DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR 1989 THURSDAY, MARCH 24, 1988 U.S. SENATE, MANPOWER AND PERSONNEL SUBCOMMITTEE, Washington, DC. RECRUITING, RETENTION, AND COMPENSATION The committee met in open session, pursuant to notice, at 10:3 a.m., in room SR-222, Russell Senate Office Building, Senator Joh Glenn (chairman) presiding. Present: Senators Glenn, Symms, and McCain. Staff present: Patrick A. Tucker, minority counsel; David S Lyles, Frederick F.Y. Pang, and Patricia L. Watson, professiona staff members; Debra A. Rice, staff assistant. Also present: Phillip P. Upschulte and Milton D. Beach, assis ants to Senator Glenn; Jeffrey B. Subko, assistant to Senator Exor Richard Roberts and Terrence M. Lynch, assistants to Senato Shelby; Samuel J. Routson, assistant to Senator Symms; and Ar thony H. Cordesman, assistant to Secretary McCain. OPENING STATEMENT OF SENATOR JOHN GLENN, CHAIRMAN Senator GLENN. Before proceeding, I am sorry we had to set th hearing back a little bit this morning because we had other com mitments here and a classified meeting of the committee over i the other building. We had to get on with that first this morning and we had to set this hearing back a little bit. It was either tha or cancel it, and I did not want to do that. We do have a great deal of material to cover, and we want t make sure we do a thorough job of covering it. I hope it does no turn out that we are not able to do all of it this morning. If we ar unable to get through everything this morning, we might have t schedule a follow-up hearing. I hate to do that. I know you hav busy schedules, as do I; however, we want to make sure we get e erything covered. The Subcommittee on Manpower and Personnel meets this morn ing to continue its review of the manpower portion of the revise Department of Defense budget authorization request for fiscal yea 1989. The first part of the hearing today will focus on the recruiting retention and compensation programs of the military services. The second part will focus on reserve and guard programs. (95) Last year, the Congress authorized a 2-year budget for partment of Defense. Now, in the area of compensation an fits, the Congress authorized increases in basic pay and all enhancement and certain special incentive pay, and exten certain temporary personnel management and compensa thorities. The one big disappointment for me last year was our ina give our military personnel a larger pay raise for fiscal ye The Senate took a 4-percent pay raise to conference v House. Unfortunately, we came out with a 3-percent raise pay and a 3.5-percent raise in basic allowance for quart basic allowance for subsistence. As it turned out, in order to avoid a Gramm-Rudman se tion, the Congress and the administration agreed dur budget summit, as it was called, just before the holidays, t the military pay raise to 2 percent, the same as for Feder ians. This was a tough choice, and I did not want to make tha I fought against it, as a matter of fact, in my participation group. Given the budget deficit pressure, however, there w we could do to turn it around. Now, I have noted and I agree that Secretary Carlucci the right thing when he put the 4.3-percent pay raise for personnel in the amended DOD budget for fiscal year 198 top of Defense priorities. I certainly support the requested and have discussed that with him as well as with some of y I think it is essential that we keep the 11-percent gap military and private sector pay stable. We do not want to widen out even further. The current gap of 11 percent is est we have had since we went to an All Volunteer Force. In my view, the only reason we have not seen a lot of tary personnel voting with their feet to get out is that been able to put in some very meaningful enhancements in ed pay and benefits that have improved the quality of life tary personnel. However, the current pay gap and the cap propriations in the military personnel accounts last year the freeze on variable housing allowance put us on a risk which we must be wary of. With regard to recruiting and retention, I continue to the success of the Department of Defense in sustaining dented levels of recruit quality as measured by enlistment egory and high school degree holders. I also note that retention levels continue to provide the ence needed to generally meet the petty officer and non sioned officer requirements of the military services. I know there are some shortfalls, and you will discuss t of pilot retention which is a problem which we will have to grips with. I understand the Department of Defense has set aside s million for a pilot bonus for the Air Force. We have not ceived that proposed legislation that would provide this a so I will be interested in hearing from our witnesses this on why the bonus is needed and how it is to be structured, the way we are going to go or what you are going to propos So at this point, I would see if Senator McCain has any comments to make before we go ahead and proceed with the hearing. Senator MCCAIN. No, Mr. Chairman. I would just like to echo your concern about the action that the House Budget Committee took last Friday. We had all anticipated an attack on the pay raise, and at the same time every witness that has testified before this committee, both civilian and military, have placed that pay raise as their highest priority for services. I find it terribly disappointing and I think one that we are going to have to do battle over. I hope that we will be able to prevail in not only that but the pilot retention issue. I will save my questions and comments for after the witnesses. Senator GLENN. Thank you. We welcome our witnesses. At the table we have Mr. Grant Green, the Assistant Secretary of Defense for Force Management and Personnel. He is accompanied by Lt. Gen. Allen Ono, the Deputy Chief of Staff for Personnel of the Army; Vice Adm. Leon Edney, the Chief of Naval Personnel; Lt. Gen. Thomas J. Hickey, the Deputy Chief of Staff for Personnel of the Air Force; and Lt. Gen. John I. Hudson, the Deputy Chief of Staff for Personnel of the Marine Corps. Gentlemen, I believe I am correct that each of you has submitted a written statement that is to be, I believe, included in the record. Was that the agreement you all made on that? If anyone disagrees and wants to deliver their statement for whatever reason, we would be glad to entertain that, but it was my understanding that each of you had agreed to include your statement in the record because of our tight schedule this morning. I would ask you each, then, to summarize your statements so we can then turn to the questions and the discussion period this morning. Mr. Green, will you proceed? STATEMENT OF HON. GRANT S. GREEN, ASSISTANT SECRETARY PERSONNEL Mr. GREEN. Thank you, Mr. Chairman, Senator McCain. I appreciate this opportunity to appear again before you, this time to focus on military recruiting, retention and compensation. As you mentioned, you have the prepared statement which covers the detailed achievements of the services during fiscal year 1987 and lays out some of the challenges we face in the year ahead. My comments this morning will highlight quickly only my most pressing concerns. I hope we will be able to discuss these and others in responding to your questions. In fiscal year 1987, the services have continued to attract and keep top quality people in the Active and the Reserve Forces. You can be proud of our military members and of the progra have supported through the years that have made this happ The first signs are surfacing, however, suggesting that th year to be particularly mindful of the compensation progr policies we must have to sustain this superior force. One key indicator of the deteriorating outlook is t number of high school graduates we recruited declined 16 during the first quarter of fiscal year 1988 when compare same period last fiscal year. The recruiting effort is getting cantly more difficult. Likewise, while retention continues at desirable levels ov peaked in 1982. Since then, the trends are down, and a look tinuation patterns shows retention is falling off more qu the more highly technical skills. I am concerned. For example, in fiscal year 1987, the Marine Corps achie 93 percent of their first term reenlistment goal, and the N short of its objectives for both second term and career p cers, many of whom must serve extended tours of sea du from their families. These initial danger signs underscore the single most u quests in the defense manpower program for fiscal year 19 is, a 4.3-percent pay raise for our people in uniform. I can summarize the importance of the pay raise w thoughts: First, adequate compensation. As you mention Chairman, a foundation of the volunteer force, competit has eroded because military raises have been outpaced by in the private sector by 11 percent since 1982. Without con pay, the number and magnitude of retention problems f can be expected to grow. Second and, I believe, equally as important, we need with clear and decisive action the value we place on servic military people. Arresting the trend toward an ever-wide will communicate positively that all members of the milita married, single, enlisted, officer, on or behind the line, a tial to combat readiness. Compounding the military pay gap is the decline in the variable housing allowance. That has seriously hurt people who reside off base. Even though housing costs have 8.5 percent since fiscal year 1986, overall VHA rates ha frozen. Combined housing allowances now fall short of member costs by 22 percent instead of the 15 percent Con tended when it restructured the military housing allowa gram in 1985. To keep member's absorption of housing costs from w we have included funding in the fiscal year 1989 budget re match the growth in housing costs over the past year. As you mentioned, some specific officer communities nee tion. Pilot losses in the Navy and the Air Force are incre unacceptable levels. While the Army and the Marine Corp have, or anticipate, near term problems, the Navy is alrea well over 1,000 pilots, and the Air Force projects a shortage pilots by fiscal year 1993. yesterday and we understand was sent yesterday. If not, it should be here today. Senator GLENN. If it is here, we have not yet read it. Mr. GREEN. The legislative proposal lays out a pilot bonus tha includes flexibility so that the service Secretaries and the Secre tary of Defense can tailor the program to specific service needs The bonus is one of several initiatives we are exploring to dea with this problem, but we need it now to stem an existing problem before it gets totally out of control. Retention of nuclear officers in the Navy is also of great concern The current submarine community shortage of 516 officers in the lieutenant commander through captain grades represents a short fall of 28 percent. The nuclear surface community is only marginal ly better off. We are hopeful that expansion of shore duty opportunities, more post-graduate education spaces, and increase in nuclear officer con tinuation pay from $9,000 to $10,000, and, with congressional sup port, an increase in submarine pay and an extension of the spo promotion authority will cause substantial improvements in the current situation. Shortfalls of medical personnel are also a matter of considerable concern to us, as I know they are to you. We are working with the Assistant Secretary of Defense for Health Affairs to attack this problem at every level: recruiting; retention; compensation for Active and Reserve components. We need to succeed here. The quantity and quality of health care both in peacetime and war is obviously of the highest priority. The real challenges we face now in attracting and retaining the people we need are likely to become more severe in the years ahead. The problems are significant, and there is some risk. While it is an acceptable risk in my judgment, the Department may fall short of some of its goals. The proposed program and funding requests for fiscal year 1989 represent a balanced mix; recruiting resources and incentives de signed to appeal to different segments of the market, and compen sation to retain those who are critical to our mission today. The only real growth in the request is to improve medical re cruiting incentives for the Reserve components. Although the joint recruitment advertising program showed real growth, $7.2 million it only partially offsets the reductions totaling more than $15 mil lion in service advertising purchasing power. Overall, the Department's outlay for advertising is down 25 per cent compared to the fiscal year 1986 program. The remainder of our request represents real declines after the effects of this infla tion are discounted, balancing the increasingly difficult recruiting and retention environment against reduced force structure require ments. While the pay raise and specific concerns I have discussed are important, we need your support for other key initiatives in the military personnel program as well. Selective reenlistment bonus special and incentive pays, full funding for recruiting and advertis ing programs, and improved reimbursement for family moving ex penses. |