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DoD: Curbs on pay and benefits finally taking hold

Jul. 1, 2014 - 08:27PM   |  
Outgoing Defense Department Comptroller Robert Hale says members of Congress are becoming comfortable with reducing some military pays and benefits.
Outgoing Defense Department Comptroller Robert Hale says members of Congress are becoming comfortable with reducing some military pays and benefits. (Staff)
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Despite stiff opposition in some quarters to cutting back on some military compensation programs, overall military personnel costs are in fact coming down, and the Pentagon’s long battle against rising pay and benefits is showing signs of gaining momentum, the Pentagon’s top money manager said.

“We are making progress,” Defense Department Comptroller Robert Hale told Military Times shortly before his retirement in late June.

Hale struck a rare note of optimism about military personnel costs, which are frequently cited as a burden on the DoD budget and a threat to future military readiness. For years, Congress resisted changes but has begun — albeit slowly — to approve curbs on military pay and benefits, Hale said.

“It takes time to get Congress comfortable so they are willing to do this,” Hale said. “They have to hear a range of views, which I understand. And they may not fully agree with this. But I think that if we keep at it, we will get many of these changes.”

Hale pointed to lawmakers’ vote in 2012 to allow “very modest” increases in Tricare pharmacy co-payments and for the first time require military families to use mail-order service for routine drug prescriptions, which saves money for DoD.

And last year, lawmakers “held their noses” and granted a Pentagon request to limit the annual basic pay raise for troops to 1 percent, which saves money not only in the current year but in every year moving forward as DoD calculates future expenses.

“All of these add up,” Hale said.

Total Pentagon personnel costs have fallen substantially during the past several years, in part due to shrinking end strength with the closeout of the Iraq War in 2011 and the winding down of combat operations in Afghanistan.

After adjusting for inflation, personnel costs peaked in 2012 at $149 billion. The most recent budget request for next year calls for $135 billion, a level of spending lower than the 2009 base budget, according to VisualDoD, a private technology firm that tracks DoD budget data.

Nevertheless, military leaders say per-troop costs have risen after Congress over the past decade approved generous wartime pay raises and rejected calls to increase health care fees.

And so the battle over personnel costs in the 2015 budget continues on Capitol Hill. Hale noted that the Senate approved personnel cost-saving measures that would provide about two-thirds of the total personnel dollar savings that DoD is seeking.

That includes another capped pay raise of 1 percent, reductions in Basic Allowance for Housing rates so troops pay about 5 percent of their housing costs out of pocket, and increases in Tricare pharmacy co-pays.

However, Hale noted, the House rejected most of those measures. Those issues will be decided when House and Senate lawmakers meet to reconcile their respective defense bills for 2015, with the outcome remaining unclear for now.

Hale says proposed reforms to military retirement might not save that much money. Unless the military services agree to change the overall shape of the force — retaining fewer people beyond 10 years of service, for example — they will have to spend a lot on retention bonuses to outweigh direct reductions in retirement benefits.

“That will eat up a lot of the savings — and the savings certainly will not be quick because we are fully committed to grandfathering,” Hale said, referring to protecting the retirement benefits of troops who are now in uniform.

As such, any potential savings from those kinds of moves would be “well downstream,” Hale said.

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