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Pay and benefits reform still in limbo

Aug. 27, 2014 - 12:19PM   |  
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In about five months, the Military Compensation and Retirement Modernization Commission will unveil its recommendations for a radical overhaul of troops’ pay and benefits.

After that, maybe other moves will finally happen, too.

For most of this year, debate over benefits changes has been stalled as Pentagon planners and outside advocates sparred over the future of military personnel accounts.

Larry Korb, a former Pentagon personnel chief and senior fellow at the Center for American Progress, said he’s already prepared to call 2014 a lost year for meaningful progress on pay reform. “All we are likely to see is some minor relief ... not really dealing with the problem,” he said.

Critics of the Defense Department are content with that for now, arguing that recent Pentagon efforts at reform have been heavy-handed and ill-informed. In their view, starting the debate anew after the commission finishes its work will result in a more thoughtful reform process.

“We need to have good information, because this is such a polarizing issue,” said Mike Barron, deputy director of government relations for the Military Officers Association of America.

In budget debates this spring, lawmakers from both parties said they preferred to wait for the commission’s final report before tackling the topic. The commission was due to offer its analysis and recommendations in May, but pushed that deadline back nine months.

DoD planners agreed to leave retirement reforms until next February, but pushed for what they called incremental steps forward on compensation programs in the fiscal 2015 budget debate.

The Senate will take up a few pay and benefits issues when it returns to work next month, including a 1 percent cap on military pay raises next year. The House backs a higher 1.8 percent raise, to keep pace with private-sector wage growth. The Pentagon and President Obama have said the lower raise will save $3.8 billion over five years.

Senators also have offered initial support for gradually trimming troops’ housing allowance, another Pentagon-backed initiative opposed by the House.

But Korb noted that those are only minor measures. More radical proposals on revamped specialty pays, 401(k)-style savings plans and trimmed benefits — all topics of debate a year ago — have been largely shelved in recent months.

The commission did release an interim report in June, but that document details only existing military compensation, and does not hint at future recommendations.

Still, advocates on both sides of the debate note that the interim report underscores the complexity of current offerings. The 358-page report covers all available military and veterans benefits, including billions in new bonuses and special pays added in the last decade.

Planners will spend the next five months combing through all those benefits, trying to balance troops’ preferences with budget realities.

Even then, several more budget cycles may pass before any changes are put in place. The Pentagon’s fiscal 2016 budget proposal is due to come in late February 2015, and it’s unclear if any commission proposals will be included in that plan.

Moreover, Korb notes that commission members have said their recommendations likely will apply only to new enlistees, grandfathering benefits for existing troops — and pushing any significant savings years into the future.

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