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MOAA says budget requires balance, end to sequestration

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February 24, 2014

Alexandria, Va. — In response to today’s Pentagon budget submission, Military Officers Association of America (MOAA) President Norb Ryan said, “MOAA understands the difficult predicament the Pentagon now faces. We agree with the Service Chiefs regarding balancing the force and ending the harmful effects of sequestration. Not doing so, the risk becomes unacceptable. However, sustaining benefits and pay raises comparable to those of average Americans is a fundamental tenet of the All-Volunteer Force. Past experience capping military raises below private sector pay growth shows once pay raise caps begin, they continue until they undermine retention and readiness. When extended pay raise caps hurt retention in the 1970s, Congress had to enact two double-digit raises to correct that.”

The Pentagon’s FY 2015 budget proposes a 1% pay raise cap (vs. the 1.8% indicated by the ECI) for the second straight year; the two lowest pay raises in 50 years. The budget submission proposes cuts to pay and benefits for the currently serving force in order to slow the growth of personnel costs. Primary features of the plan include:

  • Capping pay below the Employment Cost Index (ECI) for second straight year
  • Reducing commissary savings for uniformed service families
  • Reversing DOD action to eliminate out-of-pocket housing costs
  • Cutting end strength significantly
  • Changing TRICARE deductibles, co-pays, and new fees

MOAA has serious concerns in two major areas: pay and benefit changes and abrupt end strength reductions.

In a meeting with executives from Military and Veterans Services organizations at the Pentagon today,  Secretary Hagel stated spending on pay and benefits for service members has “risen about 40 percent more than growth in the private sector” since 2001. 

“What’s not stated,” Ryan said, “is Congress worked over the past decade to fix the 13.5% pay gap, resulting in retention problems caused by repeatedly capping military raises below private sector pay growth in the 1980s and ‘90s. Congress also had to eliminate the 18% out-of-pocket housing costs military members and families were faced with in the late ‘90s. So cost growth since 2000-2001 was essential to keep the previous cutbacks from breaking the career force.”

Recent changes to pay and benefits have already started to bend the curve of personnel costs downward. These changes include TRICARE Prime increases, pharmacy changes requiring mail order use, end strength reductions, pay caps, and future entrants’ retirement reductions.

“When you combine the two pay caps (FY14 and FY15) and the 5% out-of-pocket housing cut proposal, an E-5 (Army Sergeant) with 10 years’ service and a family of four will see an annual loss of $1,400,” Ryan said. “An 03 (Army Captain) would lose $2,100 by the end of FY2015. What’s unknown is the overall financial impact to members and their families when you add these pay and housing reductions to the proposals to cut back on the commissary benefit and change military health care. We believe that Congress should hear first from the Military Compensation and Retirement Modernization Commission tasked to take a holistic view of pay and benefits rather than piecemeal changes.  

“What also concerns us, is the end strength reduction,” Ryan said. “The Services have accelerated the 124,000 end strength cut to the active and reserve component by two years. These additional end strength reductions can only be done with draconian tools: reductions in force, selected early retirement boards, and changes to reenlistment standards. The Pentagon leaders should do everything in their power to exhaust voluntary tools to drawdown the force before implementing involuntary measures.”