[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


                                     

                         [H.A.S.C. No. 110-52]
 
       OVERVIEW OF MORALE, WELFARE, AND RECREATION (MWR) PROGRAMS

                               __________

                                HEARING

                               BEFORE THE

                    MILITARY PERSONNEL SUBCOMMITTEE

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                             MARCH 29, 2007

                                     
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                    MILITARY PERSONNEL SUBCOMMITTEE

                     VIC SNYDER, Arkansas, Chairman
MARTY MEEHAN, Massachusetts          JOHN M. McHUGH, New York
LORETTA SANCHEZ, California          JOHN KLINE, Minnesota
SUSAN A. DAVIS, California           THELMA DRAKE, Virginia
NANCY BOYDA, Kansas                  WALTER B. JONES, North Carolina
PATRICK J. MURPHY, Pennsylvania      JOE WILSON, South Carolina
CAROL SHEA-PORTER, New Hampshire
               Michael Higgins, Professional Staff Member
                 John Chapla, Professional Staff Member
                      Joe Hicken, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2007

                                                                   Page

Hearing:

Thursday, March 29, 2007, Overview of Morale, Welfare, and 
  Recreation (MWR) Programs......................................     1

Appendix:

Thursday, March 29, 2007.........................................    23
                              ----------                              

                        THURSDAY, MARCH 29, 2007
       OVERVIEW OF MORALE, WELFARE, AND RECREATION (MWR) PROGRAMS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McHugh, Hon. John M., a Representative from New York, Ranking 
  Member, Military Personnel Subcommittee........................     2
Snyder, Hon. Vic, a Representative from Arkansas, Chairman, 
  Military Personnel Subcommittee................................     1

                               WITNESSES

Arsht, Leslye A., Deputy Under Secretary of Defense for Military 
  Community & Family Policy......................................     2
Downs, Michael P., Director, Personal and Family Readiness 
  Division, Manpower and Reserve Affairs Department, 
  Headquarters, U.S. Marine Corps................................     6
Handley, Rear Adm. Mark A., Deputy Commander, Navy Installations 
  Command, U.S. Navy.............................................     5
Myers, Arthur J., Director of Services, U.S. Air Force...........     7
Pinckney, Brig. Gen. Belinda, Commander, Family and Morale, 
  Welfare and Recreation Command, U.S. Army......................     4

                                APPENDIX

Prepared Statements:

    Arsht, Leslye A..............................................    31
    Downs, Michael P.............................................    86
    Handley, Rear Adm. Mark A....................................    63
    McHugh, Hon. John M..........................................    29
    Myers, Arthur J..............................................   108
    Pinckney, Brig. Gen. Belinda.................................    49
    Snyder, Hon. Vic.............................................    27

Documents Submitted for the Record:
    [There were no Documents submitted.]

Questions and Answers Submitted for the Record:

    Mrs. Drake...................................................   158
    Mr. McHugh...................................................   150
    Dr. Snyder...................................................   141
       OVERVIEW OF MORALE, WELFARE, AND RECREATION (MWR) PROGRAMS

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                           Military Personnel Subcommittee,
                          Washington, DC, Thursday, March 29, 2007.
    The subcommittee met, pursuant to call, at 2:50 p.m. in 
room 2118, Rayburn House Office Building, Hon. Vic Snyder 
(chairman of the subcommittee) presiding.

  OPENING STATEMENT OF HON. VIC SNYDER, A REPRESENTATIVE FROM 
      ARKANSAS, CHAIRMAN, MILITARY PERSONNEL SUBCOMMITTEE

    Dr. Snyder. We apologize for the delay. I don't think we 
are anticipating further delays. You may have also caught on 
that most members over the next few minutes will start heading 
for airports to go home for the spring break. I did not even 
come down to say hello to you.
    I am going to do a brief opening statement, and we will go 
to Mr. McHugh, and we have your written statements and most 
members will have looked at them, and if you can condense that 
down, then we have got some questions to ask, and we will try 
not to keep you here longer than is necessary but, again, we 
apologize for the delay.
    We are pleased you all are here today because these 
programs you are responsible for and you have been involved in, 
we think, are absolutely vital to our men and women in uniform 
and our military families, and we will flesh that out as the 
hearing proceeds.
    You are such an important part of not just feeling good but 
of the morale and the readiness of our men and women in uniform 
and their families. If they don't feel good about what is going 
on in other parts of their lives, including the family, it 
impacts their work. And so that is why we think the work you do 
is so important.
    Some of the concerns of the subcommittee include a decline 
in appropriated fund support for Morale, Welfare, and 
Recreation (MWR) facilities, the construction at new facilities 
with increased populations, and the need to increase access to, 
call it child care, and I know that some of you will be talking 
about that in your opening statements, and we will ask you 
about that, and I would like to let Mr. McHugh make any 
comments.
    [The prepared statement of Dr. Snyder can be found in the 
Appendix on page 27.]

  STATEMENT OF HON. JOHN M. MCHUGH, A REPRESENTATIVE FROM NEW 
     YORK, RANKING MEMBER, MILITARY PERSONNEL SUBCOMMITTEE

    Mr. McHugh. I did have a chance to speak to each one of the 
witnesses personally, but I want to state for the record how 
pleased we are, how privileged we feel to have you with us 
today. I ask my statement be entered in its entirety in the 
record. Thank you, sir. And I just echo the comments that you 
made. These are challenging times. I think the opening sentence 
to the staff memo that tells us quote, ``MWR programs are 
intended to provide military personnel the same quality of life 
as is afforded the society they have pledged to defend,'' end 
quote, kind of says it. That is the challenge.
    As you know, you folks are an indispensable part of that. 
The challenges from base realignment and closure (BRAC) to 
global rebasing to pressure on appropriated fund support and on 
and on and on are going to have to cause all of us to rise to 
those significant challenges.
    So we look forward to your comments here today, and thank 
you.
    With that, Mr. Chairman, I will yield back.
    [The prepared statement of Mr. McHugh can be found in the 
Appendix on page 29.]
    Dr. Snyder. Thank you, Mr. McHugh.
    I also want to apologize in advance. You may see members 
having to leave sooner than they otherwise would because of the 
lateness in the day.
    Let me introduce our panel: Ms. Leslye Arsht, the Deputy 
Under Secretary of Defense for Military Community and Family 
Policy; Brigadier General Belinda Pinckney, Commanding General, 
U.S. Army Family and Morale, Welfare and Recreation Command; 
Rear Admiral Mark A. Handley, United States Navy, Vice 
Commander, Navy Installations Command; Mr. Michael P. Downs, 
Director, Personal and Family Readiness Division Headquarters, 
Marine Corps; and Mr. Arthur J. Myers, Director of Air Force 
Services.
    And if you would do your opening statements in that order, 
I will put the five-minute clock on you, but that is to be a 
reminder. If you finish under that today, that is great, but if 
you see the light go on and you got things we need to know 
about, you go ahead and fire away. But that is to let you know 
that five minutes have passed.

STATEMENT OF LESLYE A. ARSHT, DEPUTY UNDER SECRETARY OF DEFENSE 
             FOR MILITARY COMMUNITY & FAMILY POLICY

    Ms. Arsht. Chairman Snyder, Ranking Member McHugh, 
distinguished members of the subcommittee. Thank you for this 
opportunity to testify on Department of Defense (DOD) morale, 
welfare, and recreation programs.
    Dr. Snyder. We need you to bend that thing down and get it 
a little closer to your face. Even closer than that. This is 
old time equipment here.
    Try it again.
    Ms. Arsht. When I first appeared before the subcommittee a 
year ago, I had been in my current position just 13 days. Since 
that time, I visited over 30 military installations around the 
world and toured MWR facilities at all of them. I have talked 
to service members and their leaders, and I have a great 
appreciation for just how important MWR is to our troops and 
their families.
    I must say that the resiliency of service members and their 
families is nothing less than remarkable. Our military families 
are the heart and soul of troops on the battlefield and when 
service members call back home, what they want to hear is, we 
are doing fine, we miss you, but we are doing fine.
    Of paramount importance to those deployed is to know that 
their families have good support and someone to reach out to 
while they are away. We continue to maintain robust morale, 
welfare and recreation programs, and the Department has made 
family support a priority.
    Military spouses indicate that being able to communicate 
with their spouse members is the number one factor in being 
able to cope with deployment. Back home, computers and Internet 
services located in the family support centers, base libraries 
and use centers help ensure families can send and receive e-
mails from their deployed loved ones.
    Communications support to deployed service members include 
175 free MWR operated Internet cafes, 171 MWR operated fund 
centers. This communication capacity is essential to morale and 
our ability to sustain deployments.
    Today's military families want easy and rapid access to 
reliable information and resources. Two important Web-based 
tools are helping to improve the delivery of information and 
assistance to our families: Military One Source and Military 
Home Front. In partnership with the services, we have leveraged 
the technology to provide service members and their families 
with information they want as well as someone to talk to 24/7. 
Ready access to books, magazines, newspapers are important both 
during and between deployments.
    The Army, Navy, and Air Force each ships several thousand 
newly printed books and magazines to various addresses to 
Operation Iraqi Freedom (OIF) and Operation Enduring Freedom 
(OEF) theaters each month.
    Counseling support is available both on and off military 
installations in the United States and overseas. Family 
assistance and military member counseling has more than doubled 
over the last year.
    Among the most important supports to military families is 
high quality child care and youth programs. DOD child care 
continues to be a national model in both standards and 
oversight. While we have greatly expanded child care capacity, 
about 7,000 spaces, we still have unmet demand for 30,000 
additional child care spaces.
    Providing child care for Reserve and Guard presents 
additional challenges. Many do not live close enough to 
military installations to use on-base child care, and off-base 
care is not always affordable.
    An initiative designed to address these challenges is 
Operation Military Child--I am sorry--Military Child Care 
which, although it does not fully subsidize the cost of child 
care, does reduce the financial burden. Services are provided 
through a national non-profit organization to help parents 
locate child care at reduced rates in their own communities.
    Long-term plans are being made to modernize the fitness 
infrastructure beginning with the services request for four 
fitness center construction projects in fiscal year 2008.
    Entertainment helps build morale for deployed service 
members. Nowhere is this support more important than in the 
austere locations where service members are performing in 
support of the global war on terror. In 2006, Armed Forces 
entertainment conducted 118 tours with 1,433 shows in 25 
countries.
    In addition to the stress associated with deployments, a 
sizable number of military personnel and their families will be 
affected by base realignment and global restationing. We are 
actively pursuing partnerships with community leaders to 
facilitate development of supportive infrastructure for 
relocating families.
    Clearly the road ahead is challenging, but we are committed 
to meeting the needs of service members and their families. We 
appreciate your support of DOD MWR programs and will seek your 
continued support as we implement changes associated with BRAC 
and restationing.
    Thank you.
    [The prepared statement of Ms. Arsht can be found in the 
Appendix on page 31.]
    Dr. Snyder. Thank you, Madam Secretary.
    General Pinckney.

STATEMENT OF BRIG. GEN. BELINDA PINCKNEY, COMMANDER, FAMILY AND 
       MORALE, WELFARE AND RECREATION COMMAND, U.S. ARMY

    General Pinckney. Mr. Chairman, members of the 
subcommittee. I am honored to appear before you today to 
discuss the direction of Army family and MWR programs. Let me 
begin by thanking this committee for your consistent support to 
service members and families and their quality of life. I have 
submitted my statement for the record and have a few brief 
comments at this time.
    I am privileged to address you today as the first 
commanding general of the Family and MWR Command. The Family 
and MWR Command is a subordinate command of the United States 
Army and Installation Management Command, or MCOM. When the 
Army established MCOM, the United States Army community and 
family support center changed its name to more accurately 
reflect its mission focusing on family and MWR programs. The 
family and MWR command's efforts support soldiers and family 
readiness. This support helps to deliver a quality of life that 
matches the quality of service soldiers proudly provide to our 
Nation.
    We remain committed to providing quality support to 
deployed soldiers around the globe and their awaiting families 
back home. We have professional MWR staff in Southwest Asia and 
the Balkans supporting our deployed soldiers and maintaining 
MWR facilities in Iraq, Afghanistan, Kuwait, Kosovo, Bosnia, 
Hungary, and Macedonia, to mention some. MWR promotes physical 
fitness and provides recreation, social, and leisure pursuits.
    Activities offered in these deployed locations include 
cardiovascular and strength training theaters, electronic game 
stations, and paperback books and online libraries. Our armed 
forces recreation centers (AFRC) are also responding to the 
needs of both the active and reserve component soldiers and 
their families.
    Since our rest and recuperation program started in October 
2003, our AFRCs have privileged--have been privileged to host 
over 75,000 soldiers and their families.
    Our soldiers and families remain resilient. However, given 
the challenges of modularity, global defense, partial 
realignment, base realignment and closure, and the global war 
on terror, stress on the force remains a constant.
    Given this transformation and restationing backdrop, the 
Army is committed to providing continued quality family and MWR 
programs to all of the soldiers and their families. This 
includes active and reserve component soldiers. In fact, today 
this is--this support is crucial to maintaining our all-
volunteer force.
    Mr. Chairman, with the help and support of this committee, 
we are moving the Army's family and MWR programs forward as we 
continue to service our soldiers and their families when and 
wherever duty calls.
    I will be happy to answer your questions.
    Thank you.
    [The prepared statement of General Pinckney can be found in 
the Appendix on page 49.]
    Dr. Snyder. Thank you.
    Admiral Handley.

STATEMENT OF REAR ADM. MARK A. HANDLEY, DEPUTY COMMANDER, NAVY 
                INSTALLATIONS COMMAND, U.S. NAVY

    Admiral Handley. Thank you. Thanks for the opportunity to 
appear before you today and discuss morale, welfare and 
recreation programs for the Navy. I have submitted, like 
colleagues today, a written statement for the record. I will 
summarize a few thoughts for you today.
    Dr. Snyder. All written statements will be made a part of 
the record.
    Admiral Handley. Navy MWR continues to improve quality, 
accessibility of our programs because we know how vitally 
important it is to our sailors, our civilians, our families. We 
invested in a number of initiatives in 2006 that will serve for 
the foundation of healthy MWR and child youth programs in the 
future. Some examples of our major improvements in fiscal year 
2006 include: the creation of a ``fitness for life'' initiative 
that reaches out to improve the health and fitness habits of 
the entire Navy community, including family members, DOD 
civilians, senior personnel and retirees; a commitment to 
construct 26 new fitness facilities across the Future Years 
Defense Plan (FYDP), starting with Guam in fiscal year 2008, 
this represents over a $500 million investment in enhanced 
fitness opportunities for our sailors and their families; the 
creation of 1,300 new child development center spaces in fleet 
concentration areas that will come on line in the next 18 
months, this will reduce the current Navy child care waiting 
list and bring us closer to the goal of meeting 80 percent of 
the need; implementation of outreach contracts to provide child 
care and youth services outside the military infrastructure for 
geographically isolated active duty personnel and activated 
reservists. So far, 4,900 additional spaces have been made 
available for Navy children as a result of these contracts.
    We have also significantly increased our investment in 
major and minor Non-appropriated Funds (NAF) construction 
projects leveraging central cash funds. As part of a multi-year 
plan, our MWR board of directors approved increasing the level 
of investment of over $80 million in fiscal year 2007 and 
fiscal year 2008. An emphasis is investing in our employees so 
they have an opportunity to enhance their customer service 
skills while fulfilling personal employment objectives. Our 
focus to help them build long-term careers with MWR.
    In summary, our commitment to ``fitness for life'' programs 
will help us ensure a strong and healthy force for the Navy for 
the future. Our investment in equipment and facilities will 
assure that sailors and their families enjoy a quality 
recreational experience for many years to come. Investing in 
quality child care enhances the morale of Navy families while 
greatly contributing to force readiness.
    And, finally, ongoing training development initiatives for 
MWR staff members help to ensure the level of service our 
program exceeds customer expectations.
    Thank you for your time and continued support for MWR 
facilities and services. I look forward to working with you as 
we continue to improve this vital program, and I stand by to 
address any questions you may have.
    [The prepared statement of Admiral Handley can be found in 
the Appendix on page 63.]
    Dr. Snyder. Thank you.
    Mr. Downs.

 STATEMENT OF MICHAEL P. DOWNS, DIRECTOR, PERSONAL AND FAMILY 
 READINESS DIVISION, MANPOWER AND RESERVE AFFAIRS DEPARTMENT, 
                HEADQUARTERS, U.S. MARINE CORPS

    Mr. Downs. Thank you, Mr. Chairman, Congressman McHugh, 
Congresswoman Davis, for this opportunity to report on the 
Marine Corps welfare and recreation program. As you well know, 
MWR programs are imperative to the quality of life of Marines 
and their families. Whether providing innovative fitness 
programs to improve Marine Corps readiness, taking care of 
children and youth or offering wholesome recreational 
activities to Marines and families, our MWR program is robust 
and expansive.
    Although the environment is indeed challenging, I am proud 
to report that the Marine Corps continues to maintain required 
levels of appropriated funds necessary to our MWR programs. As 
an important part of the Marine Corps landscape, MWR has 
successfully sustained rigorous budget prioritization sessions. 
Equally important, MWR revenue generation is up $7 million in 
sales and $1 million in net income from 2005 to 2006. Moreover, 
our exchange dividends are at the highest levels in the last 
six years.
    For the third consecutive year, we have met or exceeded the 
85/65 minimum Appropriated Funds (APF) funding metric for 
categories A and B activities established by DOD. In view of 
the combat and operational tempo of the Marine Corps, 
sustainment of MWR funding is remarkable and further indicative 
of value and overall contribution.
    Our installation commanders are actively monitoring program 
delivery, and at the headquarters level, we are working to 
ensure continued compliance with DOD standards.
    Let me assure you that any necessary program adjustments 
will include safeguards to protect the integrity and 
functionality of our MWR program that continues to serve the 
Marine Corps so well.
    The support of this subcommittee through annual hearings is 
vital to the future of MWR and helps to ensure that the program 
receives the credit it deserves.
    Thank you for the opportunity to be here today and for your 
longstanding support of military MWR programs.
    [The prepared statement of Mr. Downs can be found in the 
Appendix on page 86.]
    Dr. Snyder. Thank you, Mr. Downs.
    Mr. Myers of the Air Force.

 STATEMENT OF ARTHUR J. MYERS, DIRECTOR OF SERVICES, U.S. AIR 
                             FORCE

    Mr. Myers. Mr. Chairman and distinguished members of the 
Military Personnel Subcommittee.
    I truly appreciate the opportunity to appear before you 
today to talk about the status of Air Force MWR programs. Let 
me begin by thanking you for the tremendous support you have 
provided for the troops over the past year. Our Air Force is 
transforming. As we modernize our aging weapon systems, we must 
keep the focus on our most important weapon systems, our airmen 
and the families who support them.
    The Air Force services face major challenges as we seek 
innovative ways to transform our community support services and 
programs while avoiding unnecessary impacts to service delivery 
and quality of life.
    As we balance these competing requirements, we are 
concerned about the impacts of joint basing, especially on our 
civilian workforce, the quality of life for people at that 
installation, and operational mission.
    We are also concerned about the downward trend in exchange 
dividends; five years ago, our exchange dividends averaged 
nearly $90 million per year. Last year, we received only $73 
million, and the current exchange financial plan projects less 
than $57 million for the Air Force. Almost a $33 million 
reduction from the level five years ago. This has already had a 
negative impact on our programs in the field and will have even 
larger-term consequences as we cut back our non-appropriated 
fund facility program.
    Based on the exchange's current dividend projections, even 
a partial recovery will be a long time coming. And finally, we 
can and should do better for our non-appropriated funded 
employees than the current DOD-wide NAF health benefits permit. 
As we rise to meet these challenges, we and our leaders are 
committed to ensure the needs of our airmen and their families 
are met. Our Air Force service team provides life sustaining 
support to our troops in the field and the central community 
programs to our airmen and their families back home. I am 
extremely proud of the hard work and dedication they put forth 
to make our mission and therefore the Air Force mission happen 
everyday all over the world.
    Your help continues to make a direct impact on our airmen 
and their families.
    You have my written statement, and I welcome your 
questions.
    [The prepared statement of Mr. Myers can be found in the 
Appendix on page 108.]
    Dr. Snyder. Thank you, Mr. Myers, and thank you all for 
your opening statements.
    Mr. McHugh.
    Mr. McHugh. Thank you, Mr. Chairman. And I appreciate you 
allowing me to kind of jump the order here a little bit.
    My dad was a great skeptic when it came to averages and 
percentages. He used to say to me, you know, John, if you put 
one foot in a bucket of ice water and one foot in a bucket of 
boiling water, on average, you are comfortable.
    I look at these charts, and on average, I am comfortable, 
but I wonder how comfortable I am. And they are somewhat 
misleading. Percentages of goals. You look at the Army 
expenditures was 87 percent of goals in 1997, and now in fiscal 
year 2006, they are down to 83 percent. That is below the 85. 
You might be concerned about that. But if you go to real 
expenditures, in fact, from 2003 through projected 2008, the 
Army difference is up by $92 million.
    And Mr. Downs mentioned the Marine Corps is above the 
averages, and I am not accusing the Marine Corps of this, but 
it is in fact possible to reach the averages, not by spending 
more but by cutting programs. So I am not sure what these 
percentages tell us. But I do know this, and Mr. Myers spoke 
about it, we have got a massive rebasing coming about. We know 
that huge customers of the resale system which drive dividends 
available to you in support of your programs are already on 
their way down and are probably going to continue to do so. At 
the same time, we are going to have an increase in end strength 
which means you have got more people, more families to serve, 
more gyms, more libraries.
    What kind of plan do we have for the future in meeting that 
kind of two-edge dilemma, that of decreased support from the 
dividends yet increased demand for programs through the 
rebasing here at home and the expansion of the end strength? 
Anybody got any thoughts on that and tell us what the future 
may look like?
    Mr. Myers. In the Air Force, we have gotten our MCOMs base 
level people together to devise a strategic plan to set our way 
into the future to do things smarter, more efficiently, and so 
forth.
    In the Air Force, we have always focused on quality of life 
for our programs and so--in taking care of our people. So, in 
the Air Force, rather than have a cookie-cutter approach across 
our bases, we are going to focus on the programs that meet the 
needs of our troops and their families. It will be a difficult 
task, but one, I believe, will be successful in doing.
    Mr. McHugh. As we go down, if any of you have additional 
thoughts, I would appreciate that.
    I would add to that as well into the mix the most important 
part from our perspective, what can Congress do to be as 
supportive as possible in helping you meet that challenge? If 
you have any thoughts on that.
    Madam Secretary.
    Ms. Arsht. I would like to echo what Mr. Myers has said 
here in one important way. That is all of the services. They 
are different, and you will hear us say that a lot today. They 
are different in how they make their decisions and different in 
how they allocate their funds. And those differences are 
important, that flexibility to be able to respond to the needs 
even within their services, different installations have 
different requirements, and within DOD policy. Their boards and 
other governing decision-making policy bodies do make those 
decisions to ensure that they are responding to the needs of 
the service members and families at the various installations.
    I think if you turn to Mr. Downs's comments, the exchanges 
and the MWR funding allocations are different. And so they are 
not all declining. And overall, we think the MWR programs are 
financially solid and that the services are responding to the 
changing demands and showing a tremendous innovation, some of 
which we will detail in other parts of the areas of MWR and 
specific areas that we will talk about later.
    Mr. Downs. Just for the record, the Marine Corps's MWR are 
not declining. And the ability to meet and exceed the standards 
is directly related to the infusion of appropriated funds into 
the Marine Corps MWR program beginning in fiscal year 2002 and 
continuing through this year.
    Mr. McHugh. If I may, just to underscore for the record, I 
tried to state, I am not accusing the Marine Corps of doing 
that. I am just showing the vagaries of mathematics that you 
really can't tell just from the numbers what the commitment is.
    I apologize for interrupting.
    Mr. Downs. Just from 2002 to--through 2006, the 
appropriated funds for category A has increased from 87.5 to 
125.6. And in category B programs, from 110.1 million to 151.7.
    Mr. McHugh. I am glad to hear that, but you started it, so 
I am going to finish it.
    So if you adjust for inflation, every one of the services 
is spending less today, including the Marine Corps, than they 
did back in 2004. My point is, I am more interested in hearing 
your plans as to how you are going to accommodate whether you 
are the Marine Corps, Army, Air Force Navy. You have got the 
challenges of deployment less so in the Marine Corps. Coming 
back home from rebasing is not going to be a huge issue for 
you. But for the other services, it is going to be. But end 
strength is going to be a significant issue. So I wanted to 
just try to be reassured you are on it, as they say.
    Admiral.
    Admiral Handley. Sir, from the Navy's perspective, 
obviously, it is mostly a seagoing and expeditionary service. 
Different challenges for us. We do not have the same rebasing 
challenges. Most of our changes under BRAC are addressed, but I 
will tell you that we are laser focused on looking at the cost 
of our programs to make sure we are as efficient as possible.
    In 2004, I think you know we stood up the commander, Naval 
Installations Command, similar to the Army, with the 
Installations Management Agency (IMA), and we took eight 
claimants or eight organizations that were responsible for 
running bases and running MWR programs and consolidated it into 
one.
    Just in 2005, we also consolidated our program management 
function in Millington, Tennessee, to be part of that 
organization, and we are finding a lot of efficiencies from the 
backroom consolidations that we have done for that.
    Sir, to answer your question on what more can we do and 
what more we can support, I will point that we do a lot of 
partnerships with a lot of other outside organizations, Boys 
and Girls Clubs, certifying their affiliations with our youth 
centers and as Congresswoman Davis would know, the First for 
Five initiative in San Diego to help with child development 
centers where we have a public-private or a public-public 
venture to help solve some of those problems; those are 
programs that I think we can exploit more in the future.
    Mr. McHugh. I thank you.
    I am sorry. General, please.
    General Pinckney. Sir, thank you.
    Like the Navy, I think with the stand up of the 
Installation Management Command, and two direct reporting units 
falling under the MWR, MCOM, we are able to garner a lot of 
savings by reducing the redundancies within the different 
organizations. In addition to that, we also track use of non-
appropriated funds for those activities that should be funded 
with appropriated fund dollars, and I say that to say that we 
have brought this to the attention of our board of directors, 
MWR board of directors, and we, in fact, were challenged to 
look at new initiatives that could generate additional income 
given the fact that we know there is going to be a decline in 
dividends coming from Army and Air Force Exchange Services 
(AAFES) as well as support that we get from our Army 
recreational program because they are overseas, and we know 
that people overseas tend to spend more dollars in AAFES as 
opposed to being here.
    So we are partnering with AAFES in some areas that we know 
that we can actually garner more savings and actually use our 
dollars as a buying power. We partner with corporate America 
for public and private ventures. We are also working with the 
Boys and Girls Club and the 4-H camp to provide child care. In 
terms of capacity, when we know that we can't accommodate child 
care needs on post, we have to provide that kind of support off 
our posts. So we are doing that as well.
    And we are combining contracts throughout the Installation 
Management Command, not just within the family MWR command.
    Mr. McHugh. Thank you.
    Mr. Chairman, before I yield back. Let me underscore again 
how much I know we all appreciate the great work that these 
leaders do across the board, and the challenges that they face 
are not of their making. But together I am hopeful we can 
continue to provide to our brave men and women in uniform these 
invaluable programs and as the good secretary started off at 
the beginning, they are critical to their quality of life. So I 
thank you all for your service and again for being here.
    Mr. Chairman, again, I appreciate your courtesy, and I 
yield back.
    Dr. Snyder. Mrs. Davis for five minutes.
    Mrs. Davis of California. Thank you, Mr. Chairman. I want 
to echo Mr. McHugh's thoughts as well because we know the 
important work that you were doing. Without our families, 
without them feeling supported, we really are nowhere. And so 
it is critically important work.
    I wonder as we look at these numbers though, I think it is 
always tough to point out some of the shortcomings, but are 
there some degradation of services that you have seen that 
perhaps don't show up easily in numbers that we ought to be 
alerted to in any of the services that you see. You mentioned 
child care, the need to try. I wanted to ask about that in a 
second. But are there some areas in which we really--given 
another year or two, the slide could create a problem?
    General Pinckney. I think, Ma'am, from an Army perspective 
I will tell you yes, there are some shortages. We aren't going 
to be able to actually fund the non-appropriated fund major 
construction projects that we would normally do because of the 
possible decrease in dividends coming from AAFES. So we know 
that probably on average, we will not be funding three projects 
that we normally would have--would be funding.
    Mrs. Davis of California. And do those impact families 
directly?
    General Pinckney. Depending on the type of project.
    I will tell you that the projects that I see mainly 
impacting families we are normally able to provide support to 
and that would be the Child Development Centers (CDCs), the 
Capacity for Children, because that is a given concern, and 
given the fact that we partner with Boys and Girls Clubs and 
the 4-H camp and actually other child development centers 
within--that are located around our installations and some 
further away from installations for those remote sites, I don't 
think that that is a major concern for the Army.
    Mr. Myers. I will add to that. One of the things we face in 
the future is the decline in AAFES' dividends. We sort of 
insulate the installation that they are always going to get 
their dividends but with the shortage of dividends, that 
impacts our construction program in the future. So we are going 
to be building a lot less. And one of the family programs that 
will be impacted is youth centers because they are built with 
non-appropriated funds. As we sit here today, the Air Force is 
taking care of 120,000 children so their parents can focus on 
the mission. As long as they know their family is being taken 
care of, they are a hundred percent on the mission. So down the 
road, the decrease in AFEES dividends will have a big increase 
on the Air Force.
    Ms. Arsht. I would like to address your question by talking 
about the three-pronged approach that we are taking in child 
care.
    It speaks to need, that is the first--the first prong is 
that we have used the emergency intervention support that we 
have gotten.
    Mrs. Davis of California. Do you know how many families 
that are helped as a result of that? If you have a certain 
number of families that you know aren't being served locally 
but you are trying to provide that additional support for them, 
does that answer the need or answer the need for half of the 
families who are in need?
    Ms. Arsht. We have three different ways really of talking 
about this. One is in the emergency supplemental dollars that 
we use. We actually created 7,000 new spaces, and we also did 
renovations in addition to existing spaces. So adding space is 
one of the big priorities that we had for this last year.
    That authority is going to end. So, obviously, we would 
like to continue that authority to have the small construction 
opportunities to continue to add spaces.
    The second opportunity that we have used to expand our 
capacity is a relationship with the National Association of 
Child Care Resource and Referral agencies. They are doing at 
least two things for us, two important things. One is helping 
families find quality child care in their communities, and the 
second part of that is the new child care program that provides 
discounts to families. And that program is producing direct 
savings to families.
    And then the third prong is to actually have three to four 
Military Construction (MILCON) projects each year. In 2007, we 
were able to have eight funded projects. So we are really 
working, and child care being a good example but not our only 
example, of trying to create a mix of opportunities to expand 
capacity and use some community resources where they are 
available and leverage them to extend our abilities.
    Mrs. Davis of California. Thank you. And not here but 
perhaps if you could just give us a sense of what the unmet 
need is as you address it on those different levels, that would 
be helpful. And Admiral, I know that there is a uniform fee 
structure that has been put in place with the Navy; is that 
correct?
    Admiral Handley. I am sorry?
    Mrs. Davis of California. A uniform fee schedule for child 
care, has that had an impact?
    Admiral Handley. Yes. And again, to a positive effect. The 
other things that we are also doing in child care, we have gone 
to a centralized waiting list across the Navy. We did find that 
people were on multiple waiting lists across, so it had a 
harder time on fixing on what the demand signal was. So that is 
helping us target where we need child care and how much child 
care we do need.
    As the secretary already mentioned, we do use all of the 
same tools that she has outlined, military construction, the 
operations and maintenance (O&M) funding goes from the Office 
of the Secretary of Defense (OSD) and also through our own O&M 
funding. Again, that authority runs out in the end of 2007. 
That has been very responsive to putting it to where we need it 
to most.
    And then, obviously, I mentioned earlier the First for Five 
in San Diego. And I also think we should explore more public-
private ventures similar as we have done in housing. It has 
been very successful. But we want to make sure we keep laser 
focus that we don't drop that standard.
    We obviously enjoy a very good reputation with the 
standards of care that we have been providing, and we want to 
make sure as we do that, similar as we have in housing, we set 
the standard as we go out in those kinds of deals.
    Mrs. Davis of California. Thank you very much.
    Thank you, Mr. Chairman.
    General Pinckney. I forgot one thing.
    For fiscal year 2007, for MILCON, this is the first time 
that the Army had committed this type of funding for child 
care, and I just wanted to make a point of this; 29 child 
development centers in our 2007 MILCON, I don't know if we have 
ever done that before and--29 CDCs, three youth centers, two 
physical fitness centers, and a pool for a total of $180 
million. That is record-breaking for the Army.
    Mr. Myers. Mrs. Davis, one other thing. I would like to 
reiterate what Ms. Arsht said. OSD has done great in helping us 
with emergency intervention funding so we can build additional 
child care spaces. Through their efforts, we have opened up 
2,200 additional spaces because we can use O&M funding and you 
can get them done fast. However, the National Defense 
Authorization Act (NDAA) language that constructs CDCs with O&M 
funding rather than MILCON expires this year. So we would 
really like the committee's help to extend this waiver so we 
can continue to build these child care spaces in a timely 
manner.
    Mrs. Davis of California. Thank you very much.
    And you, ma'am, you mentioned the authority that is needed 
in one of the programs as well. Is that something that you can 
make certain that we are very well aware of? Okay. Thank you.
    Dr. Snyder. Before we go to Mrs. Drake, Madam Secretary, I 
wasn't sure of one of your answers to Mrs. Davis.
    You were talking about, I think, minor MILCON projects, and 
you said that the authority is going to end. What authority are 
you talking about?
    Ms. Arsht. That is the emergency intervention from the 
supplemental funding we used. The construction of the child 
care centers doesn't come under the normal MILCON budget. It is 
a separate emergency authority.
    Mr. Myers. They come under O&M funds, so you don't have to 
go through the whole MILCON process so you can build them a 
heck of a lot faster; less than a year, sometimes months.
    Dr. Snyder. Thank you.
    Mrs. Drake.
    Mrs. Drake. Thank you, Mr. Chairman.
    Thank you all for being here.
    First, I have asked this before in other hearings, but I am 
concerned about the base credentialing. And the adverse effects 
that the lack of implementation could have on our MWR 
activities.
    Madam Secretary, if you could tell us, how do you view the 
current status or progress for base credentialing and what 
progress has been made, and is it on track for a timely 
implementation, and is there something that could be done in 
the meantime until the Department has electronic readers in 
place? Could you give us your assessment of that?
    Ms. Arsht. I think there may be two parts to this answer. 
The first part is a concern by our business partners and 
vendors who have sought credentials that would allow them to 
come on the installations. And as Mr. Dominguez reported in the 
resale hearings just a couple of weeks ago, there is a program 
now that we believe is compliant with Homeland Security, that 
is being implemented in Europe and in Korea and next to go to 
southwest Asia that we believe is going to meet the needs of 
the vendors. And that will come next after Southwest Asia to 
the U.S. It will be accessible both to commanders and will make 
it much easier for vendors to monitor and manage the people who 
need to come on the installations.
    I think you were speaking about employees also.
    Mrs. Drake. And the employees of our vendors as well as 
employees.
    Ms. Arsht. They would be covered, I believe, under this 
system.
    Mrs. Drake. If I could get each of the services to let me 
know what their concerns are, if they feel this is coming, 
because it is a big concern in people's minds right now.
    General Pinckney. From the Army, ma'am, this would be--this 
would be a topic that I would take back to the Installation 
Command, the United States Army Command, because in the Army, 
the garrison commander and the senior mission commander make 
these kinds of decisions, and so I know that there is some 
concern with the amount of dollars, resources, that would be 
required to implement.
    Mrs. Drake. And also to hear from say, Mr. Myers, next and 
then go down the line to make sure that we are doing one and 
not multiple ones for our vendors who work on multiple bases.
    Mr. Myers, could you give us your take on that?
    Mr. Myers. Of all of the years I have been with the Air 
Force, I have never heard really a concern from the vendors as 
far as access from the base, and today, of course, we are 
really concerned about force protection and so forth. So in the 
Air Force, we have a system that if the vendor is going to 
visit us, we will make the person available to assist them in 
getting on the base and so forth.
    So I think the big concerns that we have to look at is the 
force protection part.
    But I will tell you, in the Air Force, I have never had 
that concern brought to my attention.
    Mrs. Drake. Really.
    Admiral.
    Admiral Handley. I will tell you from my own experience 
down in Norfolk, vendor access was an issue. I would say less 
in the MWR arena than it was in the exchange arena because of 
the number of vendors, and you get longer-term relationships 
with them. But I will tell you, on every base that we have, we 
work vendor issues, I think you bring a valid point is if they 
go from base to base or installation or especially service to 
service, do they have a different process they would do?
    Most of our processes do tend to be regional by local to an 
installation. Under regionalization, we will set one policy for 
the region. So we don't have that problem as much in going from 
an installation like on a Norfolk Naval base to Oceana, but we 
may have that problem if you go over to an Army or Air Force 
installation. That I don't know.
    But I would tell you that we do do that consistently across 
the Navy. It is an issue that we will continue to monitor as 
base access technology also changes. We also look at common 
access card (CAC) readers and other things for access as well.
    Mrs. Drake. General Downs.
    Mr. Downs. The driving force for this is the Homeland 
Security Presidential Directive that was issued in August of 
2004. And it places a great deal of responsibility on the 
individual installation commanders and for us in the 
decentralized way to bring this security apparatus up to place 
and to make certain that adequate, background investigations 
and credentialing is done.
    We have had some installations on the West Coast that it 
implemented a stop-gap measure for credentialing that could be 
problematic.
    Right now, it has not impacted anybody, to my knowledge, 
and we are as much concerned about our non-appropriated fund 
employees as we are of vendors. And within the Marine Corps, it 
is not as well coordinated as it ought to be. The policy is run 
by C-4. They run the policy on the covered access card. The 
security folks are the ones that have interest in the security 
piece to it. There is a Marine installation board scheduled on 
the 25th and 26th of April, and I have a paper that addresses 
this issue and we would hope to--we will discuss this from 
Marine Corps headquarters oversight of installations and those 
responsible for installations Marine Corps wide.
    But your point is right on. We need to have a Marine Corps-
wide, really a DOD-wide solution, not one by base.
    Mrs. Drake. And particularly in regions like southeast 
Virginia where we have all of the bases, every branch of the 
military has a base.
    But Madam Secretary, do you have any update on that General 
Accounting Office (GAO) study that is being done? We are being 
told it could be as late as September of this year and DOD is 
waiting on them. So do you have any information on that, or 
could you get back to us on that?
    Ms. Arsht. Which study is this?
    Mrs. Drake. The GAO study. We are being told DOD is waiting 
on that.
    Ms. Arsht. On base access?
    Mrs. Drake. On base access and credentials.
    Ms. Arsht. I will take that for the record.
    Mrs. Drake. If you would do that, I appreciate it. I have 
one more, but I don't know if you want to do another round.
    If I could also ask about the merging, where we are doing 
joint bases and we are merging the MWR programs. If, Madam 
Secretary, if we could hear from you and then from each of the 
service representatives how--whether progress is or is not 
being made on the merging of these MWR programs. I am hearing 
both; it is going well, there is good progress, and then I am 
hearing that it is not. So I wonder, from your perspective, if 
you could bring us up-to-date on that.
    Ms. Arsht. I can say initially there is consensus that we 
all want to ensure that the quality-of-life programs are 
sustained and even in this opportunity perhaps improved in 
places as part of the joint basing concept. Every one at this 
table or their designees have been involved in working groups 
to address the issues around joint basing and MWR, and 
performance levels is one of the areas of concern that is being 
worked. And I am certain that the services will want to speak 
about this.
    Perhaps we will start with Mr. Myers.
    Mrs. Drake. Go right down. Thank you.
    Mr. Myers. I believe joint basing is going to have a huge 
adverse effect on employees. For instance, for our NAF 
employees, each service has a different retirement program, a 
different life insurance program, a different severance 
program. On our appropriated fund employees, like in the Air 
Force, we have a career program for them, and under joint 
basing, if you are at Bolling Air Force Base, you become a Navy 
employee. So here I am an Air Force employee. I have been 
working for a career job in the Air Force and all of a sudden, 
I become a Navy employee under Navy rules. And if I am an 
appropriated fund employee, the other services for our type of 
positions normally change them to non-appropriated fund 
employees.
    And remember, under a non-appropriated employee, if I am an 
appropriated fund employee, I go the NAF, before I have Blue 
Cross and Blue Shield as an appropriated fund employee. Now as 
a NAF, I have a choice of one health care plan. So that is a 
big change.
    Plus, the majority of our employees can be represented by a 
union, and I believe unions will have a problem with their 
personnel. We could have different standards at every single 
base.
    So I think we are going to have a big impact on our 
employees. As I go out in the field to talk to them, a lot of 
them that are on a joint base want to go back to an Air Force 
base, and consequently, I have been to an Army base where they 
want to move to an Army base because they want to stay in that 
system.
    Plus, I believe it has an impact on us on our operational 
mission. For instance, in services, we have military personnel 
postured to deploy at joint bases. Many of them are going to 
convert these to contractors and so forth, so therefore we lose 
our opportunity for deployment.
    And finally, all of the services have different standards. 
When the Air Force fights, we fight from the base. So 
consequently, we put a lot of effort into basing through the 
years. The other services, the Navy, will fight from the ships, 
the Army and Marine Corps from the field. We will see an 
adverse impact as far as standards for our people at joint 
basing.
    Mrs. Drake. Thank you.
    General.
    General Pinckney. Yes, ma'am.
    From the Army's perspective, Mr. Myers has been talking to 
the portability issue with non-appropriated fund employees, and 
that is an issue that is being worked. But the Army takes the 
lead at Fort Lewis and McCord, and I have been out there, and I 
have visited them. And what I liked about what I saw was the 
fact that on a regular basis the Air Force garrison commander 
at McCord was working closely with the Army garrison commander 
at Fort Lewis. They were meeting on a regular basis. They 
were--they were looking at it from a different perspective. 
They were taking the quality of one service over the other.
    For instance, if there was an area that the Air Force had 
that was better than the processes--the processes were better 
than what the Army had, they were making the decision to see if 
they would meet that process. The Army, Fort Lewis, for 
instance, has a point-of-sales system that the Air Force didn't 
have and felt that they needed, and it was an easy way to give 
them that system.
    So I like their approach. They were documenting the 
differences, but their approach was, let us take the best of 
both worlds, and we will work through the delta, and the delta 
wasn't that big with the exception of the portability issue.
    Mrs. Drake. Admiral.
    Admiral Handley. Yes, ma'am. I will tell you, change is 
always hard; isn't it? And I will tell you that, as we work 
through the details of joint basing, and I sit on the Senior 
Joint Base Working Group with Secretary Grone, and I have had 
many lengthy discussions with Major General Eulberg from the 
Air Force about the challenges that await us there and how we 
are going to best meet them, and Mr. Myers accurately I think 
portrayed some of the anxiety that is probably out there with 
some of that workforce.
    A couple of things that we are doing in order to address 
that. Secretary Grone has been putting out joint 
implementations, standards and guidelines still in draft form 
that we are trying to settle on. But to help further that, both 
the Army--or the Air Force and the Navy have joined together in 
holding some table top exercises for joint basing. General 
Eulberg and I just yesterday kicked off the initial planning 
conference for the first one at Bolling Air Force Base and 
Naval Station Anacostia because we have to work through all of 
these details to do that.
    We are doing this in an effort to make sure that we look at 
the standards that we are going to go to and make sure that we 
meet those.
    By and large, I think the experience that the Army has 
represented here is representative of what we are doing in 
joint basing. In fact, we are looking at what the best standard 
is out there. We may not go to the most expensive solution, but 
we are looking at the standard that we are going to be proud 
of. And for the most part, I think most people are going to see 
an increase in standards across the board as we go to joint 
basing.
    From my own personal perspective, I think that this is also 
part of the future for the Department of Defense as we look at 
the opportunities to leverage the assets we have jointly as 
opposed to running them individually.
    So as we go through this, we are going through it with eyes 
wide open. We know there are plenty of challenges out there, 
and we are going to address those as we go through the 
implementation guides with DOD and as Madam Secretary 
mentioned. We have all at some point been involved in the roll-
out of that, and we will continue to work that again through 
the BRAC process but also through the joint basing process.
    Mrs. Drake. General Downs.
    Mr. Downs. Yes, ma'am.
    The only installation in the Marine Corps mentioned in 
joint basing in the BRAC was Henderson Hall where the joint 
base was between Henderson Hall and Fort Myer. The BRAC 
Commission recognized the responsibilities Henderson Hall has 
to Marine Corps headquarters and to Marines in the National 
Capitol Region, and the MWR non-appropriated fund and to 
include the exchanges. All of Marine Corps Community Services 
(MCCS) was excluded from the elements of Henderson Hall to be 
consolidated with Fort Myer by BRAC. That decision is confirmed 
in the draft joint base guidance. And so, at this time, there 
is no--there are no joint base implications for the Marine 
Corps.
    Obviously, with the impending move of Marines from Camp 
Butler in Okinawa to Guam--Guam is a joint base. The 
differences there will be, there is no Marine presence at Guam 
now. So it won't be--we will have to work that as the time 
comes, and that is some years away yet.
    Mrs. Drake. Thank you.
    Thank you, Mr. Chairman.
    I yield back.
    Dr. Snyder. Thank you.
    We have been joined by Mr. Wilson.
    Mr. Wilson. Thank you, Mr. Chairman.
    The reason I was delayed is I am going to be on a 
Congressional Delegation (CODEL) with Congressman Ortiz 
visiting Guam this coming week on our way, amazingly enough, on 
our way to Hanoi, Vietnam. But as you--I want to always state 
how much we appreciate when we visit with our troops overseas, 
how inspiring it is to see the new greatest generation. And 
this will be my third visit to Guam, and each time, I am just 
so pleased with the young people who are serving and protecting 
our country.
    Thank you very much.
    Dr. Snyder. Thank you, Mr. Wilson.
    I wanted to touch briefly again on the issue of child care, 
Madam Secretary. In both of your written statements and in the 
discussion today, we talk about the shortfall, which is 
something that everyone wants to correct. I want to ask the 
question, how do you monitor quality of child care?
    Ms. Arsht. Not only do we monitor it ourselves and the 
services do as well; they all manage their waiting lists and 
have annual reports and do inspections and all of that, but 
just this month we received an accolade that we are very proud 
of. And that is the National Association of Child Care Research 
and Referral Agencies did a study to rank all 50 States and the 
District of Columbia child care programs for oversight and 
standards. Included in the oversight was an evaluation of 
efficiency to make sure that resources were being used 
properly.
    And out of those rankings, DOD child care centers came out 
on top of both lists. And the agencies suggested that DOD's 
child care centers should be a model for the Nation. So we are 
very proud of that. We want to be able to sustain that. We 
think our partnership with this national organization will 
build additional capacity for us outside the gate both for--
with discounting their fees and as a finder service to find 
quality child care that is a model kind of relationship for us 
to have, also to build capacity and to make sure that quality 
is maintained.
    Dr. Snyder. I want to ask a second question. I will ask it 
to you and if anybody else wants to join in, feel free to on 
that question or this one.
    If I have a special needs kid--and we are expecting a 
report out, I think in April, from DOD on autism and how the 
military is going to handle autism. That is a common diagnosis 
amongst toddlers these days. It has major ramifications on 
families. And yet you all are in a business where one of the 
parents in a household who has trouble enough keeping up with 
one or two children that don't have special needs may be jerked 
out and transplanted away for 15 or 18 months and leaving one 
parent behind in a household with one child that has--or maybe 
more that has--very dramatic increase in need in child care and 
therapy.
    How do you all feel--where do these programs fit into those 
families, our military families, with special needs children 
such as autism?
    Ms. Arsht. The special needs children receive preference in 
placement in DOD child care centers. But perhaps one of you all 
would like to speak to it in practice.
    General Pinckney. Well, in addition to that, because those 
parents need a break, we have respite care where we provide 
hours so those parents can get a break as well.
    Mr. Myers. I agree with both those statements. They do get 
priority, and we are very attuned to their needs, and I believe 
we have been successful across the board in meeting the needs 
of those families.
    Dr. Snyder. Mr. Myers, how has the impact of the reductions 
in numbers in the Air Force, how has that impacted on services 
to our men and women in uniform in the Air Force and their 
families? We have heard complaints over the last year or so 
that some of the first things to go are perhaps some of the 
things you all have been working on. How has the reduction in 
numbers impacted on the programs that you are working on?
    Mr. Myers. The impact has so far been minimal.
    Dr. Snyder. Minimal, but present?
    Mr. Myers. But present. And the reason is we were only 
manned at about 85 percent. So when we gave up positions the 
first year, we gave up authorizations and not faces. So what we 
have done with our predominantly military personnel--and in my 
organization, all of our military personnel deploy--we have 
sort of postured them at our bases with a warfighting mission 
to deploy. And our people who deploy work in food service, work 
in lodging, work in fitness, work in mortuary. So we are 
starting to migrate them to all of the bases and we are 
backfilling the military with our NAF, MOA and other positions.
    So, so far in the Air Force, we haven't seen an impact. We 
will see some impact in the future but we are already planning 
with our strategic plan and so forth to meet the needs of our 
community. For instance, in some bases we have had the same 
programs at every base, but there is not a need for that 
program. So we can shift those resources to our programs where 
they are needed.
    So I think we have a good plan. I mean, it is not going to 
be easy, but you know the Air Force's priority has always been 
taking care of its people and we will continue to do that.
    Dr. Snyder. For example, if I were to go out there and 
look, would I be able to find Air Force bases in which there 
had been a reduction of hours at a fitness center?
    Mr. Myers. If you go out there, you could find a fitness 
center with some reduction in hours. You know, in the past we 
have had some fitness centers open 24 hours a day, where in the 
middle of the night there was little or no people using it. So 
we have reduced it that way.
    And some of our dining facilities, we have had midnight 
meals with only a handful of people showing up, so we have 
reduced that. But we have other alternatives where we do our 
box lunches and so forth to provide meals.
    So I think we have taken efficient--looking at prudent 
measures to reduce operations where they impact our personnel 
the least.
    Dr. Snyder. I wanted to go back to this issue that Mr. 
McHugh touched on with regard to the dollars. And if we could 
just go down the line. Mr. Myers, let's start with you.
    When I look at this chart that compares appropriated 
funding in 2003 with funding in 2007, but putting an 
inflationary increase in there so it will compare real dollars 
to real dollars, and when I see that there is a reduction, the 
number hasn't kept pace with inflation, I need each one of you 
from the services to explain, you know, how you think we are 
doing as far as being upbeat as you are about the programming. 
Give me some reassurance. I need to understand that number 
better. And there are pretty dramatic differences between the 
services.
    Mr. Myers.
    Mr. Myers. Well, in the Air Force, as I say, we always put 
the priority on our number one weapon, our airmen and taking 
care of their families. We have seen some reduction in our 
appropriated fund support because we are going to modernize, 
recapitalize our aircraft and so forth in the Air Force. And 
over the years, we have just been more efficient. We have done 
a lot of lean events where we can do things more efficient and 
more better across the board.
    As I said, some programs that weren't being used, we are 
eliminating them and so forth. I travel the Air Force a lot. I 
got my quality-of-life programs where we have seen some 
reductions, I think. And over the long term, our programs will 
survive.
    The only programs that I have serious concerns about is our 
construction program, and that is as a result of the 
significant reduction in AAFES uniforms, in AAFES dividends.
    We protect our bases. Our bases always get their dividends 
up front so they know exactly what they are going to get every 
year. Whatever is left over, we use in construction. So with 
the reduction in AAFES dividends, we are going to do a lot less 
construction than we have in the past. So of all my major 
concerns, I think AAFES dividends is the major one right now.
    Dr. Snyder. General Pinckney
    General Pinckney. Sir, in the Army I can look at categories 
A, B and C, but I also look at military construction, and I 
look at the Army Family Program appropriated fund dollars 
coming in as well. So when we compare 2003 execution to budget 
2007, I look at '07, and what I see is a projection of more 
dollars, and primarily because of the military construction 
that I talked to earlier.
    The Army is committed, and they have added $180 million in 
the MILCON specifically for MWR programs. And that is 29 CDC, 3 
youth centers, 2 fitness, and a pool.
    The other issue you mentioned earlier is the percentage, 
the 83 percent for the Army. That really on record seems to be 
a decrease in percentages, but that actually was a difference 
of methodology. The Army looked at it from a more logical 
perspective, whereas we considered all categories, A, B, and C, 
and we looked at appropriated and non-appropriated fund 
dollars. So the total sum--and as we compare that to, say, a 
category A, if I actually would have used the same formula that 
everybody else used for category A, we would not show an 83 
percent, we would show an 87 percent.
    So I see the Army committing to actually putting more 
dollars in Family and MWR programs.
    Dr. Snyder. Admiral Hadley.
    Admiral Hadley. Thank you, sir.
    To summarize on my earlier comments, one of the things that 
we in the Navy went through, you take 2003 as a bit of a high 
watermark for us, but really the major changes for us in 2004 
was the standup of the commander--of Navy Installations 
Command. Obviously, significant efficiencies when you go from 
eight organizations managing installations, managing different 
MWR programs, you bring that into one. Our efficiencies that we 
have gained through regionalization have also made a 
significant contribution for us.
    And then, finally, is the last, the pull in management 
program from that one.
    The other one I will add, you have to look at this in total 
from a requirements base as opposed to a straight either a 
percentage of appropriated funds or a dollars of appropriated 
funds. And we go through a very rigorous process to define our 
requirements and then we fund to those requirements, and those 
do require us to look at the levels of service that we provide 
based on location, based on demographics.
    You know, clearly, overseas locations we provide a 
different level of service. There are different important 
programs that you might have. For example, a library overseas 
is going to be far more important than it would be in a place 
where we have that service right outside the gate.
    But, again, we look at it from a requirements base as we go 
forward. But we have seen significant efficiencies in the last 
three to five years as we have gone through the consolidation 
of those programs.
    Dr. Snyder. And I think, Mr. Downs, I heard your comment 
before and your number is--my numbers don't look as down as the 
other.
    Mr. Downs. Yes. I would like to reinforce what General 
Pinckney said regarding comparing program dollars in 2007 to 
actuals. And we are comparing in this figure 145.7 as an 
inflated 2003, to 138. In truth, in fiscal year 2006 we spent 
162.6 in execution. I would expect the 138.4 to be 
substantially higher at the end of 2007 than it is shown right 
now. And so it is a little misleading.
    Dr. Snyder. I gotcha.
    Mrs. Drake, do you have anything further? We had 
originally, I think, probably told you all to estimate about 
from two o'clock to four o'clock, and I think we will try to 
stick with it.
    I want to apologize for having to get up and leave a short 
time ago. But to make the point, I carry my BlackBerry. I have 
a wife and ten-month-old baby in Little Rock. And I looked at 
it and it said, your wife needs you to call now. So I went out 
there and called. She said, you didn't need to call now, it 
wasn't an emergency.
    But I don't ever forget how many of our men and women 
overseas have kids that are literally 12,000 miles away and are 
blessed or cursed with good communication.
    And on the Little Rock Air Force Base, I met with some 
families not so long ago. We have got a public school that is 
operated by and owned by the local school district that really 
needs to be replaced, and it has needed to be replaced for 
years. And one of the families told me, it was a real pain 
overseas for a person, either mother or father in the Air 
Force, to get an e-mail from the their kid that the roof leaked 
again on my desk and all my paperwork and my books were ruined.
    Well, that is just a little thing, but that is the kind of 
thing you don't want your mothers and fathers that are based 
overseas to have to hear from their kid, almost in realtime 
nowadays, about what is going on in their school.
    So what you do is really important to us. It is really 
important to the families. You all know that. And we really do 
want to help you in any way we can, because it is such a huge 
part of the morale of all our military families, but 
particularly those who are divided up for periods of time 
because of deployment.
    And we appreciate you all being here. I will give you this 
open invitation. If there is anything you think you need to 
clear up on any of these numbers, I will just submit it as a 
statement for the record, and we will add that on, and the 
staff will get it to us. We will put it as part of the record.
    [The information referred to can be found in the Appendix 
beginning on page 141.]
    Dr. Snyder. Anything further, Mrs. Drake?
    The hearing is adjourned. Thank you.
    [Whereupon, at 4 p.m., the subcommittee was adjourned.]
?

======================================================================




                            A P P E N D I X

                             March 29, 2007

=======================================================================

      
?

      
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             March 29, 2007

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=======================================================================


             QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD

                             March 29, 2007

=======================================================================

      
                   QUESTIONS SUBMITTED BY DR. SNYDER

    Dr. Snyder. I need each one of you from the services to explain, 
you know, how you think we are doing as far as being upbeat as you are 
about the programming. Give me some reassurance. I need to understand 
that number better. And there are pretty dramatic differences between 
the services.
    Ms. Arsht. The Department of Defense does not wish to add 
additional comments.
    Dr. Snyder. I need each one of you from the services to explain, 
you know, how you think we are doing as far as being upbeat as you are 
about the programming. Give me some reassurance. I need to understand 
that number better. And there are pretty dramatic differences between 
the services.
    General Pinckney. The Army has nothing else to add.
    Dr. Snyder. I need each one of you from the services to explain, 
you know, how you think we are doing as far as being upbeat as you are 
about the programming. Give me some reassurance. I need to understand 
that number better. And there are pretty dramatic differences between 
the services.
    Admiral Handley. Navy has no additional information to add or 
correct.
    Dr. Snyder. I need each one of you from the services to explain, 
you know, how you think we are doing as far as being upbeat as you are 
about the programming. Give me some reassurance. I need to understand 
that number better. And there are pretty dramatic differences between 
the services.
    Mr. Myers. We appreciate the committee's continued support for Air 
Force MWR and quality of life programs. As we transform our forces to 
meet the warfighting needs of the future, competition intensifies for 
scarce resources. The efforts of the Military Personnel Subcommittee 
has been and will continue to be instrumental in helping us provide for 
our Airmen and their families' needs.
    Dr. Snyder. I need each one of you from the services to explain, 
you know, how you think we are doing as far as being upbeat as you are 
about the programming. Give me some reassurance. I need to understand 
that number better. And there are pretty dramatic differences between 
the services.
    Mr. Downs. The Marine Corps is not projecting to spend less on MWR 
programs. The following display depicts a Marine Corps MWR budget 
increase of 34 percent between FY03 and FY07 (the period of interest to 
the Subcommittee). This stable budget profile sustains existing 
operations and programs. The FY03 and FY06 actual data totals include 
additional funds allocated during the year of execution (e.g., 
supplemental). It is important to note that budgeted numbers differ 
from actual spending. Comparisons (between budgeted figures and actual 
figures/two different data points) yield inaccurate spending 
projections.


----------------------------------------------------------------------------------------------------------------
                                                         FY03        FY03        FY06        FY06
                                                        Budget      Actual      Budget      Actual       FY07
----------------------------------------------------------------------------------------------------------------
Total MWR Direct                                        120,275     131,699     130,920     162,551     138,359
----------------------------------------------------------------------------------------------------------------
MWR Indirect                                             38,152      57,273      73,442      79,176      74,629
----------------------------------------------------------------------------------------------------------------
Total MWR                                               158,427     188,972     204,362     241,727     212,988
----------------------------------------------------------------------------------------------------------------

    MWR programs are of significant value to the Marine Corps and these 
programs have successfully sustained rigorous budget prioritization 
sessions. For the third consecutive year, the Marine Corps has met or 
exceeded the 85/65 minimum APF funding metric for Categories A and B 
activities established by DoD. Our Installation Commanders actively 
monitor program delivery, and at the Headquarters level, we work to 
ensure continued compliance with DoD standards.
    The Marine Corps is not anticipating a reduction in the level of 
MWR operations and programs. Specific MWR priorities are established by 
the respective Installation Commanders responsible for the provision of 
installation support services, to include MWR. This decentralized 
execution of support services optimizes Commander flexibilities to 
quickly adapt operations to meet current and future needs within 
available resources.
    Future MWR trends for the Marine Corps Exchange dividends are 
positive. The Marine Corps dividend is up 34 percent from 2005 to 2006. 
Irrespective of a slight decline in 2007, our dividend remains 28.5 
percent higher than in 2005.
    Dr. Snyder. While it is important to measure the services' 
commitment in terms of the percentage of appropriated fund support for 
a program, I would think you must also review the total amount of 
spending on MWR. For example, if you looked at the percentage of 
appropriated fund support in isolation of total spending, you could 
maintain that percentage by simply decreasing the total spending on MWR 
programs. Ms. Arsht, do you consider the relationship between the 
percentage of appropriated fund support and total MWR spending when 
evaluating service MWR programs? Service MWR chiefs, can the success of 
the services in meeting appropriated fund guidelines be attributed to 
some degree to cutting back on MWR program access and quality? Admiral 
Handley, why has the Navy's funding of MWR programs fallen so 
consistently since fiscal year 2003 and does the Navy plan to reverse 
the trend? General Pinckney, what prompted the dramatic increase in 
Army appropriated funding for MWR programs in fiscal year 2006 and what 
is the affect of large swings in appropriated funding on the programs?
    Ms. Arsht. This is a good point. The continued vitality of military 
MWR programs depends on consistent APF support. We also review whether 
or not the overall MWR funding goes up or down significantly and for 
what purposes. Funding must be reviewed from several angles. The 
current APT support metric serves a good purpose to monitor the degree 
of appropriated funding of MWR programs by category, and to measure 
compliance with established funding standards. The metric is not very 
useful when viewed in isolation, and it must be considered in context 
with total APF support to be meaningful. However, the metric fails to 
highlight significant disparities between the Military Services' APF 
support. The metric could be improved by excluding APF indirect 
support, which is already included in the public works budget, and 
standardizing the formula for apportionment of APF direct overhead and 
non-appropriated fund common support between Categories A, B, and C. I 
have been working with the Services to determine recommendations for 
improving the metric and would like to brief the Committee staff on the 
proposed changes before they are implemented.
    Dr. Snyder. While it is important to measure the services' 
commitment in terms of the percentage of appropriated fund support for 
a program, I would think you must also review the total amount of 
spending on MWR. For example, if you looked at the percentage of 
appropriated fund support in isolation of total spending, you could 
maintain that percentage by simply decreasing the total spending on MWR 
programs. Ms. Arsht, do you consider the relationship between the 
percentage of appropriated fund support and total MWR spending when 
evaluating service MWR programs? Service MWR chiefs, can the success of 
the services in meeting appropriated fund guidelines be attributed to 
some degree to cutting back on MWR program access and quality? Admiral 
Handley, why has the Navy's funding of MWR programs fallen so 
consistently since fiscal year 2003 and does the Navy plan to reverse 
the trend? General Pinckney, what prompted the dramatic increase in 
Army appropriated funding for MWR programs in fiscal year 2006 and what 
is the affect of large swings in appropriated funding on the programs?
    General Pinckney. MWR program access and quality have not been 
diminished or reduced due to lack of appropriated funds. Soldiers and 
Families consistently rank MWR programs very high in both importance 
and use. Garrison commanders typically use non-appropriated funds when 
appropriated funds are insufficient.
    The increased Army appropriated funding for MWR programs in fiscal 
year 2006 is a result of the increased worldwide commitments and the 
high priority Army commanders place on MWR programs for Soldiers and 
Families. Large swings in appropriated funding may result in 
inconsistent and unpredictable delivery of services. For example, 
upward swings may reduce the shortfall of child care spaces, and 
downward swings may result in the permanent loss of MWR programs at 
some installations.
    Dr. Snyder. While it is important to measure the services' 
commitment in terms of the percentage of appropriated fund support for 
a program, I would think you must also review the total amount of 
spending on MWR. For example, if you looked at the percentage of 
appropriated fund support in isolation of total spending, you could 
maintain that percentage by simply decreasing the total spending on MWR 
programs. Ms. Arsht, do you consider the relationship between the 
percentage of appropriated fund support and total MWR spending when 
evaluating service MWR programs? Service MWR chiefs, can the success of 
the services in meeting appropriated fund guidelines be attributed to 
some degree to cutting back on MWR program access and quality? Admiral 
Handley, why has the Navy's funding of MWR programs fallen so 
consistently since fiscal year 2003 and does the Navy plan to reverse 
the trend? General Pinckney, what prompted the dramatic increase in 
Army appropriated funding for MWR programs in fiscal year 2006 and what 
is the affect of large swings in appropriated funding on the programs?
    Admiral Handley. The Navy's overall budget for base operating 
support has been and remains tight and that has placed increasing 
pressure on our ability to fund MWR at pre-2004 levels. Thus, we have 
focused our efforts on continuing to find overhead and operational 
efficiencies and carefully prioritizing programs so that we ensure 
adequate funding for essential mission support MWR programs that are 
strongly supported by Sailors and their families. This has resulted in 
curtailment or elimination of some programs that could not reasonably 
be sustained with increased user fees or were not widely supported by 
users but undoubtedly had a positive impact on our ability to meet the 
appropriated fund percentage guidelines.
    Total Navy MWR, which includes MWR and Child and Youth Programs 
appropriated funding is budgeted to decline through FY07 as compared to 
FY03, but trends upward at the same rate as expected inflation across 
the Future Years Defense Program.
    With Congressional support, we will continue to fund our core MWR 
programs to the fullest extent possible. Core MWR programs include: 
fitness; afloat recreation and movies; Single Sailor (Liberty) 
programs; child and youth programs; Information, Tickets, and Tours 
(ITT); and libraries.
    Dr. Snyder. While it is important to measure the services' 
commitment in terms of the percentage of appropriated fund support for 
a program, I would think you must also review the total amount of 
spending on MWR. For example, if you looked at the percentage of 
appropriated fund support in isolation of total spending, you could 
maintain that percentage by simply decreasing the total spending on MWR 
programs. Ms. Arsht, do you consider the relationship between the 
percentage of appropriated fund support and total MWR spending when 
evaluating service MWR programs? Service MWR chiefs, can the success of 
the services in meeting appropriated fund guidelines be attributed to 
some degree to cutting back on MWR program access and quality? Admiral 
Handley, why has the Navy's funding of MWR programs fallen so 
consistently since fiscal year 2003 and does the Navy plan to reverse 
the trend? General Pinckney, what prompted the dramatic increase in 
Army appropriated funding for MWR programs in fiscal year 2006 and what 
is the affect of large swings in appropriated funding on the programs?
    Mr. Myers. Cutting back on appropriated fund (APF) MWR program 
funding can skew the figures representing the percentage of APF support 
provided. However, the Air Force places a high value on Quality of Life 
programs and tracks APF support carefully at each installation. Each 
Wing Commander is attuned to supporting the MWR needs of the Airmen and 
their families and ensures programs are well funded, but more 
importantly are meeting the needs of the base population. The Air Force 
is continually looking for ways to provide the same high quality 
service more efficiently thereby reducing overall APF requirements. For 
example, the Air Force has significantly reduced APF expenditures by 
using non-appropriated fund (NAF) memorandums of agreement (MOAs) to 
provide services in activities such as libraries and outdoor 
recreation. The Air Force then pays the NAF account for the costs of 
providing these services. The NAF programs are able to provide the same 
high quality service while reducing the APF bill by 10 to 15 percent, 
without impacting quality of life. Since 2003, our use of MOAs has 
grown from $14 million to nearly $37 million. While these are still APF 
expenditures, cost savings are realized in the form of reduced civilian 
pay and other associated costs.
    Dr. Snyder. While it is important to measure the services' 
commitment in terms of the percentage of appropriated fund support for 
a program, I would think you must also review the total amount of 
spending on MWR. For example, if you looked at the percentage of 
appropriated fund support in isolation of total spending, you could 
maintain that percentage by simply decreasing the total spending on MWR 
programs. Ms. Arsht, do you consider the relationship between the 
percentage of appropriated fund support and total MWR spending when 
evaluating service MWR programs? Service MWR chiefs, can the success of 
the services in meeting appropriated fund guidelines be attributed to 
some degree to cutting back on MWR program access and quality? Admiral 
Handley, why has the Navy's funding of MWR programs fallen so 
consistently since fiscal year 2003 and does the Navy plan to reverse 
the trend? General Pinckney, what prompted the dramatic increase in 
Army appropriated funding for MWR programs in fiscal year 2006 and what 
is the affect of large swings in appropriated funding on the programs?
    Mr. Downs. The Marine Corps MWR appropriated fund budget increased 
34 percent between FY03 and FY07. This stable budget profile sustains 
existing operations and programs to include access and quality.

    Dr. Snyder.

 MWR Funding Compared to Inflation Fiscal Years 2003 Compared to Fiscal
                                Year 2007
                          [Dollars in Millions]

                                                     FY 2003
           Service             FY 2003    FY 2007   Inflated  Difference
                               Actual   Programmed   to 2007

Army                            460.5      471.5      509.3   (-37.8)--7
                                                                      %
Navy                            369.7      300.6      408.8   (-108.2)--
                                                                    27%
Air Force                       539.4      545.6      596.6   (-51.0)--9
                                                                      %
Marine Corps                    131.7      138.4      145.7    (-7.3)--5
                                                                      %
Total DOD                     1,501.3   1,456.1     1,660.4   (-204.3)--
                                                                    12%


    Ms. Arsht, given that each of the services is projecting to spend 
less on MWR programs during fiscal year 2007 then they did in fiscal 
year 2003 when inflation is considered, what should be the 
Subcommittee's view of the future of MWR programs in the military 
community?
    Ms. Arsht. MWR programs have a profound impact on the quality of 
life of our Service members and their families. The continued vitality 
of military MWR programs depends on consistent APF support to non-
revenue generating programs. The chart below is MWR direct support only 
(no indirect support) and as noted does not include global war on 
terror (GWOT) supplemental funds for FY 2004-2006.
    There is concern about the funding trend for the MWR program, 
because the FY 2007 budget indicates the Army is budgeted to lose $93.7 
million and the Marine Corps is budgeted to lose $16.3 million from 
actual FY 2006 expenditures. Looking historically, the Navy MWR program 
is budgeted to receive $69.2 million less than in FY 2003. Typically, 
the Services offset any decline in APF funding with a combination of 
cost reduction, program cutbacks (usually in Category B programs), or 
increasing non-appropriated fund support. Some Services are able to get 
additional funding due to reprogramming actions during the year of 
execution, but often the additional money comes late in the year. When 
funding is inconsistent, programs and facilities are usually degraded 
and the quality of life for Service members and their families is 
negatively impacted.
    Based on growth by inflation, in FY 2008 Army funding is on track 
while Navy, Air Force and Marine Corps funding continue to lag behind 
minimal inflation rates since FY 2003 (Difference between FY08 inflated 
funding and FY08 budget--Navy: -$102.8, Air Force: -$53, and Marine 
Corps: -$12).

                                      Fiscal Years 2003 to Fiscal Year 2007
                                              [Dollars in Millions]
----------------------------------------------------------------------------------------------------------------
                             MWR Direct Support Only without GWOT for FY 2004-2006 *
-----------------------------------------------------------------------------------------------------------------
                                          2004 *      2005 *      2006 *      2007 *     Difference
          Service              2003       Actual      Actual      Actual      Budget       between       2008
                              Actual                                                    FY03 &  FY07    Budget
----------------------------------------------------------------------------------------------------------------
Army Total                      460.5       426.5       445.5       565.3       471.5          11.0       553.8
Difference from prior year                 -34.0         19.0       119.7      -93.7                       82.3
Navy Total                      369.7       325.5       303.0       291.9       300.6         -69.2       316.3
Difference from prior year                 -44.2       -22.6       -11.1          8.7                      15.7
Air Force Total                 539.4       543.6       537.6       511.7       545.6           6.2       558.5
Difference from prior year                    4.2       -6.0       -25.8         33.8                      12.9
USMC Total                      131.7       133.5       149.1       154.7       138.4           6.7       137.3
Difference from prior year                    1.8        15.6         5.6      -16.3                       -1.1
    Total                    1,501.3     1,429.1     1,435.2     1,523.6     1,456.0         -45.2     1,565.9
                                            -72.1         6.1        88.4       -67.6                     109.9
----------------------------------------------------------------------------------------------------------------
Source: OP-34; President's Budget--Direct Support
* Does not include GWOT Supplemental expenditures

    Dr. Snyder.

 MWR Funding Compared to Inflation Fiscal Years 2003 Compared to Fiscal
                                Year 2007
                          [Dollars in Millions]

                                                     FY 2003
           Service             FY 2003    FY 2007   Inflated  Difference
                               Actual   Programmed   to 2007

Army                            460.5      471.5      509.3   (-37.8)--7
                                                                      %
Navy                            369.7      300.6      408.8   (-108.2)--
                                                                    27%
Air Force                       539.4      545.6      596.6   (-51.0)--9
                                                                      %
Marine Corps                    131.7      138.4      145.7    (-7.3)--5
                                                                      %
Total DOD                     1,501.3   1,456.1     1,660.4   (-204.3)--
                                                                    12%


    Ms. Arsht, given that each of the services is projecting to spend 
less on MWR programs during fiscal year 2007 then they did in fiscal 
year 2003 when inflation is considered, what should be the 
Subcommittee's view of the future of MWR programs in the military 
community? Service MWR chiefs, should the Congress be concerned about 
the inevitable degradation of programs and facilities? Is it necessary 
for the Congress to step in to protect these programs?
    General Pinckney. Soldier Family Programs continue to remain a 
priority at all leadership levels. Army continues to offer robust MWR 
programs within available resources to best meet the needs of Soldiers 
and Families. The Army executed $565M on MWR and Child and Youth 
Services (CYS) activities for FY06. This expenditure represents a 23% 
increase from FY03 actual, which exceeds the 10% inflation experienced 
over the same period of time. First priority for appropriated funding 
goes to MWR programs and services that support deployed Soldiers and 
their Family members. These programs include sports, fitness, 
recreation center, library, outdoor recreation, and auto skills 
programs, and child and youth services programs. It is important to 
note that not all of the Army's MWR funding is in the base budget. MWR 
programs that directly support the global war on terror are funded in 
the Supplemental. In FY07, the Army again plans to increase Family 
program funding above the level in the FY07 budget providing additional 
MWR funding during the rest of the year of execution as we have in 
previous years as shown in the table below. The Army appreciates 
Congressional support of Army MWR programs.



                               FY03                FY06           FY07

         ($M)           (Budget)  (Actual)  (Budget)  (Actual)  (Budget)

MWR Direct               217.1     237.2     220.0     306.5     214.6
CYS Direct               194.0     221.4     237.7     258.5     239.3
Total MWR Direct         411.1     458.6     457.7     565.0     453.9



    Dr. Snyder.

 MWR Funding Compared to Inflation Fiscal Years 2003 Compared to Fiscal
                                Year 2007
                          [Dollars in Millions]

                                                     FY 2003
           Service             FY 2003    FY 2007   Inflated  Difference
                               Actual   Programmed   to 2007

Navy                            369.7      300.6      408.8   (-108.2)--
                                                                    27%



    Ms. Arsht, given that each of the services is projecting to spend 
less on MWR programs during fiscal year 2007 than they did in fiscal 
year 2003 when inflation is considered, what should be the 
Subcommittee's view of the future of MWR programs in the military 
community? Service MWR chiefs, should the Congress be concerned about 
the inevitable degradation of programs and facilities? Is it necessary 
for the Congress to step in to protect these programs?
    Admiral Handley. 1. In PB08 budget submission, Navy programmed to 
execute MWR at Common Output Level 2 (COL 2) on Naval installations 
outside the continental US (OCONUS) and COL 3 for installations within 
the continental US (CONUS). This is an increase in service level 
provided at COL 3 and addresses both MWR programs and equipment. In 
PB08 budget submission, Navy programmed to execute CD at COL 3 for both 
CONUS and OCONUS installations.
    2. An extensive review of alternative program delivery models 
determined that more efficient delivery systems such as greater 
partnering with outside organizations would streamline operations and 
maintain program delivery levels despite reduced funding. Some examples 
of successful partnering efforts are the ``Boys and Girls Club'' 
certified affiliation for all Navy youth centers, mutually supporting 
Memorandums of Agreement with the Navy Exchange Food Service and 
Vending programs and the ``First Five Commission'' in San Diego area 
child development centers.
    3. The effect of global war on terror--GWOT places additional 
demands on MWR program quality and capacity for programs outside the 
core program group. These requirements are addressed in GWOT 
appropriations and Congress has supported these requests in the past.
    4. Included in FY03 reporting figures is $5.2M MPN working within 
MWR at various activities. MPN dollars are not reported in FY 2007 
figures.
    5. Congressional support, other than fully supporting all Base 
Operating functions is not required to protect the Navy MWR program.

    Dr. Snyder.

 MWR Funding Compared to Inflation Fiscal Years 2003 Compared to Fiscal
                                Year 2007
                          [Dollars in Millions]

                                                     FY 2003
           Service             FY 2003    FY 2007   Inflated  Difference
                               Actual   Programmed   to 2007

Army                            460.5      471.5      509.3   (-37.8)--7
                                                                      %
Navy                            369.7      300.6      408.8   (-108.2)--
                                                                    27%
Air Force                       539.4      545.6      596.6   (-51.0)--9
                                                                      %
Marine Corps                    131.7      138.4      145.7    (-7.3)--5
                                                                      %
Total DOD                     1,501.3   1,456.1     1,660.4   (-204.3)--
                                                                    12%



    Ms. Arsht, given that each of the services is projecting to spend 
less on MWR programs during fiscal year 2007 then they did in fiscal 
year 2003 when inflation is considered, what should be the 
Subcommittee's view of the future of MWR programs in the military 
community?
    Service MWR chiefs, should the Congress be concerned about the 
inevitable degradation of programs and facilities? Is it necessary for 
the Congress to step in to protect these programs?
    Mr. Myers. The table above takes actual spending from FY 2003, 
projects it forward with inflation, and compares that to the amount 
shown in the FY 2007 budget. A budget-to-budget comparison would show 
Air Force with $543.9M in the FY 2003 budget, which would be inflated 
to $601.6M and reflect an apparent reduction of $56M. Regardless of 
whether the number is $51M or $55M, there is always concern when 
funding appears to decrease. Congress should be concerned about any 
degradation, or potential for degradation, in support for the service 
member. However, this is not inevitable. As part of our efforts to 
transform and deal with reduced resources, Air Force Services has and 
will continue to develop new tools and procedures to evaluate the needs 
and preferences of our Airmen and their families to ensure our programs 
remain relevant. Congress has always expressed its will regarding MWR 
programs, and our commanders have struggled to provide the needed 
resources. We do foresee potential problems with base realignment and 
closure (BRAC). Appropriated funds are supposed to pay for BRAC 
impacts, to include expanding MWR and exchange facilities and programs 
at gaining bases. We have identified over $136 million in lodging and 
MWR requirements at these locations and will continue to pursue 
funding.

    Dr. Snyder.

 MWR Funding Compared to Inflation Fiscal Years 2003 Compared to Fiscal
                                Year 2007
                          [Dollars in Millions]

                                                     FY 2003
           Service             FY 2003    FY 2007   Inflated  Difference
                               Actual   Programmed   to 2007

Army                            460.5      471.5      509.3   (-37.8)--7
                                                                      %
Navy                            369.7      300.6      408.8   (-108.2)--
                                                                    27%
Air Force                       539.4      545.6      596.6   (-51.0)--9
                                                                      %
Marine Corps                    131.7      138.4      145.7    (-7.3)--5
                                                                      %
Total DOD                     1,501.3    1,456.1    1,660.4   (-204.3)--
                                                                    12%


    Service MWR chiefs, should the Congress be concerned about the 
inevitable degradation of programs and facilities? Is it necessary for 
the Congress to step in to protect these programs?
    Mr. Downs. The Marine Corps is not projecting to spend less on MWR 
programs. The following display depicts a Marine Corps MWR budget 
increase of 34 percent between FY03 and FY07. This stable budget 
profile sustains existing operations and programs. The FY03 and FY06 
actual data totals include additional funds allocated during the year 
of execution, (e.g., supplemental). It is important to note that 
budgeted numbers differ from actual spending. Comparisons (between 
budgeted figures and actual figures/two different data points) yield 
inaccurate spending projections.



                                                         FY03        FY03        FY06        FY06        FY07
                                                       (Budget)    (Actual)    (Budget)    (Actual)    (Budget)

MW Direct                                                98,665     114,778     107,344     127,287     111,855
CD Direct                                                21,610      16,921      23,576      35,264      26,504
                                                     -----------------------------------------------------------
Total MWR Direct                                        120,275     131,699     130,920     162,551     138,359
MWR Indirect                                             38,152      57,273      73,442      79,176      74,629
                                                     -----------------------------------------------------------
Total MWR                                               158,427     188,972     204,362     241,727     212,988


    Dr. Snyder. One recent estimate suggests that the services remain 
approximately 27,000 child care spaces short of the total requirement. 
Ms. Arsht, what is the current shortage in available child care spaces 
as calculated by DOD and how is that number calculated?
    Ms. Arsht. We calculate the shortage of care at approximately 
30,000 spaces. The number of spaces DoD provides fluctuates as a result 
of several factors, including the loss of in-home care spaces offered 
by military spouses with a deployed member; families who relocate 
during deployment to be closer to their extended family; changing 
facility capacity due to shifts in age groups; population shifts due to 
rebasing; and personal decisions to change child care requirements as a 
result of stresses tied with spouse's deployment.
    The Department developed a formula to project the macro child care 
need. This formula utilizes Defense Manpower and Data Center 
demographic data, the total number of children ages 0-12 years assigned 
to an installation, and an analysis of potential demand (number of 
single parents, number of military couples, and number of children of 
military members whose spouses work outside the home, etc.). The 
Service components adjust the formula to meet the particular nuances of 
their personnel and mission for a Service-wide perspective and then 
work with local installations to determine how much care is needed at 
specific installations. This check and balance allows for unique 
adjustments based on local on and off installation capability, 
employment opportunities, mission requirements, and Service member 
demographics from additional sources such as stationing data.
    Dr. Snyder. A recent Rand report found that child care programs are 
important to retention of families and that 20 percent of military 
families are not satisfied with their current child care. The study 
also concluded that improved child care options for dual-military and 
single parent families were needed. Ms. Arsht, are you aware of this 
Rand study and what is DOD doing to deliver the child care options that 
military members desire? Service MWR chiefs, what special effort is 
being applied to providing improved child care options for dual-
military and single parent families?
    Ms. Arsht. Yes, I am aware of the Rand study and am pleased that 
the survey reinforced the Department's position that child care is a 
retention issue for our families. It is important to note that 80 
percent of the families were satisfied with their current child care 
arrangement. The Department monitors parent satisfaction through 
additional data sources such as the Services customer service surveys 
and the DoD 2006 Survey of Active Duty spouses.
    DoD supports the child care needs of families through a 
multifaceted approach based on the principles of quality, 
accessibility, and affordability. While an existing DoD child care 
arrangement may not be the parent's first choice, DoD considers care 
provided within the Child Development Program (CDP) system to be 
equivalent in quality, and encourages the military Services to 
intervene until the family's child care needs are met. Subsidies 
available to home-based care providers equalize the cost between center 
and home-based care. In order to better meet the needs of families who 
live off-installation, the Services have broadened child care options 
within the community through their partnership with the National 
Association of Child Care Resource and Referral Agencies. The 2006 DoD 
CDP annual Survey of Operations demonstrates that more than 20,000 
subsidized outreach child care spaces were utilized.
    Military child care continues to be one of our most important 
programs for supporting families, especially during deployment. The 
Department acknowledges that it is challenging to meet the child care 
needs of all military families. Many initiatives have been implemented 
that will help families find quality and affordable child care. For 
example; through the emergency intervention plan, we have accelerated 
program availability through construction of both temporary child 
development centers and permanent renovations which are resulting in 
7,000 spaces. Thank you for your strong support of these programs.
    Dr. Snyder. A recent Rand report found that child care programs are 
important to retention of families and that 20 percent of military 
families are not satisfied with their current child care. The study 
also concluded that improved child care options for dual-military and 
single parent families were needed. Ms. Arsht, are you aware of this 
Rand study and what is DOD doing to deliver the child care options that 
military members desire? Service MWR chiefs, what special effort is 
being applied to providing improved child care options for dual-
military and single parent families?
    General Pinckney. Single and dual Army personnel receive priority 
for child care in Child Development Centers, School-Age Programs, and 
Family Child Care Homes. The Army requires that installations charge 
the lowest authorized fee for single parent Families who fall under 
lower income categories.
    Single and dual military Families are primary beneficiaries of the 
Army's extended duty day subsidy, which includes evening, weekend, and 
long-term care in Child and Youth Services Programs. Additional care 
hours needed (beyond the normal duty day in direct support of the 
mission) are provided at no additional cost to these Families.
    Dr. Snyder. A recent Rand report found that child care programs are 
important to retention of families and that 20 percent of military 
families are not satisfied with their current child care. The study 
also concluded that improved child care options for dual-military and 
single parent families were needed. Ms. Arsht, are you aware of this 
Rand study and what is DOD doing to deliver the child care options that 
military members desire? Service MWR chiefs, what special effort is 
being applied to providing improved child care options for dual-
military and single parent families?
    Admiral Handley. Navy continues to give single and dual military 
families highest priority for placement into our child care programs. 
Navy is adding 1,000 additional child care spaces over the next year 
that will support our single and dual military families. Additionally, 
we offer extended hours programs in our military home care program to 
support their unique situations.
    Dr. Snyder. A recent Rand report found that child care programs are 
important to retention of families and that 20 percent of military 
families are not satisfied with their current child care. The study 
also concluded that improved child care options for dual-military and 
single parent families were needed. Ms. Arsht, are you aware of this 
Rand study and what is DOD doing to deliver the child care options that 
military members desire? Service MWR chiefs, what special effort is 
being applied to providing improved child care options for dual-
military and single parent families?
    Mr. Meyers. The Air Force remains steadfast in our commitment to 
provide Quality of Life initiatives including affordable and available 
child care through our Expanded Child Care programs. We also use the 
adjustment to the Department of Defense (DOD) formula for unmet need to 
ensure we more closely support the needs of single and dual military 
families. Through partnerships with the National Association of Child 
Care Resource and Referral Agencies (NACCRRA), the Air Force offers 
additional child care placement opportunities through its Quality 
Family Child Care program as well as other DOD-wide initiatives such as 
Military Child Care in Your Neighborhood.
    In addition, the Air Force offers a subsidy for those families 
unable to access care in on-base facilities and those whose needs are 
better suited to Family Child Care homes. The Air Force Subsidy program 
reduces out-of-pocket expenses by allowing parents to pay the same fee 
they would if they were in a center-based facility. It also provides 
increased child care options for children under two years of age, 
children with special needs and parents who must work non-standard 
shifts such as swings, evenings and weekends. Unique outreach programs 
such as our Missile Care program provide additional support to single 
and dual-military members assigned to missile sites by providing child 
care during consecutive 24-hour shifts when center-based care is 
unavailable. Another support mechanism for single and dual-military 
parents is provided via the Air Force Give Parents a Break program, 
funded by the Air Force Aid Society, to help support those parents 
needing relief from the demands of parenting.
    Dr. Snyder. A recent Rand report found that child care programs are 
important to retention of families and that 20 percent of military 
families are not satisfied with their current child care. The study 
also concluded that improved child care options for dual-military and 
single parent families were needed. Ms. Arsht, are you aware of this 
Rand study and what is DOD doing to deliver the child care options that 
military members desire? Service MWR chiefs, what special effort is 
being applied to providing improved child care options for dual-
military and single parent families?
    Mr. Downs. Our dual military and single parent families receive 
first priority on Marine Corps child care waiting lists. Additionally, 
we provide Enhanced Extended Child Care to families in emergency 
situations, when regular child care is unavailable. This care is 
available 24 hours a day, 7 days a week as needed in Family Child Care 
homes at no cost to the parents. We also provide respite care and child 
care during deployment briefs.
    Dr. Snyder. Admiral Handley, your written statement addressed the 
three-year implementation plan for a Navy-wide uniform child care fee 
structure that will ultimately allow Navy service members to pay the 
same child care fees at Navy Child Development Centers and other child 
care programs. Admiral, would such a plan call for higher fees at some 
locations where local child care rates are lower than the military 
rate? If that is true, would this plan result in service members 
seeking child care in off-base commercial facilities that are perhaps 
of lower quality? Does this policy result in the fees from low cost 
areas subsidizing the fees in high cost areas?
    Admiral Handley. Navy child care rates on average are about 60% of 
fees charged at equivalent off-base centers. Standardizing fees has 
resulted in minimal fee increases in some areas and decreases in 
others. The standardization has resulted in Service members paying the 
same fees for the same quality of care from installation to 
installation and because fees are still based on total family income 
variables. Spouse employment wages are also taken into consideration. 
After two years of the changeover process to standardized rates, we 
have no evidence that this has caused any loss in patronage. In fact, 
our problem remains that we have more demand for our spaces than we 
have capacity. Thus, it is unlikely that this effort will result in 
migration to off-base care. All fees remain within the region where 
they are generated so there will be no subsidization between low and 
high cost areas.
    Dr. Snyder. Ms. Arsht, how has Operation Military Child Care been 
progressing and what is the annual cost to DOD? How many families 
benefit from the program and how many of the total are reserve 
component families?
    Ms. Arsht. OMCC addresses the temporary need for child care 
availability and affordability for the Total Force during times of 
increased OPSTEMPO. OMCC is a DoD-funded child care subsidy program 
designed to assist all activated members with child care costs in their 
local communities, in state-licensed, off-installation Family Child 
Care Homes and Child Development Centers. Military members such as 
recruiters, those who are geographically dispersed, on special duty 
assignments and all military members in active duty status not assigned 
near a support installation are eligible for subsidized child care.
    Over 5,600 children of deployed Service members have received fee 
assistance through OMCC. Reserve Component families comprise 44% of the 
total population served. Fees are generally discounted 15-25% from the 
local rate. This program is funded through Emergency Supplemental as 
money becomes available.
    Dr. Snyder. The ongoing global repositioning of forces would seem 
to demand that some appropriated funding be provided to support 
construction of expanded MWR facilities. Ms. Arsht, will appropriated 
funds be available to reduce the pressure on non-appropriated accounts?
    Ms. Arsht. MWR is committed to providing adequate facilities to 
support quality of life for Service members and their families. Under 
Department policy, appropriations may fund requirements for those 
installations receiving over a 25 percent increase in personnel within 
a two-year period. The Military Services prioritize all Service 
military construction (MILCON) projects, to include MWR facilities 
where Service members are being repositioned. Projects are funded in 
priority order until MILCON appropriated funding is no longer 
available. Those requirements that do not receive appropriated funding 
during a budget cycle are strongly advocated for in future budget 
submissions.
    Dr. Snyder. Service MWR chiefs, as we see increasing numbers of 
overseas base closures, are the MWR activities being reimbursed for the 
facilities being returned to use by the foreign government?
    General Pinckney. No. Public Law 101-510, as amended, only allows 
for the reimbursement of the undepreciated value of non-appropriated 
fund (NAF) investments in facilities constructed or improved with NAT 
at Base Realignment and Closure locations in the United States. Status 
of Forces Agreements govern the transfer and disposal of facilities 
constructed or improved with NAF overseas.
    Dr. Snyder. Service MWR chiefs, as we see increasing numbers of 
overseas base closures, are the MWR activities being reimbursed for the 
facilities being returned to use by the foreign government?
    Admiral Handley. To date, Navy has not received, nor do we expect 
to receive, any reimbursement for facilities being returned for use by 
foreign governments.
    Dr. Snyder. Service MWR chiefs, as we see increasing numbers of 
overseas base closures, are the MWR activities being reimbursed for the 
facilities being returned to use by the foreign government?
    Mr. Myers. The Air Force is not heavily impacted by the current 
overseas base closures as most of our base closures occurred in the 
1990's. However, in 2005, we turned Rhein Main Air Base over to the 
German government. Our investment of $10 million in non-appropriated 
fund facilities was not reimbursed.
    Dr. Snyder. Service MWR chiefs, as we see increasing numbers of 
overseas base closures, are the MWR activities being reimbursed for the 
facilities being returned to use by the foreign government?
    Mr. Downs. As the Marine Corps has not yet experienced an overseas 
base closure, the question is not applicable to our organization.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. MCHUGH
    Mr. McHugh. I am concerned about the effects of reduced exchange 
dividends and in the reduced level of appropriated fund support, when 
that appropriated fund support is measured in constant dollars. I 
believe that your statements submitted for the hearing reflect a sense 
of optimism about the future of MWR programs that I do not necessarily 
share. For example, none of your statements mentioned any of the 
reductions in hours and services, as well as outright closures of 
programs that we all heard about last year from our constituents as the 
military services struggled to find the cash to fund operations and 
maintenance of deployed forces. Given what you know about future trends 
in exchange dividends and appropriated fund support levels, what MWR 
programs and services are most at risk for curtailment, reduction, or 
outright elimination?
    Ms. Arsht. The Department of Defense does not support reducing or 
eliminating MWR programs. MWR programs have a profound impact on the 
quality of life of our Service members and their families. However, if 
appropriated funding were limited, the MWR programs and services at 
most risk for reduction or closure are Category B programs, with the 
exception of child care. If exchange dividends should fall short, the 
most significant impact is reduced funding for non-appropriated major 
construction projects.
    Mr. McHugh. I am concerned about the effects of reduced exchange 
dividends and in the reduced level of appropriated fund support--when 
that appropriated fund support is measured in constant dollars. I 
believe that your statements submitted for the hearing reflect a sense 
of optimism about the future of MWR programs that I do not necessarily 
share. For example, none of your statements mentioned any of the 
reductions in hours and services, as well as outright closures of 
programs that we all heard about last year from our constituents as the 
military services struggled to find the cash to fund operations and 
maintenance of deployed forces. Given what you know about future trends 
in exchange dividends and appropriated fund support levels, what MWR 
programs and services are most at risk for curtailment, reduction, or 
outright elimination?
    General Pinckney. Given the trend in exchange dividends, the Army's 
most significant funding category at risk is non-appropriated fund 
major construction (NAFMC). The Army splits exchange dividends between 
garrisons and the Army MWR Fund, with the majority going to garrisons. 
The Army MWR Fund uses available dividend receipts to finance NAFMC 
projects. As exchange dividends diminish, the Army forecasts losing the 
ability to fund approximately three NAFMC projects a year. Currently, 
there is no alternative source of funds to offset this forecasted loss. 
The ability to keep pace with the backlog of NAFMC requirements, much 
less reduce the backlog, is severely at risk. The majority of the 
dividend going to garrisons is allocated based on the revenue generated 
by Army and Air Force Exchange Service programs at the exchanges on 
garrisons. The garrisons' share of the exchange dividend will decline 
only if sales in exchanges decline.
    Mr. McHugh. I am concerned about the effects of reduced exchange 
dividends and in the reduced level of appropriated fund support--when 
that appropriated fund support is measured in constant dollars. I 
believe that your statements submitted for the hearing reflect a sense 
of optimism about the future of MWR programs that I do not necessarily 
share. For example, none of your statements mentioned any of the 
reductions in hours and services, as well as outright closures of 
programs that we all heard about last year from our constituents as the 
military services struggled to find the cash to fund operations and 
maintenance of deployed forces. Given what you know about future trends 
in exchange dividends and appropriated fund support levels, what MWR 
programs and services are most at risk for curtailment, reduction, or 
outright elimination?
    Admiral Handley. MWR programs most likely at risk of closure or 
curtailment are primarily programs that cannot reasonably be sustained 
with increased user fees, or have been underused by patrons. The 
majority of these activities fall into the Category B and C program 
areas because APF funding is being re-directed from these programs to 
core programs. Examples of programs at risk are Category B bowling, 
auto skills, outdoor recreation, and arts and crafts programs.
    Mr. McHugh. I am concerned about the effects of reduced exchange 
dividends and in the reduced level of appropriated fund support when 
that appropriated fund support is measured in constant dollars. I 
believe that your statements submitted for the hearing reflect a sense 
of optimism about the future of MWR programs that I do not necessarily 
share. For example, none of your statements mentioned any of the 
reductions in hours and services, as well as outright closures of 
programs that we all heard about last year from our constituents as the 
military services struggled to find the cash to fund operations and 
maintenance of deployed forces. Given what you know about future trends 
in exchange dividends and appropriated fund support levels, what MWR 
programs and services are most at risk for curtailment, reduction, or 
outright elimination?
    Mr. Myers. The decrease in appropriated funds has disrupted some 
programs at base-level. However, so far, we have been successful in 
insulating our bases from the direct effect of reduced exchange 
dividends. The Air Force distributes Army and Air Force Exchange 
Service (AAFES) dividends to its installations based on a percent of 
AAFES sales, rather than earnings. This has helped shield the bases 
from the downturn in exchange profits; as long as AAFES sales remain at 
their current level, bases will continue to receive the same level of 
support. However, with AAFES earnings down, the pot from which we make 
these payments is shrinking. We feel the greatest impact in the 
centrally-funded Air Force non-appropriated fund (NAF) construction 
program. Since the majority of the over $32 million in annual NAF 
facility expenditures are centrally funded, many facility projects will 
be deferred and we will not be able to consider any new requirements 
for several years. As exchange dividends drop further, the shortfall is 
likely to spread to other centrally-funded programs that can only be 
supported with NAFs. We hope to avoid disrupting the payments that 
support day-to-day base programs, as this would have the most immediate 
impact on quality of life.
    Mr. McHugh. I am concerned about the effects of reduced exchange 
dividends and in the reduced level of appropriated fund support when 
that appropriated fund support is measured in constant dollars. I 
believe that your statements submitted for the hearing reflect a sense 
of optimism about the future of MWR programs that I do not necessarily 
share. For example, none of your statements mentioned any of the 
reductions in hours and services, as well as outright closures of 
programs that we all heard about last year from our constituents as the 
military services struggled to find the cash to fund operations and 
maintenance of deployed forces. Given what you know about future trends 
in exchange dividends and appropriated fund support levels, what MWR 
programs and services are most at risk for curtailment, reduction, or 
outright elimination?
    Mr. Downs. Future MWR trends for the Marine Corps Exchange 
dividends are positive. The Marine Corps dividend is up 34 percent from 
2005 to 2006. Irrespective of a slight decline in 2007, our dividend 
remains 28.5 percent higher than in 2005. Although the funding 
environment is constrained, MWR programs are of significant value to 
the Marine Corps and these programs have successfully sustained 
rigorous budget prioritization sessions. For the third consecutive 
year, the Marine Corps has met or exceeded the 85/65 minimum APF 
funding metric for Categories A and B activities established by DoD. 
Our Installation Commanders actively monitor program delivery and at 
the Headquarters level, we work to ensure continued compliance with DoD 
standards.
    Mr. McHugh. Let me ask you to assess the funding challenges you all 
face in another way. Describe what MWR programs and services will not 
likely be offered in two years and in five years due to funding 
challenges? Where will the MWR funding priorities for programs and 
services be in two years? In five years?
    Ms. Arsht. The Department of Defense does not support reducing or 
eliminating MWR programs. If appropriated funding were curtailed, the 
MWR programs and services at most risk for reduction or closure are 
Category B programs, with the exception of child care. Funding priority 
would most likely be given to MWR programs such as sports and fitness, 
child and youth programs, and libraries.
    Mr. McHugh. Let me ask you to assess the funding challenges you all 
face in another way. Describe what MWR programs and services will not 
likely be offered in two years and in five years due to funding 
challenges? Where will the MWR funding priorities for programs and 
services be in two years? In five years?
    General Pinckney. The Army has no plans to eliminate MWR programs 
and services in the next five years. The priority for funding in the 
next two years and five years will continue to be the programs that 
support deployed Soldiers and their Families, as well as those programs 
identified as ``most important'' by our customers. These programs 
include sports, fitness, recreation center, library, outdoor 
recreation, and auto skills programs, and child and youth services 
programs. The Army has implemented a resource prioritization and 
allocation process--Common Levels of Support (CLS). Garrisons 
participate in the development of the future years' CLS and request 
adjustments to priorities, capability levels, and performance measures. 
Annually IMCOM convenes a senior executive leadership (SEL) meeting to 
review garrison recommendations and balance priorities within available 
funding. The Commanding General, Family and MWR Command, is a member of 
the SEL.
    Mr. McHugh. Let me ask you to assess the funding challenges you all 
face in another way. Describe what MWR programs and services will not 
likely be offered in two years and in five years due to funding 
challenges? Where will the MWR funding priorities for programs and 
services be in two years? In five years?
    Admiral Handley. Over the next two to five years, MWR programs most 
likely at risk of closure or curtailment are non-core programs. The 
majority of these activities fall into the Category B and C program 
areas. Examples of programs at risk are Cat B bowling, auto skills, 
outdoor recreation, and arts and crafts programs. Realistically, only 
those non-core Category B programs with sufficient revenue generating 
capability will likely be retained in the long run.
    Mr. McHugh. Let me ask you to assess the funding challenges you all 
face in another way. Describe what MWR programs and services will not 
likely be offered in two years and in five years due to funding 
challenges? Where will the MWR funding priorities for programs and 
services be in two years? In five years?
    Mr. Myers. In the next two to five years, the Air Force intends to 
preserve our current functions; however, the delivery methods may 
change to make the best use of the available resources in meeting the 
need. We do not intend to react precipitously. Our approach will be 
determined through a deliberate strategic planning process. Using 
industry best practices, this approach will help us develop 
efficiencies in providing needed programs and services.
    Our priorities in the next two to five years will be defined by 
this strategic planning process, but we are committed to the following:

    -  Supporting the warfighting commanders, their troops and families
    -  Core programs such as fitness, libraries, and child development
    -  Community services that, in your words, Congressman McHugh, 
``provide military personnel the same quality of life as is afforded 
the society they have pledged to defend.''

    Mr. McHugh. Let me ask you to assess the funding challenges you all 
face in another way. Describe what MWR programs and services will not 
likely be offered in two years and in five years due to funding 
challenges? Where will the MWR funding priorities for programs and 
services be in two years? In five years?
    Mr. Downs. The Marine Corps is not anticipating a reduction in the 
level of MWR operations and programs. Specific MWR priorities are 
established by the respective Installations Commanders responsible for 
the provision of installation support services, to include MWR. This 
decentralized execution of support services optimizes Commander 
flexibilities to quickly adapt operations to meet current and future 
needs within available resources.
    Mr. McHugh. To what degree do you as the MWR leaders in each of 
your services influence decisions about the curtailment, reduction, 
and/or outright closure of MWR programs at the installation level when 
appropriated funding levels are reduced or reallocated?
    Ms. Arsht. The Military Services decide appropriated funding levels 
for MWR and the level of service offered when appropriated funding is 
reduced.
    Mr. McHugh. To what degree do you as the MWR leaders in each of 
your services influence decisions about the curtailment, reduction, 
and/or outright closure of MWR programs at the installation level when 
appropriated funding levels are reduced or reallocated?
    General Pinckney. The Army provides corporate governance for 
Morale, Welfare and Recreation programs through a Board of Directors. 
The Board's mission is to develop program, resource, and finance 
strategies; develop short- and long term goals and objectives; 
establish implementing plans and performance measures; and maintain 
corporate MWR oversight including fiduciary responsibility. The Board 
is comprised of Army 4-star commanders. The Morale, Welfare and 
Recreation Board of Directors has an Executive Committee comprised of 
Army 3-stars. The Commanding General, Family and MWR Command presents 
and addresses operational and funding matters that include curtailment, 
reduction, and closure of MWR programs.
    Mr. McHugh. To what degree do you as the MWR leaders in each of 
your services influence decisions about the curtailment, reduction, 
and/or outright closure of MWR programs at the installation level when 
appropriated funding levels are reduced or reallocated?
    Admiral Handley. Commander, Navy Installations Command (CNIC) makes 
the final decisions on resource allocations within the shore command 
community based on available funding. These funding allocations are 
based on well defined standards and program requirements. Guidelines 
from CNIC have been provided to regions and installations as to the 
priority of maintaining core programs. Specific decisions to curtail or 
close operations are made at the regional or installation level after 
consultation with CNIC program leadership.
    Mr. McHugh. To what degree do you as the MWR leaders in each of 
your services influence decisions about the curtailment, reduction, 
and/or outright closure of MWR programs at the installation level when 
appropriated funding levels are reduced or reallocated?
    Mr. Myers. Air Force Installation Commanders are responsible for 
setting facility hours and determining the right mix of programs to 
meet the needs of the base population. Changes in demographics and 
Airmen's needs will often drive redirecting of resources from 
underutilized programs to programs with increased demands. When making 
decisions that will reduce service, Installation Commanders make 
careful business-based decisions to ensure any negative impacts are 
minimized and that resources are maximized. In the unusual instance 
where a program is no longer viable, the installation commander can 
recommend closure. However, to ensure closure is the appropriate course 
of action, approval from the Air Force Director of Services is required 
before closing any Air Force Services activity other than at a location 
involved in Base Realignment and Closure.
    Mr. McHugh. To what degree do you as the MWR leaders in each of 
your services influence decisions about the curtailment, reduction, 
and/or outright closure of MWR programs at the installation level when 
appropriated funding levels are reduced or reallocated?
    Mr. Downs. As Installation Commanders are responsible for the 
provision of installation support services, they have full decision-
making authority. From an oversight perspective, the Commandant of the 
Marine Corps chartered the Marine Corps Community Services (MCCS) Board 
of Directors (BOD), which acts on issues that cross installation 
boundaries. The BOD reviews quarterly appropriated fund execution 
reports and takes action when necessary to ensure execution is 
appropriate and consistent with requirements. Additionally, when deemed 
appropriate by the Installation, Region, or Marine Forces Commander, 
issues are elevated to the MCCS BOD for enterprise-wide support and 
solution. This construct maintains Marine Corps leadership awareness of 
Corps-wide issues and helps sustain, to the degree possible, support 
services to Marines and their families, regardless of duty assignment.
    Mr. McHugh. What will be the impact on MWR programs if the FY07 
Emergency Supplemental is not quickly enacted?
    Ms. Arsht. Sustaining morale and readiness during deployed 
operations is the essence of MWR programs. Supplemental appropriated 
funds are required to continue providing Service members with a full 
spectrum of MWR activities, specifically implemented for forces 
deployed to fight the global war on terror. Recreation and social 
activities include cardiovascular and weight equipment, sports, 
recreation, motion pictures, reading materials and continuing education 
support, games, large screen televisions, DVD/CD players, up-to-date 
video games and game CDs, first-run movies, free Internet access, e-
mail, and voice over Internet phone capability, and celebrity and 
professional entertainment provided by Armed Forces Entertainment.
    Continued supplemental funding is also required to maintain the 
expanded capability of MWR programs on military installations to meet 
the recreational and support needs of family members left behind. 
Supplemental funding has been critical to provide activities and 
services for family members, while spouses deploy.
    Mr. McHugh. What will be the impact on MWR programs if the FY07 
Emergency Supplemental is not quickly enacted?
    General Pinckney. The Army plans to minimize the effects of a lack 
of Supplemental funding by using financial management techniques rather 
than cancelling, delaying, or deferring projects and programs. Examples 
include recording obligations and making payments as late as possible 
without breaking government accounting rules, and obligating contracts 
in 30-day increments. Should this strategy prove inadequate, the most 
significant consequence to Family and MWR programs will be reduced 
support resulting from hiring restrictions. Additionally, late receipt 
of the BRAC funds in the Supplemental will defer construction of child 
development centers at Fort Bliss, Texas, and Fort Riley, Kansas, and 
youth centers at Fort Bliss and Fort Sam Houston, Texas.
    Mr. McHugh. What will be the impact on MWR programs if the FY07 
Emergency Supplemental is not quickly enacted?
    Admiral Handley. Because MWR mission requirements have grown due to 
the demands of the global war on terror, Navy MWR needs supplemental 
appropriations in order to continue providing needed MWR programs. Navy 
has greatly expanded fleet support to provide fitness, recreation 
equipment, and movies to forward deployed forces in recent years. 
Currently, Navy supports over 110 forward deployed, ground units in 
Afghanistan, Iraq, and Kuwait. Without supplemental funding, these 
programs will be jeopardized.
    Additionally, continued supplemental support is needed to maintain 
programs for families left behind while spouses deploy. Supplemental 
funding has provided expanded capability for deployed Sailors to 
connect with loved ones at home and increased programming to meet the 
recreational and support needs of family members at home. Supplemental 
funding has been a critical element in Navy's efforts to provide the 
correct level of support for family members.
    Mr. McHugh. What will be the impact on MWR programs if the FY07 
Emergency Supplemental is not quickly enacted?
    Mr. Myers. This will impact the MWR program at every level as the 
Services try to cover these costs within existing resources. First and 
foremost, it impacts our capability to support our troops in the field: 
inability to pay contract costs, transportation of rations and 
equipment replacement and repair. Next, it impacts our programs at base 
level: reduces levels of manning and hours of operation, stops service 
and maintenance contracts and facility restorations, reduces scheduled 
equipment replacement purchases, and cancels technical subscription 
renewals. Last, it impacts many Air Force centrally-sponsored and 
funded programs and initiatives: availability and cost to the patron 
for child development and related activities; on-site visits for 
training, oversight and control; and projected savings from initiatives 
like the Non-appropriated Fund Transformation project. Even more 
drastic reductions will be likely if Air Force funding is pulled to 
cover shortfalls in other areas.
    Mr. McHugh. What will be the impact on MWR programs if the FY07 
Emergency Supplemental is not quickly enacted?
    Mr. Downs. Delays in the FY 2007 Emergency Supplemental may require 
an initial re-balancing of MWR baseline execution plans, as deemed 
appropriate by the respective Installation Commander. Due to 
uncertainties of future Emergency Supplementals and the sustained 
impacts associated with the Long War, the Marine Corps is assessing 
baseline requirements to not only ensure sufficiency and relevance, but 
to also ensure programs are transitioning to an appropriate wartime 
footing. These actions will help establish an appropriate balance in 
Marine and family support, whether forward deployed or in a garrison 
environment.
    Mr. McHugh. In your written statement (p. 9), you indicate that the 
Department continues to work with the United States Paralympics 
Committee to provide severely injured service members have 
opportunities to participate in adaptive sports programs. You also 
state that the USOC Paralympics organization is also coordinating with 
key Military Treatment Facilities to see how severely injured sports 
and recreational opportunities can be expanded and incorporated into 
all aspects of the recovery, rehabilitation and reintegration process. 
You also indicate that the Department is coordinating with 
organizations such as the Armed Forces Recreation Society to provide 
similar opportunities for severely injured veterans--that is persons 
who are no longer in the military--on the municipal and local levels. 
How extensive is the Department's support to the USOC Paralympics 
Military Program and to what extent is additional legislation required 
to expand the opportunities for severely injured military personnel to 
participate in the USOC Paralympics Military Program?
    Ms. Arsht. The Department of Defense (DoD) continues to support the 
United States Paralympics Committee. Currently there are 37 Service 
members scheduled to attend the May 2007, Military Sports Camp in 
Colorado. This number is up slightly from previous camps. The USOC is 
hopeful to double participation for the remaining three camps this 
year. The DoD remains a strong proponent of this effort. The USOC 
proposal to conduct a 20-month pilot program at Walter Reed Army 
Medical Center, Brooke Army Medical Center, and San Diego Naval Medical 
Center has been vetted at each of the Military Treatment Facilities.
    Our effort to engage organizations such as the AFRS continues to 
evolve. A clearer mission has been realized to the extent that a DoD/
AFRS partnership initiative will be discussed at the AFRS June board of 
director's meeting.
    Additional legislation is not needed at this time; however as our 
cooperative efforts continue, we will continue to review this 
possibility.
    Mr. McHugh. Explain the extent to which the Defense Health Program, 
through the MTFs, provides severely injured military personnel with 
sports and recreational opportunities to aid in their recovery, 
rehabilitation and reintegration process.
    Ms. Arsht. There are a multitude of different sports and recreation 
offerings at the MTFs. From the new Intrepid Center at Brook Army 
Medical Center to the host of outdoor trips and sporting events at 
Walter Reed, Bethesda, and other MTFs, the Office of the Secretary of 
Defense (OSD) works closely with the Wounded Warrior Disabled Sports 
Project to recruit participants directly from the MTF's. OSD has 
ongoing coordination with the National Basketball Association and the 
National Football League and is coordinating with numerous non-profit 
organizations to identify severely injured for activities ranging from 
skiing and biking to kayaking and hunting.
    Mr. McHugh. To what degree and under what conditions should DOD 
support and assistance be provided to sports and recreational programs 
at the national, regional, local and municipal levels which assist 
severely injured veterans who are no longer in military service? To 
what degree are the Veterans Administration and the Department of 
Defense coordinating in such support?
    Ms. Arsht. The DoD as a whole and through each Service continues to 
support severely injured veterans even after they have left the 
service. Ensuring that these veterans have opportunities to participate 
in sports and recreation as part of their everyday lives is of the 
utmost importance to ensure their physical and psychological health. 
Supporting local, regional, and national organization and competition 
targeted at severely injured veterans will create the structure and 
motivation for their ongoing participation in sports. Such support of 
competition should be coupled with local and municipal organization, 
education, and encouragement to yield high participation in sport 
activities and these recreational/regional competitions.
    Furthermore, the Army is actively pursing Paralympic-eligible 
soldiers to participate in the World Class Athlete Program and the Navy 
already has an active-duty, Paralympic gold medal winning sailor. DoD 
support of these athletes, and of severely injured veterans competing 
for the United States in international Paralympic competition, is of 
high value to raise awareness and motivation among other veterans who 
have sustained similar injuries.
    The DoD and VA cooperation should ensure that injured service 
members of both active duty and veteran status can immediately take 
advantage of such opportunities as part of their recovery and re-
integration process.
    Mr. McHugh. In November 2006, I wrote the Department supporting the 
creation of a DOD-wide standard for base access credentials for 
employees of companies that deliver goods and services for the military 
resale system. Last month, Dr. Chu, the Under Secretary of Defense for 
Personnel and Readiness, responded to Chairman Snyder and me, saying 
that the Department would defer action on establishing such a common 
access process until the General Accounting Office completed an audit 
of base access issues, possibly as late as September 2007, and DOD 
organizations involved could update policy to address the GAO 
recommendations. Why must DOD wait to establish of a common access card 
for exchange and commissary retail vendors until the GAO finishes its 
work? Isn't such a common access card already coming into use in many 
areas of the Department?
    Ms. Arsht. The Department of Defense is awaiting completion of the 
Government Accountability Office audit to implement common access 
policy for retail vendors to allow the Department to benefit from the 
information expected in the final report. The Department anticipates 
that the comprehensive study on the standards, protocols, and rules for 
interoperability will contain recommendations on the establishment of 
common base access policy. Awaiting these recommendations and aligning 
Department-wide policy will help ensure that the installations 
commanders, who are ultimately responsible for security, can make 
appropriate physical access system investments in accordance with a 
common implementation strategy.
    The Department is currently using the Common Access Card (CAC) to 
comply with Homeland Security Presidential Directive-12 (HSPD-12), 
which requires Federal agencies to issue interoperable credentials to 
employees and contractors. However, the CAC is not intended to serve as 
a common credential for retail vendors. The CAC supports both physical 
and logical access and is subject to HSPD-12 requirements in areas such 
as identity proofing, background checks, and personal data retention, 
making it an inappropriate choice as a common card for retail vendors.
    Mr. McHugh. No one wants to jeopardize installation security, but 
surely there is a way to expeditiously standardize some aspects of the 
clearance process and eliminate unnecessary duplication of 
administrative processing and cost?
    Ms. Arsht. The Department has started to implement systems and 
procedures that support standardized clearance processes and can help 
eliminate duplicative costs related to installation access. The Defense 
Biometric Identity System (DBIDS) is a standardized, vetted, proven, 
system that has been implemented at approximately 300 gates on over 160 
bases across the Department of Defense (DoD). DBIDS supports 
installation access for companies that deliver goods and services to 
the military resale system and has the capability to reduce a portion 
of the redundant administrative processes that currently exist in 
today's environment. DoD policy states that DBIDS will serve as the 
enterprise system for physical access, however, the system is currently 
not mandated for implementation throughout the Department. Installation 
commanders continue to have the authority over base access and the 
technology migration of base physical access control systems.
    Mr. McHugh. In your statement (p. 7), you state that the Army is 
working with both the Department of Defense and the Department of 
Education to address issues of dependent schools related to the return 
to the U.S. from overseas of significant numbers of military personnel 
and their dependents. Please explain what specific measures are being 
developed to address the increased demands on DOD and civilian 
dependent schools.
    General Pinckney. The Army is developing relationships and 
informing local education agencies and Department of Defense schools on 
the number of school-age students that are expected to be gained 
between 2004 and 2011. Representatives from 25 Army locations with 
gains of 250 or more school-age students attended the 2005 Army 
Education Summit. Community teams consisting of school liaison 
officers, garrison commanders, and school superintendents developed 
local action plans, coordinated systems for information sharing, and 
utilized the Army School Transition Plan to establish processes for 
successful transition of school-age children into local schools.
    The Army School Transition Plan develops and implements strategies 
that prepare Army Families and supporting school districts for 
successful transition from one school to another. This plan deploys a 
variety of transition support mechanisms such as: School Liaison 
Officers, School Transition Specialists, Transition Counselor 
Institutes, Special Education Leadership Institutes, Student2Student 
Transition Programs, and Parent to Parent Cadre teams. The plan 
facilitates over 270 reciprocal agreements among military-affiliated 
school districts.
    Mr. McHugh. Please describe the major initiatives that the Army is 
supporting and the extent to which DOD and the Department of Education 
are moving ahead in cooperation with the Army.
    General Pinckney. Strong collaborative relationships are 
established between the Army, Department of Defense, Department of 
Education, and local communities and garrisons. The Army participated 
in the DOD Conference on Education for Military-Connected Communities 
held in November 2006 that provided BRAC and rebasing communities and 
installations alternative approaches to consider when communities are 
looking to build or expand current facilities.
    The Army provides information about the Office of Economic 
Adjustment to garrisons as a major Department of Defense resource for 
assisting communities that are significantly impacted by stationing 
changes, such as base closures and realignments. The Army also 
submitted input for the DoD Report to Congress, November 2006, which 
addressed the number of students that have been gained or expected to 
be gained at BRAC/transforming installations; a plan for how DoD and 
Army will work with federal, state, and local education agencies; and a 
list of possible funding resources, including federal grants available 
to local education agencies to assist in financing construction, 
expansion, and addition of teachers to accommodate significant students 
increases.
    In addition, the Army supplies data regarding the requirement to 
provide information to the Department of Defense to be able to utilize 
the Department of Education NDAA 2006 and 2007 retroactive Impact Aid 
payments ($7 million and $8 million) to school districts affected in 
school years beginning 2003/2004 and 2004/2005 where local education 
agencies were impacted by growth of 250 or more military-affiliated 
students.
    Mr. McHugh. For more than a decade, as part of each National 
Defense Authorization Act, Congress steps up and authorizes additional 
funding for what I call ``DOD Supplementary Impact Aid.'' This funding 
is in addition to whatever Impact Aid is provided by the Department of 
Education. Last year the HASC authorized a total of $65 million for DOD 
Supplementary Impact Aid. DOD has never formally embraced this idea of 
DOD Supplementary Impact Aid by incorporating such funding in its 
budget request. How important is this ``DOD Supplementary Impact Aid'' 
to the Department's ability to ensure adequate support to military 
dependents by local educational agencies?
    Ms. Arsht. Funding and financing for local education agencies (LEA) 
is the responsibility of the local or state governments. The Department 
does not develop, oversee, or have authority over an LEA's budget or 
financial requirements and cannot comment on the DoD Supplementary 
Impact Aid.
    However, the Department has been given authority to assist LEAs to 
help ensure quality educational opportunities for military children. 
Therefore, the Department has offered assistance by sharing expert 
information about financing, funding, building, and ensuring quality 
education with LEAs and impacted communities.
    Funding for this new support is now included in the Department of 
Defense Education Activity budget in 2008 ($2.4M).
    Mr. McHugh. Given the significant challenges facing many local 
educational agencies due to the return to the US of military members 
and their families, should the Congress consider authorizing more than 
the $65 million?
    Ms. Arsht. Funding and financing for local education agencies (LEA) 
is the responsibility of the local or state governments. The Department 
does not develop, oversee, or have authority over an LEA's budget or 
financial requirements and cannot comment on the amount of Department 
of Defense (DoD) Supplementary Impact Aid or the assistance that it may 
or may not provide. The new budgeted support to partner with LEAs is a 
more appropriate DoD mission.
    Mr. McHugh. Internet access, recreational on-line gaming and E-mail 
are in great demand by our military personnel around the world, 
particularly those serving in combat zones. The activities provide 
relaxation and allow Service members to stay in touch with family and 
friends. How are you currently meeting the demand for these services 
within the MWR system? Are these services provided exclusively through 
MWR activities and programs? To what extent are these activities 
revenue generating entities for the MWR program?
    Ms. Arsht. Military spouses indicate that communication with their 
Service member is the number one factor in being able to cope with 
deployments. At home, computer and Internet service is located in 
libraries and recreation, community, and youth centers.
    MWR programs operate 145 free Internet cafes in Iraq with 4,435 
computers and 1,829 phones. Iraq/Kuwait totals are expected to increase 
by 615 computers and 323 telephones by May. There are 30 MWR-operated 
Internet cafes in Afghanistan with 246 computers and 142 phones. 
Afghanistan totals will increase by 9 locations, 488 computers, and 212 
phones by May. Voice over Internet protocol phone service at Internet 
cafes is less than $.04 per minute.
    Because of communication resources, families are connected to their 
Service members in near real-time, which has a dramatic effect on 
morale both at home and overseas. This communication is essential to 
morale and our ability to sustain deployments.
    Mr. McHugh. Internet access, recreational on-line gaming and E-mail 
are in great demand by our military personnel around the world, 
particularly those serving in combat zones. The activities provide 
relaxation and allow Service members to stay in touch with family and 
friends. How are you currently meeting the demand for these services 
within the MWR system? Are these services provided exclusively through 
MWR activities and programs? To what extent are these activities 
revenue generating entities for the MWR program?
    General Pinckney. MWR provides no-charge, recreational Internet 
access through community programs in libraries and Youth Technology 
Labs. Army communications infrastructure is the primary provider of no-
charge services. No-charge services allow families to maintain contact 
with deployed Soldiers but afford patrons limited gaming and 
recreational use. Fee-based Internet services are being consolidated 
through the Family and MWR Command (FMWRC) and utilize commercial and 
MWR-owned assets to provide services. FMWRC offers garrisons fee-based, 
high speed services to barracks and MWR facilities. Garrisons also 
contract locally to provide Internet access to housing areas via 
multiple commercial venues. These services are the same as those 
generally available to off-post residents and are paid for by the 
individual subscribers. Patrons can employ these services for on-line 
gaming and other personal uses. MWR generates revenue from direct 
customer payments when patrons use FMWRC offerings, from ancillary 
purchases made by patrons in the MWR facilities offering Internet 
service, and from access franchise fees charged to commercial 
providers.
    Mr. McHugh. Internet access, recreational on-line gaming and E-mail 
are in great demand by our military personnel around the world, 
particularly those serving in combat zones. The activities provide 
relaxation and allow Service members to stay in touch with family and 
friends. How are you currently meeting the demand for these services 
within the MWR system? Are these services provided exclusively through 
MWR activities and programs? To what extent are these activities 
revenue generating entities for the MWR program?
    Admiral Handley. Navy currently provides internet and e-mail 
capability at no-cost to Sailors at all MWR libraries and Single Sailor 
Liberty Centers. Additionally, this service is also provided at no-cost 
to some forward deployed, ground units. This service provides a vital 
link between Sailors and loved ones at home.
    Navy is also greatly expanding Wireless Fidelity (WI-FI) internet 
capabilities at libraries and Liberty Centers. Currently over 50% of 
Navy MWR libraries and Liberty Centers have WI-FI capability. Full 
implementation is expected during FY07. This service is provided at no-
cost to Sailors. Additionally, Navy MWR is partnering with the Navy 
Exchange Service Command (NEXCOM) to provide no-cost WI-FI at all NEX 
food courts. This effort is on-going with completion later this year.
    Expanded on-line gaming capability is also provided either free, or 
in some cases on a fee-for-service basis, at Liberty Centers.
    Since most of these services are provided at no cost, there is 
minimal revenue generated from these activities.
    Mr. McHugh. Internet access, recreational on-line gaming and E-mail 
are in great demand by our military personnel around the world, 
particularly those serving in combat zones. The activities provide 
relaxation and allow Service members to stay in touch with family and 
friends. How are you currently meeting the demand for these services 
within the MWR system? Are these services provided exclusively through 
MWR activities and programs? To what extent are these activities 
revenue generating entities for the MWR program?
    Mr. Myers. We do not consider Internet access programs as revenue 
generating activities. We currently provide internet access in our 
Services activities through a variety of activities such as Libraries, 
Youth Centers and Community Centers free of charge. Many of our Lodging 
operations also provide a business center that connects the user to the 
Internet for free. Internet gaming such as ``X-Box,'' Internet Trivial 
Pursuit and sports trivia packages are also offered free of charge 
through many Air Force Clubs and Community Centers.
    Mr. McHugh. Internet access, recreational on-line gaming and E-mail 
are in great demand by our military personnel around the world, 
particularly those serving in combat zones. The activities provide 
relaxation and allow Service members to stay in touch with family and 
friends. How are you currently meeting the demand for these services 
within the MWR system? Are these services provided exclusively through 
MWR activities and programs? To what extent are these activities 
revenue generating entities for the MWR program?
    Mr. Downs. In today's technologically-advanced society, customer 
demand for continued improved levels of Internet access requires 
innovative access strategies to satisfy changing demand. Some Internet 
access requirements are a feature or activity of MWR Category A or B 
recreational or leisure programs. In those cases, access is free or for 
a nominal fee. We additionally offer Category C, revenue-generating 
fee-for-service or a pay-as-you-go basis for more extensive electronic 
services via Marine Corps Exchange concessionaire contracts.
    Mr. McHugh. The Department of Defense regulations provide guidance 
for Exchanges and Service MWR operations. Do these regulations clearly 
address the responsibility and guidance for providing Internet and on-
line gaming functions, including both those that are provided at no 
cost and those that generate revenue?
    Ms. Arsht. MWR provides no cost Internet access, recreational on-
line gaming, and e-mail in libraries and recreation, community, and 
youth centers, as well as to forward deployed, ground units. There is a 
nominal fee for voice over Internet protocol phone service. The 
Exchanges have primacy in the operation of ``fee for service'' personal 
telecommunications, including personal Internet access (e-mail 
accounts, high-speed internet service provider accounts, etc.).
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MRS. DRAKE

    Mrs. Drake. Do you have any update on that General Accounting 
Office (GAO) study that is being done?
    Ms. Arsht. The Government Accountability Office (GAO) is currently 
conducting a comprehensive study of standards, protocols and rules for 
interoperability in physical access in the Department of Defense. The 
Department expects the GAO report
will contain useful information that can be used to establish efficient 
and effective procedures for credentialing retail vendors. We have been 
testing technology that will enable the Department to provide uniform 
validation and authentication procedures which in turn will enable 
vendors to obtain the access their employees need. It is not being 
delayed by the GAO review.

                                  
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