oversight

Military Personnel: DOD Needs More Data to Address Financial and Health Care Issues Affecting Reservists

Published by the Government Accountability Office on 2003-09-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to Congressional Committees




September 2003
                 MILITARY
                 PERSONNEL
                 DOD Needs More Data
                 to Address Financial
                 and Health Care
                 Issues Affecting
                 Reservists




GAO-03-1004
                                                September 2003


                                                MILITARY PERSONNEL

                                                DOD Needs More Data to Address
Highlights of GAO-03-1004, a report to          Financial and Health Care Issues
congressional committees
                                                Affecting Reservists



Since the 1991 Persian Gulf War,                DOD lacks sufficient information on the magnitude, the causes, and the
National Guard and Reserve                      effects of income change to determine the need for compensation programs
personnel have been deployed to a               targeting reservists who (1) fill critical wartime specialties, (2) experience
number of contingency operations.               high degrees of income loss when on extended periods of active duty, and
Since September 2001, about                     (3) demonstrate that income loss is a significant factor in their retention
300,000 reservists have been called
to active duty, and the pace of
                                                decisions. Such data are critical for assessing the full nature and scope of
reserve operations is expected to               income change problems and in developing cost-effective solutions. DOD
remain high for the foreseeable                 self-reported survey data from past and current military operations indicate
future. House Report 107-436                    that activated reservists have experienced widely varying degrees of income
accompanying the Fiscal Year 2003               change. While many reservists lost income, more than half of reservists had
National Defense Authorization Act              either no change or a gain in income. However, survey data are questionable
(P.L. 107-314) directed GAO to                  primarily because it is unclear what survey respondents considered as
review compensation programs for                income loss or gain in determining their financial status.
reservists serving on active duty.
GAO evaluated information on                    DOD has placed greater emphasis on preparing reservists’ families for
income change reported by                       potential call-ups, yet survey data show that one-third of spouses do not feel
reservists when activated; reserve
families’ readiness for call-ups and
                                                prepared, over half of reservists are not aware of family support programs,
their awareness and use of family               and more than 90 percent of spouses do not use these programs. Personal
support programs, focusing on                   financial management, one of DOD’s core family support programs,
personal financial management;                  illustrates the continuing challenges DOD faces in providing outreach to
and a legislative proposal for the              reservists. The 2000 survey data showed that 61 percent of reservists did not
Department of Defense (DOD) to                  know whether personal financial management services were available. The
offer TRICARE, the military’s                   survey also showed that reservists have financial problems similar to their
health care program, to reservists              active duty counterparts. DOD is taking steps to improve personal financial
and their families when members                 management, but it has not assessed the financial well-being of reserve
are not on active duty.                         families, assessed the impact of reservists’ financial problems on mission
                                                readiness, or determined how to tailor its programs to reservists.

GAO recommends that DOD                         Available DOD data do not identify a need to offer TRICARE to reservists
determine the need for and, if                  and their families when members are not on active duty. Estimates from
necessary, develop targeted                     DOD’s 2000 survey showed that nearly 80 percent of reservists had health
compensation programs to address                care coverage when they were not on active duty. This rate is similar to that
income loss incurred by certain                 of comparable groups within the overall U.S. population. DOD has
activated reservists; improve                   expressed concern over the estimated costs of this proposal. Cost estimates
awareness and access to personal                range up to $5.1 billion a year. However, DOD has not fully assessed the
financial management programs;
                                                ramifications of this proposed legislation, including the impact on recruiting
and assess the need for and
ramifications of additional                     and retention, the effects on active duty personnel, the extent reservists and
improvements to health care for                 their families might participate in such a program, or the impact on the
reservists and their families. DOD              TRICARE system. In addition, a high percentage of reservists’ civilian
concurred with our                              employers who currently pay some or all of health care premiums for
recommendations.                                reservists during activations could discontinue providing such assistance. A
                                                number of recent improvements have been made to reservists and their
www.gao.gov/cgi-bin/getrpt?GAO-03-1004.
To view the full product, including the scope
                                                families’ health care when members are activated. However, DOD lacks data
and methodology, click on the link above.       on problems reservists and their families have experienced with health care
For more information, contact Derek B.          since the mobilizations following September 11, 2001; the causes of these
Stewart (202) 512-5559 or
stewartd@gao.gov.
                                                problems; and their effects on readiness, recruiting, and retention.
Contents


Letter                                                                                  1
               Results in Brief                                                         3
               Background                                                               6
               DOD Lacks Data to Determine the Need for Income Protection
                 Programs                                                             11
               DOD Faces Challenges in Family Readiness and Support                   26
               DOD Has Not Fully Assessed the Need for Expansion of TRICARE
                 to Nonactivated Reservists                                           33
               Conclusions                                                            42
               Recommendations for Executive Action                                   43
               Matters for Congressional Consideration                                44
               Agency Comments and Our Evaluation                                     44

Appendix I     Scope and Methodology                                                   46



Appendix II    DOD Surveys of Reservists and Spouses                                   49



Appendix III   Policies and Protections That May Help Mitigate
               Reservists’ Financial Hardship During Activation                        51



Appendix IV    Selected States’ Policies on Compensation for
               Activated Employees                                                     55



Appendix V     Preactivation Activities of Spouses of Activated
               Reservists                                                              70



Appendix VI    Comments from the Department of Defense                                 72



Appendix VII   Staff Acknowledgments                                                   75




               Page i                          GAO-03-1004 Reserve Personnel Compensation
Tables
          Table 1: Estimates of Drilling Unit Members’ Total Reported
                   Change in Family Income for Mobilizations or
                   Deployments Prior to 2001                                                        14
          Table 2: Estimates of Spouses’ Monthly Reported Change in Family
                   Income during Activation                                                         16
          Table 3: Reservists’ Views on Availability of Selected Family
                   Support Programs or Services                                                     28
          Table 4: Income Assistance, Military Leave, and Health Benefits
                   Offered to State Employees Called to Federal Active Duty                         56
          Table 5: Comparison of Spouses’ Preparedness to Preactivation
                   Activities and Other Factors                                                     70


Figures
          Figure 1: Annual Number of Days Per Capita for Reserve
                   Mobilizations and Support to the Services and Combatant
                   Commands (Fiscal Years 1986-2002)                                                 8
          Figure 2: Annual Basic Military Compensation for Selected Pay
                   Grades (Fiscal Years 1990-2003)                                                  52




          Abbreviations

          COBRA             Consolidated Omnibus Budget Reconciliation Act
          DOD               Department of Defense
          OSD               Office of the Secretary of Defense



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          Page ii                                   GAO-03-1004 Reserve Personnel Compensation
United States General Accounting Office
Washington, DC 20548




                                   September 10, 2003

                                   The Honorable John W. Warner
                                   Chairman
                                   The Honorable Carl Levin
                                   Ranking Minority Member
                                   Committee on Armed Services
                                   United States Senate

                                   The Honorable Duncan Hunter
                                   Chairman
                                   The Honorable Ike Skelton
                                   Ranking Minority Member
                                   Committee on Armed Services
                                   House of Representatives

                                   Since the 1991 Persian Gulf War, National Guard and Reserve1 personnel
                                   have been deployed to a number of contingency operations, including
                                   those in Southwest Asia and the Balkans. About 300,000 reservists have
                                   been called to active duty since September 2001 to support the war on
                                   terrorism, conflicts in Afghanistan and Iraq, and other operations. Some
                                   reservists have served for a year or more, and the pace of reserve
                                   operations is expected to remain high for the foreseeable future. Citing the
                                   increased reliance on the reserves, House Report 107-436 accompanying
                                   the Fiscal Year 2003 National Defense Authorization Act2 directed us to
                                   review compensation3 programs for reservists serving on active duty. Our
                                   objectives were to evaluate (1) information on income change reported by
                                   reservists when activated for a military operation to determine the need
                                   for compensation programs; (2) reserve families’ readiness for call-ups and
                                   their awareness and use of family support programs, specifically focusing
                                   on personal financial management; and (3) a legislative proposal for the
                                   Department of Defense (DOD) to offer TRICARE, the military’s health care
                                   program, to reservists and their families when members are not on active


                                   1
                                    We use the generic terms “reserves” and “reservists” throughout this report to refer to
                                   both National Guard and Reserve personnel.
                                   2
                                       Public Law 107-314, Dec. 2, 2002.
                                   3
                                    For this report, we use the term “compensation” to refer to both pay and employee
                                   benefits, to include programs and services that support servicemembers and their families.



                                   Page 1                                     GAO-03-1004 Reserve Personnel Compensation
duty. This report is a follow-on to our March 2003 testimony, Military
Personnel: Preliminary Observations Related to Income, Benefits, and
Employer Support for Reservists During Mobilizations, GAO-03-549T
(Washington, D.C.: Mar. 19, 2003).4

Military compensation is one of the tools DOD uses to attract, retain, and
motivate people. One of DOD’s guiding principles for military
compensation is that servicemembers, both reserve and active component
members, be treated fairly.5 Military compensation for reservists is
affected by the type of military duty they perform. 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 serving in the active component. For
contingency operations, these same thresholds generally do not apply.
Thus, reservists activated for contingency operations such as Iraqi
Freedom, Noble Eagle, and Enduring Freedom are generally eligible to
receive the same compensation as active component personnel.6

Our review focused on the more than 870,000 reservists who generally drill
and train part-time with their military units (referred to as drilling unit
members in this report). To review compensation programs for reservists
on active duty, we analyzed legislation, policies, and other pertinent
documents; obtained and analyzed proposals to enhance reserve
compensation; and discussed these with officials from the Office of the
Assistant Secretary of Defense for Reserve Affairs, the Office of Military
Compensation, the Deputy Under Secretary of Defense for the Office of
Military Community and Family Policy, reserve component headquarters,
and the TRICARE Management Activity. To gain the perspective of



4
 In response to the mandate, we also issued a report on special pay for duty in the polar
regions. See U.S. General Accounting Office, 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.: Apr. 29, 2003).
5
 Department of Defense, Office of the Secretary of Defense, Military Compensation
Background Papers: Compensation Elements and Related Manpower Cost Items, Their
Purposes and Legislative Backgrounds (September 1996).
6
 In a prior report comparing the benefits offered to active duty servicemembers with those
offered in the private sector, we found no significant gaps in military benefits. See U.S.
General Accounting Office, Military Personnel: Active Duty Benefits Reflect Changing
Demographics, but Opportunities Exist to Improve, GAO-02-935 (Washington, D.C.:
Sept. 18, 2002).




Page 2                                    GAO-03-1004 Reserve Personnel Compensation
                   reservists and their spouses, we obtained and analyzed the results of a
                   2000 DOD survey of reservists, which covered reservists’ experiences
                   during military operations between 1991 and 2000, and a 2002 DOD survey
                   of spouses of activated reservists. (See app. I for more information on our
                   scope and methodology and app. II for a description of the 2000 and 2002
                   surveys.) We completed our work for this report from March to July 2003
                   in accordance with generally accepted government auditing standards.


                   DOD lacks sufficient information on the magnitude, the causes, and the
Results in Brief   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 self-reported survey data from
                   past and current military operations indicate that reservists have
                   experienced widely varying degrees of income change when they are
                   activated. 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 a gain in family income when they
                   were mobilized or deployed for a military operation, and about 41 percent
                   lost income. A higher percentage of reservists in certain groups, such as
                   self-employed individuals and health care professionals, lost income
                   compared with reservists overall. 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. However, survey data are
                   questionable primarily because it is unclear what survey respondents
                   considered as income loss or gain in determining their financial status.
                   Although existing pay policies and protections may help mitigate
                   reservists’ financial hardship during activation, additional measures have
                   been proposed to provide income protection to reservists. For example,
                   the Army has proposed a new special pay targeting certain self-employed
                   physicians to make up for some of the income loss they may experience
                   while serving on active duty over an extended period of time. Targeted
                   compensation programs, such as the Army’s special pay proposal, could
                   provide a cost-effective means of providing income protection to
                   reservists who meet the three criteria above. Other proposals to provide
                   income protection to reservists—including legislative proposals to provide
                   differential pay to activated federal employees and an Air Force proposal



                   Page 3                             GAO-03-1004 Reserve Personnel Compensation
to establish an income insurance program—are not targeted compensation
programs.

Although DOD has placed greater emphasis on family readiness—
preparing servicemembers and their families for potential activation—and
on making family support services available during activation, many
reserve families do not feel prepared and many do not use and are not
aware of family support services. In 2002, one-third of spouses felt they
were unprepared or very unprepared when the member was notified of
active duty, and more than 90 percent of spouses did not use the military’s
family support programs. The 2000 survey estimates showed that more
than half of reservists either did not know that family support services
were available or thought they were unavailable. DOD officials
acknowledge that they face outreach challenges in preparing families and
providing family support and have expanded outreach efforts. Personal
financial management, one of DOD’s core family support programs,
illustrates some of the challenges DOD faces in providing outreach to
reservists. Under DOD policy, military personnel bear primary
responsibility for the welfare of their families, but the commitment
demanded by military service requires that they be provided a
comprehensive family support system, to include financial planning
assistance. DOD is taking some steps to improve servicemembers’
personal financial management, including drafting a new policy and
developing partnerships with nonprofit groups that support financial
assistance programs. DOD, however, has not assessed the financial well-
being of reserve families or determined how to tailor its programs to this
population. Our review of DOD survey data shows that reservists reported
having many of the same financial problems as their active duty
counterparts. The 2000 DOD survey showed that an estimated 61 percent
of drilling unit members did not know whether financial counseling and
management education services were available, and another 16 percent
did not think these services were available. In addition, DOD has found a
link between financial problems and readiness in the active component.
For example, the Navy identified $250 million in productivity and salary
losses due to poor personal financial management. However, DOD has not
assessed the impact of reservists’ financial problems on mission readiness.
DOD and the military services have noted a need to improve reservists’
and their spouses’ awareness of and access to personal financial
management programs, but they have not tailored their programs to
reservists by developing plans that specify how these needs will be met.

Available DOD data do not identify a need to offer TRICARE to reservists
and their families when members are not on active duty. Estimates from


Page 4                             GAO-03-1004 Reserve Personnel Compensation
DOD’s 2000 survey showed that nearly 80 percent of reservists reported
having health care coverage when they were not on active duty. This rate
is similar to that of comparable groups within the overall U.S. population.
DOD has expressed concern over the estimated costs of this proposal.
Cost estimates range up to $5.1 billion a year. However, DOD has not fully
assessed the ramifications of this proposed legislation, including the
impact on recruiting and retention, the effects on active duty personnel,
the extent reservists and their families might participate in such a
program, or the impact on the TRICARE system. In addition, a high
percentage of reservists’ civilian employers who currently pay some or all
of health care premiums for reservists during activations could
discontinue providing such assistance. A number of recent improvements
have been made to reservists and their families’ health care when
members are activated. Recent improvements include earlier access to
certain TRICARE programs when a member is activated and higher
reimbursement rates for care received from physicians outside DOD’s
health care networks. However, DOD lacks data on problems reservists
and their families have experienced in maintaining continuity of health
care since the activations following September 11, 2001; the causes of
these problems; and their effects on readiness, recruiting, and retention.

We are making recommendations in this report to (1) enhance DOD’s
ability to determine the need for and, if necessary, develop compensation
programs targeted at reservists in critical specialties who experience high
degrees of income loss when activated; (2) improve reservists’ and their
spouses’ awareness of and access to personal financial management
programs; and (3) assess the need for and ramifications of additional
improvements to health care for reservists and their families. In
commenting on a draft of this report, DOD concurred with our
recommendations. On the basis of DOD’s concurrence with our
recommendation concerning reserve health care benefits, we are also
including matters for congressional consideration concerning the
legislative proposal to extend TRICARE benefits to nonactivated reservists
and their families.




Page 5                             GAO-03-1004 Reserve Personnel Compensation
Background
Components of the   The reserve forces are divided into three major categories, one of which is
Reserve Forces      the Ready Reserve.7 The Ready Reserve, with approximately 1.2 million
                    reservists at the end of fiscal year 2002, is further subdivided into the
                    Selected Reserve, the Individual Ready Reserve, and the Inactive National
                    Guard. The Selected Reserve, with approximately 880,000 members in
                    fiscal year 2002, includes all personnel who are active members of reserve
                    units and who participate in regularly scheduled drills and training. In this
                    report, we refer to these personnel as “drilling unit members.” The
                    Selected Reserve also includes individual mobilization augmentees—
                    individuals who regularly train with active component units. The
                    Individual Ready Reserve principally consists of individuals who have had
                    training and have previously served in the active forces or in the Selected
                    Reserve, and the Inactive National Guard contains individuals who are
                    temporarily unable to participate in regular training with the Guard unit.
                    Together, the Individual Ready Reserve and Inactive National Guard had
                    about 320,000 members in fiscal year 2002. There are seven reserve
                    components—the Army Reserve, the Army National Guard, the Air Force
                    Reserve, the Air National Guard, the Naval Reserve, the Marine Corps
                    Reserve, and the Coast Guard Reserve.




                    7
                     The other two categories of the reserve forces are the Standby Reserve and the Retired
                    Reserve.




                    Page 6                                    GAO-03-1004 Reserve Personnel Compensation
Reserve Participation in   Since the end of the Cold War, there has been a shift in the way reserve
Military Operations        forces have been used. Previously, reservists were viewed primarily as an
                           expansion force that would supplement active forces during a major war.
                           Today, reservists not only supplement but also replace active forces in
                           military operations worldwide.8 In fact, DOD has stated that no significant
                           operation can be conducted without reserve involvement. Figure 1 shows
                           per capita involvement of reservists annually since 1986 and illustrates the
                           spikes in reserve participation in military operations in fiscal years 1991
                           (Desert Shield and Desert Storm) and 2002 (Noble Eagle and Enduring
                           Freedom), as well as a fairly steady level of involvement between 1996 and
                           2001. We derived per capita calculations by dividing the total days of
                           support for military missions by the end strength of the Selected Reserve.
                           However, force structure within the Selected Reserve qualifies only a
                           portion of those available to serve for a particular mission. Despite this,
                           the data highlight trends in the average number of support days served by
                           reservists.




                           8
                            The average reservist trains 38 or 39 days per year. In addition to this training, some
                           reservists provide support for counterdrug operations, domestic emergencies, exercises,
                           and established and emerging operations, including those involving either presidential call-
                           ups or mobilizations.




                           Page 7                                     GAO-03-1004 Reserve Personnel Compensation
Figure 1: Annual Number of Days Per Capita for Reserve Mobilizations and Support
to the Services and Combatant Commands (Fiscal Years 1986-2002)




Notes: GAO analysis of Office of the Assistant Secretary of Defense for Reserve Affairs data.

This figure includes the contributions of the Coast Guard Reserve.

Mobilizations are operations using the Presidential Reserve Call-up or mobilization authorities.
Support of the services or combatant commands is mission assistance provided under voluntary
orders and includes both contingency operations and other missions. The figure excludes days for
training as well as support for counterdrug operations, exercises, and domestic emergencies.

Per capita calculations are derived by dividing the total days of support for these missions by the end
strength of the Selected Reserve. However, force structure within the Selected Reserve qualifies only
a portion of those available to serve for a particular mission. Despite this, the data highlight trends in
the average number of support days served by reservists.




Page 8                                            GAO-03-1004 Reserve Personnel Compensation
                            There have been wide differences in the operational tempos9 of individual
                            reservists in certain units and occupations. Prior to the current
                            mobilization, personnel in the fields of aviation, special forces, security,
                            intelligence, psychological operations, and civil affairs had been in high
                            demand, experiencing operational tempos that were two to seven times
                            higher than those of the average reservist. Since September 2001,
                            operational tempos have increased significantly for reservists in DOD
                            reserve components due to the partial mobilization in effect to support
                            Operations Iraqi Freedom, Noble Eagle, and Enduring Freedom.


End Strength, Enlistment,   For each year from fiscal year 1997 to 2002, the reserves on the whole
and Attrition               achieved at least 99 percent of their authorized end strength. In 4 of these
                            6 years, they met at least 100 percent of their enlistment goals. During this
                            time period, enlistment rates fluctuated from component to component.
                            For the fiscal year 1997-2002 period, only the Army National Guard
                            experienced a slight overall increase in attrition.10 The attrition data
                            suggest there has not been a consistent relationship between a
                            component’s average attrition rate for a given year and the attrition rate
                            for that component’s high demand capabilities (which include units and
                            occupations). In other words, attrition rates for high demand capabilities
                            were higher than average in some cases but lower than average in other
                            cases. Shortfalls have been identified in certain specialties, such as health
                            care professionals.


DOD’s Use of Survey Data    DOD uses surveys of reservists and their spouses to obtain information on
                            reservists’ income change when they are activated for a military operation
                            and to obtain their perspective on a number of issues relating to
                            activation, including family support and health care. The most recent
                            survey of reservists was completed in 2000,11 prior to the terrorist attacks


                            9
                             For this report, operational tempo refers to the total days reservists spend participating in
                            normal drills, training, and exercises, as well as domestic and overseas operational
                            missions.
                            10
                              Attrition is the total number of personnel losses from the Selected Reserve divided by the
                            average Selected Reserve end strength for the year. Under this definition, attrition is not a
                            true measure of retention since it does not reflect the number of personnel who left
                            compared with the eligible population of those who could have left.
                            11
                               The population of interest consisted of all Selected Reserve members below flag or
                            general officer rank, with at least 6 months of service when the questionnaires were first
                            mailed in August 2000. The sample consisted of 74,487 members. Eligible respondents
                            returned 35,223 completed surveys.



                            Page 9                                      GAO-03-1004 Reserve Personnel Compensation
                             that occurred on September 11, 2001, and the ensuing mobilization. The
                             2000 survey included questions on various aspects of mobilization and
                             deployment for operations dating back to the 1991 Persian Gulf War. In
                             2002, the Office of the Assistant Secretary of Defense for Reserve Affairs
                             surveyed spouses of activated reservists.12 In 2003, DOD fielded a new
                             “status of forces” survey of activated reservists. However, the survey had
                             not been completed at the time we were conducting our work.


Roles and Responsibilities   The Under Secretary of Defense for Personnel and Readiness has
                             oversight for policies, plans, and programs for military personnel
                             management, military compensation, and personnel support programs.
                             The Assistant Secretary of Defense for Reserve Affairs is responsible for
                             the overall supervision of issues involving reserve forces. The Assistant
                             Secretary of Defense for Health Affairs has the responsibility to execute
                             DOD’s health care mission. The TRICARE Management Activity manages
                             and executes the Defense Health Program Appropriation and supports the
                             uniformed services in implementation of TRICARE. Regarding family
                             support programs, the secretaries of the military departments are
                             responsible for, among other things, ensuring that comprehensive family
                             support systems are developed at DOD installations and that family
                             support systems are monitored and evaluated to ensure that they are
                             accessible, effective, and responsive to the needs of DOD personnel and
                             their families.


Recent GAO Reports on        We have previously reported on several issues surrounding the increased
Reserve Forces               use of reserve forces. In August 2003, we reported on the efficiency of
                             DOD’s process for mobilizing reservists following September 11, 2001.13 In
                             April 2003, we examined whether the Army was collecting and maintaining
                             information on the health of early-deploying reservists.14 In March 2003, we
                             testified before the Subcommittee on Total Force, House Committee on


                             12
                               The population of interest was spouses of reservists activated for Operations Noble
                             Eagle, Enduring Freedom, Bosnia, Southwest Asia, or Southern Watch. The sample
                             consisted of 7,658 spouses when the survey was first mailed in August 2002. Eligible
                             respondents returned 3,874 completed surveys.
                             13
                               U.S. General Accounting Office, Military Personnel: DOD Actions Needed to Improve the
                             Efficiency of Mobilizations for Reserve Forces, GAO-03-921 (Washington, D.C.: Aug. 21,
                             2003).
                             14
                               U.S. General Accounting Office, Defense Health Care: Army Needs to Assess the Health
                             Status of All Early-Deploying Reservists, GAO-03-437 (Washington, D.C.: Apr. 15, 2003).




                             Page 10                                    GAO-03-1004 Reserve Personnel Compensation
                        Armed Services, on our preliminary observations related to the issues
                        covered in this report, as well as employer support.15 Also in March 2003,
                        we testified before the Subcommittee on Total Force concerning DOD’s
                        oversight of TRICARE’s network of civilian providers, and we issued a
                        report on this topic in July 2003.16 In September 2002, we issued a report in
                        response to a congressional mandate to study the health care benefits of
                        reserve component members and dependents and the effect mobilization
                        may have on these benefits.17 In June 2002, we noted that maintaining
                        employers’ continued support for their reservist employees will be critical
                        if DOD is to retain experienced reservists in these times of longer and
                        more frequent deployments.18


                        DOD lacks sufficient information from the survey data to determine the
DOD Lacks Data to       magnitude of income loss or gain experienced by reservists, the causes for
Determine the Need      this change, and the effects of income loss on reserve retention. Such data
                        are critical for assessing the full nature and scope of income change
for Income Protection   problems and in developing cost-effective solutions. DOD self-reported
Programs                survey data from past and current military operations indicate that
                        reservists have experienced widely varying degrees of income change
                        when they are activated. While many reservists have reported lost income
                        during activation, more than half of reservists have reported either no
                        change or a gain in income. Current pay policies and protections, as well
                        as emergency aid services, may help mitigate reservists’ financial hardship
                        during activation. Additional income protection initiatives for reservists
                        have been proposed. Three of these proposals are (1) an Army initiative to
                        provide special deployment pay to self-employed physicians who fill



                        15
                          GAO-03-549T. We also provided a statement for the record to the Subcommittee on
                        Personnel, Senate Committee on Armed Services, titled Military Personnel: Preliminary
                        Observations Related to Income, Benefits, and Employer Support for Reservists During
                        Mobilization, GAO-03-573T (Washington, D.C.: Mar. 19, 2003).
                        16
                         U.S. General Accounting Office, Defense Health Care: Oversight of the Adequacy of
                        TRICARE’s Civilian Provider Network Has Weaknesses, GAO-03-592T (Washington, D.C.:
                        Mar. 27, 2003) and Defense Health Care: Oversight of the TRICARE Civilian Provider
                        Network Should Be Improved, GAO-03-928 (Washington, D.C.: July 31, 2003).
                        17
                          U.S. General Accounting Office, Defense Health Care: Most Reservists Have Civilian
                        Health Coverage but More Assistance Is Needed When TRICARE Is Used, GAO-02-829
                        (Washington, D.C.: Sept. 6, 2002).
                        18
                          U.S. General Accounting Office, Reserve Forces: DOD Actions Needed to Better Manage
                        Relations between Reservists and Their Employers, GAO-02-608 (Washington, D.C.:
                        June 13, 2002).




                        Page 11                                  GAO-03-1004 Reserve Personnel Compensation
                            critical medical wartime positions in the reserves, (2) legislative proposals
                            to authorize differential pay for federal employee reservists, and (3) an Air
                            Force initiative to establish an income insurance program for activated
                            reservists.


Information on Magnitude,   The 2000 and 2002 DOD surveys provide incomplete information on the
Causes, and Effects of      magnitude of income change experienced by activated reservists, the
Income Loss Is Incomplete   causes of income loss, and the effects of income loss on reservists’
                            attitudes toward military life and on retention. Such data are critical for
                            assessing the full nature and scope of income change problems and in
                            developing cost-effective solutions. Based on the 2000 survey data, DOD
                            estimated that the average total income change for all reservists (including
                            losses and gains) was almost $1,700 in losses. However, this figure should
                            be considered with caution because of the estimating methodology that
                            was used and because it is unclear what survey respondents considered as
                            income loss or gain in answering this question.19 For example, when
                            members reported income loss or gain, they may or may not have included
                            the value of indirect compensation, such as health care benefits, or
                            considered changes in their expenses, such as those for household and car
                            maintenance and for child care. In addition, it is unclear whether survey
                            respondents included paid civilian leave received concurrently with
                            military pay or whether they included differential pay if provided by their
                            employer. Further, reservists were mobilized or deployed for varying
                            lengths of time, which is likely to affect their overall income change.
                            According to DOD’s analysis of the survey data, certain groups reported
                            greater losses of income on average. For example, self-employed
                            reservists reported an average income loss of $6,500, physicians/registered
                            nurses reported an average income loss of $9,000, and self-employed
                            physicians/registered nurses reported an average income loss of $25,600.
                            DOD’s analysis presents little data on those groups who reported an
                            overall income gain. Two groups that were identified as reporting a gain
                            were clergy and those who worked for a family business without pay.

                            The existing survey data provide incomplete information on the causes of
                            income change. Income change can be attributed to various factors,
                            including a difference between civilian and military pay, a change in


                            19
                              The 2000 survey asked respondents: “Please estimate your (and your spouse’s) total
                            income change from all sources as a result of your most recent mobilization and
                            deployment. If you (and your spouse) have continuing losses from a business or practice,
                            include those in your estimate.”




                            Page 12                                   GAO-03-1004 Reserve Personnel Compensation
spousal income, a change resulting from continuing losses from a business
or practice, a different job being performed, or some combination of these.
The 2002 spouse survey estimates showed that about 60 percent had an
increase in the military member’s earnings, 10 percent had an increase in
their own earnings due to working more hours or taking a second job,
31 percent had a reduction in the military member’s earnings, 19 percent
had a reduction in their own earnings because they were unable to work
as much, 6 percent had other increases in income, and 15 percent had
other reductions in income. In addition to these factors, military
households may also experience a change in expenses during the
activation period. The 2000 survey estimates showed that about 22 percent
of drilling unit members had an increase in child-care expenses, 26 percent
had an increase in household maintenance and car repair expenses, and
63 percent had an increase in telephone expenses. However, neither
survey provides complete information on the extent these individual
factors contribute to overall income change.

Although reservists have reported that income loss causes problems for
them, the effects of these problems are not clear. When asked to rank
income loss among other problems they have experienced during
mobilization or deployment, about 41 percent of drilling unit members
ranked it as one of their most serious problems.20 But the survey data are
inconclusive concerning the effects of income loss problems on
servicemembers’ attitudes toward military life or on retention. Our prior
work has shown that retention decisions are highly personal in nature and
that many factors may affect the decision of a servicemember to stay in
the military or leave. A 1998 RAND study conducted for DOD found that
income loss during the 1991 Persian Gulf War, while widespread among
reservists, did not have a measurable effect on the retention of enlisted
reservists.21 The study was cautiously optimistic that mobilizing the
reserves under similar circumstances in the future would not have adverse
effects on enlisted recruiting and retention. However, the effects of future
mobilizations can depend on the mission, the length of time reservists are
deployed, the frequency of deployment, the degree of support from
employers and family members, and other factors. Office of the Secretary
of Defense (OSD) officials told us it was too early to know how the current



20
  The survey listed 22 possible problems and asked respondents to choose their top 3 most
serious problems experienced during mobilization or deployment.
21
 RAND, The Effect of Mobilization on Retention of Enlisted Reservists After Operation
Desert Shield/Storm, MR-943-OSD (1998). The study did not include officers.



Page 13                                   GAO-03-1004 Reserve Personnel Compensation
                            mobilization would affect retention or what factors would be driving
                            reservists’ retention decisions.


Reservists Have             The 2000 DOD survey showed that an estimated 41 percent of reservists
Experienced Widely          who were drilling unit members in the Selected Reserve lost family income
Varying Degrees of Income   when they were mobilized or deployed for a military operation, 30 percent
                            had no change in income, and 29 percent had an increase in income.
Loss or Gain                Table 1 shows the distribution of income change reported by drilling unit
                            members in the 2000 survey.

                            Table 1: Estimates of Drilling Unit Members’ Total Reported Change in Family
                            Income for Mobilizations or Deployments Prior to 2001

                             Total income change                                                                    Percentage
                             Decreased $50,000 or more                                                                      0.9
                             Decreased $25,000 to $49,999                                                                   1.5
                             Decreased $10,000 to $24,999                                                                   4.1
                             Decreased $5,000 to $9,999                                                                     6.0
                             Decreased $2,500 to $4,999                                                                     8.9
                             Decreased $1 to $2,499                                                                        19.5
                             Subtotal                                                                                      40.9
                             No change in income                                                                           30.0
                             Subtotal                                                                                      30.0
                             Increased $1 to $2,499                                                                        16.6
                             Increased $2,500 to $4,999                                                                     6.8
                             Increased $5,000 or more                                                                       5.7
                             Subtotal                                                                                      29.1
                             Total                                                                                        100.0
                            Sources: DOD 2000 Reserve Component Survey (data); GAO (presentation).


                            Our analysis of the 2000 DOD survey estimates showed that differences in
                            total family income change were attributable to different civilian
                            occupations. For example, a higher percentage of self-employed reservists
                            lost income (55 percent)22 compared with drilling unit members overall
                            (41 percent). About 10 percent of self-employed drilling unit members had
                            income loss of $25,000 or more, compared with about 3 percent for drilling
                            unit members overall. The percentage of federal employee reservists who


                            22
                                 The sampling error for this estimate is plus or minus 9 percentage points.




                            Page 14                                                  GAO-03-1004 Reserve Personnel Compensation
lost income did not differ statistically from the overall average for drilling
unit members. Of federal employee reservists, about 39 percent had an
income loss, and 62 percent had no change or a gain in income.23 Of
reservists in selected civilian career fields,24 a higher percentage of health
care professionals had income loss compared with reservists in other
career fields, and about 38 percent of health care professionals25 had an
income loss of $25,000 or more. Income change differences were also
evident based on reserve component and pay grade. For example, a higher
percentage of members in the Marine Corps Reserve and the Naval
Reserve had income loss compared with members of the Army National
Guard.

The 2002 DOD survey of spouses of activated reservists found that an
estimated 58 percent had an increase in monthly family income, 30 percent
had a loss in monthly income, and 12 percent experienced no change in
monthly income (see table 2).




23
  The percentages do not add to 100 due to rounding. Sampling errors for federal
employees who had a decrease, no change, or a gain in income were about plus or minus
6 percentage points.
24
  The 2000 survey obtained information on reservists in the following civilian career fields:
medical professionals, lawyers, information technology specialists, clergy, and
pilots/navigators.
25
     The sampling error for this estimate was about plus or minus 8 percentage points.




Page 15                                      GAO-03-1004 Reserve Personnel Compensation
                           Table 2: Estimates of Spouses’ Monthly Reported Change in Family Income during
                           Activation

                            Monthly income change                                                    Percentage
                            Decreased more than $3,500                                                         3
                            Decreased $2,001-$3,500                                                            4
                            Decreased $1,001-$2,000                                                            7
                            Decreased $501-$1,000                                                              8
                            Decreased $251-$500                                                                6
                            Decreased $1-$250                                                                  2
                            Subtotal                                                                          30
                            No change                                                                         12
                            Subtotal                                                                          12
                            Increased $1-$250                                                                  8
                            Increased $251-$500                                                               12
                            Increased $501-$1,000                                                             16
                            Increased $1,001-$2,000                                                           14
                            Increased $2,001-$3,500                                                            6
                            Increased more than $3,500                                                         2
                            Subtotal                                                                          58
                            Total                                                                           100
                           Sources: DOD (data); GAO (presentation).




Additional Income          Current pay policies and protections, as well as emergency aid services,
Protection Measures Have   may help mitigate reservists’ financial hardship during activation. For
Been Proposed to           example, basic military compensation has increased in recent years. In
                           addition, the Soldiers’ and Sailors’ Civil Relief Act provides numerous
Supplement Existing Pay    financial protections to reservists. (See app. III for more information on
Policies and Protections   existing pay policies and protections.) Additional income protection
                           measures for reservists have been proposed. Three proposals are (1) an
                           Army initiative to provide special deployment pay to self-employed
                           physicians who fill critical medical wartime positions in the reserves,
                           (2) legislative proposals to authorize differential pay for federal employee
                           reservists, and (3) an Air Force initiative to establish income insurance for
                           activated reservists.




                           Page 16                                    GAO-03-1004 Reserve Personnel Compensation
Special Deployment Pay for       The Army, through DOD’s Unified Legislation and Budgeting process,26 has
Physicians in Critical Wartime   proposed a special deployment pay to limit income loss and improve
Specialties                      retention of certain Army Reserve Medical Corps physicians. The pay
                                 would be targeted at reservists called to active duty who are
                                 (1) self-employed,27 (2) serve as officers in the Army Reserve Medical
                                 Corps in critical wartime medical specialties, and (3) deploy involuntarily
                                 beyond the established rotation. The special deployment pay would be
                                 available during contingencies and funded through a supplemental
                                 appropriation. Under this proposal, an eligible reservist would receive an
                                 additional monthly pay that would vary by specialty, level of training, and
                                 years of active duty service as a Medical Corps officer. The monthly pay
                                 would be limited to no more than twice the special pay currently earned
                                 by an eligible individual. The Army estimates the mean cost at $6,000 per
                                 month per eligible professional. The Army estimates that had this pay
                                 policy been in place in May 2003, Army Reserve physicians deployed
                                 beyond the established rotation period (90 days) would have received a
                                 total of $630,000 in special deployment pay for that month.28

                                 According to the Army, this special pay is needed because of difficulties
                                 retaining and replacing fully trained physicians29 in the Army Reserve
                                 Medical Corps to meet its wartime needs. These retention difficulties are
                                 due, in part, to reservists’ concerns about financial loss during
                                 deployment. According to the Army, it has been unsuccessful in recruiting
                                 and retaining enough fully trained physicians to meet authorized personnel
                                 levels in the Selected Reserve and has had to rely on transfers from the
                                 Individual Ready Reserve to reconstitute its Selected Reserve strength.
                                 The Army attributes retention challenges within the reserves to a decrease
                                 in the number of active duty physicians transferring to the reserve


                                 26
                                   DOD established the Unified Legislation and Budgeting process in 1994 to develop and
                                 review personnel compensation proposals.
                                 27
                                   Internal Revenue Publication 533 defines “self-employed” individuals as sole proprietors
                                 or independent contractors; members of a partnership that carries on a trade or business;
                                 or otherwise in business for themselves. A 2001 survey of medical personnel conducted for
                                 the Army Surgeon General found that almost 40 percent of Army Reserve Medical Corps
                                 officers identified themselves as self-employed.
                                 28
                                   The cost estimate assumes that about 30 percent of the 350 Army Reserve Medical Corps
                                 officers deployed in May 2003 would have qualified for the special deployment pay. The
                                 actual total monthly cost may be less since this figure assumes that all qualifying
                                 physicians had been deployed involuntarily beyond the 90-day rotation schedule.
                                 29
                                   The Army considers physicians to be fully trained and deployable when they have passed
                                 a written exam and completed their residency.




                                 Page 17                                   GAO-03-1004 Reserve Personnel Compensation
component, attrition due to an aging force and professionals meeting
retirement eligibility, and the inability of some medical professionals to
tolerate income loss resulting from frequent or lengthy activations.

Every 2 years, the Assistant Secretary of Defense for Health Affairs
publishes a list of critical officer skills needed to meet Ready Reserve
medical shortages and for which the services could offer retention and
recruiting incentives. During fiscal years 2002 and 2003, the Army Reserve
was projected to have critical shortages—that is, projected to fill less than
80 percent of authorized positions during the next 24 months—in
18 wartime health care specialties, such as general surgery, thoracic
surgery, and preventative medicine. For example, as of January 2003, the
Army Reserve had filled 78 percent of authorized general surgeon
positions, 62 percent of thoracic surgeon positions, and 41 percent of
preventative medicine positions.

A 1996 survey conducted for the Chief, Army Reserve, found that
54 percent of Army Reserve physicians cited the financial impact of
mobilization as a primary reason that they did not intend to remain in the
reserves until retirement. The survey showed that catastrophic financial
loss associated with long-term deployments was the primary factor in their
decisions to leave the Army Reserve. Furthermore, over three-quarters of
all Army Reserve physicians surveyed in 1996 and 2001 required
mobilization periods of 90 days or less to avoid seriously affecting their
medical practices. Fifty-nine percent of respondents to the 2001 survey
preferred a maximum deployment length of 60 days or less. However,
these respondents indicated that a special deployment pay would allow
them to deploy for longer periods of time and would increase the
likelihood that they would remain in the Army Reserve. The amount of
special pay that respondents would need varied by medical specialty, with
the majority indicating a need for less than $10,000 a month to maintain
their practices while deployed.

To increase retention among medical professionals concerned about the
financial impact of lengthy mobilizations on their practices, the Army
implemented the Presidential Reserve Call-Up 90-Day Rotation Pilot
Program in 1999. The 3-year pilot program limited deployments of
physicians, dentists, and nurse anesthetists to 90 days in the area of
operations. A 2001 survey of Army Reserve medical personnel found that
intent to remain in the Army Reserve increased among self-employed
medical professionals who were aware of the 90-day rotation pilot
program. By 2001, the percentage of Army Reserve medical professionals
who indicated that they did not intend to remain until retirement had


Page 18                             GAO-03-1004 Reserve Personnel Compensation
                                 dropped slightly. Those aware of the 90-day cap who indicated that they
                                 would leave because of the financial impact of mobilization decreased by
                                 23 percent from 1996 to 2001. Moreover, those indicating that they would
                                 leave because of concerns about future mobilizations decreased by
                                 20 percent over the same time period. Respondents to the 2001 survey
                                 indicated that a special deployment pay would allow them to deploy for
                                 longer periods of time. For example, of respondents whose original
                                 optimal deployment length was 31 to 60 days, 76 percent indicated that
                                 they could increase their deployment time up to 90 days with a special
                                 deployment pay.

Differential Pay for Activated   Federal employee reservists called to active military duty do not receive
Federal Employees                paid compensation from their civilian employing agency other than paid
                                 military and annual leave.30 Under various legislative proposals introduced
                                 during the current congressional cycle,31 federal agencies that employ
                                 reservists called to active duty would be required to pay the difference, if
                                 any, between the employee’s civilian pay and military pay from
                                 appropriated funds. DOD’s 2000 survey estimates indicated that 9 percent
                                 of drilling unit members were federal employees in 1999. Proponents of
                                 differential pay for federal employee reservists state that providing this
                                 pay (1) would recognize the demands and burdens placed on reservists
                                 and their families, (2) would help federal employee reservists maintain
                                 their standard of living, and (3) would set an example for other employers
                                 of reservists. The Office of Personnel Management has opposed similar
                                 legislation in the past on the basis of equity and cost issues. In addition, as
                                 noted earlier, available data indicate that federal employee reservists are
                                 not suffering income loss to a greater extent than other reservists, such as
                                 certain health care professionals.

                                 Federal law provides many rights and benefits for federal employees
                                 called to active military duty. In December 2001, federal agencies were
                                 granted discretionary authority to pay both the employee and government



                                 30
                                   Activated federal employees who use military leave receive full compensation from their
                                 civilian agency in addition to their military pay for the same period. Federal employee
                                 reservists earn up to 15 days of military leave a year. Employees who perform active
                                 military duty to assist domestic civilian authorities in the protection of life or property may
                                 be granted an additional 22 days of military leave.
                                 31
                                   Four legislative proposals that would offer differential pay to activated federal employee
                                 reservists are S. 593, Reservists Pay Security Act of 2003; S. 442, Reservists and Guardsmen
                                 Pay Protection Act of 2003; H.R. 217, Reservists Pay Security Act of 2003; and H.R. 1345,
                                 Equity for Reservists Pay Act of 2003.




                                 Page 19                                      GAO-03-1004 Reserve Personnel Compensation
    shares of the Federal Employees Health Benefits Program premium for
    any or all of an 18-month period when an employee is called to active duty
    in support of a contingency operation.32 As of March 2003, about
    64 percent of federal agencies reported paying the entire premium when
    an employee is called to active duty. At agencies that have not used this
    discretionary authority, employees may continue to pay their share of
    premiums for the first 12 months and their share of premiums plus the
    government’s share of premiums and a 2 percent administrative
    processing fee for the next 6 months.33

    Other benefits for activated federal employee reservists include the
    following:

•   continuation of life insurance for up to 12 months at no cost;
•   continued accrual of military leave, which may be carried over to the
    following fiscal year or used while activated; and
•   retroactive retirement credits upon return to their civilian positions.

    In an August 2002 memorandum, the Office of Personnel Management
    cited “equity issues” in its opposition to differential pay for federal
    employee reservists. While the Office of Personnel Management did not
    elaborate, differential pay could create inequities in pay between federal
    employee reservists and their active duty counterparts who are serving in
    the same positions and pay grades. Two servicemembers performing the
    same military job could receive different amounts of compensation simply
    because one is a reservist with a full-time job in the federal civilian sector.
    In addition, there may not be a correlation between a reservist’s civilian
    and military pay grades. A federal employee’s civilian salary is based on
    work performed at a certain pay grade and may require different skills and
    knowledge than the employee’s military job. Providing differential pay
    would, in effect, be paying the reservist for a job other than that being
    performed.

    The Office of Personnel Management also stated that the cost of providing
    differential pay for activated federal employee reservists on an indefinite
    basis would be significant and that data are lacking to make an accurate



    32
         Public Law 107-107, sec. 519. (Dec. 28, 2001) 5 U.S.C. sec. 8906(e)(3).
    33
      Federal employees can extend coverage beyond 18 months for 31 days and convert to an
    individual policy offered by the plan carrier. Public Law 103-353, Oct. 13, 1994, 38 U.S.C.
    sec. 4301-4333.




    Page 20                                        GAO-03-1004 Reserve Personnel Compensation
cost projection. It noted that because federal agencies would fund the cost
of differential pay, agencies with greater numbers of activated reservists
would have higher costs, reducing the amount of funds available for other
program operations. The Congressional Budget Office developed a cost
estimate for one of the legislative proposals.34 It estimated that this
proposal would cost $201 million for the fiscal year 2003-08 period, which
includes retroactive payments for federal employees called to active duty
since September 11, 2001.35

A factor that complicates calculation of the total cost of differential pay is
DOD’s lack of complete information about reservists’ employment. Until
recently, DOD did not require reservists to provide information to DOD
about their civilian employers. In response to our recommendation that
DOD collect complete data about reservists’ employment, DOD and the
services implemented the Civilian Employment Information Program in
March 2003.36 Under this program, Selected Reserve members are required
to provide their employment status, employer’s name, and civilian job title,
among other information. When fully established, the program will allow
DOD to consider employment-related factors during premobilization
planning and assist the department in accomplishing its employer
outreach efforts. The data could also help to identify the number of federal
employees who could be called to active duty and to develop a total cost
estimate if a pay differential were offered to them.

While civilian employers are not required under the Uniformed Services
Employment and Reemployment Rights Act37 to provide differential pay to
activated reservists, we have found that many employers do so. As part of
our earlier work on employer support for the Guard and Reserve, we
contacted 359 employers of reservists in high tempo units between
November 2001 and March 2002 about their pay practices for activated
employees. Of 183 employers who completed and returned the survey,


34
     S. 593, Reservist Pay Security Act of 2003, as introduced on March 11, 2003.
35
  For its analysis, the Congressional Budget Office assumed that (1) 15 percent of those
reserves called to active duty at any time are federal employees; (2) the average annual
reduction in salary while serving on active duty is about $3,000; and (3) an average of
20,000 federal employees will be on active duty military service between July 1, 2003, and
September 30, 2003, diminishing to about 2,000 by 2008. Lengthier, larger, or more frequent
deployments could increase the costs of differential pay.
36
     GAO-02-608.
37
     Public Law 103-353, 38 U.S.C., sec. 4301-4333.




Page 21                                       GAO-03-1004 Reserve Personnel Compensation
                                 about 40 percent indicated that they provide either full pay, differential
                                 pay, or a combination of both to activated reservists. For this report, we
                                 also surveyed officials from 22 states about their compensation policies
                                 for state employees called to federal active duty and found that most offer
                                 some type of financial assistance to their activated employees. Nineteen of
                                 the 22 states offer financial assistance, such as pay differentials, to
                                 employees who are on military leave without pay and can document a loss
                                 of income. (App. IV provides information on income assistance, military
                                 leave, health benefits, and other benefits offered by the 22 states to their
                                 employees who are called to active duty.) DOD’s 2002 spouse survey
                                 estimates showed that the reserve member’s civilian employer continued
                                 to pay the member’s salary in full or in part for 22 percent of spouses.

Income Insurance for Activated   From 1996 to 1997, DOD offered the Ready Reserve Mobilization Income
Reservists                       Insurance Program to reservists as a way to protect their civilian income
                                 when called to active duty. The program was canceled after it failed
                                 financially. Through DOD’s Unified Legislation and Budgeting process, the
                                 Air Force has proposed that DOD establish a somewhat similar income
                                 insurance program that addresses some of the problems associated with
                                 the original program but not others.

                                 The original DOD program was initiated after concerns were raised
                                 following the 1991 Persian Gulf War that income loss would adversely
                                 affect retention of reservists. According to a 1991 DOD survey of reservists
                                 activated during the Gulf War, economic loss was widespread across all
                                 pay grades and military occupations. In response to congressional
                                 direction,38 DOD in 1996 established the Ready Reserve Mobilization
                                 Income Insurance Program, an optional, self-funded income insurance
                                 program for members of the Ready Reserve ordered involuntarily to active
                                 duty for more than 30 days. Reservists who elected to enroll could obtain
                                 monthly coverage ranging from $500 to $5,000 for up to 12 months within
                                 an 18-month period. Far fewer reservists than DOD expected enrolled in
                                 the program. Many of those who enrolled were activated for duty in
                                 Bosnia and, thus, entitled to almost immediate benefits from the program.
                                 The program was terminated in 1997 after going bankrupt.

                                 We reported in 1997 that private sector insurers were not interested in
                                 underwriting a reserve income mobilization insurance program due to
                                 concerns about actuarial soundness and unpredictability of the frequency,


                                 38
                                      See section 512, National Defense Authorization Act for Fiscal Year 1996 (P.L. 104-106).




                                 Page 22                                       GAO-03-1004 Reserve Personnel Compensation
duration, and size of future call-ups.39 Certain coverage features violated
many of the principles private sector insurers usually require to protect
themselves from adverse selection.40 These features include voluntary
coverage and full self-funding by those insured, the absence of rates that
differentiated between participants based on their likelihood of
mobilization, the ability to choose coverage that could result in full
replacement of their lost income rather than those insured bearing some
loss, and the ability to obtain immediate coverage shortly before an
insured event occurs. DOD officials told us that private sector insurers
remain unsupportive of a new reserve income insurance mobilization
program and that the amount of federal financial commitment required for
the program is prohibitive. Thus, DOD has no plans to implement a new
mobilization insurance program.

However, the Air Force has proposed that DOD establish a self-funded
income insurance program for reserve component members ordered
involuntarily to active duty for more than 30 days, or in support of forces
activated during a war declared by Congress or a period of national
emergency. The Air Force proposal attempts to address adverse selection,
low participation rates, and funding concerns that contributed to the
failure of the Ready Reserve Mobilization Income Insurance Program. For
instance, to address adverse selection and low participation rates, all
drilling unit members and individual mobilization augmentees would be
automatically enrolled in the program for $1,000 of monthly coverage with
the option to opt out. Individual Ready Reserve members would have the
option to enroll. To further mitigate adverse selection and funding
concerns, payments would not be made during the first 6 months of
enrollment in the program, regardless of mobilization or recall status. This
delay would allow funds to accrue for future payouts. Furthermore, DOD
would be able to suspend the annual enrollment open season during
national emergencies and periods of war that are declared by Congress.
Mandatory waiting periods for coverage to become effective would help
counter adverse selection that resulted when reservists with knowledge of
their imminent mobilization enrolled in the Ready Reserve Mobilization



39
  U.S. General Accounting Office, Reserve Forces: Observations on the Ready Reserve
Mobilization Income Insurance Program, GAO/T-NSIAD-97-154 (Washington, D.C.: May 8,
1997).
40
  Adverse selection occurs when those enrolling in an insurance program have
significantly higher claim probabilities than the average for the population to which the
insurance is offered.




Page 23                                     GAO-03-1004 Reserve Personnel Compensation
Income Insurance Program. However, instituting waiting periods and
requiring mandatory participation still would not overcome financial
liability associated with large mobilizations. Even infrequent mobilizations
could produce a large number of claims. As a result, funding for the
program could be exhausted quickly. In 1998, the Congressional Research
Service estimated that if every Selected Reservist were enrolled for
coverage of $1,000 per month and paid premiums of $10 per month, the
fund would accumulate $9 million in income each month and $702 million
over 5 years, assuming that premiums were invested at a 10 percent
compound interest rate.41 A mobilization of 250,000 reservists would create
a monthly liability of $250 million, making the fund insolvent by the fourth
month of mobilization.42

The Air Force proposal does not completely address some of the problems
experienced with the prior program, including adverse selection, low
participation rates, proof of loss of income, and funding concerns. As
currently structured, the Air Force’s proposed income insurance program
would not have graduated premiums that differentiate between
participants based on their likelihood of mobilization. However,
participants would be able to purchase additional coverage or opt out of
the program depending on their perceived risk of activation. Similar to the
Ready Reserve Mobilization Income Insurance Program, the Air Force’s
proposed program is designed to be financed entirely by premiums paid by
individual members. DOD would need to assume responsibility for any
unfunded liability that may result from a larger than expected
mobilization. As a result, the Secretary of Defense would need to submit a
supplemental appropriation request.

In addition, the Air Force’s proposed income insurance program does not
require proof of loss of income. As designed, the program would pay
benefits based on the amount of coverage chosen by the reservists
regardless of actual losses incurred. Premium rates would be set for a
specified amount of insurance coverage. There is no provision to prevent
reservists from subscribing to amounts of coverage significantly greater
than their actual loss of income. To minimize the program’s financial
liability, reservists could be required to document income loss when


41
  This estimate seems overly optimistic in today’s environment based on the assumed
10 percent compound interest rate.
42
  Reserve mobilizations exceeded 200,000 by mid-March 2003 and remained above that
level into July 2003.




Page 24                                  GAO-03-1004 Reserve Personnel Compensation
submitting claims. However, verifying losses from self-owned businesses,
lost commissions or bonuses, or additional expenses could be difficult and
delay timely payment of benefits.

Even if these design criteria were addressed, designing a financially sound
program may not be possible. There is no reliable way to estimate the
duration, number, and timing of future mobilizations and the number and
specialties of reservists that would be called up. DOD’s increased reliance
on the reserve components in a changing and unpredictable world
situation makes projections of future call-ups exceedingly difficult. To be
financially sound, an insurance program, at a minimum, should have a
large eligible population of whom a large proportion are insured and the
proportion of those insured who file claims should be reasonably stable
over time. In addition, to be affordable, the majority of those insured will
not, in any period, incur the losses that they insure against.

Furthermore, it is unclear whether reservists want or need an income
insurance program. Although the 2000 DOD survey indicated that an
estimated 41 percent of drilling unit members had losses in family income
when mobilized or deployed, it is unknown whether reservists would be
willing to participate in a new income insurance program. For example,
high premiums and a mandatory waiting period before becoming eligible
for payouts could discourage participation. A survey conducted before the
Ready Reserve Mobilization Income Insurance Program was implemented
showed that about 70 percent of enlisted members and 55 percent of
officers indicated interest in participating in such a program. The DOD
Office of the Actuary estimated that about 40 percent of reservists would
participate. However, only about 3 percent of Selected Reserve members
actually enrolled. The enrollment pattern indicated that reservists in
certain military specialties had a greater need or demand for income
protection. Of the approximate 5,500 military specialties in the reserve
components, about 1,930 (35 percent) had some reservists enrolled in the
program, including 420 military specialties that had enrollment levels of
10 percent or more. Although these 420 military specialties accounted for
less than 8 percent of the total military specialties within the reserve
components, they made up over 25 percent of the total reservists enrolled
in the program. Of the 420 specialties with enrollment levels of 10 percent
or more, 250 were in aviation, legal, and medical fields.




Page 25                             GAO-03-1004 Reserve Personnel Compensation
                             Although DOD has placed greater emphasis on family readiness, many
DOD Faces                    reserve families indicate they do not feel prepared for call-ups. In addition,
Challenges in Family         although reservists and their families are eligible for military family
                             support services, many reservists appear not to be aware of these services,
Readiness and                and most spouses of activated reservists have not used these services.
Support                      DOD officials have acknowledged they face challenges in providing family
                             support outreach to reservists and have taken steps to improve outreach.
                             Personal financial management, one of DOD’s core family support
                             programs, illustrates the continuing challenges DOD faces in providing
                             outreach to reservists. DOD has not assessed the financial well-being of
                             reserve families, nor has it assessed the impact of reservists’ financial
                             problems on mission readiness. DOD has noted a need to improve
                             reservists’ and their spouses’ awareness of and access to personal
                             financial management programs, but it has not tailored its programs to
                             reservists by developing plans that specify how these needs will be met.


Surveys Indicate a Lack of   DOD has recognized the importance of family readiness and family
Readiness among Many         support for its servicemembers, including reservists. Under a 1994 DOD
Reserve Families and Low     policy, the military services must “ensure National Guard and Reserve
                             members and their families are prepared and adequately served by their
Awareness and Use of         services’ family care systems and organizations for the contingencies and
Support Programs             stresses incident to military service.” According to DOD, families of
                             reservists who use family support services and who are provided
                             information from the military cope better during activations. Furthermore,
                             military members who are preoccupied with family issues during
                             deployments may not perform well on the job, which in turn, may
                             negatively affect the mission. According to DOD’s 2000 survey estimates,
                             reservists who had been activated stated that among the most serious
                             problems they experienced were burdens placed on their spouse and
                             problems created for their children. More than half of all reservists are
                             married, and about half have dependents. As of September 2001, there
                             were about 960,000 family members of Selected Reserve members,
                             including spouses, children, and adult dependents.

                             Despite this recognition of the importance of family readiness and family
                             support, many reserve families feel they are not prepared when the
                             member is notified for active duty. According to DOD officials, Operations
                             Noble Eagle and Enduring Freedom highlighted that not all reserve
                             families were prepared. Since many families never thought their military
                             member would be mobilized, they had not become involved in their family
                             readiness networks. Results from the 2000 DOD survey also showed a
                             substantial number of reservists did not anticipate call-up— about


                             Page 26                             GAO-03-1004 Reserve Personnel Compensation
35 percent of drilling unit members thought it was unlikely or very unlikely
that they would be mobilized or deployed in the next 5 years.
Furthermore, about one-fourth of drilling unit members said their
dependent care arrangements were not realistically workable for
deployments lasting longer than 30 days.

DOD’s 2002 spouse survey showed that an estimated 33 percent of spouses
felt they were unprepared or very unprepared when they first learned of
the member’s order to active duty, while 37 percent felt they were very
well prepared or well prepared and 30 percent felt they were neither
prepared nor unprepared. The survey data indicated that less than half of
spouses were involved in family readiness groups,43 attended readiness
briefings, received preactivation materials, or had a military point of
contact to help them deal with emergency issues that might arise. Our
analysis showed that some of these factors appeared to be related to
whether spouses felt prepared or unprepared when the member was
notified for active duty, although involvement in family readiness groups
and receiving preactivation materials upon the member’s notification to
active duty did not appear to be significant factors. (See app. V.)
Compared with unprepared spouses, a higher percentage of prepared
spouses had a longer period of notice before the member was activated.
As might be expected, a higher percentage of prepared spouses than
unprepared spouses were coping well or very well during the activation.
An estimated 84 percent of prepared spouses were coping well or very
well, 3 percent were coping poorly or very poorly, and 13 percent were
coping neither poorly nor well. Of unprepared spouses, 41 percent were
coping well or very well, 31 percent were coping poorly or very poorly,
and 28 percent were coping neither poorly nor well.

Although activated reservists and their family members are eligible for the
same family support services as their active duty counterparts, the DOD
2000 survey estimates showed that more than half of all reservists either
believed that family support services were not available to them or did not
know whether these services were available (see table 3).




43
   Asked what prevented them from participating with their unit’s family readiness program
or from being a member of their unit’s family readiness group, about 37 percent of spouses
were not aware of a family readiness group, 34 percent did not have time, for 31 percent
the location was not convenient, and 30 percent had not been asked. (These percentages
do not add to 100 percent because more than one reason could be indicated.)




Page 27                                   GAO-03-1004 Reserve Personnel Compensation
Table 3: Reservists’ Views on Availability of Selected Family Support Programs or
Services

 Estimated percentage of drilling unit members
                                       Available off
                                    installation, on
 Program/service                installation or both                     Not available   Don’t know
 Services for families
 during separation                                       25                        13           62
 Crisis referral
 services                                                15                        17           68
 Financial
 counseling/manage
 ment education                                          22                        16           61
 Family support
 centers                                                35                         14           51
Sources: DOD 2000 Reserve Component Survey (data); GAO (presentation).

Note: Rows may not add to 100 percent due to rounding.


DOD has found that the degree to which reservists are aware of family
support programs and benefits varies according to component, unit
programs, command emphasis, reserve status, and willingness of the
individual member to receive or seek out information. Among the key
challenges in providing family support are the long distances that many
reservists live from their home unit and military installations,44 the
difficulty in persuading reservists to share information with their families,
the unwillingness of some reservists and their families to take the
responsibility to access available information, conflicting priorities during
drill weekends that limit the time spent on family support, and a heavy
reliance on volunteers to act as liaisons between families and units.

Spouses of activated reservists have not made extensive use of military
family support programs. DOD’s 2002 spouse survey indicated that most
spouses did not use family programs during activation. When asked to rate
the helpfulness of various military support services, an estimated
94 percent of spouses said they had not used family programs. In response
to another survey question concerning the difficulty they experienced


44
  The 2000 survey of reservists showed that about 40 percent of drilling unit members lived
50 miles or farther from their home unit. The 2002 survey of spouses showed that about
22 percent lived more than 100 miles away from where the member’s unit regularly drills or
trains. In addition, 28 percent of spouses said they lived more than 50 miles from the
nearest military installation.




Page 28                                                  GAO-03-1004 Reserve Personnel Compensation
                          accessing military services, 87 percent said they had not used family
                          programs. It is unclear from the survey data why spouses did not use
                          family programs. About 1 percent of spouses rated family programs as
                          their most important military support service.

                          DOD has recognized the need for improved outreach. For example, the
                          department has published benefit guides for reservists and family
                          members and has enhanced information posted on its Web sites.45 DOD
                          published a “Guide to Reserve Family Member Benefits” that informs
                          family members about military benefits and entitlements and a family
                          readiness “tool kit” to enhance communication about predeployment and
                          mobilization information among commanders, servicemembers, family
                          members, and family program managers. Each reserve component has
                          established family program representatives to provide information and
                          referral services, with volunteers at the unit level providing additional
                          assistance. The U.S. Marine Corps began offering an employee assistance
                          program in December 2002 to improve access to family support services
                          for Marine Corps servicemembers and their families who reside far from
                          installations. Through this program, servicemembers and their families can
                          obtain information and referrals on a number of family issues, including
                          parenting, preparing for and returning from deployment, basic tax
                          planning, legal issues, and stress. The National Guard has established
                          family assistance centers across the United States to act as an entry point
                          for service and assistance that a family member may need during the
                          current mobilization. As of May 2003, over 400 family assistance centers
                          had been established.


DOD Has Identified        Personal financial management, one of DOD’s core family support
Outreach Challenges for   programs, illustrates the continuing challenges DOD faces in providing
Personal Financial        outreach to reservists. These challenges include improving access to and
                          awareness of personal financial management programs for reservists and
Management Programs       their family members. Under DOD policy, military personnel bear primary
                          responsibility for the welfare of their families, but the commitment
                          demanded by military service requires that they be provided a
                          comprehensive family support system, to include financial planning
                          assistance. Servicemembers receive financial management training during



                          45
                           Examples of these Web sites are www.armyfamilyteambuilding.org/home.asp,
                          www.afcrossroads.com/index-home.cfm,
                          www.usmc-mcss.org/mcftb/fa_te_build_main.html, and www.cnet.navy.mil.




                          Page 29                                GAO-03-1004 Reserve Personnel Compensation
their basic training and, in some cases, during advanced training. In
addition, personal financial management is one of the core services
offered at the military services’ family support centers. Personal financial
management consists of programs conducted by counselors who provide
personal and family financial training, counseling, and assistance.

DOD studies have identified problems with personal financial management
in the active duty force, particularly among junior enlisted members. A
2002 study found that (1) 20 percent of the junior enlisted force in the
active component has financial problems; (2) these personnel have
substantially more financial problems than does the comparable civilian
population; and (3) financial problems are not related to family income,
which suggests that financial problems are shaped by spending patterns
and management skills rather than by the level of income.46 According to
this study, “unit leaders consistently complained that much of their time
was spent dealing directly with financially overextended members. These
problems had a corrosive effect on the unit because they affected work
performance through added stress on members as well as through
absences to deal with creditors or get credit counseling.” A 2000 Navy
study found that 57 percent of Navy leaders cited financial concerns as the
main servicemember issue with which they dealt most often.47 Further, in
response to a House Committee on Armed Services requirement in the
Fiscal Year 2002 National Defense Authorization Act, the Navy identified
$250 million in productivity and salary losses due to poor personal
financial management.

In 2002, as part of its human capital strategic plan, DOD identified a need
to improve the financial literacy and responsibility of servicemembers,
including reservists.48 The plan states that mission readiness and quality of
life are dependent upon servicemembers’ using their financial resources
responsibly and that the military services must make a commitment to
educate servicemembers and their families and encourage them to use
good financial sense. Financial literacy training and counseling is one of



46
 RAND, Assessing the Personal Financial Problems of Junior Enlisted Personnel,
MR-1444-OSD (2002).
47
     Caliber Associates, U.S. Navy Family Service Center Leadership Survey 2000.
48
 Department of Defense, Deputy Assistant Secretary of Defense (Military Community and
Family Policy), A New Social Compact: A Reciprocal Partnership Between the
Department of Defense, Service Members, and Families (July 2002).




Page 30                                    GAO-03-1004 Reserve Personnel Compensation
the pillars that support financial well-being. However, DOD has not
developed plans to address these needs.

DOD is reviewing a draft uniform personal financial management policy.
Currently, DOD and service regulations address aspects of personal
financial management. The draft policy seeks to establish a uniform
approach to educating and training all servicemembers, including
reservists. Regarding the reserves specifically, the draft policy would
require the military departments to provide a financial planning package
and instructional information to reservists as part of their mobilization
training. In addition, the draft policy outlines metrics to track financial
well-being, such as the number of delinquent government credit cards, the
number of individuals who have had their wages garnished, the self-
reported financial condition of military personnel and their families, and
the number of administrative Uniform Code of Military Justice actions
taken against military personnel for financial indebtedness and
irresponsibility.

In addition to drafting a personal financial management policy, DOD has
taken steps to improve personal financial management programs. In May
2003, DOD formally launched a “financial readiness campaign” to address
servicemembers’ poor financial habits and to increase financial
management awareness, savings, and protection against predatory
practices. It has also entered into a number of partnerships with nonprofit
organizations and government agencies that have agreed to support
counselors who offer financial assistance programs to servicemembers.
The services have also made improvements. For example, the Navy has
increased the number of mandatory hours of personal financial
management training and uses mobile financial management teams to
train financial specialists, including in geographically remote regions
where there are no financial educators to provide training. The services
also provide financial planning information on their Web sites.

As shown in table 3, the 2000 DOD survey showed that an estimated
61 percent of drilling unit members did not know whether financial
counseling and management education services were available, and
16 percent did not think these services were available. DOD’s 2002 spouse
survey showed that about 76 percent of spouses did not use the military’s
financial information and counseling services, although it is unclear why
they did not. Although DOD has identified challenges in the service
personal financial management programs, it has not developed plans to
provide outreach to reservists and their spouses. A DOD official from the
Office of the Deputy Under Secretary of Defense for Military Community


Page 31                            GAO-03-1004 Reserve Personnel Compensation
and Family Policy said that little attention has been placed on extending
personal financial management programs to the reserve population. In a
2002 report to Congress,49 DOD stated, “The services should improve
access to personal financial management information by Reserve forces.”
The DOD report also stated that most personal financial management
training “does not adequately provide support to spouses.” The Army
noted that “increasing spouse participation is not easy and requires
significant marketing and leadership support.” The Air Force and the
Marine Corps specifically identified the lack of spousal outreach as a gap
in their programs. The services also recognize a need to improve
marketing of financial management programs to reservists and their
spouses. Two services—the Army and the Air Force—cited lack of
resources, including dedicated personal financial management personnel,
as a challenge to increasing access to and awareness of personal financial
management programs.

In addition, while DOD has assessed the financial well-being of the active
duty force, it has not conducted such assessments of reservists. Our
review of DOD survey data showed that reservists reported having many
of the same financial problems as their active duty counterparts.50 For
instance, about 20 percent of reservists and 19 percent of active duty
personnel characterized their family’s financial condition as “in over your
head” or “tough to make ends meet but keeping your head above water.”
However, a higher percentage of reservists reported having such financial
difficulties as bouncing checks, receiving a letter of indebtedness, and
falling behind in paying rent or mortgage, than did their active duty
counterparts. For example, 12 percent of reservists fell behind in paying
rent or mortgage compared with 3 percent of active duty members. In
addition, while DOD has found a link between financial problems and
readiness in the active component, it has not assessed the impact of
reservists’ financial problems on mission readiness.




49
  In 2001, Congress expressed concern that the military departments were not providing
sufficient personal financial management training and that when personal financial
problems occurred, the services were not providing adequate supervision to ensure that
servicemembers and their families regained financial security. Due to these concerns,
Congress directed DOD to review personal financial management programs.
H. Rpt. 107-194.
50
 We compared responses to identical questions included in DOD’s 1999 Survey of Active
Duty Members and the 2000 Reserve Component Survey.




Page 32                                   GAO-03-1004 Reserve Personnel Compensation
                          Reservists’ family members are eligible for TRICARE when reservists have
DOD Has Not Fully         been activated for 31 days or more, and a number of recent improvements
Assessed the Need for     have been made to reserve family health benefits. These improvements
                          include earlier access to certain benefits, expanded options, higher
Expansion of              reimbursement rates for nonnetwork physicians, and efforts to improve
TRICARE to                outreach. Reserve families may choose to use TRICARE when reservists
                          are activated or remain under civilian health insurance coverage. Our prior
Nonactivated              work showed that despite having access to TRICARE, most reservists with
Reservists                civilian health insurance had opted to retain their civilian health care
                          coverage for their families during periods of activation. To further expand
                          reservists and their family members’ access to health care, Congress is
                          considering legislation to offer military health care coverage to reservists
                          and their families when members are not on active duty. However, DOD
                          has not fully assessed the need for or ramifications of this proposal. For
                          example, DOD does not know the impact this proposal would have on
                          recruiting and retention, the effects on active duty personnel, the extent
                          reservists and their families might participate in such a program, or the
                          impact on the TRICARE system. Cost estimates range up to $5.1 billion a
                          year.


Improvements to Reserve   When activated for a contingency operation, reservists and their family
Family Health Benefits    members are eligible for health care benefits under TRICARE, DOD’s
                          managed health care program. TRICARE offers beneficiaries three health
                          care options: Prime, Standard, and Extra. TRICARE Prime is similar to a
                          private HMO plan and does not require enrollment fees or copayments.
                          TRICARE Standard, a fee-for-service program, and TRICARE Extra, a
                          preferred provider option, require copayments and annual deductibles.
                          None of these three options require reservists to pay a premium. Benefits
                          under TRICARE are provided at more than 500 military treatment facilities
                          worldwide, through a network of TRICARE-authorized civilian providers,
                          or through nonnetwork physicians who will accept TRICARE
                          reimbursement rates.

                          Reservists who are activated for 30 days or less are entitled to receive
                          medical care for injuries and illnesses incurred while on duty. In addition,
                          Congress requires the Army to monitor the health status of those
                          designated as early-deploying reservists by providing annual medical and
                          dental screenings, selected dental treatment, and—for those over age 40—
                          physical examinations every 2 years. Those under age 40 are required to
                          undergo a physical examination once every 5 years. For its early-deploying
                          reservists, the Army conducts and pays for physical and dental
                          examinations and selected dental treatment at military treatment facilities


                          Page 33                             GAO-03-1004 Reserve Personnel Compensation
or pays civilian physicians and dentists to provide these services.
Reservists who are placed on active duty orders for 31 days or more are
automatically enrolled in TRICARE Prime and receive most care at a
military treatment facility. Family members of reservists who are activated
for 31 days or more may obtain coverage under TRICARE Prime, Standard,
or Extra. Family members who participate in Prime obtain care either at a
military treatment facility or through a network provider. Under Standard
or Extra, beneficiaries may use either a network provider or a nonnetwork
physician who will accept TRICARE rates. Upon release from active duty
that extended for at least 30 days, reservists and their family members are
entitled to continue their TRICARE benefits for 60 days or 120 days,
depending on the reservists’ cumulative active duty service time.
Reservists and their dependents may also elect to purchase extended
health care coverage for 3 months at a time for a maximum of up to either
18 months or 3 years under the Continued Health Care Benefit Program.

Legislation passed in December 2002 (P.L. 107-314, sec. 702) 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. In March 2003, DOD altered
TRICARE policy such that all family members of reservists activated for
31 days or more are eligible for TRICARE Prime. In conjunction with this
change, DOD announced a change in the eligibility of reserve families for
TRICARE Prime Remote for Active Duty Family Members.51 DOD stated
that a legislative provision of the program that required a family member
to “reside with” the servicemember would be interpreted as meaning that
eligible family members resided with the servicemember before the
servicemember left for their home station, mobilization site, or
deployment location, and the family members continue to reside there.

Under DOD authorities in the National Defense Authorization Acts for
2000 and 2001, DOD instituted several 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



51
  TRICARE Prime Remote for Active Duty Family Members provides reserve component
families with access to civilian health care providers when the servicemember and family
reside more than 50 miles, or a 1-hour commute, from a military medical treatment facility.




Page 34                                    GAO-03-1004 Reserve Personnel Compensation
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. In addition, DOD may pay a nonnetwork physician up to
15 percent more than the current TRICARE rate.

About 40 percent of the problems reservists have reported relate to
understanding TRICARE’s benefits and obtaining assistance when
questions or problems arose. Because these problems could be reduced
through improved education about TRICARE’s benefits and better
assistance while navigating the TRICARE system, we recommended in
September 2002 that DOD ensure that reservists, as part of their ongoing
readiness training, receive information and training on health care
coverage available to them and their dependents when mobilized and
provide TRICARE assistance during mobilizations targeted to the needs of
reservists and their dependents.52 DOD has added information for
reservists to its TRICARE Web site and, in response to our
recommendation, has begun to implement a TRICARE reserve
communications plan aimed at outreach and education of reservists and
their families.

The TRICARE Web site is a robust source of information on DOD’s health
care benefits. The Web site contains information on all TRICARE
programs, TRICARE eligibility requirements, briefing and brochure
information, location of military treatment facilities, toll free assistance
numbers, network provider locations and other general network
information, beneficiary assistance counselor information, and enrollment
information. There is also a section devoted specifically to reservists, with
information and answers to questions that reservists are likely to have.
Results from DOD’s 2000 survey showed that about 9 of every 10 reservists
had access to the Internet.

DOD has begun to implement a TRICARE communications plan to educate
reservists and their family members on available health care and dental
benefits. The plan identifies a number of tactics for improving how health
care information is delivered to reservists and their families. Under the
plan, materials are to be delivered through direct mailing campaigns, fact
sheets, brochures, working groups, and briefings. The plan also identifies


52
     GAO-02-829.




Page 35                             GAO-03-1004 Reserve Personnel Compensation
                            methods of measurement that will assist in identifying the degree
                            information is being requested and received. In March 2003, OSD
                            distributed educational materials for beneficiary counseling assistance
                            coordinators, reserve component staff, and others. In May 2003, the
                            TRICARE Management Activity established a working group to improve
                            reserve component communications.


Reservists’ Families Have   Most reservists who are not on active duty have civilian health insurance
Health Care Choices and     through either their own or their spouse’s employer. Estimates from
Challenges                  DOD’s 2000 survey showed that nearly 80 percent of reservists had health
                            care coverage when they were not on active duty and about 20 percent did
                            not. According to DOD’s 2002 survey, an estimated 90 percent of spouses
                            of activated reservists had private health insurance prior to activation, and
                            4 percent had no insurance. The other 6 percent had TRICARE coverage or
                            some combination of TRICARE and private health insurance. While DOD
                            requires activated reservists to use TRICARE for their own health care,
                            using TRICARE is an option for their dependents. During mobilization,
                            some reservists may choose to save the cost of premiums by dropping
                            civilian insurance for their dependents and relying on TRICARE, which
                            has no associated premium. However, doing so means that dependents
                            must learn the benefits and requirements of a new health plan. It also
                            means they may be unable to use the same civilian providers if these
                            providers do not participate in TRICARE networks or accept TRICARE
                            patients. Reservists’ decisions regarding health care coverage for their
                            dependents are affected by a variety of factors—whether they or their
                            spouses have civilian health coverage, the amount of support civilian
                            employers are willing to provide with health care premiums, and where
                            they and their dependents live.

                            Despite the availability of DOD health care benefits with no associated
                            premium, our prior work has shown that many reserve family members
                            elect to maintain their civilian health care insurance during mobilizations.53
                            According to estimates from DOD’s 2000 survey, about 90 percent of
                            reservists with civilian health care coverage maintained it during their
                            mobilization. Reservists we interviewed often told us that they maintained
                            this coverage to better ensure continuity of health benefits and care for
                            their dependents. The Uniformed Services Employment and
                            Reemployment Rights Act does not require employers to continue paying


                            53
                                 GAO-02-829.




                            Page 36                             GAO-03-1004 Reserve Personnel Compensation
    their share of health care premiums when mobilizations extend beyond
    30 days. However, employers continued to pay at least their portion of
    health insurance premiums beyond this 30-day period for about 80 percent
    of the reservists we contacted who maintained their employer-sponsored
    coverage. DOD’s 2002 survey of spouses of activated reservists indicated
    that only a small percentage of reserve families had to pick up the entire
    premium in order to retain the member’s civilian health care coverage
    during activation. Specifically, the survey estimated that

•   35 percent of families paid the employee share of the premium,
•   29 percent paid no additional costs because the member’s employer paid
    the full health care premium,
•   18 percent paid no additional costs because the family was covered under
    the spouse’s health care plan, and
•   8 percent paid the full health care premium.54

    Our surveys of reservists’ civilian employers also show that a high
    percentage of employers provide assistance with continued health care
    benefits for their activated reservists. Of the 183 employers of reservists in
    high tempo units who completed and returned our survey on employer
    support, 121 employers provided information on their health benefit
    policies. Of these 121 employers, 105 (88 percent) reported that they paid
    the full heath care premium or the employer share of the health care
    premium during the activation period. Of the 22 states we surveyed about
    pay and benefit policies for their activated reserve employees, 13
    (59 percent) reported that they paid the full health care premium or the
    employer share of the health care premium. Most of these states provided
    these benefits during the entire activation period.

    In our prior work, we found that many reservists who did drop their
    civilian insurance and whose dependents did use TRICARE reported
    difficulties moving into and out of the system, finding a TRICARE
    provider, establishing eligibility, understanding TRICARE benefits, and
    knowing where to go for assistance when questions and problems arose.
    While reserve and active component beneficiaries report similar
    difficulties using the TRICARE system, these difficulties are magnified for
    reservists and their dependents. For example, 75 percent of reservists live
    more than 50 miles from military treatment facilities, compared with
    5 percent of active component families. As a result, access to care at



    54
         An estimated 11 percent of the spouses did not know how much it cost.




    Page 37                                     GAO-03-1004 Reserve Personnel Compensation
                            military treatment facilities becomes more challenging for dependents of
                            reservists than their active component counterparts.

                            Reservists may also transition into and out of TRICARE several times
                            throughout a career. These transitions create additional challenges in
                            ensuring continuity of care, reestablishing eligibility in TRICARE, and
                            familiarizing or refamiliarizing themselves with the TRICARE system.
                            Reservists are also not part of the day-to-day military culture and,
                            according to DOD officials, generally have less incentive to become
                            familiar with TRICARE because it becomes important to them and their
                            families only if they are mobilized. Furthermore, when reservists are first
                            mobilized, they must accomplish many tasks in a compressed period.55 For
                            example, they must prepare for an extended absence from home, make
                            arrangements to be away from their civilian employment, obtain military
                            examinations, and ensure their families are properly registered in the
                            Defense Enrollment Eligibility Reporting System (DOD’s database system
                            maintaining benefit eligibility status). It is not surprising that many
                            reservists, when placed under condensed time frames and high stress
                            conditions, experience difficulties when transitioning to TRICARE.


DOD Has Not Assessed the    To further expand reservists and their family members’ access to health
Need for or Ramifications   care, Congress is considering legislation to offer TRICARE to reservists
of Expanding TRICARE to     when they are not on active duty.56 The legislation would entitle members
                            of the Selected Reserve and certain members of the Individual Ready
Reservists Not on Active    Reserve57 and their dependents to the same TRICARE benefits as a
Duty and Paying Health      member of the uniformed services on active duty or a dependent of such a
Insurance Premiums of       member. An enlisted reservist enrolled in the TRICARE program would
Activated Reservists        pay an annual premium of $330 for self only coverage and $560 for self and
                            family coverage, while a reserve officer would pay an annual premium of
                            $380 for self only coverage and $610 for self and family coverage. (Military
                            personnel on active duty and family members of personnel on active duty



                            55
                              OSD has established a goal of providing reservists with at least 30 days notice prior to
                            mobilization when operationally feasible. Our prior work on DOD’s mobilization process
                            found that advance notice was often not possible following the events of September 11,
                            2001.
                            56
                                 See S. 1050, amend. 696.
                            57
                              The amendment applies to a special category of Individual Ready Reserve members who
                            have volunteered to be called to active duty under Presidential Reserve Call-up authority
                            when needed.




                            Page 38                                    GAO-03-1004 Reserve Personnel Compensation
do not pay a premium for TRICARE coverage.) The legislation also would
require DOD to pay premium costs incurred by reservists who choose to
continue their civilian health care insurance coverage when activated.
DOD would cover the civilian insurance costs up to the total cost of the
reservist’s premium and would be required to pay an amount equal to
TRICARE’s average cost of providing TRICARE for self and family
coverage. Proponents have stated that the legislation (1) would recognize
an expansion of reserve roles and missions in recent years and an
increased demand placed on reservists and their families, (2) would assist
DOD in recruiting and retaining reservists, and (3) would help reservists
who opt to join TRICARE maintain continuity of their health care
coverage.

We have a number of concerns with the proposal to extend TRICARE
coverage to reservists not on active duty and their family members and to
require DOD to pay premium costs incurred by reservists who choose to
continue their civilian health care insurance coverage when activated.
First, while there has been an expansion of reserve participation in
military operations, with a dramatic increase in mobilizations to support
operations in Iraq, many reservists have deployed only once or not at all.
According to the results of DOD’s 2000 survey, only 25 percent of
reservists reported in 2000 that they had been mobilized or deployed. Of
those mobilized or deployed at least once, nearly 70 percent had
participated in only one operation. Since September 2001, DOD has called
300,000 reservists to active duty, representing one-fourth of the 1.2 million
reservists eligible for call-up. Second, DOD officials we spoke with about
the proposed legislation noted that DOD currently has not identified an
overall recruiting and retention problem in the reserves and that it was too
early to project the potential for future recruiting and retention problems
that might result from the ongoing mobilization. They also could not tell us
what effect the proposed legislation would have on the military’s ability to
recruit and retain reservists. Third, as noted previously, most reservists
activated prior to 2001 achieved continuity of care for their families by
retaining civilian health insurance during activation. However, DOD
officials said that little is known about reservists’ behavior patterns of
health care usage during mobilizations since September 2001 and that it is
difficult to project their behavior if the current proposal were approved.
According to a DOD official, it is unknown whether younger members of
the reserve force would purchase TRICARE health care coverage even at
reduced rates. In addition, a high percentage of reservists’ civilian
employers who currently pay some or all of health care premiums for
reservists during activations could discontinue providing such assistance
if DOD makes this coverage available to reservists year-round.


Page 39                             GAO-03-1004 Reserve Personnel Compensation
Other concerns with the proposed legislation have also been raised. DOD
officials said that creating greater uniformity of benefits between active
and reserve forces could have unanticipated effects on the active
component if active component members are enticed into leaving the
active component and joining the reserves. The OSD Health Affairs Policy
Director also noted that DOD could have difficulties tracking reservists’
premium costs in order to pay these costs during activation as required by
the legislative proposal. Another concern is the stress that could be placed
upon the TRICARE system. Currently, TRICARE provides care for
8.7 million beneficiaries—eligible active duty personnel, retirees, and
dependents. It is not clear to what extent reservists and their eligible
dependents would use TRICARE and the impact this could have on the
system. Beneficiary groups have described problems with access to care
from TRICARE civilian providers. In March 2003, we testified on DOD’s
oversight of the TRICARE civilian provider network, noting the problems
with assessing the network’s adequacy due to insufficient information.

In addition, controlling rising health care costs is a major concern of
DOD’s. According to a 2003 Congressional Budget Office analysis of
long-term defense spending,58 spending for military medical care, which
already makes up more than 10 percent of DOD’s operation and support
costs, is the fastest growing category of operation and support spending.
In this projection of the administration’s plans, annual medical spending
rises by 67 percent over the 2007-2020 period, from $33 billion to
$55 billion. Many of the same forces that cause national health
expenditures to rise—an increase in the volume of health care services
available and expanded use of new, high-cost drugs and procedures—
translate into higher military medical costs. In addition, retirees and their
dependents now make up a larger share of beneficiaries, increasing the
average age and costs of the people who receive health coverage through
DOD. Two reasons military medical costs are expected to rise dramatically
over the next 5 years are (1) new benefits for military retirees over age 65
(called TRICARE for Life), which had an actuarial liability estimated at
$592 billion as of September 30, 2001, and (2) a switch to an accrual
accounting system—with DOD’s budget being charged each year for the
expected costs of future benefits. DOD’s fiscal year 2003 budget for the
defense health program was $14.8 billion.




58
  Congressional Budget Office, The Long-Term Implications of Current Defense Plans
(Washington, D.C.: January 2003).




Page 40                                 GAO-03-1004 Reserve Personnel Compensation
    The Congressional Budget Office estimated that implementing the
    legislation— extending TRICARE coverage to reservists not on active duty
    and their family members and requiring DOD to pay premium costs
    incurred by reservists who choose to continue their civilian health care
    insurance coverage when activated—would cost a total of $466 million in
    2004 and $7.3 billion over 2004-2008.59

•   The Congressional Budget Office estimated that extending TRICARE
    coverage to reservists who are not on active duty would cost $393 million
    in 2004 and $7.1 billion over 2004-2008. On the basis of DOD data, the
    Congressional Budget Office estimated that the provision would apply to
    760,000 reservists after excluding 120,000 who work for the federal
    government.60 It also estimated that about 70 percent of qualified reservists
    would opt to enroll in the TRICARE program.
•   The Congressional Budget Office estimated that requiring DOD to pay
    premium costs for continued civilian health care coverage during
    activation would cost $73 million in 2004 and $155 million over 2004-2008.
    According to this estimate, the amount DOD would pay reservists would
    cover about 60 percent of the average civilian premium.61

    DOD estimated that the cost of extending TRICARE coverage to reservists
    who are not on active duty would be $5.1 billion per year. DOD’s estimate
    does not include the costs to pay the premiums of activated reservists’
    civilian health care. DOD’s estimate is significantly higher than the
    Congressional Budget Office estimate due to certain assumptions
    concerning the number of potential beneficiaries, the proportion of
    potential beneficiaries that would opt to enroll in TRICARE, and the per
    capita costs of providing care. DOD officials told us that they used
    historical cost profile data to develop their cost estimates. However, we
    did not independently verify either the DOD or the Congressional Budget
    Office cost estimate. Noting the high cost of this proposed legislation, the
    Secretary of Defense has expressed opposition to this legislation, stating
    he will recommend that the President veto the National Defense



    59
      Congressional Budget Office, Cost Estimate, S. 1050, National Defense Authorization Act
    for Fiscal Year 2004 as passed by the Senate (June 2, 2003).
    60
      Federal government employees in the reserves who are called to active duty continue to
    receive health benefits under the Federal Employee Health Benefits Program up to
    18 months.
    61
     The Congressional Budget Office projected that the average cost of self and family
    TRICARE coverage in 2004 will be $5,600.




    Page 41                                   GAO-03-1004 Reserve Personnel Compensation
              Authorization Act for Fiscal Year 2004 if a provision to expand TRICARE
              is included.


              DOD survey estimates showed income change varied considerably among
Conclusions   activated reservists, with a sizeable proportion of reservists experiencing
              income loss, but more than half experiencing no change or a gain in
              income. However, these data are questionable because it is unclear what
              survey respondents considered as income loss or gain in determining their
              financial status. For example, the number of reservists reporting income
              loss could be lower if respondents did not include the sum of their military
              pay— basic pay, special pays, allowances, and indirect compensation,
              such as health care benefits. Currently, DOD cannot determine the need
              for compensation programs to provide income protection to reservists
              because it lacks sufficient information on the scope and nature of income
              change experienced by activated reservists. More specifically, DOD lacks
              sufficient data on the magnitude of income change, the causes of income
              change, and the effects of income change on reservists’ retention
              decisions. Survey results showed that a higher percentage of reservists in
              certain groups, such as self-employed reservists and health care
              professionals, experienced greater income loss compared with reservists
              overall and that, for some, income loss or the potential for income loss is a
              significant factor in their decisions on whether to stay in the reserves. A
              number of approaches to providing income protection have been
              proposed, including an income insurance program, differential pay for
              activated federal employee reservists, and special pay for certain reserve
              physicians. Of these three, only the last is targeted at reservists who (1) fill
              critical wartime specialties, (2) experience high degrees of income loss
              when on active duty, and (3) demonstrate that income loss is a significant
              factor in their retention decisions. This is the kind of business case
              approach that we think is necessary to determine the need for income
              protection compensation programs.

              In the area of family support, DOD and the military services have taken
              steps to improve personal financial management programs. They have also
              identified challenges such as increasing reservists’ and spouses’ awareness
              of and access to personal financial management programs. However, they
              have not developed specific plans to address these identified needs.
              Further, while DOD has assessed the financial well-being of active duty
              members and linked financial well-being with mission readiness, it has not
              conducted similar assessments of the reserve force. Our review of DOD
              survey data showed that reservists reported having many of the same
              financial problems as their active duty counterparts. For instance, a higher


              Page 42                              GAO-03-1004 Reserve Personnel Compensation
                      percentage of reservists reported having such financial difficulties as
                      bouncing checks and receiving a letter of indebtedness than have their
                      active duty counterparts. Conducting these assessments would provide a
                      better understanding of financial difficulties reservists encounter and the
                      impact these difficulties have on mission readiness.

                      Recent improvements have been made to reservists and their families’
                      access to TRICARE when the member is activated. In past military
                      operations, most activated reservists retained civilian health care
                      insurance coverage for their families during the activation period. To
                      further expand access to health care benefits, legislation has been
                      proposed that would provide TRICARE benefits to reservists and their
                      family members when they are not on active duty. Furthermore, the
                      legislation would require DOD to pay premium costs incurred by reservists
                      who choose to continue civilian health care insurance coverage when
                      activated. While proponents have cited a number of reasons for this
                      legislation, concerns have also been raised. We believe these concerns
                      may outweigh the perceived benefits and costs of the legislation.
                      Currently, DOD lacks sufficient information to determine the need for the
                      expanded health care benefits offered in the legislation and the
                      implications of the proposal for reservists, active duty members, and the
                      military health care system. DOD officials further stated that currently no
                      problem has been demonstrated in overall reserve recruiting and
                      retention. DOD has not yet identified problems reservists and their
                      families have experienced with access to health care during mobilizations
                      since September 11, 2001, such as problems in maintaining continuity of
                      health care; the causes of these problems; and their effects on readiness,
                      recruiting, and retention.


                      We recommend that the Secretary of Defense direct the Under Secretary
Recommendations for   of Defense for Personnel and Readiness to determine the need for
Executive Action      compensation programs aimed at addressing reservists’ income loss
                      during periods of active duty by obtaining more complete information on
                      the magnitude of income change, the causes of income change, and the
                      effects of income change on reserve retention. At a minimum, these efforts
                      should be designed to identify reservists who (1) fill critical wartime
                      specialties, (2) experience high degrees of income loss when on active
                      duty, and (3) demonstrate that income loss is a significant factor in their
                      retention decisions. We further recommend that, on the basis of this
                      information, the Secretary of Defense develop targeted compensation
                      programs, as appropriate, to retain these reservists in the armed forces.



                      Page 43                             GAO-03-1004 Reserve Personnel Compensation
                     We recommend that the Secretary of Defense direct the Secretaries of the
                     Army, the Air Force, and the Navy and the Commandant of the Marine
                     Corps to develop specific plans for improving reservists’ and their spouses’
                     awareness of and access to personal financial management programs. In
                     developing these plans, the military services, in conjunction with the
                     Under Secretary of Defense for Personnel and Readiness, should assess
                     the financial well-being of reservists and determine whether reservists’
                     financial problems affect mission readiness.

                     We recommend that the Secretary of Defense direct the Under Secretary
                     of Defense for Personnel and Readiness to assess problems reservists have
                     experienced since the mobilizations following the events of September 11,
                     2001, in maintaining continuity of health care; the causes of these
                     problems; and their effects on readiness, recruiting, and retention. As part
                     of this assessment, DOD should evaluate the ramifications of extending
                     TRICARE coverage to reservists not on active duty and their family
                     members as well as paying premium costs incurred by reservists who
                     choose to continue their civilian health care insurance coverage when
                     activated. DOD should also evaluate the potential impact of extending
                     such coverage on the retention of active duty personnel and on the
                     TRICARE system.


                     In order to provide DOD an opportunity to determine the need for and
Matters for          ramifications of expanding TRICARE, Congress may wish to delay a
Congressional        decision on the legislative proposal to offer TRICARE to reservists and
                     their families when members are not on active duty. Furthermore,
Consideration        Congress may wish to direct the Secretary of Defense to assess and report
                     on reserve health care benefits as we have recommended in this report.


                     In written comments on a draft of this report, DOD concurred with our
Agency Comments      recommendations. Regarding our recommendation that DOD develop
and Our Evaluation   targeted compensation programs to retain reservists in the armed forces,
                     DOD stated that the department must exercise concern about paying its
                     part-time force more than its full-time force when undertaking similar
                     duties. As discussed in our report, we agree that equity between active
                     component and reserve component personnel is one factor that must be
                     considered in compensation programs that address income loss.
                     Nevertheless, we believe that DOD could target such compensation
                     programs appropriately by gathering more complete information on
                     reservists’ income loss and applying the three criteria included in our
                     recommendation.


                     Page 44                            GAO-03-1004 Reserve Personnel Compensation
On the basis of DOD’s concurrence with our recommendation concerning
reserve health care benefits, we have added matters for congressional
consideration concerning the legislative proposal to extend TRICARE
benefits to nonactivated reservists and their families. We believe the
proposed expansion of TRICARE deserves scrutiny due to its high costs,
the current lack of information on the need for this expansion of
TRICARE, and its potential ramifications. An assessment of this proposed
expansion of TRICARE is likely to be a complex and time-consuming
undertaking.

DOD’s comments are reprinted in appendix VI.


We are sending copies of this report to the Secretary of Defense, the Under
Secretary of Defense for Personnel and Readiness; the Secretaries of the
Army, the Air Force, and the Navy; and the Commandant of the Marine
Corps. We will also make copies available to appropriate congressional
committees and to other interested parties on request. In addition, the
report will be available at no charge at the GAO Web site at
http://www.gao.gov.

If you or your staff have any questions concerning this report, please call
me at (202) 512-5559. Major contributors to this report are listed in
appendix VII.




Derek B. Stewart
Director, Defense Capabilities and Management




Page 45                             GAO-03-1004 Reserve Personnel Compensation
                Appendix I: Scope and Methodology
Appendix I: Scope and Methodology


                To evaluate information on income change reported by reservists when
                activated for a military operation, we obtained and analyzed the results of
                the Department of Defense’s (DOD) 2000 Reserve Component Survey and
                2002 Survey of Spouses of Activated National Guard and Reserve
                Component Members. We stratified the results of these surveys by pay
                grade group, reserve component, and for certain other groups such as type
                of employers. Further, we discussed the extent of income change with
                officials from the following offices or commands:

            •   Office of the Assistant Secretary of Defense for Reserve Affairs.1
            •   Office of the Deputy Under Secretary of Defense for Military Personnel
                Policy, Office of Military Compensation.
            •   National Guard Bureau.
            •   National Committee for Employer Support of the Guard and Reserve.
            •   Service Reserve Forces Policy Committees.
            •   Office of the Assistant Secretary of the Army for Manpower and Reserve
                Affairs.
            •   U.S. Army Reserve Command, Fort McPherson, Georgia.
            •   Office of the Chief of Army Reserve.
            •   U.S. Army National Guard.
            •   U.S. Air Force Reserve.
            •   U.S. Air National Guard.
            •   U.S. Naval Reserve.
            •   U.S. Marine Corps Reserve, Quantico, Virginia.

                We reviewed relevant reports from the DOD Office of the Inspector
                General and the U.S. Army Audit Agency and our prior GAO reports and
                testimony. We discussed with an official from the Congressional Budget
                Office the estimated cost of a pay differential for federal employees who
                are called to active duty. We did not verify the methodology used to
                calculate this estimate. We analyzed current compensation and benefits
                policies for activated federal employees from the Office of Personnel
                Management. Further, we surveyed officials from 22 states between May
                and July 2003 and obtained their compensation and benefits policies to
                gain the perspective of state governments’ financial assistance and
                benefits for state employee reservists called to federal active duty. To
                determine the 22 states, we chose the 11 states with the highest total
                population of reservists in the state, the 5 states with the smallest total


                1
                 Unless otherwise noted, the officials listed in this scope and methodology appendix have
                their offices in the Pentagon or at other locations in the Washington, D.C., metropolitan
                area.




                Page 46                                   GAO-03-1004 Reserve Personnel Compensation
Appendix I: Scope and Methodology




reservist population, and 6 states in the middle. We obtained a standard set
of information regarding each state’s policy. We also updated information
on employer compensation policies from our June 2002 report on
employer support of the National Guard and the Reserve.2 We had
surveyed 359 employers of reservists in high tempo units between
November 2001 and March 2002. Due to concerns about mail
contaminated with anthrax, not all completed surveys were obtained
before issuance of the employer support report. We updated the data with
an additional 72 surveys for a total of 183 completed surveys. Employers
were not randomly selected; therefore, the results are not projectable to
all employers. We also reviewed data from the Defense Manpower Data
Center regarding Army Reserve Medical Corps authorized and actual fill
rates for critical medical specialties and gains and losses from the Army
Selected Reserve and the Army Individual Ready Reserve from 1991 to
2002 to review an Army proposal for special deployment pay. We reviewed
DOD surveys on Army Reserve physicians’ experiences during
mobilizations, on a rotation program to address earlier concerns about the
length of deployments, and on associated catastrophic income loss. We
also contacted military aid associations, including the Army Emergency
Relief, the Navy-Marine Corps Relief Society, and the Air Force Aid
Society, to obtain and review information on emergency loans and
financial assistance provided to activated reservists on active duty.

To evaluate reserve families’ readiness and awareness and use of family
support programs, we reviewed DOD family policy regulations. We also
reviewed DOD Web sites and other materials designed to inform
servicemembers and their families about benefits. To obtain further insight
into reservists’ awareness and access to family support programs, we
reviewed service personal financial management regulations and policies
to determine the extent to which these programs are extended to
reservists and their family members. To evaluate the financial well-being
of reservists, we reviewed RAND and other DOD studies. We also
compared the results of the 2000 DOD survey with the 1999 DOD Survey of
Active Duty Personnel. Specifically, we met with and obtained information
from DOD officials from the Office of the Assistant Secretary of Defense
for Reserve Affairs, the Office of the Deputy Under Secretary of Defense
for Military Community and Family Policy, the military services, and
reserve components. We also met with representatives from the National




2
    GAO-02-608.




Page 47                             GAO-03-1004 Reserve Personnel Compensation
Appendix I: Scope and Methodology




Military Family Association and the JumpStart Coalition for Financial
Literacy to discuss challenges reservists face when called to active duty.

To evaluate a legislative proposal for DOD to offer TRICARE to reservists
and their families when members are not on active duty, we reviewed
relevant GAO reports. We discussed health care benefits and eligibility
criteria for reservists and their family members and recent improvements
to military health care with DOD health care officials. We obtained cost
estimates of the legislative proposal from the Congressional Budget Office
and DOD, but we did not verify the methodology used to calculate the
estimates. During our survey of officials from 22 states, we obtained their
respective health care benefits policies to gain the perspective of state
governments’ health benefits for state employee reservists called to
federal active duty. We met with and obtained information from DOD
officials within the Office of the Assistant Secretary of Defense for
Reserve Affairs, Office of the Assistant Secretary of Defense for Health
Affairs, and the TRICARE Management Activity.

We completed our work for this report from March to July 2003 in
accordance with generally accepted government auditing standards.




Page 48                             GAO-03-1004 Reserve Personnel Compensation
                    Appendix II: DOD Surveys of Reservists and
Appendix II: DOD Surveys of Reservists and
                    Spouses



Spouses

                    This appendix describes DOD’s 2000 survey of reserve personnel and 2002
                    survey of spouses of activated reserve personnel. We did not participate in
                    the design or collection of the results.


                    The 2000 Survey of Reserve Component Personnel is a survey of Selected
2000 Survey of      Reserve members of the reserve components sponsored by the Office of
Reserve Component   the Assistant Secretary of Defense for Reserve Affairs. The study
                    population consisted of 728,347 members below flag or general officer
Personnel           rank and having at least 6 months of reserve duty service as of
                    August 2000. The sample consisted of 74,487 members, and eligible
                    respondents returned 35,223 questionnaires for a response rate of
                    47 percent. DOD officials believe that the response rate for the survey is as
                    good as other similar surveys that they have conducted. However, there is
                    a potential for bias in the estimates to the extent that respondents and
                    nonrespondents had different opinions on the questions asked. Data were
                    weighted by the Defense Manpower Data Center to allow the study to
                    provide estimates for the study population or subpopulations. This was a
                    mail-out survey, with the data collection period running from August 16,
                    2000, through December 29, 2000.

                    Because this is a probability sample based on random selections, the
                    sample is only one of a large number of samples that might have been
                    drawn. Since each sample could have provided different estimates,
                    confidence in the precision of the particular sample’s results is expressed
                    as a 95 percent confidence interval (e.g., plus or minus 4 percentage
                    points). This is the interval that would contain the actual population value
                    for 95 percent of the samples that could have been drawn. As a result, we
                    are 95 percent confident that each of the confidence intervals in this
                    report will include the true values in the study population. All percentage
                    estimates from the survey review have sampling errors of plus or minus
                    5 percentage points or less, unless otherwise noted. We used the weighting
                    factors and the sampling error methodology provided by the Defense
                    Manpower Data Center to develop 2000 estimates and sampling error
                    estimates. In some cases, we used the estimates developed by the Defense
                    Manpower Data Center.




                    Page 49                                  GAO-03-1004 Reserve Personnel Compensation
                       Appendix II: DOD Surveys of Reservists and
                       Spouses




                       The 2002 survey of spouses was sponsored by the Office of the Assistant
2002 Survey of         Secretary of Defense for Reserve Affairs to assess the needs and concerns
Spouses of Activated   of National Guard and Reserve families prior to and during activation, to
                       assess the status of family support initiatives, and to gather data from
National Guard and     spouses of members who have been activated since September 11, 2001.
Reserve Component      The study population for this survey consisted of 29,673 spouses of
                       reservists activated for Operations Noble Eagle, Enduring Freedom,
Members                Bosnia, Southwest Asia, or Southern Watch. The survey was a stratified
                       random sample consisting of 7,658 spouses. Eligible respondents returned
                       3,874 completed surveys for a response rate of 51 percent. DOD officials
                       believe that the response rate for the survey is as good as other similar
                       surveys that they have conducted. However, there is a potential for bias in
                       the estimates to the extent that respondents and nonrespondents had
                       different opinions on the questions asked.

                       As with the 2000 survey, the 2002 spouse survey is also a probability
                       sample based on random selections, so the sample is only one of a large
                       number of samples that might have been drawn. For this survey, we
                       express confidence in the precision of our estimates as a 95 percent
                       confidence interval. All percentage estimates from the 2002 survey have
                       sampling errors of plus or minus 5 percentage points or less, unless
                       otherwise noted. To produce estimates of the study population, the sample
                       data were weighted to reflect the sample design and to adjust for
                       nonresponse. Because weighting factors were not provided to us for use
                       with the data, we computed weighting factors as the ratio of the
                       population to respondents for each stratum.




                       Page 50                                  GAO-03-1004 Reserve Personnel Compensation
               Appendix III: Policies and Protections That
Appendix III: Policies and Protections That
               May Help Mitigate Reservists’ Financial
               Hardship During Activation


May Help Mitigate Reservists’ Financial
Hardship During Activation
               This appendix discusses existing pay policies and protections, as well as
               emergency aid services, that may help mitigate reservists’ financial
               hardship during activation.

               While basic military compensation, in constant dollars, remained fairly
               steady during most of the 1990s, it has increased in recent years.1 As a
               result, reservists activated today are earning more in the military than they
               did just a few years ago. (See fig. 2.) For example, an enlisted member in
               pay grade E-4 who is married with no other dependents would earn $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.




               1
                Basic military compensation consists of basic pay, basic allowance for housing, basic
               allowance for subsistence, and the federal tax advantage. It does not include special and
               incentive pays, other allowances, and the value of fringe benefits such as health care and
               retirement.




               Page 51                                       GAO-03-1004 Reserve Personnel Compensation
                                        Appendix III: Policies and Protections That
                                        May Help Mitigate Reservists’ Financial
                                        Hardship During Activation




Figure 2: Annual Basic Military Compensation for Selected Pay Grades (Fiscal Years 1990-2003)




                                        Note: GAO analysis.


                                        In addition to increases in basic military compensation, Congress in
                                        April 2003 increased family separation allowance from $100 to $250 per
                                        month and imminent danger pay from $150 to $225 per month. These
                                        increases expire September 30, 2003.2 The Senate and House are also




                                        2
                                            Public Law 108-11, section 1316, April 16, 2003.




                                        Page 52                                       GAO-03-1004 Reserve Personnel Compensation
    Appendix III: Policies and Protections That
    May Help Mitigate Reservists’ Financial
    Hardship During Activation




    considering a new special pay of up to $1,000 per month that would
    compensate servicemembers for frequent or lengthy deployments.3

    In addition to these increases in pay, other pay policies and protections
    may help to mitigate reservists’ financial hardship during deployment. For
    example:

•   The Soldiers’ and Sailors’ Civil Relief Act caps debt interest rates at
    6 percent annually for debts incurred prior to activation and provides
    many other financial protections if members can show that their ability to
    pay is materially affected by being activated. Legislation currently before
    Congress would amend the act to expand certain protections for activated
    servicemembers.4
•   Income that servicemembers earn while mobilized in combat zones is tax-
    free. The President designates combat zones. Military pay received while
    in these combat zones is excluded from gross income and not subject to
    federal income tax. Legislation currently before Congress would expand
    combat zone tax exemptions to any designated contingency operation.5
•   For Iraqi Freedom, Noble Eagle, and Enduring Freedom, DOD has
    authorized reservists to receive both a housing allowance and per diem for
    their entire period of activation, up to 2 years.
•   Military Reservist Economic Injury Disaster Loans up to $1.5 million are
    available through the Small Business Administration to help small
    businesses meet necessary operating expenses and debt payments until a




    3
     Senate Bill 1050, the National Defense Authorization Act for Fiscal Year 2004, would
    require payment of up to $1,000 each month during which a member has been (1) deployed
    for at least 401 days out of the preceding 730 days; (2) deployed continuously for more than
    191 days; or (3) in the case of a reservist called or ordered to active duty for a period of
    more than 30 days, if this period begins within 1 year after the date on which the member
    was released from previous active-duty service lasting more than 30 days. The House
    version of the act contains similar language. This high tempo allowance would replace a
    $100 per diem allowance authorized for servicemembers deployed for more than 400 days
    in a 720-day period. However, DOD has suspended the payment of this per diem.
    4
     H.R. 100, the Servicemembers Civil Relief Act, passed the House of Representatives by a
    vote of 425 to 0 in May 2003. As approved by the House, the bill would delay eviction
    proceedings for at least 3 months if rent does not exceed $1,700 and the servicemember
    invokes the act; guarantee the payment of premiums for a servicemember’s life insurance
    policy for policies up to $250,000; and give protection to a servicemember who has fallen
    behind on car payments by requiring the lessor to obtain a court order before repossessing
    the car.
    5
     H.R. 1307, the Armed Forces Tax Fairness Act of 2003, passed the House of
    Representatives in March 2003.




    Page 53                                       GAO-03-1004 Reserve Personnel Compensation
    Appendix III: Policies and Protections That
    May Help Mitigate Reservists’ Financial
    Hardship During Activation




    key employee—including the owner—is able to return from active duty to
    the business and normal operations resume.

    Servicemembers who are experiencing financial hardship can also obtain
    emergency assistance in the form of interest-free loans or grants from
    private aid organizations to pay for basic living expenses such as food or
    rent during activation. The Army Emergency Relief, the Air Force Aid
    Society, and the Navy-Marine Corps Relief Society are nonprofit charitable
    organizations that provide financial, educational, and other assistance to
    servicemembers and their families who are in need. These organizations
    provide assistance to active component members, reservists, and retirees.

•   In 2002, the Navy-Marine Corps Relief Society distributed approximately
    $41 million to almost 51,000 individuals, including $1.5 million provided
    due to inadequate income to meet basic living expenses such as rent or
    mortgage, food, and utilities. The Navy-Marine Corps Relief Society did not
    track separately the assistance it provided to reservists.
•   The Air Force Aid Society distributed over $24 million in 2002 to more
    than 34,000 individuals. Of this amount, $600,000 was provided to
    reservists. The Aid Society reported significant increases in reservists’
    receiving emergency assistance and phone card use. About 140 reservists
    received emergency assistance for basic living expenses because they
    experienced loss of civilian pay or military pay problems.
•   Army Emergency Relief distributed $41 million in 2002 to more than
    56,000 people. At least $850,000 went to about 900 reservists for
    emergency travel assistance, vehicle repairs, rent or mortgage assistance,
    and as an income supplement while waiting for delayed military pay when
    called to active duty.




    Page 54                                       GAO-03-1004 Reserve Personnel Compensation
               Appendix IV: Selected States’ Policies on
Appendix IV: Selected States’ Policies on
               Compensation for Activated Employees



Compensation for Activated Employees

               This appendix displays the results of our survey of 22 states to obtain their
               policies regarding pay and benefits offered to state employees who are
               called to federal active duty. It describes the military leave policies and
               financial assistance programs such as state pay differentials for activated
               state employees who experience income loss as a result of federal
               activation. It also describes each state’s policy on the continuation of
               dependent health care coverage and other reported benefits. To determine
               the 22 states, we chose the 11 states with the highest total population of
               reservists in the state, the 5 states with the smallest total reservist
               population, and 6 states in the middle. We conducted our survey of the
               22 states between April and July 2003.

               In summary, we found that 19 of the 22 states surveyed offer pay
               differentials to employees who are on military leave without pay and can
               document a loss of income. Of these 19 states, 16 are mandated under
               state law or executive order to provide financial assistance, while
               3 states—Colorado, Georgia, and Texas—allow the individual state
               agencies to offer pay differentials at the agencies’ discretion. The other
               three states do not offer pay differentials to activated employees on
               unpaid leave. The manner in which states calculate the amount of the pay
               differential varies. For example, 7 states calculate the amount of the pay
               differential as the difference between an employee’s civilian salary and
               basic military pay, not including military special pays and allowances. In
               contrast, 10 states include military special pays, allowances, or both in the
               calculation, which can lower the differential amount that the state pays to
               its activated employees. Georgia allows state agencies to formulate their
               own differential calculation, while Pennsylvania offers a flat rate monthly
               stipend to all activated employees. States offering financial assistance do
               so for a period of time ranging from 90 days in Colorado to the duration of
               the activation in states like Florida and Alabama. We did not find a
               correlation between the size of a state’s reservist population and the type
               or extent of financial assistance the state offers. The results of our survey
               are presented in table 4.




               Page 55                                     GAO-03-1004 Reserve Personnel Compensation
                                           Appendix IV: Selected States’ Policies on
                                           Compensation for Activated Employees




Table 4: Income Assistance, Military Leave, and Health Benefits Offered to State Employees Called to Federal Active Duty

                          Income assistance
                          offered to activated       Military leave and            Status of dependent         Status of other
                          state employees on         compensation policy           health care coverage        reported state benefits
State (Reserve            military leave without     for state employees on        for state employees on      for employees on
           a
population)               pay                        federal active duty           federal active duty         federal active dutyb
Alabama                   State pay differential     Alabama began                 The state continues to      Employees in the state’s
(22,255)                                             implementing a pay            contribute its portion of   retirement system
                                                     differential policy for       an employee’s               continue to receive
                                                     activated state               dependent health care       retirement credit while on
                                                     employees in July 2002.       premium for the duration    military leave without
                                                     It is active for the          of the activation.          pay, unless they receive
                                                     duration of the war on                                    credit for the time in
                                                     terrorism and retroactive                                 another public retirement
                                                     to September 11, 2001.                                    system, other than the
                                                     The state offers 21                                       federal social security
                                                     working days of paid                                      system. Employees who
                                                     military leave each year,                                 used accrued leave while
                                                     after which activated                                     on active duty for the war
                                                     employees are placed on                                   on terrorism are eligible
                                                     military leave without                                    to reclaim the expended
                                                     pay. Employees                                            leave. Activated state
                                                     activated for 30 or more                                  employees do not
                                                     consecutive days and                                      continue to accrue leave
                                                     who are on military leave                                 while on leave without
                                                     without pay are eligible to                               pay.
                                                     receive a pay differential
                                                     if their state pay exceeds
                                                     their base military pay,
                                                     excluding all special pays
                                                     and allowances.
                                                     Employees must submit
                                                     a military Leave and
                                                     Earnings Statement each
                                                     month to receive the
                                                     differential. Activated
                                                     employees receive the
                                                     differential for the
                                                     duration of their
                                                     activation.




                                           Page 56                                      GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and           Status of dependent           Status of other
                 state employees on         compensation policy          health care coverage          reported state benefits
State (Reserve   military leave without     for state employees on       for state employees on        for employees on
           a
population)      pay                        federal active duty          federal active duty           federal active dutyb
Alaska           Not available              Alaska offers its            The state suspends its        Employees in the state’s
(3,650)                                     employees 16.5 working       employees’ dependent          retirement system
                                            days of paid military        health coverage when          continue to receive
                                            leave each year for          they are called to active     retirement credit while on
                                            reserve training, but it     military duty. Activated      active military duty.
                                            does not offer paid          employees may continue
                                            military leave for active    their dependent health
                                            duty.                        care coverage under the
                                                                         Consolidated Omnibus
                                                                         Budget Reconciliation
                                                                         Act (COBRA) in which
                                                                         they must pay the full
                                                                         premium plus a 2 percent
                                                                         administrative fee.
Arizona          State pay differential     Arizona enacted a pay        Employees on military         Upon return from active
(11,041)                                    differential policy for      leave without pay may         duty, the employing
                                            activated state              continue to participate in    agency pays the
                                            employees in May 2002.       the health benefit plan for   employee’s and
                                            The policy is retroactive    a maximum of 6 months         employer’s share of
                                            to September 11, 2001,       by paying both the state      retirement contributions
                                            and expires on June 30,      and employee                  accrued during the period
                                            2004. The state offers 60    contributions. After 6        of active duty.
                                            working days of paid         months, they are eligible
                                            military leave for every 2   for COBRA.
                                            consecutive years that a
                                            reservist is employed by
                                            the state. Employees
                                            who are on military leave
                                            without pay and have
                                            exhausted all annual and
                                            military leave balances
                                            are eligible to receive a
                                            pay differential if their
                                            state pay, including all
                                            other compensation
                                            except overtime, exceeds
                                            the sum of their base
                                            military pay, special
                                            pays, and allowances.
                                            Employees must submit
                                            each military Leave and
                                            Earnings Statement
                                            received during the
                                            period of active duty to
                                            receive the pay
                                            differential. During any
                                            consecutive
                                            5-year period, activated
                                            employees may receive a




                                  Page 57                                     GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and            Status of dependent          Status of other
                 state employees on         compensation policy           health care coverage         reported state benefits
State (Reserve   military leave without     for state employees on        for state employees on       for employees on
           a
population)      pay                        federal active duty           federal active duty          federal active dutyb
                                            pay differential one time
                                            for up to 270 days.
Arkansas         Not available              Arkansas offers its           The state continues to       The state continues to
(12,446)                                    employees called to duty      contribute a portion of an   contribute its portion to
                                            in emergency situations       employee’s dependent         any life or disability
                                            30 days of paid military      health care premium for      insurance policies. State
                                            leave, after which            the duration of an           employees continue to
                                            activated employees go        employee’s activation.       accumulate retirement
                                            on military leave without                                  credit while on active
                                            pay.                                                       duty.
California       State pay differential     California enacted a pay      While on military leave      State employees
(57,441)                                    differential policy for       during war or national       continue to accrue
                                            activated state               emergency, employees         retirement credits while
                                            employees in February         continue to receive state    on military leave without
                                            2002. The policy is active    paid health, dental, and     pay. They also continue
                                            for the war on terrorism      vision care benefits for     to accrue annual leave,
                                            and is retroactive to         the duration of the          vacation, and sick leave
                                            September 11, 2001. It        activation or until the      for up to 6 months.
                                            expires December 31,          policy expires in
                                            2003. The state offers 30     December 2003.
                                            days of paid military
                                            leave each year, after
                                            which activated
                                            employees are placed on
                                            military leave without
                                            pay. Employees are
                                            eligible to receive a pay
                                            differential if their state
                                            pay exceeds the sum of
                                            their base military pay,
                                            special pays, and
                                            allowances. Employees
                                            must prepare a
                                            worksheet to receive the
                                            pay differential and must
                                            provide a copy of their
                                            military Leave and
                                            Earnings Statement and
                                            military orders to their
                                            supervisor. Employees
                                            are eligible to receive the
                                            pay differential until the
                                            policy expires in
                                            December 2003.




                                  Page 58                                      GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and            Status of dependent         Status of other
                 state employees on         compensation policy           health care coverage        reported state benefits
State (Reserve   military leave without     for state employees on        for state employees on      for employees on
           a
population)      pay                        federal active duty           federal active duty         federal active dutyb
Colorado         Pay differential at agency Colorado enacted a pay        The state continues to      The state does not offer
(13,524)         discretion                 differential policy for       contribute the employer     any additional benefits
                                            activated state               portion of an employee’s    while state employees
                                            employees in December         dependent health care       are on military leave
                                            2001. The policy is           coverage as long as the     without pay.
                                            retroactive to                employee is in a pay
                                            September 11, 2001, and       status. An employee may
                                            is active for military        remain in a pay status by
                                            operations designated in      using at least 1 day of
                                            the war against terrorism.    annual leave each month
                                            The policy authorizes         while on military leave.
                                            state agencies to provide     Otherwise, an employee
                                            a pay differential to their   can continue group
                                            employees at the              health insurance benefits
                                            agencies’ discretion. The     by paying the entire
                                            state offers 15 working       premium amount.
                                            days of paid military
                                            leave each year.
                                            Following the 15 days of
                                            paid leave, agencies may
                                            grant their employees
                                            administrative leave,
                                            during which they receive
                                            a pay differential if their
                                            state pay exceeds the
                                            sum of their base military
                                            pay, special pays, and
                                            allowances. Employees
                                            may receive
                                            administrative leave for
                                            up to 90 days. According
                                            to a state official, all
                                            Colorado state agencies
                                            were offering a pay
                                            differential to their
                                            employees as of June
                                            12, 2003. Employees
                                            must furnish proof of their
                                            military pay, such as a
                                            military Leave and
                                            Earnings Statement, to
                                            receive the pay
                                            differential.
Florida          State pay differential     Florida enacted a pay         The state continues to      Employees may choose
(30,477)                                    differential policy for       provide all health          to continue all other
                                            activated state               insurance and to            benefit programs by
                                            employees in September        contribute its portion of   paying their portion of the
                                            2001. The policy applies      an employee’s               premiums for the
                                            to state employees called     dependent health care       duration of the activation.




                                  Page 59                                      GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and           Status of dependent          Status of other
                 state employees on         compensation policy          health care coverage         reported state benefits
State (Reserve   military leave without     for state employees on       for state employees on       for employees on
           a
population)      pay                        federal active duty          federal active duty          federal active dutyb
                                            to active duty for the war   premium for the duration     Employees on military
                                            on terrorism. The state      of the activation.           leave receive full
                                            offers 30 days of paid                                    retirement credit for their
                                            military leave per year.                                  period of military service
                                            After the first 30 days,                                  upon their return to
                                            employees are eligible                                    employment. They also
                                            for a pay differential if                                 accrue full annual and
                                            their state pay exceeds                                   sick leave and holiday
                                            their base military pay,                                  pay.
                                            excluding special pays
                                            and allowances.
                                            Employees must provide
                                            copies of their military
                                            Leave and Earnings
                                            Statements to their
                                            supervisors to receive
                                            the pay differential.
                                            Employees receive the
                                            pay differential for the
                                            duration of their
                                            activation.
Georgia          Pay differential at agency Georgia authorized state     The state continues to       The state suspends
(25,123)         discretion                 agencies to offer a pay      contribute its portion of    retirement benefits while
                                            differential to their        an employee’s                the employees are on
                                            activated state              dependent health care        military leave without
                                            employees at the             premium for up to 18         pay. The activated
                                            agencies’ discretion in      months if the employee       employees have the
                                            July 2002. The state         was activated on an          option of paying their
                                            offers 18 working days of    emergency basis. After       premiums retroactively
                                            paid military leave each     18 months, employees         upon return from active
                                            year, after which            may retain health            duty to reclaim lost
                                            employees are placed on      insurance for their family   credits. They do not
                                            military leave without       by paying 102 percent of     accrue any kind of leave
                                            pay. State agencies have     the premium as specified     while on leave without
                                            the discretion to offer a    under the COBRA              pay.
                                            pay differential and         provisions.
                                            independently determine
                                            the calculation of the pay
                                            differential. A pay
                                            differential is the
                                            difference between state
                                            government and military
                                            salaries.
Illinois         State pay differential     Illinois enacted a pay       The state continues to       The state continues to
(24,382)                                    differential policy for      contribute its portion of    pay an employee’s full
                                            activated state              an employee’s                retirement coverage
                                            employees in February        dependent health care        while on military leave
                                            2003. While on military      premium for the duration     without pay. Employees
                                            leave, activated             of the activation.           also continue to accrue
                                                  l            li ibl                                       ti    d i kl



                                  Page 60                                     GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and            Status of dependent         Status of other
                 state employees on         compensation policy           health care coverage        reported state benefits
State (Reserve   military leave without     for state employees on        for state employees on      for employees on
           a
population)      pay                        federal active duty           federal active duty         federal active dutyb
                                            employees are eligible                                    vacation and sick leave.
                                            for a pay differential if
                                            their state pay exceeds
                                            their base military pay,
                                            excluding special pays
                                            and allowances.
                                            Employees must submit
                                            a copy of their military
                                            Leave and Earnings
                                            Statement to their
                                            employing agency to
                                            receive the pay
                                            differential. Employees
                                            receive the pay
                                            differential for the
                                            duration of their
                                            activation.
Iowa             Not available              The state offers its          The state suspends its      Employees continue to
(12,593)                                    employees 30 days of          contributions for           accrue retirement credit
                                            paid military leave each      dependent health care       while on military leave
                                            year, after which             coverage for employees      without pay.
                                            activated employees go        on military leave without
                                            on military leave without     pay. Employees may
                                            pay.                          continue their dependent
                                                                          health care coverage
                                                                          under COBRA.
Nevada           State pay differential     Nevada enacted a pay          The state allows its        The state offers two
(3,939)                                     differential policy for       employees to continue       retirement policies.
                                            activated state               dependent health care       Under one policy, the
                                            employees in October          coverage for the duration   employee can elect to
                                            2001. The state offers 15     of the activation if the    pay for a portion of the
                                            working days of paid          employees pay the full      premium and the state
                                            administrative leave each     premium.                    contributes the
                                            year for employees                                        remainder. Under the
                                            called to active military                                 second option, the state
                                            duty. Employees are then                                  pays the entire premium,
                                            placed on civil leave at                                  but the employee either
                                            reduced pay and receive                                   receives less pay or
                                            a pay differential if their                               forfeits the equivalent
                                            state pay exceeds the                                     basic salary and/or cost-
                                            sum of their base military                                of living increases.
                                            pay, special pays, and                                    According to a state
                                            allowances except for                                     official, the state
                                            clothing. To receive the                                  encourages its
                                            differential, employees                                   employees who are
                                            must provide their                                        called to active duty to
                                            supervisor copies of their                                transition their retirement
                                            deployment orders and                                     coverage to the second
                                            military Leave and                                        option, which allows




                                  Page 61                                      GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and              Status of dependent             Status of other
                 state employees on         compensation policy             health care coverage            reported state benefits
State (Reserve   military leave without     for state employees on          for state employees on          for employees on
           a
population)      pay                        federal active duty             federal active duty             federal active dutyb
                                            Earnings Statements,                                            them to continue to
                                            among other forms, each                                         accumulate retirement
                                            month they are on active                                        credit while on active
                                            duty. Employees receive                                         duty.
                                            the pay differential for the
                                            duration of their
                                            activation.
New Hampshire    State pay differential     New Hampshire enacted           The state pays the full         State employees
(3,617)                                     a pay differential policy       premium for all state           continue to accrue
                                            for activated full-time,        employees’ dependent            retirement credit while on
                                            permanent state                 health care coverage and        military leave without
                                            employees in March              continues to pay the full       pay.
                                            2003. The policy applies        premium for the duration
                                            only to the conflict in Iraq.   of their military activation.
                                            The state offers 15 days
                                            of paid military leave
                                            each federal fiscal year
                                            to eligible employees
                                            called to active military
                                            duty, after which
                                            employees are placed on
                                            military leave without
                                            pay. Employees receive
                                            a pay differential if their
                                            state pay exceeds their
                                            base military pay,
                                            excluding special pays
                                            and allowances. To
                                            receive the differential,
                                            employees must submit
                                            an application and a
                                            military Leave and
                                            Earnings Statement to
                                            the Adjutant General’s
                                            office. They receive the
                                            pay differential for up to 1
                                            year after activation
                                            beginning March 21,
                                            2003.
New Jersey       State pay differential     New Jersey enacted a            The state continues to          The state continues to
(15,891)                                    pay differential policy for     contribute its portion of       contribute its portion to
                                            activated state                 an employee’s                   an employee’s life
                                            employees in February           dependent health care           insurance and pension
                                            2003. The policy applies        premium for the duration        coverage during federal
                                            to the global war on            of the activation.              active duty.
                                            terrorism, armed conflict
                                            in Iraq, or heightened
                                            tensions with North
                                            Korea. The state also




                                  Page 62                                        GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and            Status of dependent         Status of other
                 state employees on         compensation policy           health care coverage        reported state benefits
State (Reserve   military leave without     for state employees on        for state employees on      for employees on
           a
population)      pay                        federal active duty           federal active duty         federal active dutyb
                                            authorized pay
                                            differentials for
                                            employees called to
                                            active service to support
                                            the Bosnia and Kosovo
                                            missions. The state
                                            offers 90 days of paid
                                            military leave to state
                                            employees serving in the
                                            National Guard and 30
                                            days of paid leave to
                                            members of the
                                            Reserves. After
                                            employees exhaust their
                                            paid military leave they
                                            are placed on leave
                                            without pay, but without
                                            loss of time, during which
                                            they receive a pay
                                            differential if their state
                                            pay exceeds their base
                                            military pay, excluding
                                            special pays and
                                            allowances. Employees
                                            must submit their orders
                                            to their employing
                                            agency to receive the
                                            pay differential.
                                            Employees remain on
                                            partial military leave for
                                            the duration of their time
                                            on active duty.
New York         State pay differential     New York enacted a pay        The state offers its        Employees enrolled in
(30,997)                                    differential policy for       employees on military       the M/C Life Insurance
                                            activated state               leave at reduced pay        Program may continue
                                            employees in September        continued health care       their life insurance
                                            2000. The policy expires      coverage for their          coverage by paying their
                                            in December 2004. The         dependents at no cost for   portion of the premiums.
                                            state offers 44 working       the duration of the
                                            days or 60 days               employees’ activation.
                                            (whichever is longer) of
                                            paid military leave each
                                            year or continuous period
                                            of absence that spans
                                            more than 1 calendar
                                            year, after which
                                            activated employees are
                                            placed on military leave
                                            at reduced pay.
                                            Employees receive a pay



                                  Page 63                                      GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and              Status of dependent          Status of other
                 state employees on         compensation policy             health care coverage         reported state benefits
State (Reserve   military leave without     for state employees on          for state employees on       for employees on
           a
population)      pay                        federal active duty             federal active duty          federal active dutyb
                                            differential if their state
                                            pay exceeds the sum of
                                            their base military pay,
                                            basic allowance for
                                            housing, and basic
                                            allowance for
                                            subsistence. They must
                                            submit a military Leave
                                            and Earnings Statement
                                            to their employing
                                            agency to receive the
                                            pay differential. Activated
                                            employees receive the
                                            differential until the policy
                                            expires.
North Carolina   State pay differential     North Carolina extended         The state continues to       Activated state
(20,697)                                    its pay differential policy     contribute its portion of    employees continue to
                                            for involuntarily activated     an employee’s                receive retirement
                                            state employees to              dependent health care        service credit while on
                                            include all reservists in       premium for 30 days          military leave without pay
                                            September 2001. The             from the date of active      and to accrue vacation
                                            state offers 30 days of         service. After 30 days, an   and sick leave.
                                            paid military leave for         employee may choose to
                                            each period of                  continue dependent
                                            involuntary service, after      coverage in the State
                                            which activated                 Health Plan by paying
                                            employees are placed on         the full premium.
                                            military leave without
                                            pay. Employees receive
                                            a pay differential if their
                                            state pay exceeds their
                                            base military pay,
                                            excluding special pays
                                            and allowances. To
                                            receive the differential,
                                            employees must provide
                                            their military Leave and
                                            Earnings Statements to
                                            their employing agency.
                                            They receive the pay
                                            differential for the
                                            duration of their
                                            activation.
Ohio             State pay differential     Ohio enacted a pay              The state continues to       Employees continue to
(28,080)                                    differential policy for         contribute its portion of    earn retirement credit
                                            activated state                 an employee’s                while on active military
                                            employees in 1991. The          dependent health care        duty for up to 10 years if
                                            state offers 22 working         coverage for the duration    they meet certain state
                                            days of paid military           of the employee’s time       employment criteria.
                                            l          h         ft               ti d t



                                  Page 64                                        GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and            Status of dependent          Status of other
                 state employees on         compensation policy           health care coverage         reported state benefits
State (Reserve   military leave without     for state employees on        for state employees on       for employees on
           a
population)      pay                        federal active duty           federal active duty          federal active dutyb
                                            leave each year, after        on active duty.
                                            which activated
                                            employees are placed on
                                            military leave without
                                            pay. Employees receive
                                            a pay differential if their
                                            state pay exceeds the
                                            sum of their base military
                                            pay, special pays, and
                                            allowances. They must
                                            apply for the pay
                                            differential on a pay
                                            period-by-pay period
                                            basis and submit each
                                            military Leave and
                                            Earnings Statement they
                                            receive while on active
                                            duty to their employing
                                            agency. They receive the
                                            pay differential for the
                                            duration of their
                                            activation.
Oklahoma         State pay differential     Oklahoma enacted a pay        To ensure continuation of    Activated employees
(15,502)                                    differential for activated    state-sponsored              may continue to pay into
                                            state employees in May        dependent health care        their retirement
                                            2003. The policy is           coverage, activated          accounts.
                                            retroactive to September      employees may choose
                                            11, 2001. The state           to use annual leave each
                                            offers 20 days of paid        month to remain in pay
                                            military leave each           status. Employees
                                            federal fiscal year, after    continue to pay their
                                            which activated               portion of the premium if
                                            employees are placed on       they remain in pay
                                            military leave without        status, and the amount of
                                            pay. State agencies must      state pay received for the
                                            grant their employees on      used annual leave is
                                            military leave without pay    deducted from the pay
                                            a pay differential for        differential payments.
                                            active service on or after    The state suspends its
                                            September 11, 2001,           employees’ dependent
                                            during the period             health benefits when they
                                            Operation Enduring            are on military leave
                                            Freedom is in effect, if      without pay. Employees
                                            the employees’ state pay      may retain health
                                            exceeds the sum of their      insurance for their family
                                            base military pay and         by paying 102 percent of
                                            housing allowance.            the premium as specified
                                            Agencies may require          under COBRA
                                            employees to submit a         provisions.
                                            military Leave and



                                  Page 65                                      GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated        Military leave and            Status of dependent          Status of other
                 state employees on          compensation policy           health care coverage         reported state benefits
State (Reserve   military leave without      for state employees on        for state employees on       for employees on
           a
population)      pay                         federal active duty           federal active duty          federal active dutyb
                                             Earnings Statement to
                                             receive the differential.
                                             Employees receive the
                                             pay differential for the
                                             duration of their
                                             activation.
Pennsylvania     Stipend                     Pennsylvania began            The state pays the full      Employees retain
(35,189)                                     offering stipends to all      premium for all state        retirement and
                                             activated permanent           employees’ dependent         supplemental health
                                             state employees in            health care coverage and     benefits if they continue
                                             September 2001. The           continues to pay the full    to pay their portion of the
                                             state offers 30 days of       premium for the duration     premium.
                                             paid military leave, after    of state employees’
                                             which activated               military activation.
                                             employees are placed on
                                             military leave without
                                             pay. All employees on
                                             military leave without pay
                                             receive a $500 monthly
                                             stipend, regardless of
                                             whether they gain or lose
                                             income as a result of
                                             being called to federal
                                             active duty. Activated
                                             employees must show
                                             their military orders to
                                             their employing agency
                                             to receive military leave.
                                             Employees receive the
                                             stipend for the duration of
                                             their activation.
Texas            Pay differential at agency The governor of Texas          The state will continue to   Employees will continue
(46,922)         discretion                 encouraged agencies to         contribute its portion of    to accrue full retirement
                                            provide pay differentials      employees’ dependent         credit by receiving at
                                            to federally activated         health care coverage for     least 1 hour of state pay
                                            employees in November          employees who are still      during each month of
                                            2001. The state offers 15      in a pay status beginning    active military service by
                                            working days of paid           September 2003.              using any combination of
                                            military leave each            Activated employees can      paid leave beginning
                                            federal fiscal year, after     remain on a pay status       September 2003.
                                            which employees are            by using as little as 1
                                            placed on military leave       hour of paid leave
                                            without pay. Agency            (compensatory, overtime,
                                            heads may grant                vacation, etc.) each
                                            federally activated            month they are on
                                            employees on leave             military leave. If
                                            without pay a pay              employees are unable or
                                            differential if their state    choose not to remain in a
                                            pay exceeds the sum of         pay status, they may




                                  Page 66                                       GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and            Status of dependent        Status of other
                 state employees on         compensation policy           health care coverage       reported state benefits
State (Reserve   military leave without     for state employees on        for state employees on     for employees on
           a
population)      pay                        federal active duty           federal active duty        federal active dutyb
                                            their base military pay,      retain dependent health
                                            special pays, and             insurance coverage for
                                            allowances.                   up to 12 months by
                                            A new law requires state      paying the full premium.
                                            agencies to provide a
                                            pay differential to their
                                            employees in September
                                            2003. The employing
                                            agency requests a copy
                                            of the employee’s military
                                            Leave and Earnings
                                            Statement to determine
                                            the differential. Under the
                                            new law, employees can
                                            receive the pay
                                            differential up to 5 years.
Vermont          State pay differential     Vermont enacted a pay         The state continues to     The state does not offer
(3,824)                                     differential policy for       contribute the employer    any additional benefits
                                            activated state               portion of an activated    while state employees
                                            employees in 2001. The        employee’s dependent       are on military leave
                                            policy expires June 2005.     health care coverage for   without pay.
                                            The state offers 11           1 month after the
                                            working days of paid          employee’s activation.
                                            military leave each           After 1 month,
                                            federal fiscal year to its    employees may continue
                                            employees, after which        their dependent health
                                            they are placed on            care coverage by paying
                                            military leave without        the full premium.
                                            pay. Employees receive
                                            a pay differential if their
                                            state pay exceeds the
                                            sum of their base military
                                            pay, special pays, and
                                            allowances. Employees
                                            must provide a military
                                            Leave and Earnings
                                            Statement to their
                                            employing agency to
                                            receive the differential.
                                            Employees can receive
                                            the pay differential for a
                                            period of up to 6 months
                                            from their date of
                                            activation.




                                  Page 67                                     GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                 Income assistance
                 offered to activated       Military leave and             Status of dependent         Status of other
                 state employees on         compensation policy            health care coverage        reported state benefits
State (Reserve   military leave without     for state employees on         for state employees on      for employees on
           a
population)      pay                        federal active duty            federal active duty         federal active dutyb
Virginia         State pay differential     Virginia enacted a pay         The state continues to      Employees continue to
(22,458)                                    differential policy for        contribute the employer     receive retirement credit
                                            activated classified state     portion of an activated     while on active duty if
                                            employees in March             employee’s dependent        they receive an
                                            2002. The state offers 15      health care coverage and    honorable discharge. The
                                            working days of paid           the additional 2 percent    state continues to pay
                                            military leave each            administrative fee under    basic life insurance for up
                                            federal fiscal year to its     COBRA for up to 18          to 2 years from the date
                                            employees, after which         months. After 18 months,    military leave without pay
                                            they are placed on             employees may convert       begins. Optional life
                                            military leave without         their dependent health      insurance can be
                                            pay. Employees receive         care to nongroup            continued if the
                                            a pay differential if their    coverage.                   employee continues to
                                            state pay exceeds the                                      pay the premiums.
                                            sum of their base military
                                            pay, special pays, and
                                            allowances. Employees
                                            must provide a military
                                            Leave and Earnings
                                            Statement to their
                                            employing agency to
                                            receive the differential.
                                            Employees may receive
                                            the pay differential for the
                                            duration of their
                                            activation.
Wyoming          State pay differential     Wyoming enacted a pay          The state continues to      The state continues to
(2,344)                                     differential policy for        contribute its portion of   match any type of pay
                                            activated state                an employee’s               deferrals that activated
                                            employees in October           dependent health care       employees make to their
                                            2001. The policy expires       coverage for the duration   deferred compensation
                                            in October 2005. The           of the activation.          plans. Employees
                                            state offers up to 15                                      continue to accrue
                                            calendar days of paid                                      vacation leave while on
                                            military leave in any                                      active military duty. Life
                                            calendar year, after                                       insurance continues if
                                            which employees are                                        employees continue to
                                            placed on military leave                                   pay their portion of the
                                            without pay. While on                                      premium.
                                            military leave without
                                            pay, activated employees
                                            are eligible for a pay
                                            differential if their state
                                            pay exceeds their base
                                            military pay, excluding
                                            special pays and
                                            allowances. Employees
                                            must submit a copy of
                                            each military Leave and




                                  Page 68                                       GAO-03-1004 Reserve Personnel Compensation
                                  Appendix IV: Selected States’ Policies on
                                  Compensation for Activated Employees




                  Income assistance
                  offered to activated       Military leave and             Status of dependent            Status of other
                  state employees on         compensation policy            health care coverage           reported state benefits
 State (Reserve   military leave without     for state employees on         for state employees on         for employees on
            a
 population)      pay                        federal active duty            federal active duty            federal active dutyb
                                             Earnings Statement they
                                             receive while on active
                                             military duty to their
                                             employing agency to
                                             receive the pay
                                             differential. Employees
                                             receive the pay
                                             differential for the
                                             duration of their
                                             activation.
Source: GAO.
                                  a
                                   Reserve population denotes the total number of reserve members residing in the state as of April
                                  2003 and includes, but is not limited to, state employees who are reservists. The population figures
                                  exclude Active Guard/Reserve members.
                                  b
                                   Information in this column reflects responses to an open-ended question regarding state benefits,
                                  other than health coverage, for state employees activated for federal duty and may not necessarily
                                  describe the full range of benefits offered to state employees on federal active duty.




                                  Page 69                                         GAO-03-1004 Reserve Personnel Compensation
                                           Appendix V: Preactivation Activities of
Appendix V: Preactivation Activities of    Spouses of Activated Reservists



Spouses of Activated Reservists

                                           This appendix provides an analysis of data from the 2002 DOD survey of
                                           spouses of activated reservists concerning preactivation activities of
                                           spouses. Based on spouses’ self-reported feelings of being prepared or
                                           unprepared upon receiving a notice of activation for the military member,
                                           we compared their responses to questions concerning preactivation
                                           activities—volunteering or participating in unit family readiness programs
                                           or groups, attending preactivation briefings, receiving preactivation
                                           materials. We also compared their responses to questions concerning
                                           other factors that could affect preparedness, such as being assigned a
                                           military point of contact and the amount of advance notice received prior
                                           to activation. Finally, we compared their responses to a question
                                           concerning how well they have coped with the activation. The results of
                                           our analysis are presented in table 5.

Table 5: Comparison of Spouses’ Preparedness to Preactivation Activities and Other Factors

Numbers in percent
                                             Spouses who felt       Spouses who felt      Spouses who felt
                                              prepared or very     unprepared or very     neither prepared
Question                                             prepared            unprepared        nor unprepared           All spouses
Are you a volunteer with the family
readiness program or a member of your
spouse’s unit’s Family Readiness Group?
Yes                                                           13                     12                   9                  11
No                                                            87                     88                  91                  89
Have you attended any briefings to help
you and your family prepare for your
spouse’s order to active duty?
Yes, in the past year                                         14                     10                  11                  12
Have you attended any briefings to help
you and your family prepare for your
spouse’s order to active duty?
Yes, upon notification of this order to
active duty                                                   24                     30                  28                  27
Did you receive any preactivation
materials such as checklist or booklet …
to help you and your family prepare?
Yes, in the past year                                         28                     19                  22                  23
Did you receive any preactivation
materials such as checklist or booklet …
to help you and your family prepare?
Yes, upon notification of this order to
active duty                                                   44                     43                  43                  43




                                           Page 70                                   GAO-03-1004 Reserve Personnel Compensation
                                                             Appendix V: Preactivation Activities of
                                                             Spouses of Activated Reservists




 Numbers in percent
                                                                 Spouses who felt             Spouses who felt       Spouses who felt
                                                                  prepared or very           unprepared or very      neither prepared
 Question                                                                prepared                  unprepared         nor unprepared           All spouses
 Before the military member reported for
 active duty, did you have a military point
 of contact … to help you deal with
 emergency issues that might arise during
 the activation?
 Yes                                                                                  48                        36                  41                  42
 No                                                                                   52                        64                  59                  58
 How far in advance did your family
 receive notice of the activation before the
 military member reported for active duty?
 24 hours or less                                                                     14                        28                  22                  21
 2-6 days                                                                             24                        29                  27                  27
 1-2 weeks                                                                            23                        20                  22                  22
 2-4 weeks                                                                            20                        15                  18                  18
 more than 1 month                                                                    18                        8                   11                  13
 Overall, how well have you coped with
 this activation?
 Very well                                                                            37                        6                   15                  20
 Well                                                                                 47                        35                  44                  42
 Neither poorly nor well                                                              13                        28                  30                  23
 Poorly                                                                                 2                       21                   9                  10
 Very poorly                                                                            1                       10                   2                   4
Source: GAO analysis of DOD 2002 Survey of Spouses of Activated National Guard and Reserve Component Members.

                                                             Note: Percentages may not add to 100 due to rounding.




                                                             Page 71                                            GAO-03-1004 Reserve Personnel Compensation
             Appendix VI: Comments from the Department of Defense
Appendix VI: Comments from the
Department of Defense




             Page 72                                GAO-03-1004 Reserve Personnel Compensation
                Appendix VI: Comments from the Department of Defense




Now on p. 43.




Now on p. 43.




Now on p. 44.




                Page 73                                GAO-03-1004 Reserve Personnel Compensation
                Appendix VI: Comments from the Department of Defense




Now on p. 44.




Now on p. 44.




                Page 74                                GAO-03-1004 Reserve Personnel Compensation
                            Appendix VII: Staff Acknowledgments
Appendix VII: Staff Acknowledgments


                  Kelly Baumgartner, Brenda S. Farrell, Thomas W. Gosling, Krislin M.
Acknowledgments   Nalwalk, Jennifer R. Popovic, Mark F. Ramage, Loch-Hung Leo Sze, and
                  Nicole Volchko made significant contributions to this report.




(350343)
                  Page 75                              GAO-03-1004 Reserve Personnel Compensation
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