these other places, that could work," he said.

-- Bryant Jordan can be reached at bryant.jordan@monster.com.