    [Senate Hearing 110-394]
    [From the U.S. Government Publishing Office]

                                                      S. Hrg. 110-394 Pt. 6

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2009

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

                                    HEARINGS

                                   before the

                          COMMITTEE ON ARMED SERVICES
                              UNITED STATES SENATE

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                    S. 3001

         TO AUTHORIZE APPROPRIATIONS FOR FISCAL YEAR 2009 FOR MILITARY
    ACTIVITIES OF THE DEPARTMENT OF DEFENSE, FOR MILITARY CONSTRUCTION, AND
       FOR DEFENSE ACTIVITIES OF THE DEPARTMENT OF ENERGY, TO PRESCRIBE
        PERSONNEL STRENGTHS FOR SUCH FISCAL YEAR, AND FOR OTHER PURPOSES

                                   __________

                                     PART 6

                                   PERSONNEL

                                   __________

                         FEBRUARY 27 AND APRIL 16, 2008

             Printed for the use of the Committee on Armed Services

                                   ----------
                             U.S. GOVERNMENT PRINTING OFFICE

    42-634 PDF                       WASHINGTON : 2008

    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
    DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
    Washington, DC 20402-0001

                          COMMITTEE ON ARMED SERVICES

                         CARL LEVIN, Michigan, Chairman

    EDWARD M. KENNEDY, Massachusetts     JOHN McCAIN, Arizona
    ROBERT C. BYRD, West Virginia        JOHN WARNER, Virginia,
    JOSEPH I. LIEBERMAN, Connecticut     JAMES M. INHOFE, Oklahoma
    JACK REED, Rhode Island              JEFF SESSIONS, Alabama
    DANIEL K. AKAKA, Hawaii              SUSAN M. COLLINS, Maine
    BILL NELSON, Florida                 SAXBY CHAMBLISS, Georgia
    E. BENJAMIN NELSON, Nebraska         LINDSEY O. GRAHAM, South Carolina
    EVAN BAYH, Indiana                   ELIZABETH DOLE, North Carolina
    HILLARY RODHAM CLINTON, New York     JOHN CORNYN, Texas
    MARK L. PRYOR, Arkansas              JOHN THUNE, South Dakota
    JIM WEBB, Virginia                   MEL MARTINEZ, Florida
    CLAIRE McCASKILL, Missouri           ROGER F. WICKER, Mississippi

                       Richard D. DeBobes, Staff Director

                  Michael V. Kostiw, Republican Staff Director

                                     ______

                           Subcommittee on Personnel

                     E. BENJAMIN NELSON, Nebraska, Chairman

    EDWARD M. KENNEDY, Massachusetts     LINDSEY O. GRAHAM, South Carolina
    JOSEPH I. LIEBERMAN, Connecticut     SUSAN M. COLLINS, Maine
    JIM WEBB, Virginia                   SAXBY CHAMBLISS, Georgia
    CLAIRE McCASKILL, Missouri           ELIZABETH DOLE, North Carolina

                                      (ii)

                                C O N T E N T S

                                  ----------

                        CHRONOLOGICAL LIST OF WITNESSES
      Active Component, Reserve Component, and Civilian Personnel Programs
                               february 27, 2008

                                                                       Page

    Chu, Hon. David S., Under Secretary of Defense for Personnel and
      Readiness......................................................    39
    Rochelle, LTG Michael D., USA, Deputy Chief of Staff, G1, United
      States Army....................................................    82
    Harvey, VADM John C., Jr., USN, Deputy Chief of Naval Operations
      (Manpower, Personnel, Training, and Education), United States
      Navy...........................................................    88
    Coleman, Lt. Gen. Ronald S., USMC, Deputy Commandant for Manpower
      and Reserve Affairs, United States Marine Corps................   106
    Newton, Lt. Gen. Richard Y., III, USAF, Deputy Chief of Staff,
      Manpower and Personnel, United States Air Force................   115

     Testimony of Military Beneficiary Organizations Regarding the Quality
     of Life of Active, Reserve, and Retired Military Personnel and Their
                                 Family Members
                                 april 16, 2008

    Beck, Meredith M., National Policy Director, Wounded Warrior
      Project........................................................   161
    Barnes, Master Chief Petty Officer Joseph L., USN (Ret.),
      National Executive Director, Fleet Reserve Association.........   166
    Moakler, Kathleen B., Director of Government Relations, National
      Military Family Association....................................   172
    Cline, Master Sergeant Michael P., USA (Ret.), Executive
      Director, Enlisted Association of the National Guard of the
      United States..................................................   196
    Strobridge, Col. Steven P., USAF (Ret.), Director of Government
      Relations, Military Officers Association of America............   202

                                     (iii)

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2009

                                  ----------

                          WEDNESDAY, FEBRUARY 27, 2008

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

      ACTIVE COMPONENT, RESERVE COMPONENT, AND CIVILIAN PERSONNEL PROGRAMS

        The subcommittee met, pursuant to notice, at 3 p.m. in room
    SR-232A, Russell Senate Office Building, Senator E. Benjamin
    Nelson (chairman of the subcommittee) presiding.
        Committee members present: Senators Ben Nelson, Webb, and
    Graham.
        Committee staff member present: Leah C. Brewer, nominations
    and hearings clerk.
        Majority staff members present: Gabriella Eisen, counsel;
    Gerald J. Leeling, counsel; and Peter K. Levine, general
    counsel.
        Minority staff members present: Lucian L. Niemeyer,
    professional staff member; Diana G. Tabler, professional staff
    member; and Richard F. Walsh, minority counsel.
        Staff assistants present: Ali Z. Pasha and Brian F. Sebold.
        Committee members' assistants present: Jon Davey, assistant
    to Senator Bayh; Gordon I. Peterson, assistant to Senator Webb;
    Sandra Luff, assistant to Senator Warner; Clyde A. Taylor IV,
    assistant to Senator Chambliss; and Andrew King, assistant to
    Senator Graham.

       OPENING STATEMENT OF SENATOR E. BENJAMIN NELSON, CHAIRMAN

        Senator Ben Nelson. Good afternoon. This Personnel
    Subcommittee hearing will now come to order.
        The subcommittee meets today to receive testimony on the
    Active, Guard, Reserve, and civilian personnel programs in
    review of the National Defense Authorization Request for Fiscal
    Year 2009 and the Future Years Defense Program.
        I'm honored to continue to serve as chairman of this
    subcommittee, the subcommittee that's focused on the care and
    well-being of our servicemembers, their families, retirees, and
    Department of Defense (DOD) civilians. No aspect of our
    military programs is more important than taking care of our
    people.
        I'm privileged once again to be joined in this effort by my
    ranking member, Senator Graham. He and I have worked together
    for several years now to do what's right for our servicemembers
    and their families, and will continue in this never-ending
    effort.
        I welcome our witnesses here today. Secretary Chu, staff
    tell me this will be your 10th appearance before this
    subcommittee. Is that right? Or, who's counting?
        Dr. Chu. Right, sir.
        Senator Ben Nelson. Okay. [Laughter.]
        We appreciate your service and dedication to our
    servicemembers and their families, and thank you for what you
    have done to provide continuity and steady leadership during
    your time as the Under Secretary of Defense for Personnel and
    Readiness.
        We also welcome here today the military personnel chiefs of
    each of the military branches: Lieutenant General Michael D.
    Rochelle, United States Army; Vice Admiral John C. Harvey, Jr.,
    United States Navy; Lieutenant General Ronald S. Coleman,
    United States Marine Corps; and Lieutenant General Richard
    Newton III, United States Air Force.
        Admiral Harvey, this committee has already favorably acted
    on your nomination for another position, and your nomination is
    now before the full Senate, so I congratulate you on your very
    successful service as the Chief of Naval Personnel and your
    nomination to yet another position of trust and importance.
    Congratulations.
        Admiral Harvey. Thank you very much, sir.
        Senator Ben Nelson. General Newton, this is your first
    appearance before this subcommittee. You follow a long
    tradition of successful Air Force chiefs of personnel. I'm
    confident that General Brady gave you very wise counsel as he
    moved on to--[laughter]
        ----a four-star position. General Rochelle and General
    Coleman, we welcome you back and thank you for your continued
    service.
        The current stress on the All-Volunteer Force, Active and
    Reserve, is overwhelming and unprecedented. As we meet here
    today, we're entering our 7th year of combat.
        We continue the effort to increase the size of the Army and
    Marine Corps. Growing the force raises obvious questions about
    recruiting and retention, as well as the right mix of pay,
    bonuses, and benefits to attract and retain America's best
    young men and women.
        Congress fully appreciates the sacrifices that our
    servicemembers and their families are making. In recognition of
    this, Congress continues to improve military pay and benefits.
    The stress of military operations is not limited to our
    servicemembers, as we know. We must never lose sight of their
    families as we consider what measures to take to enhance the
    safety and well-being of our servicemembers. Their family is
    our family.
        To help our military families, Congress passed a law last
    year requiring the establishment of a Military Family Readiness
    Council to assess the adequacy and effectiveness of military
    family readiness programs and to recommend improvements.
    Congress also passed the Wounded Warrior Act. This
    comprehensive, bipartisan legislation advances the care,
    management, and transition of wounded and ill servicemembers,
    enhances healthcare and benefits for their families, and begins
    the process of fundamental reform for the disability evaluation
    systems of the DOD and the Department of Veterans Affairs (VA).
        All of this reflects the reality that we face today. Our
    servicemembers shoulder more responsibility and are
    increasingly asked to do more. With the increased requirements
    comes a cost that is difficult to bear. We absolutely must take
    care of our servicemembers, especially those who are wounded,
    and their families. We must ensure that our servicemembers are
    properly trained and equipped to perform the tasks we ask them
    to perform. On these issues, there can be no compromise. The
    issues we face, going forward, are difficult, but not
    insurmountable.
        So, I look forward to hearing from our witnesses today on
    the programs and priorities the Department has identified to
    overcome these challenges.
        With that, thank you. Senator Graham, do you have an
    opening statement?

                 STATEMENT OF SENATOR LINDSEY O. GRAHAM

        Senator Graham. Very briefly, Mr. Chairman, and it will
    begin the way all of them have, and that's thanking you. We've
    swapped roles a couple of times here, but nothing has really
    changed. I've thoroughly, thoroughly enjoyed working with you
    and your staff on this subcommittee, as sort of a respite from
    partisanship. We seem to figure it out, how to get along for
    the common good here, and nothing could bring us together more
    quickly than the needs of the men and women in uniform and
    their families. So, I look forward to another year of trying to
    help those who are making us all safe.
        Dr. Chu, thank you very much for your service. You have a
    very demanding job, and you have been here many times, and I
    appreciate the knowledge and expertise you bring to the table
    in serving your country. I'm sure you could go other places and
    make more money. I just really appreciate your staying around
    and helping us figure out the challenges that we face.
        Admiral Harvey, good job. [Laughter.]
        The proof's in the pudding. People recognized your work and
    your accomplishments, and well done. We look forward to dealing
    with you in another capacity, down the road, and definitely
    looking forward to hearing from you in terms of where we need
    to go this year.
        General Newton, you're the new guy. I know how that feels.
    I can't think of a more important task right now for the Air
    Force, in particular, to try to figure out the balance between
    planes and people and ever-increasing health care costs, how
    you all reconcile that with the missions we assign you.
        We have a great staff. I look forward to working with
    everybody. One of the highlights of our time together, I think,
    has been the Wounded Warrior Act. I think this committee and
    our staffs put together the Wounded Warrior Act in a way that
    received a lot of bipartisan support, and hopefully will
    continue to deliver good service to those who have been
    terribly wounded, and the families who suffer alongside.
        There's so much more to be done, and the question, I think,
    for the country is, how much of the health care role should DOD
    provide? Should we, long term, look at having retiree health
    care separated and just focus on a very limited health care
    function within the military? I don't know the answer to that,
    but I do believe that the biggest challenge facing all of us is
    how to deal with the growing personnel costs, particularly in
    the area of health care, because, as you said, Senator Nelson,
    no one wants to retreat from quality, availability, and access,
    but when you look at the demographic changes in the pie chart,
    the personnel costs, particularly the health care costs, are
    growing at a dramatic rate. We're going to have to figure out
    how to balance that out.
        I'll look forward to listening to the testimony, in terms
    of force structure, the number of people we have, the number of
    people we'll need--who are we getting in, what kind of level of
    education do they provide, and is the force ready for the
    fight? The answer, to me, is overwhelmingly yes, because we're
    winning the fight; but, as Senator Nelson said, it's been a
    long, hard struggle for many years, and we're all aware of what
    the strain has been.
        I look forward to receiving your testimony and working with
    Senator Nelson, and putting together a good package.
        Senator Ben Nelson. Thank you, Senator Graham.
        Dr. Chu, I hope you weren't listening too closely when he
    said you could make more money elsewhere. [Laughter.]
        That's not an invitation to go anywhere.
        The Military Coalition has submitted a written statement
    for the record, and, without objection, it will be included in
    the record.
        [The prepared statement of The Military Coalition follows:]
                  Prepared Statement by The Military Coalition
        Mr. Chairman and distinguished members of the committee. On behalf
    of The Military Coalition, a consortium of nationally prominent
    uniformed services and veterans' organizations, we are grateful to the
    committee for this opportunity to express our views concerning issues
    affecting the uniformed services community. This statement provides the
    collective views of the following military and veterans' organizations,
    which represent approximately 5.5 million current and former members of
    the 7 uniformed services, plus their families and survivors.

             Air Force Association
             Air Force Sergeants Association
             Air Force Women Officers Associated
             American Logistics Association
             American Veterans (AMVETS)
             Army Aviation Association of America
             Association of Military Surgeons of the United States
             Association of the United States Army
             Chief Warrant Officer and Warrant Officer Association,
            U.S. Coast Guard
             Commissioned Officers Association of the U.S. Public
            Health Service, Inc.
             Enlisted Association of the National Guard of the
            United States
             Fleet Reserve Association
             Gold Star Wives of America, Inc.
             Jewish War Veterans of the United States of America
             Marine Corps League
             Marine Corps Reserve Association
             Military Chaplains Association of the United States of
            America
             Military Officers Association of America
             Military Order of the Purple Heart
             National Association for Uniformed Services
             National Military Family Association
             National Order of Battlefield Commissions
             Naval Enlisted Reserve Association
             Naval Reserve Association
             Noncommissioned Officers Association
             Reserve Enlisted Association
             Reserve Officers Association *
             Society of Medical Consultants to the Armed Forces
             The Retired Enlisted Association
             United States Army Warrant Officers Association
             United States Coast Guard Chief Petty Officers
            Association
             Veterans of Foreign Wars of the United States
             Veterans' Widows International Network

        * The Reserve Officers Association supports the non-health care
    portion of the testimony.
        The Military Coalition, Inc., does not receive any grants or
    contracts from the Federal Government.
                               executive summary
    Wounded Warrior Issues
        Joint Transition Office
        The Coalition is encouraged with the creation of a joint DOD-VA
    office to oversee development of a bi-directional electronic medical
    record. However, we strongly recommend that the subcommittee upgrade
    the scope of responsibilities and span of authority for the new DOD-VA
    Interagency Program Office to include top-down planning and execution
    of all ``seamless transition'' functions, including the joint
    electronic health record; joint DOD/VA physical; implementation of best
    practices for Traumatic Brain Injuries (TBI), Post-Traumatic Stress
    Disorder (PTSD), and special needs care; care access/coordination
    issues; and joint research.
        The Coalition believes authorizing 3 years of their active-duty-
    level health care benefit for service-disabled members and their
    families after separation or retirement is essential to align stated
    ``seamless transition'' intentions with the realities faced by disabled
    members and families.
        Disability Retirement Reform
        The Coalition urges the subcommittee to ensure any legislative
    changes to the military disability evaluation and retirement systems do
    not reduce compensation and benefit levels for disabled servicemembers.
        The Coalition does not support proposals to do away with the
    military disability retirement system and shift disability compensation
    responsibility to the VA.
        The Coalition urges an expanded review of all administrative and
    disciplinary separations since October 7, 2001, for members with recent
    combat experience to assess whether the behavior that led to separation
    may have been due to service-caused exposure.
    Active Force Issues
        End Strength and Associated Funding
        The Coalition strongly urges the subcommittee to sustain projected
    increases in ground forces and provide additional recruiting,
    retention, and support resources as necessary to attain/sustain them.
        The Coalition urges the subcommittee to reconsider the consistency
    of projected reductions of Navy and Air Force forces with long-term
    readiness needs.
        Compensation and Special Incentive Pay
        The Coalition urges the subcommittee to propose a military pay
    raise of at least 3.9 percent for fiscal year 2009 (one-half percentage
    point above private sector pay growth) and to continue such half-
    percent annual increases over the Employment Cost Index (ECI) until the
    current 3.4 percent pay comparability gap is eliminated.
        The Coalition also urges the subcommittee to continue periodic
    targeted pay raises as appropriate to recognize the growing education
    and technical qualifications of enlisted members and warrant officers
    and sustain each individual grade/longevity pay cell at the minimum
    70th percentile standard.
        Access to Quality Housing
        The Military Coalition (TMC) urges reform of military housing
    standards that inequitably depress Basic Allowance for Housing (BAH)
    rates for mid- to senior-enlisted members by relegating their occupancy
    to inappropriately small quarters.
        Family Readiness and Support
        The Coalition urges the subcommittee to support increased family
    support funding and expanded education and other programs to meet
    growing needs associated with increased ops tempo, extended deployments
    and the more complex insurance, retirement, and savings choices faced
    by over-extended military families.
        Spouse Employment
        The Coalition urges the subcommittee to support legislation which
    would expand the Workforce Opportunity Tax Credit for employers who
    hire spouses of Regular and Reserve component servicemembers.
        Additionally, the Coalition supports providing tax credits to
    offset military spouses' expenses in obtaining career-related licenses
    or certifications when servicemembers are relocated to a different
    State.
        Flexible Spending Accounts
        TMC urges the subcommittee to continue pressing the Defense
    Department until servicemembers are provided the same eligibility to
    participate in Flexible Spending Accounts that all other Federal
    employees and corporate employees enjoy. Additionally, we support S.
    773.
        Permanent Change of Station (PCS) Allowances
        TMC urges the subcommittee to upgrade permanent change-of-station
    allowances to better reflect the expenses members are forced to incur
    in complying with government-directed relocations, with priority on
    adjusting flat-rate amounts that have been eroded by years--or
    decades--of inflation, and shipment of a second vehicle at government
    expense to overseas accompanied assignments.
        Base Realignment and Closure (BRAC)/Rebasing/Military Construction/
            Commissaries
        The Coalition urges the subcommittee to closely monitor rebasing/
    BRAC plans and schedules to ensure sustainment and timely development
    of adequate family support/quality of life programs. At closing and
    gaining installations, respectively--to include housing, education,
    child care, exchanges and commissaries, health care, family centers,
    unit family readiness, and other support services.
        Morale, Welfare, and Recreation Programs
        TMC urges the subcommittee to ensure that DOD funds MWR programs at
    least to the 85 percent level for Category A programs and 65 percent
    for Category B requirements.
        Education Enhancements
        TMC urges the subcommittee to work with the Veterans Affairs
    Committee to establish the benchmark level of Montgomery GI Bill (MGIB)
    education benefits at the average cost of attending a 4-year public
    college, and support continuous in-State tuition eligibility for
    servicemembers and their families in the State in which the member is
    assigned and the member's home State of record once enrolled as a
    student.
    National Guard and Reserve Issues
        Reserve Retirement and `Operational Reserve' Policy
        TMC strongly urges further progress in revamping the Reserve
    retirement system in recognition of increased service and sacrifice of
    National Guard and Reserve component members, including at a minimum,
    extending the new authority for a 90 day=3 month reduction to all Guard
    and Reserve members who have served since September 11.
        A Total Force Approach to the Montgomery GI Bill
        TMC urges Congress to integrate Guard and Reserve and active duty
    MGIB laws into Title 38. In addition, TMC recommends restoring basic
    Reserve MGIB rates to approximately 50 percent of active duty rates and
    authorizing upfront reimbursement of tuition or training coursework for
    Guard and Reserve members.
        Family Support Programs and Benefits
        TMC urges Congress to continue and expand its emphasis on providing
    consistent funding and increased outreach to connect Guard and Reserve
    families with relevant support programs.
        Tangible Support for Employers
        The Coalition urges Congress to support needed tax relief for
    employers of Selected Reserve personnel and reinforce the Employer
    Support for Guard and Reserve Program.
        Seamless Transition for Guard and Reserve Members
        The Coalition urges the subcommittee to continue and expand its
    efforts to ensure Guard and Reserve members and their families receive
    needed transition services to make a successful readjustment to
    civilian status.
    Retirement Issues
        Concurrent Receipt
        The Coalition urges the subcommittee to act expeditiously on the
    recommendations of the Veterans' Disability Benefits Commission and
    implement a plan to eliminate the deduction of VA disability
    compensation from military retired pay for all disabled military
    retirees.
        Uniformed Services Retiree Entitlements and Benefits
        TMC urges the subcommittee to resist initiatives to ``civilianize''
    the military retirement system in ways that reduce the compensation
    value of the current retirement system and undermine long-term
    retention.
        Permanent ID Card Reform
        The Coalition urges the subcommittee to direct the Secretary of
    Defense to authorize issuance of permanent military identification
    cards to uniformed services family members and survivors who are age 65
    and older.
    Survivor Issues
        Survivor Benefit Plan (SBP)-Dependency and Indemnity Compensation
            (DIC) Offset
        The Coalition strongly urges the subcommittee to take further
    action to expand eligibility for the special survivor indemnity
    allowance to include all SBP-DIC survivors and continue progress toward
    completely repealing the SBP-DIC offset for this most-aggrieved group
    of military widows.
        Final Retired Paycheck
        TMC urges the subcommittee to end the insensitive practice of
    recouping the final month's retired pay from the survivor of a deceased
    retired member.
    Health Care Issues
        Full Funding for the Defense Health Program
        TMC strongly urges the subcommittee to take all possible steps to
    restore the reduction in TRICARE-related budget authority and ensure
    continued full funding for Defense Health Program needs.
        Protecting Beneficiaries Against Cost-Shifting
        The Coalition urges the subcommittee to require DOD to pursue
    greater efforts to improve TRICARE and find more effective and
    appropriate ways to make TRICARE more cost-efficient without seeking to
    ``tax'' beneficiaries and make unrealistic budget assumptions.
        TMC Healthcare Cost Principles
        The Coalition most strongly recommends Representative Chet Edwards'
    and Representative Walter Jones' H.R. 579 and Senator Frank
    Lautenberg's and Senator Chuck Hagel's S. 604 as models to establish
    statutory findings, a sense of Congress on the purpose and principles
    of military health care benefits, and explicit guidelines for and
    limitations on adjustments.

             Active duty members and families should be charged no
            fees except retail pharmacy co-payments, except to the extent
            they make the choice to participate in TRICARE Standard or use
            out-of-network providers under TRICARE Prime.
             For retired and survivor beneficiaries, the percentage
            increase in fees, deductibles, and co-payments that may be
            considered in any year should not exceed the percentage
            increase beneficiaries experience in their compensation.
             The TRICARE Standard inpatient copay should not be
            increased further for the foreseeable future. At $535 per day,
            it already far exceeds inpatient copays for virtually any
            private sector health plan.
             There should be no enrollment fee for TRICARE Standard
            or TRICARE For Life (TFL), since neither offers assured access
            to TRICARE-participating providers. An enrollment fee implies
            enrollees will receive additional services, as Prime enrollees
            are guaranteed access to participating providers in return for
            their fee. Congress already has required TFL beneficiaries to
            pay substantial Medicare Part B fees to gain TFL coverage.
             There should be one TRICARE fee schedule for all
            retired beneficiaries, just as all legislators, Defense leaders
            and other Federal civilian grades have the same health fee
            schedule. The TRICARE schedule should be significantly lower
            than the lowest tier recommended by the Defense Department,
            recognizing that all retired members paid large upfront
            premiums for their coverage through decades of arduous service
            and sacrifice.

        TRICARE Standard Enrollment
        The Coalition strongly recommends against establishment of any
    TRICARE Standard enrollment system; to the extent enrollment may be
    required, any beneficiary filing a claim should be enrolled
    automatically, without denying the claim. No enrollment fee should be
    charged for TRICARE Standard until and unless the program offers
    guaranteed access to a participating provider.
        Private Employer Incentive Restrictions
        The Coalition recommends Congress modify the law restricting
    private employer TRICARE incentives to explicitly exempt employers who
    offer only cafeteria plans (i.e., cash payments to all employees to
    purchase care as they wish) and employers who extend specific cash
    payments to any employee who uses health coverage other than the
    employer plan (e.g., Federal Employees Health Benefits Program (FEHBP),
    TRICARE, or commercial insurance available through a spouse or previous
    employer).
        Provider Participation Adequacy
        The Coalition urges the subcommittee to continue monitoring DOD and
    Government Accountability Office (GAO) reporting on provider
    participation to ensure proper follow-on action.
        Administrative Deterrents to Provider Participation
        The Coalition urges the subcommittee to continue its efforts to
    reduce administrative impediments that deter providers from accepting
    TRICARE patients.
        TRICARE Reimbursement Rates
        The Coalition urges the subcommittee to exert what influence it can
    to persuade the Finance Committee to reform Medicare/TRICARE statutory
    payment formula. To the extent the Medicare rate freeze continues, we
    urge the subcommittee to encourage the Defense Department to use its
    reimbursement rate adjustment authority as needed to sustain provider
    acceptance.
        Additionally, The Coalition urges the subcommittee to require a
    Comptroller General report on the relative propensity of physicians to
    participate in Medicare vs. TRICARE, and the likely effect on such
    relative participation of a further freeze in Medicare/TRICARE
    physician payments along with the affect of an absence of bonus
    payments.
        Minimize Medicare/TRICARE Coverage Differences
        The Coalition urges the subcommittee to align TRICARE coverage to
    at least match that offered by Medicare in every area and provide
    preventive services at no cost.
        TRICARE Reserve Select (TRS) Premium
        The Coalition recommends reducing TRS premiums to $48/month
    (single) and $175/month (family), as envisioned by the GAO, with
    retroactive refunds as appropriate. For the future, the percentage
    increase in premiums in any year should not exceed the percentage
    increase in basic pay.
        The Coalition further recommends that the subcommittee request a
    report from the Department of Defense on options to assure TRS
    enrollees' access to TRICARE-participating providers.
        Private Insurance Premium Option
        The Coalition recommends developing a cost-effective option to have
    DOD subsidize premiums for continuation of a Reserve employer's private
    family health insurance during periods of deployment as an alternative
    to permanent TRS coverage.
        Involuntary Separatees
        The Coalition recommends authorizing 1 year of post-Transitional
    Assistance Management Program (TAMP) TRS coverage for every 90 days
    deployed in the case of returning members of the Individual Ready
    Reserve (IRR) or members who are involuntarily separated from the
    Selected Reserve. The Coalition further recommends that voluntarily
    separating reservists subject to disenrollment from TRS should be
    eligible for participation in the Continued Health Care Benefits
    Program (CHCBP).
        Gray Area Reservists
        The Coalition urges the subcommittee to authorize an additional
    premium-based option under which members entering ``gray area'' retiree
    status would be able to avoid losing health coverage.
        Reserve Dental Coverage
        The Coalition supports providing dental coverage to reservists for
    90 days pre- and 180 days post-mobilization (during TAMP), unless the
    individual's dental readiness is restored to T-2 condition before
    demobilization.
        Restoration of Survivors' TRICARE Coverage
        The Coalition recommends restoration of TRICARE benefits to
    previously eligible survivors whose second or subsequent marriage ends
    in death or divorce.
        TRICARE Prime Remote Exceptions
        The Coalition recommends removal of the requirement for the family
    members to reside with the active duty member to qualify for the
    TRICARE Prime Remote Program, when the family separation is due to a
    military-directed move or deployment.
        BRAC, Rebasing, and Relocation
        The Coalition recommends codifying the requirement to provide a
    TRICARE Prime network at all areas impacted by BRAC or rebasing.
    Additionally, we recommend that DOD be required to provide an annual
    report to Congress on the adequacy of health resources, services,
    quality, and access of care for those beneficiary populations affected
    by transformation plans.
        Pharmacy Co-payment Changes
        The Coalition recommends deferral of any pharmacy copay increases
    pending assessment of the effects of the new Federal pricing law on
    usage and cost patterns for the different venues, and that the
    subcommittee instead urge DOD to pursue copay reductions and ease prior
    authorization requirements for medications for chronic diseases, based
    on private sector experience that such initiatives reduce long-term
    costs associated with such diseases.
        Rapid Expansion of ``Third Tier'' Formulary
        The Coalition urges the subcommittee to reassert its intent that
    the Beneficiary Advisory Panel should have a substantive role in the
    formulary-setting process, including access to meaningful data on
    relative drug costs in each affected class, consideration of all
    Beneficiary Advisory Panel (BAP) comments in the decisionmaking
    process, and formal feedback concerning rationale for rejection of BAP
    recommendations.
        Referral and Authorization System
        The Coalition recommends that Congress require a cost analysis
    report, including input from each Managed Care Support Contractor,
    concerning the referral process within DOD and reliance on Civilian
    Network Providers within an MTF's Prime Service Area.
        Deductibility of Health and Dental Premiums
        The Coalition urges all Armed Services Committee members to seek
    the support of the Finance Committees to approve legislation to allow
    all military beneficiaries to pay TRICARE-related insurance premiums in
    pre-tax dollars, to include TRICARE dental premiums, TRS premiums,
    TRICARE Prime enrollment fees, premiums for TRICARE Standard
    supplements, and long-term care insurance premiums.
                                    overview
        Mr. Chairman, TMC thanks you and the entire subcommittee for your
    continued, steadfast support of our active duty, Guard, Reserve,
    retired members, and veterans of the uniformed services and their
    families and survivors. The subcommittee's work last year generated
    ground-breaking, innovative improvements in military end strength,
    currently serving pay, survivor benefits, disabled retiree programs,
    and of most significance, improvements in wounded warrior benefits,
    care, and treatment. These enhancements will definitely make a positive
    difference in the lives of active, Guard and Reserve personnel,
    retirees, survivors, and families.
        As our men and women in uniform continue to prosecute the global
    war on terror, the Coalition believes it is critical that the Nation
    support our troops with the appropriate resources. The Services have
    reported that they are wearing out equipment at a record pace; however,
    the Coalition is concerned that we are wearing out our people in
    uniform at even a faster pace. The current rate of deployments and the
    accompanied stress to our troops and their families put at risk the
    readiness of our servicemembers.
        The men and women in uniform--Active Duty, Guard, and Reserve--are
    answering the call--but not without ever-greater sacrifice. Currently,
    over 615,000 National Guard and Reserve members have been called to
    active Federal service for the war on terrorism. Over 150,000 have had
    two or more deployments, putting particular stress on these members'
    civilian careers and employers. The ``total force'', with the support
    of their families, continues to endure mounting stress brought about by
    repeated deployments and ever-increasing workloads. Therefore, now is
    not the time to scrimp on the needs for our troops and their families.
        Over the past several years, the Pentagon has repeatedly sought to
    curb spending on military personnel and facilities to fund operational
    requirements. In the process, the Defense Department has imposed
    dramatic force reductions in the Air Force and the Navy, tried to deter
    military retirees from using their earned health coverage by proposing
    large TRICARE fee increases, and cut back on installation quality of
    life programs.
        The Coalition believes these efforts to rob personnel to fund
    operations will only make the uniformed services more vulnerable to
    future readiness problems. We agree with the Chairman of the Joint
    Chiefs of Staff, who has stated that 4 percent of GDP should be the
    ``absolute floor'' for the overall military budget. If we want a strong
    national defense, we have to pay for a strong military force as well as
    replace and upgrade aging, war-worn weapons and equipment.
        The Coalition is encouraged by Congress' strong support for
    continued increases to Army and Marine Corps end strength, in
    recognition that our troops and families are dangerously overburdened.
    We believe the country must follow through on future planned increases,
    regardless of troop withdrawals from Iraq, and that these should be
    funded through permanent increases in the defense budget, not
    supplemental appropriations that undermine essential, long-term
    commitments. It's been proven that our military didn't have sufficient
    forces to meet the requirements of the current war. It would be
    inexcusable not to be better prepared for future contingencies.
        In our statement today, TMC offers its collective recommendations
    on what needs to be done to address important personnel-related issues
    in order to sustain long-term personnel readiness.
                             wounded warrior issues
        Last February, a series of articles in the Washington Post titled
    ``The Other Walter Reed'' profiled shocking cases of wounded
    servicemembers who became lost in military health care and
    administrative systems upon being transferred to outpatient
    rehabilitative care.
        Subsequently, the national media ran many stories of seriously
    wounded troops warehoused in substandard quarters, waiting weeks and
    months for medical appointments and evaluation board results, left
    pretty much on their own to try and navigate the confusing maze of
    medical system and benefit and disability rules, and low-balled into
    disability separations rather than being awarded the higher benefits of
    military disability retirement.
        Interviews with family members--spouses, children, and parents--
    revealed heartbreaking real life dramas of those who quit their jobs
    and virtually lived at military hospitals to become caregivers to
    seriously wounded troops. Left with diminishing resources and
    unfamiliar with military benefit and disability rules, they were
    severely disadvantaged in trying to represent the interests of their
    wounded spouses and children who couldn't stand up for themselves.
        These issues drew the attention of the President and Congress,
    leading to the immediate appointment of multiple special commissions
    and task forces charged with investigating the problems and identifying
    needed solutions. The Coalition is very grateful for the work of the
    Dole-Shalala Commission, the Marsh-West Independent Review Group, the
    VA Interagency Task Force on Returning Veterans, the Mental Health Task
    Force, and the previously authorized Veterans' Disability Benefits
    Commission. The Coalition endorses the vast majority of these groups'
    recommendations, and we're pleased that the subcommittee made a
    conscientious effort to address many of them in the Wounded Warrior Act
    provisions of the National Defense Authorization Act (NDAA) for Fiscal
    Year 2008.
        Congress and TMC agree that our Nation's service men and women have
    earned first class care and assistance, both during recuperation and
    following separation or retirement from the military.
        We are gratified at the sincere and unprecedented leadership
    efforts in the Departments of Defense and Veterans' Affairs and the
    Armed Services and Veterans' Affairs Committees to transform the system
    to make this long overdue goal a reality.
        But years of bureaucratic and parochial barriers can't be swept
    away as easily as we all would wish. The good work done in 2007 was
    only a modest first step on the path to transforming military and
    veterans programs to meet the pressing needs of wounded and disabled
    members and their families. We're still a long, long way from achieving
    the ``seamless transition'' goal.
    Joint Transition Office
        The Coalition believes one critical problem is bureaucratic stove-
    piping in each department. While both DOD and VA are making great
    efforts to cooperate, there is no permanent joint activity or office
    whose primary mission is to jointly plan and execute the seamless
    transition strategy and then exercise productive oversight over the
    longer-term process. There's no doubt about the good intentions of
    leadership, but to sustain the effort for the long term requires a
    change in organizational structure. Periodic meetings, after which the
    DOD and VA participants return to their separate offices on opposite
    sides of the Potomac, won't sustain the effort after the horror stories
    fade from the headlines.
        This simply can't be someone's part-time job. It requires a full-
    time joint Federal transition office, staffed by full-time DOD, service
    and VA personnel working in the same office with a common joint
    mission: developing, implementing and overseeing the Joint Executive
    Council's strategic plan. This office's responsibilities should
    include:

             Joint In-Patient Electronic Health Record--The NDAA
            for Fiscal Year 2008 took the first step in authorizing a DOD/
            VA Interagency Program Office to oversee this specific
            initiative, which TMC has been seeking for years. But we
            believe the 2012 objective for implementing this system is too
            long to wait. Congress must press DOD and VA to speed delivery
            as soon as humanly possible, with concrete timelines and
            milestones for action. TMC also believes that the same logic
            that necessitates a joint office's oversight of this specific
            initiative is equally applicable in other areas, and that the
            interagency office's area of responsibility should be expanded
            accordingly.
             Special Needs Health Care--Polytrauma Rehabilitation
            Centers were established to meet the specialized clinical care
            needs of patients with multiple trauma conditions. They provide
            comprehensive inpatient rehabilitation services for individuals
            with complex cognitive, physical and mental health sequelae of
            severe disabling trauma. These centers require special
            oversight in order to ensure the required resources are
            available to include specialized staff, technical equipment and
            adequate bed space. This oversight must be a joint effort since
            it provides a significant piece of the health care continuum
            for severely injured personnel.
             PTSD, TBI, and Mental Health/Counseling--The Coalition
            strongly supports the provisions in the NDAA for Fiscal Year
            2008 establishing Centers of Excellence for these programs. We
            simply must have some central monitoring, evaluation, and
            crossfeed to take best advantage of the wide variety of current
            and planned DOD, service, and VA programs and pilot projects
            aimed at destigmatizing, identifying, and treating TBI and
            PTSD. The Coalition believes it also is important to ensure
            that TBI and PTSD are identified and treated as combat injuries
            rather than mental health problems. The Coalition is doubtful
            whether these centers, by themselves, will be in a position to
            ensure coordination and implementation of best practices across
            all departments and Services.
             Caregiver Initiatives--Several wounded warrior
            provisions in the recently enacted NDAA provide additional
            support for the caregiver of the wounded warrior, typically a
            family member. However, we believe more needs to be done to
            strengthen support for families, to include the authorization
            of compensation for family member caregivers of severely
            injured who must leave their employment to care for the
            servicemember.
             Access to Care--A significant impediment to the
            ``seamless transition'' goal is that there are significant
            differences between health coverage and some other entitlements
            when a member transitions from active military service to
            separated or retired status. TRICARE benefits for disability
            retirees and families are not the same as they were on active
            duty, and there are significant differences between coverage
            and availability of programs between TRICARE and the VA. When a
            member dies on active duty, Congress has deemed that the
            member's family should be eligible for 3 years of active-duty
            level TRICARE coverage to assist in the family's transition.
            TMC believes strongly that members who are disabled
            significantly by military service deserve equal treatment. The
            NDAA for Fiscal Year 2008 authorized continued active-duty
            level coverage, but only for the servicemember, and then only
            in cases where VA coverage is not available. TMC believes this
            limitation significantly undermines the seamless transition
            goal for wounded/disabled members whose rehabilitation and
            recovery may continue long after the time they leave active
            duty. Their needs--and those of their families--should not be
            inhibited by higher copays, deductibles, and coverage decreases
            the moment they are separated or retired from active duty.
            Allowing disabled members and their families to retain their
            active duty military health care benefit for 3 years after
            separation or retirement is essential to align our stated
            intentions with the realities faced by disabled members and
            families.
             Joint Research--Combined Research Initiatives would
            further enhance the partnership between VA and DOD. Since many
            of the concerns and issues of care are shared, joint
            collaboration of effort in the area of research should enable
            dollars to go much further and provide a more standardized
            system of health care in the military and veteran communities.
            Furthermore, research must also be performed jointly and across
            all military departments and with other practicing health care
            agencies to ensure timely integration of these findings in the
            diagnosis and treatment of wounded and disabled patients.

              The Coalition is encouraged with the creation of a joint DOD-
            VA office to oversee development of a bi-directional electronic
            medical record. However, we strongly recommend that the
            subcommittee upgrade the scope of responsibilities and span of
            authority for the new DOD-VA Interagency Program Office to
            include top-down planning and execution of all ``seamless
            transition'' functions, including the joint electronic health
            record; joint DOD/VA physical; implementation of best practices
            for TBI, PTSD, and special needs care; care access/coordination
            issues; and joint research.
              The Coalition believes authorizing 3 years of their active-
            duty level health care benefit for service-disabled members and
            their families after separation or retirement is essential to
            align stated ``seamless transition'' intentions with the
            realities faced by disabled members and families.
    Disability Retirement Reform
        Several of the Walter Reed task forces and commissions recommended
    significant changes to the DOD Disability Evaluation System (DES), and
    the NDAA for Fiscal Year 2008 includes several initiatives requiring
    joint DOD/VA DES pilot programs; use of the VA Schedule for Rating
    Disabilities; review of medical separations with disability ratings of
    20 percent or less; and enhanced disability severance pay. These
    changes will hopefully improve the overall DES and correct the reported
    ``low-ball'' ratings awarded some wounded warriors.
        The Coalition is very supportive of the current DOD/VA disability
    rating pilot, which has the potential to help streamline transition
    from active duty into veteran/retired status. However, we believe
    further legislative efforts are required to curb service differences in
    determining whether a condition existed prior to service. To this end,
    language in the NDAA for Fiscal Year 2008 aimed at addressing this
    problem may actually have exacerbated it by amending only a part of the
    relevant provisions of law.
        The Coalition does not support proposals to simply do away with the
    military disability retirement system and shift disability compensation
    responsibility to the VA. While this proposal seems administratively
    simple, and supports our longstanding ``concurrent receipt'' goal of
    ensuring proper vesting of service-based retirement for members who
    suffer from service-caused disabilities, it poses two significant risks
    that TMC deems unacceptable. First, it would cause significant
    compensation reductions for some severely disabled personnel--up to
    $1,000 a month or more in some cases, and even more for some Guard and
    Reserve members who suffer severe disabilities. Second, it would
    eliminate the 30 percent-disability retirement threshold that now
    establishes eligibility for retiree TRICARE coverage for disabled
    members and their families. TMC believes there must continue to be a
    statutory military disability threshold above which the member is
    considered a military retiree (not simply a separatee and veteran) and
    eligible for all the privileges of military retirement, including
    TRICARE coverage. The Coalition objects strongly to establishing
    disability ratings, compensation, or health care eligibility based
    whether the disability was incurred in combat vice non-combat.
        The Coalition strongly supports the recent NDAA requirement for a
    case review of members separated with 20 percent or lower ratings since
    October 7, 2001. There is evidence that many received ``low-ball''
    ratings that did not adequately reflect the degree of their
    disabilities and unfairly denied them eligibility for military
    disability retired pay and health coverage.
        But we believe the subcommittee did not go far enough to correct
    past inequities. The Coalition is aware of many cases of ``model
    troops'' who fell into depression, drug use, and disciplinary
    situations after one or more combat tours, and who subsequently
    received administrative or disciplinary discharges.
        The Coalition urges the subcommittee to ensure any legislative
    changes to the military disability evaluation and retirement systems do
    not reduce compensation and benefit levels for disabled servicemembers.
        The Coalition does not support proposals to do away with the
    military disability retirement system and shift disability compensation
    responsibility to the VA.
        The Coalition urges an expanded review of all administrative and
    disciplinary separations since October 7, 2001, for members with recent
    combat experience to assess whether the behavior that led to separation
    may have been due to service-caused exposure.
                              active force issues
        The subcommittee's key challenges will be to fend off those who
    wish to cut needed personnel and quality of life programs while working
    with DOD and the administration to reduce the stress on the force and
    their families already subjected to repeated, long-term deployments.
    Rising day-to-day workloads for non-deployed members and repeated
    extensions of combat tours creates a breeding ground for retention
    problems. Meeting these challenges will require a commitment of
    personnel and resources on several fronts.
    End Strength and Associated Funding
        The Coalition was encouraged whenthe subcommittee ensured that the
    Army and Marine Corps authorized end strengths continued to grow in
    fiscal year 2008, and we are further encouraged that the DOD has asked
    for additional manpower increases for the Army and Marine Corps over
    the next 4 years.
        Congress must ensure these increases are sufficient to ease force
    rotation burdens and the Services are fully funded in order to achieve
    the new end strength. Increasing end strength is not a quick fix that
    will ease the stressors on currently serving servicemembers and their
    families.
        Some already speculate that the planned increases may not be needed
    if we can reduce the number of troops deployed to Iraq. The Coalition
    believes strongly that the increases are essential to future readiness,
    regardless of force levels in Iraq. We know we didn't have enough
    troops to fight the current war without imposing terrible penalties on
    military members and families, and we must build our force management
    plans to avoid having to do so when the Nation is faced with another
    major unexpected contingency requirement.
        For too long, we have planned only for the best-case scenario,
    which ignores our responsibility to the Nation to be prepared for
    unexpected and less-favorable scenarios, which could well arise
    anywhere around the globe, including the Far East.
        A full range of funding is required to support this necessary end
    strength, including housing, health care, family programs, and child
    care. Having the Services absorb these costs out of pocket is self-
    defeating.
        Furthermore, as the Army and Marine Corps increase over the next 4
    years, the Coalition remains concerned that ongoing Navy and Air Force
    Active and Reserve personnel cuts are driven by budget considerations
    rather than operational requirements. We believe it is increasingly
    likely that future experience will prove these cutbacks ill-advised,
    and urge the subcommittee to reconsider their consistency with long-
    term readiness needs.
        The Coalition strongly urges the subcommittee to sustain projected
    increases in ground forces and provide additional recruiting,
    retention, and support resources as necessary to attain/sustain them.
        The Coalition urges the subcommittee to reconsider the consistency
    of projected reductions of Navy and Air Force forces with long-term
    readiness needs.

    Compensation and Special Incentive Pays
        The Coalition is committed to ensuring that pay and allowance
    programs are equitably applied to the seven uniformed Services. In that
    regard, the Coalition urges the subcommittee to be mindful that
    personnel and compensation program adjustments for Department of
    Defense forces should also apply to uniformed members of the Coast
    Guard, NOAA Corps, and Public Health Service.
        Since the turn of the century, Congress and DOD have made
    significant progress to improve the lives of men and women in uniform
    and their families. Since 1999, when military pay raises had lagged a
    cumulative 13.5 percent behind the private sector pay comparability
    standard, the subcommittee has narrowed that gap to 3.4 percent. Each
    year during that span, the subcommittee has ensured at least some
    progress in shrinking that disparity further. TMC is grateful for that
    progress, and believes strongly that it should continue until full pay
    comparability is restored.
        DOD uses the 70th percentile of earnings of private workers of
    comparable age, experience and education as a standard to help
    rebalance the military pay table through special targeted pay increases
    depending on grade and longevity status. The Coalition believes this
    measure is useful as one tool in the process of establishing the proper
    progression of the pay table, and needs to be monitored and applied as
    necessary in the future. But it does not, by itself, supplant overall
    growth in the ECI as the measure of pay comparability, nor does it
    erase the remaining 3.4 percent gap between military pay raises and
    private sector pay growth.
        The Coalition believes Congress will never find a better
    opportunity to phase out the remaining gap than today's conditions when
    private sector pay growth is relatively low. In assessing the proper
    amount to reduce the pay gap, Congress also should consider that
    today's troops are working much harder--and their families sacrificing
    much more--for their modest raises.
        This year, we expect the Defense budget will propose a 3.4 percent
    raise for military personnel in 2009--a percentage equal to the growth
    in private sector pay 2 years earlier in 2007. The Coalition believes
    strongly that this is not the time to end Congress' steady path of
    progress in reducing the military pay comparability gap.
        The Coalition urges the subcommittee to propose a military pay
    raise of at least 3.9 percent for fiscal year 2009 (one-half percentage
    point above private sector pay growth) and to continue such half-
    percent annual increases over the ECI until the current 3.4 percent pay
    comparability gap is eliminated.
        The Coalition also urges the subcommittee to continue periodic
    targeted pay raises as appropriate to recognize the growing education
    and technical qualifications of enlisted members and warrant officers
    and sustain each individual grade/longevity pay cell at the minimum
    70th percentile standard.
    Access to Quality Housing
        Today's housing allowances come much closer to meeting military
    members' and families' housing needs than in the past, thanks to the
    conscientious efforts of the subcommittee in recent years.
        But the Coalition believes it's important to understand that some
    fundamental flaws in the standards used to set those allowances remain
    to be corrected, especially for enlisted members.
        The Coalition supports revised housing standards that are more
    realistic and appropriate for each pay grade. Many enlisted personnel
    are unaware of the standards for their respective pay grade and assume
    that their BAH level is determined by a higher standard or by the type
    of housing for which they would qualify if they live on a military
    installation. For example, only 1.25 percent of the enlisted force (E-
    9) is eligible for BAH sufficient to pay for a 3-bedroom single-family
    detached house, even though thousands of more junior enlisted members
    do, in fact, reside in detached homes. The Coalition believes that as a
    minimum, this BAH standard (single-family detached house) should be
    extended gradually to qualifying servicemembers beginning in grade E-8
    and subsequently to grade E-7 and below over several years as resources
    allow.
        TMC urges reform of military housing standards that inequitably
    depress BAH rates for mid to senior enlisted members by relegating
    their occupancy to inappropriately small quarters.
    Family Readiness and Support
        A fully funded, robust family readiness program continues to be
    crucial to overall readiness of our military, especially with the
    demands of frequent and extended deployments.
        Resource issues continue to plague basic installation support
    programs. At a time when families are dealing with increased
    deployments, they are being asked to do without. Often family centers
    are not staffed for outreach. Library and sports facilities hours are
    being abbreviated or cut altogether. Manpower for installation security
    is being reduced. These are additional sacrifices that we are imposing
    on our families left behind while their servicemembers are deployed.
        In a similar vein, the Coalition believes additional authority and
    funding is needed to offer respite and extended child care for military
    families. These initiatives should be accompanied by a more aggressive
    outreach and education effort to improve members' and families'
    financial literacy. We should ensure members are aware of and
    encouraged to use child care, mental health support, spousal
    employment, and other quality-of-life programs that have seen recent
    growth. However, this education effort should also include expanded
    financial education initiatives to inform and counsel members and
    families on life insurance options, Thrift Savings Plan, IRAs, flexible
    spending accounts, savings options for children's education, and other
    quality of life needs.
        In particular servicemembers must be educated on the long-term
    financial consequences of electing to accept the much lower-value
    $30,000 REDUX retention bonus after 15 years of service vice sustaining
    their full High-3 retirement benefit.
        The Coalition urges the subcommittee to support increased family
    support funding and expanded education and other programs to meet
    growing needs associated with increased operations tempo (OPTEMPO),
    extended deployments and the more complex insurance, retirement, and
    savings choices faced by over-extended military families.
    Spouse Employment
        The Coalition is pleased that movement is being made to enhance the
    total force spouse employment opportunities through a test program and
    strong partnerships between DOD, Department of Labor, service
    organizations, employers, and others; however, more needs to be done.
        More and more military spouses are in the workforce than in the
    past, but challenges in finding jobs after relocation adversely impact
    the military families' financial stability and satisfaction with
    military life. Spouse employment helps contribute to a strong military
    and helps in retention of our high quality, All-Volunteer Force.
    Defense leaders repeatedly acknowledge, ``We recruit servicemembers,
    but we retain families.''
        One of the greatest frustrations for working spouses is the career
    and financial disruption associated with military-directed relocations.
    If we're serious about retaining more military families, we must get
    serious about easing this significant career and military life
    dissatisfier.
        The Coalition urges the subcommittee to support legislation which
    would expand the Workforce Opportunity Tax Credit for employers who
    hire spouses of Regular and Reserve component servicemembers.
        Additionally, the Coalition supports providing tax credits to
    offset military spouses' expenses in obtaining career-related licenses
    or certifications when servicemembers are relocated to a different
    State.
    Flexible Spending Accounts
        The Coalition cannot comprehend the Defense Department's continuing
    failure to implement existing statutory authority for active duty and
    Selected Reserve members to participate in Flexible Spending Accounts
    (FSAs), despite both Armed Services Committees' prodding on this
    subject.
        All other Federal employees and corporate civilian employees are
    able to use this authority to save thousands of dollars a year by
    paying out-of-pocket health care and dependent care expenses with pre-
    tax dollars. It is unconscionable that the Department has failed to
    implement this money-saving program for the military members who are
    bearing the entire burden of national sacrifice in the global war on
    terrorism.
        TMC urges the subcommittee to continue pressing the Defense
    Department until servicemembers are provided the same eligibility to
    participate in Flexible Spending Accounts that all other Federal
    employees and corporate employees enjoy. Additionally, we support S.
    773.
    Permanent Change of Station Allowances
        PCS allowances have continually failed to keep pace with the
    significant out-of-pocket expenses servicemembers and their families
    incur in complying with government-directed moves.
        For example, PCS mileage rates still have not been adjusted since
    1985. The current rates range from 15 to 20 cents per mile--an ever-
    shrinking fraction of the 50.5 cents per mile rate authorized for
    temporary duty travel. Also, military members must make any advance
    house-hunting trips at personal expense, without any government
    reimbursements such as Federal civilians receive.
        Additionally, the overwhelming majority of service families consist
    of two working spouses, making two privately owned vehicles a
    necessity. Yet the military pays for shipment of only one vehicle on
    overseas moves, including moves to Hawaii and Alaska. This forces
    relocating families into large out-of-pocket expenses, either by
    shipping a second vehicle at their own expense or selling one car
    before leaving the States and buying another upon arrival. The
    Coalition is greatly disappointed that, for 2 consecutive years, a
    subcommittee proposal to authorize shipping two vehicles to non-foreign
    duty locations outside of the continental United States has been
    dropped in conference.
        The Coalition is grateful that the senior enlisted PCS weight
    allowance tables were increased slightly in the NDAA for Fiscal Year
    2006; however, we believe that these modification need to go further
    for personnel in pay grades E-7, E-8, and E-9 to coincide with
    allowances for officers in grades O-4, O-5, and O-6 respectively. The
    personnel property weight for a senior E-9 leader without dependents
    remains the same as for a single O-3 despite the normal accumulation of
    household goods over the course of a career.
        Four years ago, the subcommittee authorized the Families First
    initiative. Among its provisions was full replacement value (FRV)
    reimbursement for household goods damaged during PCS moves. We are
    grateful that this first FRV phase has begun but will continue to
    monitor its implementation. The next phase, focusing on survey results
    and real time access to the progress of household goods in the moving
    process has yet to be fully implemented. We will continue to monitor
    the progress and hope that Congress will be doing the same.
        Aside from that long-delayed initiative the last real adjustment in
    PCS expenses was 7 years ago in 2001, when this subcommittee upgraded
    PCS per diem (but not mileage) rates and raised the maximum daily
    Temporary Lodging Expense (TLE) allowance from $110 to $180 a day for a
    PCSing family, among certain other adjustments, including the increase
    in the junior enlisted weight allowances. That TLE amount is supposed
    to cover a family's food and lodging expenses while in temporary
    quarters at the gaining or losing installation. Today, after 7 years of
    inflation, it's hardly adequate to cover the daily expenses of a family
    of four or five anywhere in America, let alone a family ordered to
    relocate to San Diego or Washington, DC.
        The Coalition also supports authorization of a dislocation
    allowance for servicemembers making their final ``change of station''
    upon retirement from the uniformed services and a 500-pound
    professional goods weight allowance for military spouses.
        We cannot avoid requiring members to make regular relocations, with
    all the attendant disruptions in their children's education and their
    spouses' careers. The Coalition believes strongly that the Nation that
    requires military families to incur these disruptions should not be
    making them bear the attendant high expenses out of their own pockets.
        TMC urges the subcommittee to upgrade permanent change-of-station
    allowances to better reflect the expenses members are forced to incur
    in complying with government-directed relocations, with priority on
    adjusting flat-rate amounts that have been eroded by years--or
    decades--of inflation, and shipment of a second vehicle at government
    expense to overseas accompanied assignments.
    BRAC/Rebasing/Military Construction/Commissaries
        TMC remains concerned about inadequacy of service implementation
    plans for DOD transformation, global repositioning, Army modularity,
    and BRAC initiatives. Given the current wartime fiscal environment, TMC
    is greatly worried about sustaining support services and quality of
    life programs for members and families. These programs are clearly at
    risk--not a week goes by that the Coalition doesn't hear reports of
    cutbacks in base operation accounts and base services because of
    funding shortfalls.
        Feedback from the installation level is that local military and
    community officials often are not brought ``into the loop'' or provided
    sufficient details on changing program timetables to plan, seek, and
    fund support programs (housing, schools, child care, roads, and other
    infrastructure) for the numbers of personnel and families expected to
    relocate to the installation area by a specific date.
        We believe it is important to note that the commissary is a key
    element of the total compensation package for servicemembers and
    retirees. In addition to providing average savings of 30 percent over
    local supermarkets, commissaries provide an important tie to the
    military community. Shoppers get more than groceries at the commissary.
    It is also an opportunity to connect with other military family members
    and to get information on installation programs and activities through
    bulletin boards and installation publications. Finally, shoppers
    receive nutrition information and education through commissary
    promotions and educational campaigns contributing to the overall health
    of the entire beneficiary population.
        The Coalition urges the subcommittee to closely monitor rebasing/
    BRAC plans and schedules to ensure sustainment and timely development
    of adequate family support/quality of life programs. At closing and
    gaining installations, respectively--to include housing, education,
    child care, exchanges and commissaries, health care, family centers,
    unit family readiness, and other support services.
    Morale, Welfare, and Recreation Programs
        The availability of appropriated funds to support MWR activities is
    an area of continuing concern. TMC strongly opposes any DOD initiative
    that withholds or reduces MWR appropriated support for Category A and
    Category B programs or that reduces the MWR dividend derived from
    military base exchange programs.
        Servicemembers and their families are reaching the breaking point
    as a result of the war and the constant changes going on in the force.
    It is unacceptable to have troops and families continue to take on more
    responsibilities and sacrifices and not give them the support and
    resources to do the job and to take care of the needs of their
    families.
        TMC urges the subcommittee to ensure that DOD funds MWR programs at
    least to the 85 percent level for Category A programs and 65 percent
    for Category B requirements.
    Education Enhancements
        Providing quality education for all military children is a key
    recruiting and retention standard that has been historically supported
    by the subcommittee.
        The Coalition is concerned that there was no increase in the amount
    of the DOD Supplement to Impact Aid. The need for supplemental funding
    as school districts receive more military children as rebasing is
    implemented is increasing. We believe that the funding should reflect
    this greater impact.
        Servicemembers have seen the value of their MGIB dramatically
    diminish due to double digit education inflation. The Coalition
    recommends tying the MGIB education benefit level to the average cost
    of a 4-year public college.
        Furthermore, service families facing several duty location changes
    during a career often encounter problems establishing State residency
    for the purpose of obtaining in-State tuition rates for military
    children and spouses. The Coalition supports authorizing in-State
    college tuition rates for servicemembers and their families in the
    State in which the member is assigned and the member's home State of
    record. The in-State tuition should remain continuous once the military
    member or family member is established as a student.
        TMC urges the subcommittee to work with the Veterans' Affairs
    Committee to establish the benchmark level of MGIB education benefits
    at the average cost of attending a 4-year public college, and support
    continuous in-State tuition eligibility for servicemembers and their
    families in the State in which the member is assigned and the member's
    home State of record once enrolled as a student.
                    national guard and reserve force issues
        Every day somewhere in the world, our National Guard and Reserves
    are answering the call to service. Although there is no end in sight to
    their participation in homeland security, overseas deployment and
    future contingency operations, Guard and Reserve members have
    volunteered for these duties and accept them as a way of life in the
    21st century.
        Since September 11, 2001, more than 615,000 National Guard and
    Reserve service men and women have been called to active Federal
    service for the war on terrorism and more than 150,000 have served
    multiple deployments. They are experiencing similar sacrifices as the
    Active-Duty Forces. However, readjusting to home life, returning to
    work and the communities and families they left behind puts added
    stress on Guard and Reserve members. Unlike active duty members, whose
    combat experience enhances their careers, many Guard Reserve members
    return to employers who are unhappy about their active duty service and
    find that their civilian careers have been inhibited by their prolonged
    absences. Further, despite the continuing efforts of the subcommittee,
    most Guard and Reserve families do not have the same level of
    counseling and support services that the active duty members have.
        All Guard and Reserve components are facing increasing challenges
    involving major equipment shortages, end strength requirements,
    wounded-warrior health care, assistance and counseling for Guard and
    Reserve members for pre-deployment and post-deployment contingency
    operations.
        Congress and the Department of Defense must provide adequate
    benefits and personnel policy changes to support our troops who go in
    harm's way.
    Reserve Retirement and `Operational Reserve' Policy
        The assumption behind the 1948-vintage G-R retirement system--
    retired pay eligibility at age 60--was that these servicemembers would
    be called up only infrequently for short tours of duty, allowing the
    member to pursue a full-time civilian career with a full civilian
    retirement. Under the ``Operational Reserve'' policy, reservists will
    be required to serve 1-year active duty tours every 5 or 6 years.
        Repeated, extended activations devalue full civilian careers and
    impede reservists' ability to build a full civilian retirement, 401(k),
    etc. Regardless of statutory reemployment protections, periodic long-
    term absences from the civilian workplace can only limit Guard and
    Reserve members' upward mobility, employability and financial security.
    Further, strengthening the Reserve retirement system is needed as an
    incentive to retain critical mid-career officers and NCOs for a full
    Reserve career to meet long-term readiness needs.
        The Coalition is grateful for the NDAA for Fiscal Year 2008
    provision that would lower the Reserve retirement age by 3 months for
    each cumulative 90 days of active duty on contingency operation orders.
    TMC appreciates the importance of this small first step, but is very
    concerned that the new authority authorizes such credit only for
    service in 2008 and beyond--ignoring the extreme sacrifices of those
    who have borne the greatest burden of sacrifice in the war on terror
    for one, two, three or more combat tours in the past 6 years.
        TMC strongly urges further progress in revamping the Reserve
    retirement system in recognition of increased service and sacrifice of
    National Guard and Reserve component members, including at a minimum,
    extending the new authority for a 90-day=3-month reduction to all Guard
    and Reserve members who have served since September 11.
    A Total Force Approach to the MGIB
        The Nation's Active-Duty, National Guard and Reserve Forces are
    operationally integrated under the Total Force policy. But educational
    benefits under the MGIB do not reflect the policy nor match benefits to
    service commitment.
        TMC is grateful that the NDAA for Fiscal Year 2008 addressed a
    major inequity for operational reservists by authorizing 10 years of
    post-service use for benefits earned under chapter 1607, 10 U.S.C.
        But this change will require the DOD, not the VA to pay the costs
    of readjustments for reservists. At a hearing on January 17, 2008, a
    senior DOD official acknowledged that the DOD no longer should control
    chapter 1607.
        In addition, basic Reserve MGIB benefits for initial service entry
    have lost proportional parity with active duty rates since September
    11. These relative benefits have spiraled down from a historic ratio of
    47-50 percent of active duty MGIB levels to less than 29 percent--at a
    time when Guard and Reserve recruitment continues to be very
    challenging.
        TMC urges Congress to integrate Guard and Reserve and active duty
    MGIB laws into title 38. In addition, TMC recommends restoring basic
    Reserve MGIB rates to approximately 50 percent of active duty rates and
    authorizing upfront reimbursement of tuition or training coursework for
    Guard and Reserve members.
    Family Support Programs and Benefits
        The Coalition supports providing adequate funding for a core set of
    family support programs and benefits that meet the unique needs of
    Guard and Reserve families with uniform access for all servicemembers
    and families. These programs would promote better communication with
    servicemembers, specialized support for geographically separated Guard
    and Reserve families and training and back up for family readiness
    volunteers. This access would include:
             Web-based programs and employee assistance programs
            such as Military OneSource and Guardfamily.org.
             Enforcement of command responsibility for ensuring
            that programs are in place to meet the special needs of
            families of individual augmentees or the geographically
            dispersed.
             Expanded programs between military and community
            religious leaders to support servicemembers and families during
            all phases of deployments.
             Availability of robust preventive counseling services
            for servicemembers and families and training so they know when
            to seek professional help related to their circumstances.
             Enhanced education for Guard and Reserve family
            members about their rights and benefits.
             Innovative and effective ways to meet the Guard and
            Reserve community's needs for occasional child care,
            particularly for preventive respite care, volunteering, and
            family readiness group meetings and drill time.
             A joint family readiness program to facilitate
            understanding and sharing of information between all family
            members, no matter what the service.

        The Coalition recognizes the subcommittee's longstanding interest
    and efforts on this topic, including several provisions in the NDAA for
    Fiscal Year 2008. The Coalition will monitor the results of the surveys
    and increased oversight called for in the provisions and looks forward
    to working closely with the Family Readiness Council.
        TMC urges Congress to continue and expand its emphasis on providing
    consistent funding and increased outreach to connect Guard and Reserve
    families with relevant support programs.
    Tangible Support for Employers
        Employers of Guard and Reserve servicemembers shoulder an extra
    burden in support of the national defense. The new ``Operational
    Reserve'' policy places even greater strain on employers. For their
    sacrifice, they get plaques to hang on the wall.
        For Guard and Reserve members, employer `pushback' is listed as one
    of the top reasons for reservists to discontinue Guard and Reserve
    service. If we are to sustain a viable Guard and Reserve Force for the
    long-term, the Nation must do more to tangibly support employers of the
    Guard and Reserve and address their substantive concerns, including
    initiatives such as:

             Tax credits for employers who make up any pay
            differential for activated employees.
             Tax credits to help small business owners hire
            temporary workers to fill in for activated employees.
             Tax credits for small manufacturers to hire temporary
            workers.

        The Coalition urges Congress to support needed tax relief for
    employers of Selected Reserve personnel and reinforce the Employer
    Support for Guard and Reserve Program.
    Seamless Transition for Guard and Reserve Members
        Over 615,000 members of the Guard and Reserve have been activated
    since September 11. Congressional hearings and media reports have
    documented the fact that at separation, many of these servicemembers do
    not receive the transition services they and their families need to
    make a successful readjustment to civilian status. Needed improvements
    include but are not limited to:

             Funding to develop tailored Transition Assistance
            Program (TAP) services in the hometown area following release
            from active duty.
             Expansion of VA outreach to provide ``benefits
            delivery at discharge'' services in the hometown setting.
             Authority for mobilized Guard and Reserve members to
            file ``Flexible Spending Account'' claims for a prior reporting
            year after return from active duty.
             Authority for employers and employees to contribute to
            401k and 403b accounts during mobilization.
             Enactment of academic protections for mobilized Guard
            and Reserve students including: academic standing and refund
            guarantees; and, exemption of Federal student loan payments
            during activation.
             Automatic waivers on scheduled licensing/
            certification/promotion exams scheduled during a mobilization.
             Authority for reemployment rights for Guard and
            Reserve spouses who must suspend employment to care for
            children during mobilization.

        The Coalition appreciates the work of this subcommittee in seeking
    to address some of these needs in the NDAA for Fiscal Year 2008, but
    more remains to be done.
        The Coalition urges the subcommittee to continue and expand its
    efforts to ensure Guard and Reserve members and their families receive
    needed transition services to make a successful readjustment to
    civilian status.
                               retirement issues
        TMC is extremely grateful to the subcommittee for its support of
    maintaining a strong military retirement system to help offset the
    extraordinary demands and sacrifices inherent in a career of uniformed
    service.
    Concurrent Receipt
        In the NDAA for Fiscal Year 2004, Congress acknowledged the
    inequity of the disability offset to earned retired pay and established
    a process to end or phase out the offset for all members with at least
    20 years of service and at least a 50 percent disability rating. That
    legislation also established the Veterans' Disability Benefits
    Commission and tasked the Commission to review the disability system
    and recommend any further adjustments to the disability offset law.
        Now the Commission has provided its report to Congress, in which it
    recommended an end to the VA compensation offset for all disabled
    military retirees, regardless of years of service, percentage of
    disability, or source of the service-connected disability (combat vs.
    non-combat).
        In the interim, congressional thinking has evolved along similar
    lines. The Coalition is thankful for the subcommittee's efforts in the
    NDAA for Fiscal Year 2008 to extend Combat-Related Special Compensation
    to disabled retirees who had their careers forced into retirement
    before attaining 20 years of service, as well as ending the offset for
    retirees rated unemployable by the VA.
        Despite this important progress, major inequities still remain that
    require the subcommittee's immediate attention. Many retirees are still
    excluded from the same principle that eliminates the disability offset
    for those with 50 percent or higher disabilities. The Coalition agrees
    strongly with the Veterans' Disability Benefits Commission that
    principle is the same for all disabled retirees, including those not
    covered by concurrent receipt relief enacted so far.
        The one key question is, ``Did the retired member fully earn his or
    her service-based retired pay, or not, independent of any disability
    caused by military service in the process?'' The Coalition and the
    Disability Commission agree that the answer has to be ``Yes.'' Any
    disability compensation award should be over and above service-earned
    retired pay.
        If a service-caused disability is severe enough to bar the member's
    continuation on active duty, and the member is forced into medical
    retirement short of 20 years of service, the member should be
    ``vested'' in service-earned retired pay at 2.5 percent times pay times
    years of service.
        To the extent that a member's military disability retired pay
    exceeds the amount of retired pay earned purely by service, that
    additional amount is for disability and therefore is appropriately
    subject to offset by VA disability compensation.
        The principle behind eliminating the disability offset for Chapter
    61 retirees with less than 20 years of service with combat-related
    disabilities is no less applicable to those who had their careers cut
    short by other service-caused conditions. It is simply inappropriate to
    make such members fund their own VA disability compensation from their
    service-earned military retired pay, and it is unconscionable that
    current law forces thousands of severely injured members with as much
    as 19 years and 11 months of service to forfeit most or all of their
    earned retired pay.
        The Coalition urges the subcommittee to act expeditiously on the
    recommendations of the Veterans' Disability Benefits Commission and
    implement a plan to eliminate the deduction of VA disability
    compensation from military retired pay for all disabled military
    retirees.
    Uniformed Services Retiree Entitlements and Benefits
        The Coalition awaits the results of the 10th Quadrennial Review of
    Military Compensation, which was tasked with reviewing the
    recommendations of the Defense Advisory Committee on Military
    Compensation (DACMC). The Coalition does not support the DACMC (nor the
    Commission on the National Guard and Reserve) recommendations to modify
    the military retirement system to more closely reflect civilian
    practices, including vesting for members who leave service short of a
    career and delaying retired pay eligibility for those who serve a
    career.
        Many such proposals have been offered in the past, and have been
    discarded for good reasons. The only initiative to substantially
    curtail/delay military retired pay that was enacted--the 1986 REDUX
    plan--had to be repealed 13 years later after it began inhibiting
    retention.
        The Coalition believes such initiatives to ``civilianize'' the
    military retirement system in ways that reduce the value of the current
    retirement system and undermine long-term retention are based on a
    seriously flawed premise. The reality is that unique military service
    conditions demand a unique retirement system. Surveys consistently show
    that the military retirement system is the single most powerful
    incentive to serve a full career under conditions few civilians would
    be willing to endure for even 1 year, much less 20 or 30. A civilian-
    style retirement plan would be appropriate for the military only if
    military service conditions were similar to civilian working
    conditions--which they most decidedly are not. The Coalition believes
    strongly that, if such a system as recommended by the DACMC existed for
    today's force under today's service conditions, the military Services
    would already be mired in a much deeper and more traumatic retention
    crisis than they have experience for many of the past several years.
        TMC urges the subcommittee to resist initiatives to ``civilianize''
    the military retirement system in ways that reduce the compensation
    value of the current retirement system and undermine long-term
    retention.
    Permanent ID Card Eligibility
        The advent of TFL, expiration of TFL-eligible spouses' and
    survivors' military identification cards--and the threatened denial of
    health care claims--have caused many frail and elderly members and
    their caregivers significant administrative and financial distress.
        Previously, those who lived miles from a military installation or
    who resided in nursing homes and assisted living facilities simply did
    not bother to renew their identification (ID) cards upon the 4 year
    expiration date. Before enactment of TFL, they had little to lose by
    not doing so. But now, ID card expiration cuts off their new and all-
    important health care coverage.
        Congress has agreed with the Coalition's concerns that a 4-year
    expiration date is reasonable for younger family members and survivors
    who have a higher incidence of divorce and remarriage, but it imposes
    significant hardship and inequity upon elderly dependents and
    survivors.
        In the NDAA for Fiscal Year 2005, Congress authorized permanent ID
    cards for spouses and survivors who have attained age 75 (vs. the
    Coalition-recommended age 65), recognizing that many elderly spouses
    and survivors with limited mobility or who live in residential care
    facilities find it difficult or impossible to renew their military ID
    cards. Subsequently, Congress expanded that eligibility to permanently
    disabled dependents of retired members, regardless of age.
        Coalition associations continue to hear from a number of
    beneficiaries below the age of 75 who are disabled, living in
    residential facilities, are unable to drive, or do not live within a
    reasonable distance of a military facility. The threat of loss of
    coverage is forcing many others to try to drive long distances--
    sometimes in adverse weather and at some risk to themselves and
    others--to get their cards renewed.
        For administrative simplicity, the Coalition believes the age for
    the permanent ID card for spouses and survivors should coincide with
    the advent of TFL. To the extent an interim step may be necessary, the
    eligibility age could be reduced to 70.
        The Coalition urges the subcommittee to direct the Secretary of
    Defense to authorize issuance of permanent military identification
    cards to uniformed services family members and survivors who are age 65
    and older.
                                survivor issues
        The Coalition is grateful to the subcommittee for its significant
    efforts in recent years to improve the SBP. We particularly note that,
    as of April 1, thanks to this subcommittee's efforts, the minimum
    annuity for all SBP beneficiaries, regardless of age will be 55 percent
    of covered retired pay.
        We also appreciate Congress' initiative in last year's defense bill
    that establishes a special survivor indemnity allowance that is the
    first step in a longer-term effort to phase out the DIC offset to SBP
    when the member died of a service-caused condition.
    SBP-DIC Offset
        The Coalition believes strongly that current law is unfair in
    reducing military SBP annuities by the amount of any survivor benefits
    payable from the VA DIC program.
        If the surviving spouse of a retiree who dies of a service-
    connected cause is entitled to DIC from the Department of Veterans
    Affairs and if the retiree was also enrolled in SBP, the surviving
    spouse's SBP benefits are reduced by the amount of DIC. A pro-rata
    share of SBP premiums is refunded to the widow upon the member's death
    in a lump sum, but with no interest. This offset also affects all
    survivors of members who are killed on active duty.
        The Coalition believes SBP and DIC payments are paid for different
    reasons. SBP is purchased by the retiree and is intended to provide a
    portion of retired pay to the survivor. DIC is a special indemnity
    compensation paid to the survivor when a member's service causes his or
    her premature death. In such cases, the VA indemnity compensation
    should be added to the SBP the retiree paid for, not substituted for
    it. It should be noted as a matter of equity that surviving spouses of
    Federal civilian retirees who are disabled veterans and die of
    military-service-connected causes can receive DIC without losing any of
    their Federal civilian SBP benefits.
        The Coalition is concerned that, in authorizing the special
    survivor indemnity allowance in last year's NDAA, the conferees did not
    use the precise language proposed by this subcommittee, but adopted a
    technical language change that had the effect of limiting eligibility
    for the new allowance to survivors of members who were either retired
    or in the ``gray area'' reserve at the time of death. That is, it
    excluded survivors of members who died while serving on active duty.
        The Coalition believes strongly that the latter group of survivors
    is equally deserving of the new allowance. Some have argued that relief
    should be allowed only for those who paid a cash premium in retirement.
    The Coalition strongly disagrees, noting that a severely injured member
    who dies 1 month after his military disability retirement and who paid
    1 month of SBP premiums is little different than the case of a member
    who is more severely injured and expires more rapidly. Further, the new
    law authorizes coverage for ``gray area'' retirees who have paid no
    premiums, since their retired pay and SBP premiums don't begin until
    age 60.
        But the Coalition believes the issue goes beyond any such hair-
    splitting. The reality is that, in every SBP/DIC case, active duty or
    retired, the true premium extracted by the service from both the member
    and the survivor was the ultimate one--the very life of the member--and
    that the service was what caused his or her death.
        The Coalition knows that the subcommittee is aware that the
    military community (and especially the survivors concerned) view the
    amount of the new allowance--$50 per month initially, and growing to
    $100 over the course of several years--as grossly inadequate. We
    appreciate that the subcommittee could have elected to do nothing
    rather than incur the expected negative feedback about the small
    amount. In that regard, we applaud you for having the courage to
    acknowledge the inequity and take this first step, however small, to
    begin trying to address it.
        But we also urge the subcommittee to work hard to accelerate
    increases in the amount of the allowance, to send the much-needed
    message to these survivors who have given so much to their country that
    Congress fully intends to find a way to address their loss more
    appropriately.
        The Coalition strongly urges the subcommittee to take further
    action to expand eligibility for the special survivor indemnity
    allowance to include all SBP-DIC survivors and continue progress toward
    completely repealing the SBP-DIC offset for this most-aggrieved group
    of military widows.
    Final Retired Paycheck
        TMC believes the policy requiring recovery of a deceased member's
    final retired paycheck from his or her survivor should be changed to
    allow the survivor to keep the final month's retired pay.
        Current regulations require the survivor to surrender the final
    month of retired pay, either by returning the outstanding paycheck or
    having a direct withdrawal recoupment from her or his bank account.
        The Coalition believes this is an extremely insensitive policy
    imposed by the government at a most traumatic time for a deceased
    member's next of kin. Unlike his or her active duty counterpart, a
    retiree's survivor receives no death gratuity. Many older retirees do
    not have adequate insurance to provide even a moderate financial
    cushion for surviving spouses. Very often, the surviving spouse already
    has had to spend the final month's retired pay before being notified by
    the military finance center that it must be returned. Then, to receive
    the partial month's pay of the deceased retiree up to the date of
    death, the spouse must file a claim for settlement--an arduous and
    frustrating task, at best--and wait for the military's finance center
    to disburse the payment. Far too often, this strains the surviving
    spouse's ability to meet the immediate financial obligations
    commensurate with the death of the average family's ``bread winner.''
        TMC urges the subcommittee to end the insensitive practice of
    recouping the final month's retired pay from the survivor of a deceased
    retired member.
                               health care issues
        The Coalition very much appreciates the subcommittee's strong and
    continuing interest in keeping health care commitments to military
    beneficiaries. We are particularly grateful for your support for the
    last 2 years in refusing to allow the Department of Defense to
    implement disproportional beneficiary health fee increases.
        The Coalition is more than willing to engage substantively in
    TRICARE fee and copay discussions with DOD. In past years, the
    Coalition and the Defense Department have had regular and substantive
    dialogues that proved very productive in facilitating reasonably smooth
    implementation of such major program changes as TRICARE Prime and TFL.
    The objective during those good-faith dialogues has been finding a
    balance between the needs of the Department and the needs of
    beneficiaries.
        It is a great source of regret to the Coalition that there has been
    substantively less dialogue on the more recent fee increase
    initiatives. From its actions, it is hard to draw any other conclusion
    than the Department's sole concern is to extract a specified amount of
    budget savings from beneficiaries. The savings are intended to come
    from increased revenues from higher fees and less utilization by
    military retirees. The Coalition and Congressional Budget Office
    believe that DOD's approach will not achieve the projected savings.
        The unique package of military retirement benefits--of which a key
    component is a top-of-the-line health benefit--is the primary offset
    afforded uniformed servicemembers for enduring a career of unique and
    extraordinary sacrifices that few Americans are willing to accept for 1
    year, let alone 20 or 30. It is an unusual--and essential--compensation
    package that a grateful Nation provides for the relatively few who
    agree to subordinate their personal and family lives to protecting our
    national interests for so many years.
    Full Funding for the Defense Health Program
        The Coalition very much appreciates the subcommittee's support for
    maintaining--and expanding where needed--the healthcare benefit for all
    military beneficiaries, consistent with the demands imposed upon them.
        The Defense Department, Congress, and TMC all have reason to be
    concerned about the rising cost of military health care. But it is
    important to recognize that the bulk of the problem is a national one,
    not a military-specific one. To a large extent, military health cost
    growth is a direct reflection of health care trends in the private
    sector.
        It is true that many private sector employers are choosing to shift
    an ever-greater share of health costs to their employees and retirees.
    In the bottom-line-oriented corporate world, many firms see their
    employees as another form of capital, from which maximum utility is to
    be extracted at minimum cost, and those who quit are replaceable by
    similarly experienced new hires. But that can't be the culture in the
    military's closed personnel, all volunteer model, whose long-term
    effectiveness is utterly dependent on establishing a sense of mutual,
    long-term commitment between the servicemember and his/her country.
        Some assert active duty personnel costs have increased 60 percent
    since 2001, of which a significant element is for compensation and
    health costs. But much of that cost increase is due to conscious
    decisions by Congress to correct previous shortfalls--including easing
    the double-digit military ``pay gap'' of that era and correcting the
    unconscionable situation before 2001 when military beneficiaries were
    summarily dropped from TRICARE coverage at age 65. Additionally, much
    of the increase is due to the cost of war and increased OPTEMPO.
        Meanwhile, the cost of basic equipment soldiers carry into battle
    (helmets, rifles, body armor) has increased 257 percent (more than
    tripled) from $7,000 to $25,000 since 1999. The cost of a Humvee has
    increased seven-fold (600 percent) since 2001 (from $32,000 to
    $225,000).
        While we have an obligation to do our best to intelligently
    allocate these funds, the bottom line is that maintaining the most
    powerful military force in the world is expensive--and doubly so in
    wartime.
        The Coalition assumes that DOD will again propose a reduction to
    the defense health budget based on the assumption that Congress will
    approve beneficiary fee increases for fiscal year 2009 at least as
    large as those as outlined last year. The Coalition objects strongly to
    the Administration's arbitrary reduction of the TRICARE budget
    submission. DOD has typically overestimated its healthcare costs as
    evidenced by a recent GAO report on the TRS premiums. The Coalition
    deplores this inappropriate budget ``brinksmanship'', which risks
    leaving TRICARE significantly underfunded, especially in view of
    statements made for the last 2 years by leaders of both Armed Services
    Committees that the Department's proposed fee increases were excessive.
        The Coalition understands only too well the very significant
    challenge such a large and arbitrary budget reduction would pose for
    this subcommittee if allowed to stand. If the reduction is not made up,
    the Department almost certainly will experience a substantial budget
    shortfall before the end of the year. This would then generate
    supplemental funding needs, further program cutbacks, and likely
    efforts to shift even more costs to beneficiaries in future years--all
    to the detriment of retention and readiness.
        The Coalition particularly objects to DOD's past imposition of
    ``efficiency wedges'' in the health care budget, which have nothing to
    do with efficiency and everything to do with imposing arbitrary budget
    cuts that impede delivery of needed care. We are grateful for the
    subcommittee's strong action on this topic, and trust in your vigilance
    to ensure that such initiatives will not be part of this year's budget
    process.
        TMC strongly urges the subcommittee to take all possible steps to
    restore the reduction in TRICARE-related budget authority and ensure
    continued full funding for Defense Health Program needs.
    Protecting Beneficiaries Against Cost-Shifting
        The Task Force on the Future of Military Health Care had a great
    opportunity for objective evaluation of the larger health care issues.
    Unfortunately, the Coalition believes the Task Force missed that mark
    by a substantial margin.
        The bulk of its report cites statistics provided by the Defense
    Department and focuses discussions of cost-sharing almost solely on
    government costs, while devoting hardly a sentence to what the
    Coalition views as an equally fundamental issue--the level of health
    coverage that members earn by their arduous career service, the value
    of that service as an in-kind, upfront premium prepayment, and the role
    of lifetime health coverage as an important offset to the unique
    conditions of military service. The Task Force focused on what was
    ``fair to the taxpayer'' and felt the benefit should be ``generous but
    not free.''
        The Task Force gave short shrift to what the Coalition sees as a
    fundamental point--that generations of military people have been told
    by their leaders that their service earned them their health care
    benefit, and the Defense Department and Congress reinforced that
    perception by sustaining flat, modest TRICARE fees over long periods of
    time. But now the Department and the Task Force assert that the
    military retirement health benefit is no longer earned by service. They
    now say beneficiary costs should be ``restored'' to some fixed share of
    Defense Department costs, even though no such relationship was ever
    stated or intended in the past. The Task Force report acknowledges that
    DOD cost increases over the intervening years have been inflated by
    military/wartime requirements, inefficiency, lack of effective
    oversight, structural dysfunction, or conscious political decisions by
    the administration and Congress. Yet they assert that the government
    should foist a fixed share of those costs on beneficiaries anyway.
        The Coalition believes the Task Force's fee recommendations (see
    charts below)--which actually propose larger fee increases than DOD
    had--would be highly inequitable to beneficiaries and would pose a
    significant potential deterrent to long-term career retention.

      CURRENT VS. PROPOSED TRICARE FEES   (Recommended by DOD Task Force on
                         Future of Military Health Care)
                      Retiree Under Age 65, Family of Three
    ------------------------------------------------------------------------
                  TRICARE Prime1                 Current        Proposed
    ------------------------------------------------------------------------
    Enrollment Fee...........................        $460     $1,090-$2,0903
    Doctor Visit Copays......................         $60               $125
    Rx Cost Shares2..........................        $288               $960
    Yearly Cost..............................        $808      $2,175-$3,175
    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
                TRICARE Standard 1               Current        Proposed
    ------------------------------------------------------------------------
    Enrollment Fee...........................          $0               $120
    Deductible...............................        $300       $600-$1,1503
    Rx Cost Shares2..........................        $288               $960
    Yearly Cost..............................        $588      $1,680-$2,230
    ------------------------------------------------------------------------
    \1\ Fully phased-in proposal; assumes five doctor visits per year.
    \2\ Assumes two generic and two brand name prescriptions per month in
      retail pharmacy
    \3\ Includes annual medical inflation adjustment recommended by the Task
      Force.

                         Retiree Over Age 65 and Spouse
    ------------------------------------------------------------------------
               TRICARE for Life \2\              Current        Proposed
    ------------------------------------------------------------------------
    Medicare Part B..........................      $2,314             $2,314
    Enrollment Fee...........................          $0               $240
    Rx Cost Shares \2\.......................        $396             $1,260
    Yearly Cost..............................      $2,710             $3,814
    ------------------------------------------------------------------------
    \1\ Assumes lowest tier Medicare Part B premium for 2008.
    \2\ Two generic and three brand name prescriptions per month purchased
      at a network retail pharmacy

                        Currently Serving Family of Four
    ------------------------------------------------------------------------
               TRICARE Standard \1\              Current        Proposed
    ------------------------------------------------------------------------
    Enrollment Fee...........................          $0          $120 (??)
    Deductible...............................        $300    $600-$1,150 \3\
    Rx Cost Shares \2\.......................        $180               $660
    Yearly Cost..............................        $480      $1,260-$1,930
    ------------------------------------------------------------------------
    \1\ Fully phased in proposals. Spouse and two children use Standard.
    (??) Task Force report unclear whether enrollment fee would apply to
      currently serving families who elect TRICARE Standard
    \2\ Assumes two generic and one brand name prescription per month
      purchased at retail pharmacy.
    \3\ Includes annual military medical inflation adjustment as recommended
      by the Task Force.

        The Task Force cited GAO and other government reports to the effect
    that DOD financial statements and cost accounting systems are not
    auditable because of system problems and inadequate business processes
    and internal controls. Despite those statements, the Task Force
    accepted DOD data as the basis for assessing and proposing beneficiary
    cost-sharing percentages. The Coalition has requested information
    concerning the 1996 calculation and has never received an adequate
    accounting as to what was included in the calculation.
        The Task Force refers to its fee increases as ``modest'' and
    suggests the changes would be more generous than those offered by 75
    percent to 80 percent of all organizations in the private sector that
    offer health care benefits. The Coalition finds it telling that the
    Task Force would be content that 20 percent to 25 percent of U.S. firms
    offer their employees--most of whom never served 1 day for their
    country--a better benefit than the Defense Department provides in
    return for two or three decades of service and sacrifice in uniform.
        The Coalition is very grateful that Congress has expressed a much
    greater recognition of beneficiary perspectives, and has sought a more
    comprehensive examination of military health care issues. In that
    regard, the Coalition testimony will outline several specific concerns
    and address some principles that the Coalition believes need to be
    addressed in statute, just as there are statutory standards and
    guidelines for other major compensation elements--pay raises, housing
    and subsistence allowances, retired pay cost-of-living adjustments
    (COLAs), et cetera.
        People vs. Weapons
        Defense officials have provided briefs to Congress indicating that
    the rising military health care costs are ``impinging on other service
    programs.'' Other reports indicate that DOD leadership is seeking more
    funding for weapons programs by reducing the amount it spends on
    military health care and other personnel needs.
        TMC continues to assert that such budget-driven trade-offs are
    misguided and inappropriate. Cutting people programs to fund weapons
    ignores the much larger funding problem, and only makes it worse.
        The Coalition believes strongly that the proposed defense budget is
    too small to meet national defense needs. Today's defense budget (in
    wartime) is only about 4 percent of GDP, well short of the average for
    the peacetime years since World War II.
        The Coalition believes strongly that America can afford to and must
    pay for both weapons and military health care.
        Military vs. Civilian Cost-Sharing Measurement
        Defense leaders assert that substantial military fee increases are
    needed to bring military beneficiary costs more in line with civilian
    practices. But merely contrasting military vs. civilian cash cost-
    shares is a grossly misleading, ``apple-to-orange'' comparison.
        For all practical purposes, those who wear the uniform of their
    country are enrolled in a 20- to 30-year prepayment plan that they must
    complete to earn lifetime health coverage. In this regard, military
    retirees and their families paid enormous ``upfront'' premiums for that
    coverage through their decades of service and sacrifice. Once that
    prepayment is already rendered, the government cannot simply pretend it
    was never paid, and focus only on post-service cash payments.
        The Department of Defense and the Nation--as good-faith employers
    of the trusting members from whom they demand such extraordinary
    commitment and sacrifice--have a reciprocal health care obligation to
    retired servicemembers and their families and survivors that far
    exceeds any civilian employer's to its workers and retirees.
        The Task Force on the Future of Military Health Care acknowledges
    that its recommendations for beneficiary fee increases, if enacted,
    would leave military beneficiaries with a lesser benefit than 20-25
    percent of America's corporate employees. The pharmacy copayment
    schedule they propose for military beneficiaries is almost the same--
    and not quite as good in some cases--as the better civilian programs
    they reviewed.
        The Coalition believes that military beneficiaries from whom
    America has demanded decades of extraordinary service and sacrifice
    have earned coverage that is the best America has to offer--not just
    coverage that is at the 75th percentile of corporate plans.
        Large Retiree Fee Increases Can Only Hurt Retention
        The reciprocal obligation of the government to maintain an
    extraordinary benefit package to offset the extraordinary sacrifices of
    career military members is a practical as well as moral obligation.
    Mid-career military losses can't be replaced like civilians can.
        Eroding benefits for career service can only undermine long-term
    retention/readiness. Today's troops are very conscious of Congress'
    actions toward those who preceded them in service. One reason Congress
    enacted TFL is that the Joint Chiefs of Staff at that time said that
    inadequate retiree health care was affecting attitudes among active
    duty troops.
        The current Joint Chiefs have endorsed increasing TRICARE fees only
    because their political leaders have convinced them that this is the
    only way they can secure funding for weapons and other needs. TMC
    believes it is inappropriate to put the Joint Chiefs in the untenable
    position of being denied sufficient funding for current readiness needs
    if they don't agree to beneficiary benefit cuts.
        Those who think retiree health care isn't a retention issue should
    recall a quote by then Chief of Naval Operations and now Chairman of
    Joint Chiefs of Staff, Admiral Mike Mullen, in a 2006 Navy Times:

              ``More and more sailors are coming in married. They talk to
            me more about medical benefits than I ever thought to when I
            was in my mid-20s. I believe we have the gold standard . . .
            for medical care right now, and that's a recruiting issue, a
            recruiting strength, and it's a retention strength.''

        That's more than backed up by two independent Coalition surveys. A
    2006 Military Officers Association of America survey drew 40,000
    responses, including more than 6,500 from active duty members. Over 92
    percent in all categories of respondents opposed the DOD-proposed plan.
    There was virtually no difference between the responses of active duty
    members (96 percent opposed) and retirees under 65 (97 percent
    opposed). A Fleet Reserve Association survey showed similar results.
        Reducing military retirement benefits would be particularly ill-
    advised when recruiting is already a problem and an overstressed force
    is at increasing retention risk.
        Proposed Increases Far Exceed Inflation Increases
        The increases proposed by the Administration and the Task Force are
    grossly out of line with TRICARE benefit levels originally enacted by
    Congress, even allowing for interim inflation since current fees were
    established.
        If the $460 family Prime enrollment fee had been increased by the
    same Consumer Price Index (CPI) percentage increase as retired pay, it
    would be $642 for fiscal year 2009--far less than either the $1,512
    envisioned in the fiscal year 2008 budget request or the $900-$1,700
    cited by the Task Force as its ultimate target fees.
        If the $300 deductible for TRICARE Standard were CPI-adjusted for
    the same period, it would be $419 by 2009--far short of the $1,210 in
    annual deductible and new fees proposed by DOD in 2007, or the $610-
    $1,080 Task Force target.
        Further, both the administration and the Task Force propose
    adjusting beneficiary fees by medical cost growth, which has been two
    to three times the inflation-based increase in members' retired pay.
    The Task Force estimates the annual increase would be 7.5 percent.
        Both methodologies would ensure that medical costs would consume an
    ever-larger share of beneficiaries' income with each passing year. The
    Coalition realizes that this has been happening to many private sector
    employees, but believes strongly that the government has a greater
    obligation to protect the interests of its military beneficiaries than
    private corporations feel for their employees.
        Pharmacy copay increases proposed by the Task Force are even more
    disproportional. They would increase retail copays from $3 (generic),
    $9 (brand), and $22 (nonformulary) to $15, $25, and $45, respectively.
    Those represent increases of 400 percent, 178 percent, and 100 percent,
    respectively. Despite citing experience in civilian firms that
    beneficiary use of preferred drugs increased when their copays were
    reduced or eliminated, the Task Force actually proposes the highest
    percentage copay increases for the medications TRICARE most wants
    beneficiaries to use. That huge increase for retail generics flies in
    the face of recent commercial initiatives such as Wal-Mart's offering
    of many generics to the general public for a $4 copay. If the purpose
    is to push military beneficiaries to use Wal-Mart instead of TRICARE,
    it might indeed save the government some money on those medications,
    but it won't make military beneficiaries feel very good about their
    military pharmacy benefit. It shouldn't make Congress feel good about
    it, either.
        The Coalition particularly questions the need for pharmacy copay
    increases now that Congress has approved Federal pricing for the
    TRICARE retail pharmacy system.
        Retirees Under 65 ``Already Gave'' 10 percent of Retired Pay
        The large proposed health fee increases would impose a financial
    ``double whammy'' on retirees and survivors under age 65.
        Any assertion that military retirees have been getting some kind of
    ``free ride'' because TRICARE fees have not been increased in recent
    years conveniently overlooks past government actions that have
    inflicted far larger financial penalties on every retiree and survivor
    under 65--penalties that will grow every year for the rest of their
    lives.
        That's because decades of past budget caps already depressed
    lifetime retired pay by an average of 10 percent for military members
    who retired between 1984 and 2006. For most of the 1980s and 1990s,
    military pay raises were capped below private sector pay growth,
    accumulating a 13.5 percent ``pay gap'' by 1998-99--a gap which has
    been moderated since then but persists at 3.4 percent today.
        Every member who has retired since 1984--exactly the same under-65
    retiree population targeted by the proposed TRICARE fee increases--has
    had his or her retired pay depressed by a percentage equal to the pay
    gap at the time of retirement. That depressed pay will persist for the
    rest of their lives, with a proportional depression of SBP annuities
    for their survivors.
        As a practical example, a member who retired in 1993--when the pay
    gap was 11.5 percent--continues to suffer an 11.5 percent retired pay
    loss today. For an E-7 who retired in 1993 with 20 years of service,
    that means a loss of $2,000 this year and every year because the
    government chose to cap his military pay below the average American's.
    An O-5 with 20 years of service loses more than $4,300 a year.
        The government has spent almost a decade making incremental
    reductions in the pay gap for currently serving members, but it still
    hasn't made up the whole gap--and it certainly hasn't offered to make
    up those huge losses for members already retired. Under such
    circumstances, it strikes the Coalition as ironic that defense
    officials now propose, in effect, billing those same retirees for
    ``back TRICARE fee increases''.
        Fee-Tiering Scheme Is Inappropriate
        Both the administration and the Task Force have proposed multi-
    tiered schemes for proposed beneficiary fee increases, with the
    Administration's based on retired pay grade and the Task Force's based
    on retired pay amount. The intent of the plan is to ease opposition to
    the fee increases by introducing a means-testing initiative that
    penalizes some groups less than others.
        The Coalition rejects such efforts to mask a fundamental inequity
    by trying to convince some groups that the inequity being imposed on
    them is somehow more acceptable because even greater penalties would be
    imposed on other groups.
        Any such argument is fundamentally deceptive, since the Task Force
    plan envisions adjusting fee levels by medical inflation (7-8 percent a
    year), while retired pay thresholds would be adjusted by retiree COLAs
    (2 percent-3 percent a year). That would guarantee ``tier creep''--
    shifting ever greater numbers of beneficiaries into the top tier every
    year.
        Surveys of public and private sector health coverage indicate that
    less than 1 percent of plans differentiate by salary. No other Federal
    plan does so. The Secretary of Defense has the same coverage as any GS
    employee, and the Majority Leader of the Senate has the same coverage
    as the Senate's lowest-paid staff member.
        The Coalition believes strongly that all military retirees earned
    equal health benefits by virtue of their career service, and that the
    lowest fee tier proposed by either the administration or the Task Force
    would be an excessive increase for any military beneficiary (see chart
    at appendix A).
        TRICARE for Life Trust Fund Accrual Deposit Is Dubious Excuse
        According to DOD, most of the growth in defense health spending (48
    percent) was attributable to the establishment of the accrual
    accounting methodology for the TFL trust fund (which doesn't affect
    current outlays). The next largest contributor is medical care cost
    inflation (24 percent). Increase in usage by retirees and their
    dependents under age 65 accounted for 7 percent of the increase. Other
    benefit enhancements weigh in at 5 percent while global war on terror
    and other factors account for the remaining 15 percent. However, the
    affect of shifting beneficiaries from military treatment facilities to
    the civilian network was not discussed.
        When the Defense Department began arguing 3 years ago that the
    trust fund deposit was impinging on other defense programs, the
    Coalition and the subcommittee agreed that that should not be allowed
    to happen. When the Administration refused to increase the budget top
    line to accommodate the statutorily mandated trust fund deposit,
    Congress changed the law to specify that the entire responsibility for
    TFL trust fund deposits should be transferred to the Treasury.
    Subsequently, Administration budget officials chose to find a way to
    continue charging that deposit against the defense budget anyway.
        In the Coalition's view, this represents a conscious and
    inappropriate Administration decision to cap defense spending below the
    level needed to meet national security needs. If the administration
    chooses to claim to Congress that its defense budget can't meet those
    other needs, then Congress (which directed implementation of TFL and
    the trust fund deposit) has an obligation to increase the budget as
    necessary to meet them.
        TRICARE For Life Enrollment Fee is Inappropriate
        The Coalition disagrees strongly with the Task Force's
    recommendation to impose a new $120 annual enrollment fee for each TFL
    beneficiary. The Task Force report acknowledged that this would be
    little more than a ``nuisance fee'' and would be contrary to Congress'
    intent in authorizing TFL.
        The Task Force report cites data highlighting that costs are higher
    for beneficiaries age 65 and older, as if neither the administration
    nor Congress envisioned in 2001 that older beneficiaries might need
    more medications and more care.
        Congress authorized TFL in 2001 in recognition that, prior to that
    date, most older beneficiaries had to pay for all of their care out of
    their own pockets after age 65, since most had been summarily ejected
    from any military health or pharmacy coverage. Congress also required
    that, to be eligible for TFL, beneficiaries must enroll in Medicare
    Part B, which already entails a substantial and rapidly growing annual
    premium. Therefore, TRICARE only pays the portion of costs not covered
    by Medicare.
        When the current administration came to office in 2001, military
    and civilian Defense leaders praised TFL, as enacted, as an appropriate
    benefit that retirees had earned and deserved for their career service.
    The Coalition asks, ``What has changed in the 6 intervening years of
    war that has somehow made that service less meritorious?''
        Alternative Options to Make TRICARE More Cost-Efficient
        The Coalition continues to believe strongly that the Defense
    Department has not sufficiently investigated other options to make
    TRICARE more cost-efficient without shifting costs to beneficiaries.
    The Coalition has offered a long list of alternative cost-saving
    possibilities, including:

             Promote retaining other health insurance by making
            TRICARE a true second-payer to other insurance (far cheaper to
            pay another insurance's copay than have the beneficiary migrate
            to TRICARE).
             Reduce or eliminate all mail-order co-payments to
            boost use of this lowest-cost venue.
             Change electronic claim system to kick back errors in
            real time to help providers submit ``clean'' claims, reduce
            delays/multiple submissions.
             Size and staff military treatment facilities (least
            costly care option) in order to reduce reliance on non-MTF
            civilian providers.
             Promote programs to offer special care management
            services and zero copays or deductibles to incentivize
            beneficiaries to take medications and seek preventive care for
            chronic or unusually expensive conditions.
             Promote improved health by offering preventive and
            immunization services (e.g., shingles vaccine, flu shots) with
            no copay or deductible.
             Authorize TRICARE coverage for smoking cessation
            products and services (it's the height of irony that TRICARE
            currently doesn't cover these programs that have been long and
            widely acknowledged as highly effective in reducing long-term
            health costs).
             Reduce long-term TRS costs by allowing members the
            option of a government subsidy (at a cost capped below TRS
            cost) of civilian employer premiums during periods of
            mobilization.
             Promote use of mail-order pharmacy system via mailings
            to users of maintenance medications, highlighting the
            convenience and individual expected cost savings.
             Encourage retirees to use lowest-cost-venue military
            pharmacies at no charge, rather than discouraging such use by
            limiting formularies, curtailing courier initiatives, etc.

        The Coalition is pleased that the Defense Department has begun to
    implement at least some of our past suggestions, and stands ready to
    partner with DOD to investigate and jointly pursue these or other
    options that offer potential for reducing costs.
        TRICARE Still Has Significant Shortcomings
        While DOD chooses to focus its attention on the cost of the TRICARE
    program to the government, the Coalition believes there is insufficient
    acknowledgement that thousands of providers and beneficiaries continue
    to experience significant problems with TRICARE. Beneficiaries at many
    locations, particularly those lacking large military populations,
    report difficulty in finding providers willing to participate in the
    program. Doctors complain about the program's low payments and
    administrative hassles. Withdrawal of providers from TRICARE networks
    at several locations has generated national publicity.
        Of particular note is a 2007 GAO survey of Guard and Reserve
    personnel, also cited by the DOD Task Force on the Future of Military
    Health Care, in which almost one-third of respondents reported having
    difficulty obtaining assistance from TRICARE, and more than one-fourth
    reported difficulty in finding a TRICARE-participating provider.
        That problem is getting worse rather than better. The Task Force
    report stated that all military beneficiary categories report more
    difficulty than civilians in accessing care, and that military
    beneficiaries' reported satisfaction with access to care declined from
    2004 to 2006. The problem is exacerbated in areas like Alaska where a
    combination of physician shortages and an unwillingness to take TRICARE
    make it very difficult to find a physician.
        The Coalition urges the subcommittee to require DOD to pursue
    greater efforts to improve TRICARE and find more effective and
    appropriate ways to make TRICARE more cost-efficient without seeking to
    ``tax'' beneficiaries and make unrealistic budget assumptions.
        TMC Health Care Cost Principles
        TMC believes strongly that the current fee controversy is caused in
    part by the lack of any statutory record of the purpose of military
    health benefits and the degree to which cost adjustments are or should
    be allowable. Under current law, the Secretary of Defense has broad
    latitude to make administrative adjustments to fees for TRICARE Prime
    and the pharmacy systems. As a practical matter, the Armed Services
    Committees can threaten to change the law if they disapprove of the
    Secretary's initiatives. But absent such intervention, the Secretary
    can choose not to increase fees for years at a time or can choose to
    quadruple fees in 1 year.
        Until recently, this was not a particular matter of concern, as no
    Secretary had previously proposed dramatic fee increases. Given recent
    years' precedents, the Coalition believes strongly that the
    subcommittee needs to establish more specific and permanent principles,
    guidelines, and prohibitions to protect against dramatic administrative
    fluctuations in this most vital element of servicemembers' career
    compensation incentive package.
        Other major elements of the military compensation package have much
    more specific standards in permanent law. There is a formula for the
    initial amount of retired pay and for subsequent annual adjustments.
    Basic pay raises are tied to the ECI, and housing and food allowances
    are tied to specific standards as well.
        A 2006 survey of military retirees indicates that 65 percent of
    retirees under 65 have access to private health insurance. What the
    Task Force report does not measure is the percent of retirees that do
    not embark on a second career and thus depend solely on their
    retirement income. If fees are allowed to be tiered, up to one third of
    retirees could see a large portion of their retirement eaten up by
    healthcare costs.
        The Coalition most strongly recommends Representative Chet Edwards'
    and Representative Walter Jones' H.R. 579 and Senator Frank
    Lautenberg's and Senator Chuck Hagel's S. 604 as models to establish
    statutory findings, a sense of Congress on the purpose and principles
    of military health care benefits, and explicit guidelines for and
    limitations on adjustments.

             Active duty members and families should be charged no
            fees except retail pharmacy co-payments, except to the extent
            they make the choice to participate in TRICARE Standard or use
            out-of-network providers under TRICARE Prime.
             For retired and survivor beneficiaries, the percentage
            increase in fees, deductibles, and co-payments that may be
            considered in any year should not exceed the percentage
            increase beneficiaries experience in their compensation.
             The TRICARE Standard inpatient copay should not be
            increased further for the foreseeable future. At $535 per day,
            it already far exceeds inpatient copays for virtually any
            private sector health plan.
             There should be no enrollment fee for TRICARE Standard
            or TFL, since neither offers assured access to TRICARE-
            participating providers. An enrollment fee implies enrollees
            will receive additional services, as Prime enrollees are
            guaranteed access to participating providers in return for
            their fee. Congress already has required TFL beneficiaries to
            pay substantial Medicare Part B fees to gain TFL coverage.
             There should be one TRICARE fee schedule for all
            retired beneficiaries, just as all legislators, Defense leaders
            and other Federal civilian grades have the same health fee
            schedule. The TRICARE schedule should be significantly lower
            than the lowest tier recommended by the Defense Department,
            recognizing that all retired members paid large upfront
            premiums for their coverage through decades of arduous service
            and sacrifice.

        TRICARE Standard Enrollment
        Last year, the Department of Defense proposed requiring
    beneficiaries to take an additional step of signing an explicit
    statement of enrollment in TRICARE Standard. The Department proposed a
    one-time $25 enrollment fee. The Task Force on the Future of Military
    Health Care also endorsed enrollment, and proposed an annual enrollment
    fee of $120.
        The proposals are based on three main arguments:

             Enrollment is needed to define the population that
            will actually use the program
             Enrollment would allow more accurate budgeting for
            program needs
             The fee would help offset DOD's cost of implementing
            the enrollment system (DOD rationale) and ``impose some
            personal accountability for health care costs'' (Task Force
            rationale).

        The Coalition believes none of these arguments stands up to
    scrutiny.
        Department officials already know exactly which beneficiaries use
    TRICARE Standard. They have exhaustive records on what doctors they've
    seen and what medications they've used on what dates and for what
    conditions. They already assess trends in beneficiary usage and project
    the likely effect on those trends for current and future years--such as
    the effect of changes in private employer changes on the likely return
    of more beneficiaries to the TRICARE system.
        The Defense Department does not have a good record on communicating
    policy changes to Standard beneficiaries. That means large numbers of
    beneficiaries won't get the word, or appreciate the full impact if they
    do get it. They have always been told that their eligibility is based
    on the Defense Enrollment Eligibility Reporting System. A single, bulk-
    mail communication can't be expected to overwrite decades of
    experience.
        Hard experience is that many thousands of beneficiaries would learn
    of the requirement only when their TRICARE Standard claims are rejected
    for failure to enroll. Some would involve claims for cancer, auto
    accidents and other situations in which it would be unacceptable to
    deny claims because the beneficiary didn't understand an administrative
    rule change. DOD administrators who casually dismiss this argument as
    involving a relative minority of cases see the situation much
    differently if they found their family in that situation--as hundreds
    or thousands of military families certainly would.
        Inevitably, most beneficiaries who do receive and understand the
    implications of an enrollment requirement will enroll simply ``to be
    safe'', even if their actual intent is to use VA or employer-provided
    coverage for primary care--thus undercutting the argument that
    enrollment would increase accuracy of usage projections.
        The arguments for a Standard enrollment fee also don't hold water.
    First, it's inequitable to make beneficiaries pay a fee to cover the
    cost of an enrollment system that's established solely for the benefit
    and convenience of the government, with no benefit whatsoever for the
    beneficiary. Second, the Task Force acknowledges that a $120 fee is
    more a ``nuisance fee'' than a behavior modifier, and existing
    deductibles and copays provide a much more immediate ``accountability''
    sense to the beneficiary. Third and most important, one who pays an
    enrollment fee expects something extra in return for the fee. An
    enrollment fee for TRICARE Prime is reasonable, because it buys the
    beneficiary guaranteed access to a participating provider. TRICARE
    Standard provides no such guarantee, and in some locations it's very
    difficult for beneficiaries to find a TRICARE provider.
        For all these reasons, establishing an enrollment requirement will
    neither better define the user population nor better define budget
    needs.
        The Coalition believes the real intent of the enrollment proposal
    is simply to reduce TRICARE costs by allowing DOD to reject payment for
    any claims by beneficiaries who fail to enroll.
        To the extent any enrollment requirement may still be considered
    for TRICARE Standard, such enrollment should be automatic for any
    beneficiary who files a TRICARE claim. Establishing an enrollment
    requirement must not be allowed to become an excuse to deny claims for
    members who are unaware of the enrollment requirement.
        The Coalition strongly recommends against establishment of any
    TRICARE Standard enrollment system; to the extent enrollment may be
    required, any beneficiary filing a claim should be enrolled
    automatically, without denying the claim. No enrollment fee should be
    charged for TRICARE Standard until and unless the program offers
    guaranteed access to a participating provider.
        Private Employer Incentive Restrictions
        Current law, effective January 1, 2008, bars private employers from
    offering incentives to TRICARE-eligible employees to take TRICARE in
    lieu of employer-sponsored plans. This law is well-intended, but
    inadvertently imposes unfair penalties on many employees of companies
    that are not, in fact, attempting to shift costs to TRICARE.
        The Armed Services Committees have tasked the Secretary of Defense
    for a report on the issue, which may not protect current beneficiaries
    and, even with a favorable response, in no way restricts future
    Secretaries of Defense who may impose a strict interpretation of the
    law.
        In the meantime, Coalition associations have heard from hundreds of
    TRICARE beneficiaries whose civilian employers are using the new law to
    bar equal payments to TRICARE beneficiaries that are available to other
    company employees (e.g., if the company offers $100 per month to any
    employee who uses insurance available through a spouse's coverage or a
    previous employer).
        TRICARE coverage is an extremely important career benefit that is
    earned by decades of service in uniform. TMC believes it is
    contradictory to the spirit of this earned benefit to impose statutory
    provisions that deny access to TRICARE by those who have earned it or
    that deny TRICARE beneficiaries the same options available to non-
    TRICARE beneficiaries who work for the same civilian employer.
        The Coalition recommends Congress modify the law restricting
    private employer TRICARE incentives to explicitly exempt employers who
    offer only cafeteria plans (i.e., cash payments to all employees to
    purchase care as they wish) and employers who extend specific cash
    payments to any employee who uses health coverage other than the
    employer plan (e.g., FEHBP, TRICARE, or commercial insurance available
    through a spouse or previous employer).

        TRICARE Standard Improvements
        The Coalition very much appreciates the subcommittee's continuing
    interest in the specific problems unique to TRICARE Standard
    beneficiaries. In particular, we applaud your efforts to expand TRICARE
    Standard provider and beneficiary surveys and establish Standard
    support responsibilities for TRICARE Regional Offices. These are needed
    initiatives that should help make it a more effective program. We
    remain concerned, however, that more remains to be done. TRICARE
    Standard beneficiaries need assistance in finding participating
    providers within a reasonable time and distance from their home. This
    will become increasingly important with the expansion of TRS, as these
    individuals are most likely not living within a Prime Service Area.
        Provider Participation Adequacy
        We are pleased that Congress added the requirement to survey
    beneficiaries in addition to providers. The Coalition believes this
    will help correlate beneficiary inputs with provider inputs for a more
    accurate view of participation by geographic location.
        The Coalition is concerned that DOD has not yet established any
    standard for the adequacy of provider participation. Participation by
    half of the providers in a locality may suffice if there is not a large
    Standard beneficiary population. The Coalition hopes to see an
    objective participation standard (perhaps number of beneficiaries per
    provider) that would help shed more light on which locations have
    participation shortfalls of Primary Care Managers and Specialists that
    require positive action.
        The Coalition is grateful to the subcommittee for provisions in the
    NDAA for Fiscal Year 2008 that will require DOD to establish benchmarks
    for participation adequacy and follow-up reports on actions taken.
        The Coalition urges the subcommittee to continue monitoring DOD and
    GAO reporting on provider participation to ensure proper follow-on
    action.
        Administrative Deterrents to Provider Participation
        The Coalition is pleased that Congress has directed DOD to modify
    current claims procedures to be identical to those of Medicare. We look
    forward to implementation with the next generation of Managed Care
    Support Contracts. Feedback from providers indicates TRICARE imposes
    additional administrative requirements on providers that are not
    required by Medicare or other insurance plans. On the average, about 50
    percent of a provider's panel is Medicare patients, whereas only 2
    percent are TRICARE beneficiaries. Providers are unwilling to incur
    additional administrative expenses that affect only a small number of
    patients. Thus, providers are far more prone to non-participation in
    TRICARE than in Medicare.
        TRICARE still requires submission of a paper claim to determine
    medical necessity on a wide variety of claims for Standard
    beneficiaries. This thwarts efforts to encourage electronic claim
    submission and increases provider administrative expenses and delays
    receipt of payments. Examples include speech therapy, occupational/
    physical therapy, land or air ambulance service, use of an assistant
    surgeon, nutritional therapy, transplants, durable medical equipment,
    and pastoral counseling.
        Another source of claims hassles and payment delays involve cases
    of third party liability (e.g., auto insurance health coverage for
    injuries incurred in auto accidents). Currently, TRICARE requires
    claims to be delayed pending receipt of a third-party-liability form
    from the beneficiary. This often delays payments for weeks and can
    result in denial of the claim (and non-payment to the provider) if the
    beneficiary doesn't get the form in on time. Recently, a major TRICARE
    claims processing contractor recommended that these claims should be
    processed regardless of diagnosis and that the third-party-liability
    questionnaire should be sent out after the claim is processed to
    eliminate protracted inconvenience to the provider of service.
        Additionally, changes to the TRICARE pharmacy formulary are
    becoming increasingly burdensome for providers. The number of
    medications added to non-formulary status ($22 copay) has increased
    tremendously, and changing prescriptions has added to the providers'
    workload, as have increases in prior-authorization (Step Therapy)
    requirements. The increase in the number of third tier drugs and DOD's
    reliance on pharmacy medical necessity requests has increased provider
    workload to the extent that many now charge beneficiaries extra to
    complete this form. For others, it's yet another TRICARE-unique
    administrative hassle that makes them less likely to agree to see
    TRICARE beneficiaries.
        The Coalition urges the subcommittee to continue its efforts to
    reduce administrative impediments that deter providers from accepting
    TRICARE patients.
        TRICARE Reimbursement Rates
        Physicians consistently report that TRICARE is virtually the
    lowest-paying insurance plan in America. Other national plans typically
    pay providers 25-33 percent more. In some cases the difference is even
    higher.
        While TRICARE rates are tied to Medicare rates, TRICARE Managed
    Care Support Contractors make concerted efforts to persuade providers
    to participate in TRICARE Prime networks at a further discounted rate.
    Since this is the only information providers receive about TRICARE,
    they see TRICARE as even lower-paying than Medicare.
        This is exacerbated by annual threats of further reductions in
    TRICARE rates due to the statutory Medicare rate-setting formula.
    Doctors are unhappy enough about reductions in Medicare rates, and many
    already are reducing the number of Medicare patients they see.
        But the problem is even more severe with TRICARE, because TRICARE
    patients typically comprise a small minority of their beneficiary
    caseload. Physicians may not be able to afford turning away large
    numbers of Medicare patients, but they're more than willing to turn
    away a small number of patients who have low-paying, high-
    administrative-hassle TRICARE coverage.
        Congress has acted to avoid Medicare physician reimbursement cuts
    for the last 4 years, but the failure to provide a payment increase for
    2006 and 2007 was another step in the wrong direction, according to
    physicians. Further, Congress still has a long way to go in order to
    fix the underlying reimbursement determination formula.
        Correcting the statutory formula for Medicare and TRICARE physician
    payments to more closely link adjustments to changes in actual practice
    costs and resist payment reductions is a primary and essential step. We
    fully understand that is not within the purview of this subcommittee,
    but we urge your assistance in pressing the Finance Committee for
    action.
        In the meantime, the rate freeze for 2006 and 2007 along with a
    small increase for the first part of 2008 makes it even more urgent to
    consider some locality-based relief in TRICARE payment rates, given
    that doctors see TRICARE as even less attractive than Medicare.
    Additionally, the Medicare pay package that was enacted in Public Law
    109-432 included a provision for doctors to receive a 1.5 percent bonus
    next year if they report a basic set of quality-of-care measures. The
    TFL beneficiaries should not be affected as their claims are submitted
    directly to Medicare and should be included in the physicians' quality
    data. But there's been no indication that TRICARE will implement the
    extra increases for treating beneficiaries under 65, and this could
    present a major problem. If no such bonus payment is made for TRICARE
    Standard patients, then TRICARE will definitely be the lowest payer in
    the country and access could be severely decreased.
        The TRICARE Management Activity has the authority to increase the
    reimbursement rates when there is a provider shortage or extremely low
    reimbursement rate for a specialty in a certain area and providers are
    not willing to accept the low rates. In some cases a State Medicaid
    reimbursement for a similar service is higher than that of TRICARE. As
    mentioned previously, the Department has been reluctant to establish a
    standard for adequacy of participation and should use survey data to
    apply adjustments nationally.
        The Coalition urges the subcommittee to exert what influence it can
    to persuade the Finance Committee to reform Medicare/TRICARE statutory
    payment formula. To the extent the Medicare rate freeze continues, we
    urge the subcommittee to encourage the Defense Department to use its
    reimbursement rate adjustment authority as needed to sustain provider
    acceptance.
        The Coalition urges the subcommittee to require a Comptroller
    General report on the relative propensity of physicians to participate
    in Medicare vs. TRICARE, and the likely effect on such relative
    participation of a further freeze in Medicare/TRICARE physician
    payments along with the affect of an absence of bonus payments.
        Minimize Medicare/TRICARE Coverage Differences
        A 2006 DOD report to Congress contained the coverage differences
    between Medicare and TRICARE. The report showed that there are at least
    a few services covered by Medicare that are not covered by TRICARE.
    These include an initial physical at age 65, chiropractic coverage,
    respite care, and certain hearing tests. We believe TRICARE coverage
    should at least equal Medicare's in every area and include recommended
    preventive services at no cost. As an example, the Army Medical
    department has implemented the ``Adult Pneumovax'' program and projects
    savings of $500 per vaccine given.
        Our military retirees deserve no less coverage than is provided to
    other Federal beneficiaries.
        The Coalition urges the subcommittee to align TRICARE coverage to
    at least match that offered by Medicare in every area and provide
    preventive services at no cost.
    National Guard and Reserve Health Care
        The Coalition is grateful to the subcommittee for its leadership in
    extending lower-cost TRICARE eligibility to all drilling National Guard
    and Reserve members. This was a major step in acknowledging that the
    vastly increased demands being placed on Selected Reserve members and
    families needs to be addressed with adjustments to their military
    compensation package.
        While the subcommittee has worked hard to address the primary
    health care hurdle, there are still some areas that warrant attention.
        TRICARE Reserve Select Premium
        The Coalition believes the premium-setting process for this
    important benefit needs to be improved and was incorrectly based upon
    the basic Blue Cross Blue Shield option of the FEHBP. This adjustment
    mechanism has no relationship either to the Department's military
    health care costs or to increases in eligible members' compensation.
        When the program was first implemented, the Coalition urged DOD to
    base premiums (which were meant to cover 28 percent of program costs)
    on past TRICARE Standard claims data to more accurately reflect costs.
    Now a GAO study has confirmed that DOD's use of Blue Cross Blue Shield
    data and erroneous projections of participation resulted in
    substantially overcharging beneficiaries.
        GAO found that DOD projected costs of $70 million for fiscal year
    2005 and $442 million for fiscal year 2006, whereas actual costs proved
    to be $5 million in fiscal year 2005 and about $40 million in fiscal
    year 2006. GAO found that DOD estimates were 72 percent higher than the
    average single member cost and 45 percent higher than average family
    cost. If DOD were to have used actual fiscal year 2006 costs, the
    annual individual premium would have been $48/month instead of $81/
    month. The corresponding family premium would have been $175/month
    instead of $253/month.
        GAO recommended that DOD stop basing TRS premiums on Blue Cross
    Blue Shield adjustments and use the actual costs of providing the
    benefit. DOD concurred with the recommendations and says, ``it remains
    committed to improving the accuracy of TRS premium projections.''
    However, GAO observed that DOD has made no commitment to any timetable
    for change.
        The Coalition believes our obligation to restrain health cost
    increases for Selected Reserve members who are periodically being asked
    to leave their families and lay their lives on the line for their
    country is should be even greater than our obligation to restrain
    government cost increases. These members deserve better than having
    their health premiums raised arbitrarily by a formula that has no real
    relationship to them.
        The Coalition believes strongly that TRS premiums should be reduced
    immediately to $48/month (single) and $175/month (family), with
    retroactive refunds to those who were overcharged in the past.
        For the future, as a matter of principle, the Coalition believes
    that TRS premiums should not be increased in any year by a percentage
    that exceeds the percentage increase in basic pay.
        The Coalition also is concerned that members and families enrolled
    in TRS are not guaranteed access to TRICARE-participating providers and
    are finding it difficult to locate providers willing to take TRICARE.
    As indicated earlier in this testimony, the Coalition believes that
    members who are charged a fee for their health coverage should be able
    to expect assured access, and hopes the subcommittee will explore
    options for assuring such access for TRS enrollees.
        The Coalition recommends reducing TRS premiums to $48/month
    (single) and $175/month (family), as envisioned by the GAO, with
    retroactive refunds as appropriate. For the future, the percentage
    increase in premiums in any year should not exceed the percentage
    increase in basic pay.
        The Coalition further recommends that the subcommittee request a
    report from the Department of Defense on options to assure TRS
    enrollees' access to TRICARE-participating providers.
        Private Insurance Premium Option
        The Coalition thanks Congress for authorizing subsidy of private
    insurance premiums for reservists called to active duty in cases where
    a dependent possesses a special health care need that would be best met
    by remaining in the member's civilian health plan.
        The Coalition believes Congress is missing an opportunity to reduce
    long-term health care costs by failing to authorize eligible members
    the option of electing a partial subsidy of their civilian insurance
    premiums during periods of mobilization. Current law already authorizes
    payment of up to 24 months of FEHBP premiums for mobilized members who
    are civilian employees of the Defense Department.
        Congress directed GAO to review this issue and submit a report in
    April 2007--a report that, to our knowledge, has not been completed. We
    hope that report will address not only the current wartime situation,
    but the longer-term peacetime scenario. Over the long term, when Guard
    and Reserve mobilizations can be expected at a considerably lower pace,
    the Coalition believes subsidizing continuation of employer coverage
    during mobilizations periods offers considerable savings opportunity
    relative to funding year-round family TRICARE coverage while the member
    is not deployed.
        In fact, the Department could calculate a maximum monthly subsidy
    level that would represent a cost savings to the government, so that
    each member who elected that option would reduce TRICARE costs.
        The Coalition recommends developing a cost-effective option to have
    DOD subsidize premiums for continuation of a Reserve employer's private
    family health insurance during periods of deployment as an alternative
    to permanent TRS coverage.
        Involuntary Separatees
        The Coalition believes it is unfair to deny TRS coverage for IRR
    members who have returned from deployment or terminate coverage for
    returning members who are involuntarily separated from the Selected
    Reserve (other than for cause).
        The Coalition recommends authorizing 1 year of post-TAMP TRS
    coverage for every 90 days deployed in the case of returning members of
    the IRR or members who are involuntarily separated from the Selected
    Reserve. The Coalition further recommends that voluntarily separating
    reservists subject to disenrollment from TRS should be eligible for
    participation in the CHCBP.
        Gray Area reservists
        The Coalition is sensitive that Selected Reserve members and
    families have one remaining ``hole'' in their military health coverage.
    They are eligible for TRS while currently serving in the Selected
    Reserve, then lose coverage while in ``Gray area'' retiree status, then
    regain full TRICARE eligibility at age 60.
        The Coalition believes some provisions should be made to allow such
    members to continue their TRICARE coverage in gray area status.
    Otherwise, we place some members at risk of losing family health
    coverage entirely when they retire from the Selected Reserve. We
    understand that such coverage likely would have to come with a higher
    premium.
        The Coalition urges the subcommittee to authorize an additional
    premium-based option under which members entering ``gray area'' retiree
    status would be able to avoid losing health coverage.
        Reserve Dental Coverage
        The Coalition remains concerned about the dental readiness of the
    Reserve Forces. Once these members leave active duty, the challenge
    increases substantially, so the Coalition believes the services should
    at least facilitate correction of dental readiness issues identified
    while on active duty. DOD should be fiscally responsible for dental
    care to reservists to ensure servicemembers meet dental readiness
    standards when DOD facilities are not available within a 50 mile radius
    of the members' home for at least 90 days prior and 180 days post
    mobilization.
        The Coalition supports providing dental coverage to reservists for
    90 days pre- and 180 days post-mobilization (during TAMP), unless the
    individual's dental readiness is restored to T-2 condition before
    demobilization.
    Consistent Benefit
        As time progresses and external changes occur, we are made aware of
    pockets of individuals who for one reason or another are denied the
    benefits that they should be eligible for. DOD and its health
    contractors were leaders in modifying policy and procedures to assist
    Katrina victims. Additionally, Congress' action to extend eligibility
    for TRICARE Prime coverage to children of deceased active duty members
    was truly the right thing to do.
        Restoration of Survivors' TRICARE Coverage
        When a TRICARE-eligible widow/widower remarries, he/she loses
    TRICARE benefits. When that individual's second marriage ends in death
    or divorce, the individual has eligibility restored for military ID
    card benefits, including SBP coverage, commissary/exchange privileges,
    et cetera--with the sole exception that TRICARE eligibility is not
    restored.
        This is out of line with other Federal health program practices,
    such as the restoration of CHAMPVA eligibility for survivors of
    veterans who died of service-connected causes. In those cases, VA
    survivor benefits and health care are restored upon termination of the
    remarriage.
        Remarried surviving spouses deserve equal treatment.
        The Coalition recommends restoration of TRICARE benefits to
    previously eligible survivors whose second or subsequent marriage ends
    in death or divorce.
        TRICARE Prime Remote Exceptions
        Longer deployments and sea/shore and overseas assignment patterns
    leave many military families faced with tough decisions. A spouse and
    children may find a greater level of support by residing with or near
    relatives during extended separations from the active duty spouse. DOD
    has the authority to waive the requirement for the spouse to reside
    with the servicemember for purposes of TRICARE Prime Remote eligibility
    if the service determines special circumstances warrant such coverage.
    We remain concerned about the potential for inconsistent application of
    eligibility. The special authority is a step in the right direction,
    but there is a wide variety of circumstances that could dictate a
    family separation of some duration, and the Coalition believes each
    family is in the best situation to make its own decision.
        The Coalition recommends removal of the requirement for the family
    members to reside with the active duty member to qualify for the
    TRICARE Prime Remote Program, when the family separation is due to a
    military-directed move or deployment.
        BRAC, Rebasing, and Relocation
        Relocation from one geographic region to another and base closures
    brings multiple problems. A smooth health care transition is crucial to
    the success of DOD and Service plans to transform the force. That means
    ensuring a robust provider network and capacity is available to all
    beneficiary populations, to include active and Reserve component and
    retirees and their family members, and survivors at both closing and
    gaining installations. It is incumbent upon the Department and its
    Managed Care Support Contractors to ensure smooth beneficiary
    transition from one geographic area to another. We stress the
    importance of coordination of construction and funding in order to
    maintain access and operations while the process takes place.
        The Coalition recommends codifying the requirement to provide a
    TRICARE Prime network at all areas impacted by BRAC or rebasing.
    Additionally, we recommend that DOD be required to provide an annual
    report to Congress on the adequacy of health resources, services,
    quality and access of care for those beneficiary populations affected
    by transformation plans.
    Pharmacy
        The TRICARE Pharmacy benefit must remain strong to meet the
    pharmaceutical needs of millions of military beneficiaries. While we
    are pleased at the overall operation of the program, the Coalition has
    significant concerns about certain recent trends.
        Beneficiary Migration
        One issue highlighted by the Task Force report is that a large
    share of the growth in retail pharmacy use has been the result of
    beneficiaries migrating from military treatment facilities to local
    retail pharmacies. In that regard, the number of beneficiaries using
    only military pharmacies declined by 900,000 between fiscal year 2002
    and fiscal year 2007, whereas the number of beneficiaries using only
    retail pharmacies increased by about 1,000,000 in the same period.
        Some of the shift is because enactment of TFL and TSRx meant that
    Medicare beneficiaries who live some distance from military
    installations no longer have to make long treks to the military
    pharmacy.
        But the change also coincides with the onset of increased wartime
    deployments and installation security measures. The deployment of large
    numbers of military medical professionals has forced shifting more
    beneficiaries of all kinds to see civilian providers, which reduces
    proximity access to the military pharmacy and ease the convenience of
    using retail stores. Increased installation security measures also
    increase the ``hassle factor'' for retirees to use on-base facilities.
    Finally, local budget pressures and DOD ``core formulary'' guidance
    removes many medications from the installation formulary that retirees
    use, leaving many no choice but to use alternative venues.
        Coalition associations have heard anecdotal reports that some local
    commanders have actively discouraged retirees from using the military
    pharmacies, primarily for budget savings purposes. What's worse is that
    MTFs have failed to educate beneficiaries of the next most cost-
    effective venue--the TRICARE Mail Order Pharmacy (TMOP).
        The point is that it is inappropriate to punish beneficiaries
    (through higher retail copayments) for migration that may be dictated
    more by military operational and budget requirements than by retiree
    preferences.
        Pharmacy Co-payment Changes
        The Coalition thanks the subcommittee for freezing pharmacy co-
    payments for fiscal year 2008. The Coalition believes strongly that
    uniformed services beneficiaries deserve more stability in their
    benefit levels, and that DOD has not performed due diligence in
    exploring other ways to reduce pharmacy costs without shifting such
    increased expense burdens to beneficiaries. The DOD Health Care Task
    Force would dramatically raise most military pharmacy copays. For
    example, they'd raise the copay for generic drugs purchased in retail
    pharmacies from the current $3 to $15. But Wal-Mart is now dispensing
    generic drugs to the general public for $4. Shouldn't the military
    pharmacy benefit be better than what civilians can get through Wal-
    Mart?
        One important consideration in the mail-order vs. retail discussion
    is that some medications are simply not appropriate or available for
    delivery through the TMOP. If the purpose of imposing higher retail
    copays is to incentivize beneficiaries to use military or mail-order
    pharmacies, application of this philosophy is inappropriate when the
    beneficiary has no access to those lower-cost venues.
        The Coalition believes any further discussion of pharmacy copayment
    increases should be deferred pending review of the implications of
    requiring Federal pricing in the retail system. We believe that this
    action by Congress in the fiscal year 2008 has shifted the dynamic of
    pharmacy costs, and that the primary cost differential may no longer be
    the venue of dispensing.
        Rather, the Coalition urges the subcommittee to consider the
    findings of RAND, Pharma, and others cited by the Task Force that
    considerable cost savings can be gained by establishing positive
    motivations for beneficiaries with chronic diseases to take any of the
    medications--regardless of generic, brand, or nonformulary--that reduce
    the adverse effects of their conditions over the long term. Those steps
    included eliminating copays for the lowest-cost and most effective
    medications, reducing copays for some effective nonformulary
    medications, and reducing prior authorization requirements that impede
    beneficiaries from using the medications they and their doctors believe
    are best for them.
        We note with regret that the Department has declined to comply with
    Congress' urging to eliminate copayments for generic medications in the
    mail-order system--a recommendation echoed by the Task Force. In this
    case, the administrative cost of processing the co-pay actually wipes
    out a large percentage of the co-pay revenue.
        The Coalition believes pharmacy cost growth concerns have missed
    the mark by focusing on current-year dollars rather than long-term
    effects. For example, the Task Force report highlights as part of the
    cost ``problem'' that some drugs, including medications to treat
    diabetes, grew more than 15 percent in a single year. Viewed in terms
    of long-term effects, it's a good thing to identify patients who have
    diabetes and a good thing for diabetes patients to take their
    medications. So growing use (and cost) of medications for such chronic
    diseases is a positive, not a negative, and the copay structure should
    be remodeled to incentivize beneficiaries and make it as easy as
    possible for them to take whatever medication will mitigate the effects
    of their condition through whatever venue they are most likely to be
    satisfied with and therefore will be most likely to take their
    medications.
        The Coalition recommends deferral of any pharmacy copay increases
    pending assessment of the effects of the new Federal pricing law on
    usage and cost patterns for the different venues, and that the
    subcommittee instead urge DOD to pursue copay reductions and ease prior
    authorization requirements for medications for chronic diseases, based
    on private sector experience that such initiatives reduce long-term
    costs associated with such diseases.
        Rapid Expansion of ``Third Tier'' Formulary
        The Coalition very much appreciated the efforts of Congress to
    protect beneficiary interests by establishing a statutory requirement
    for a BAP to give beneficiary representatives an opportunity in a
    public forum to voice our concerns about any medications DOD proposes
    moving to the third tier ($22 co-pay). We were further reassured when,
    during implementation planning, Defense officials advised the BAP that
    they did not plan on moving many medications to the third tier.
        Unfortunately, this has not been the case. To date, DOD has moved
    over 90 medications to the third tier. While the BAP did not object to
    most of these, the BAP input has been universally ignored in the small
    number of cases when it recommended against a proposed
    reclassification. The Coalition is also concerned that the BAP has been
    denied access to information on relative costs of the drugs proposed
    for reclassification and the Defense Department has established no
    mechanism to provide feedback to the BAP on why its recommendations are
    being ignored.
        The Coalition believes Congress envisioned that the BAP would be
    allowed substantive input in the Uniform Formulary decision process,
    but that has not happened. In fact, BAP discussion issues and
    recommendations (other than the final vote tallies) are routinely
    excluded from information provided to the Assistant Secretary of
    Defense (Health Affairs) for decisionmaking purposes, and there has
    been no formal feedback to the BAP on the reasons why their
    recommendations were not accepted.
        Although Congress has tasked GAO for a report on the effectiveness
    of the BAP process, that report has not been issued to date.
        The Coalition urges the subcommittee to reassert its intent that
    the BAP should have a substantive role in the formulary-setting
    process, including access to meaningful data on relative drug costs in
    each affected class, consideration of all BAP comments in the
    decisionmaking process, and formal feedback concerning rationale for
    rejection of BAP recommendations.
    TRICARE Prime and MCSC Issues
        DOD and its health contractors are continually trying to improve
    the level of TRICARE Prime service. We appreciate their inclusion of
    Coalition associations in their process improvement activities and will
    continue to partner with them to ensure the program remains
    beneficiary-focused and services are enhanced, to include: beneficiary
    education, network stability, service level quality, uniformity of
    benefit between regions (as contractors implement best business
    practices), and access to care.
        Referral and Authorization System
        There has been much discussion and consternation concerning the
    Enterprise Wide Referral and Authorization System. Much time, effort
    and money have been invested in a program that has not come to
    fruition. Is adding to the administrative paperwork requirements and
    forcing the civilian network providers into a referral system really
    accomplishing what DOD set out to do? Rather than forcing unique
    referral requirements on providers, perhaps DOD should look at
    expanding its Primary care base in the Prime Service Areas and capture
    the workload directly.
        The Coalition recommends that Congress require a cost analysis
    report, including input from each Managed Care Support Contractor,
    concerning the referral process within DOD and reliance on Civilian
    Network Providers within an MTF's Prime Service Area.
    Health-Related Tax Law Changes
        The Coalition understands fully that tax law changes are not within
    the subcommittee's jurisdiction. However, there are numerous military-
    specific tax-related problems that are unlikely to be addressed without
    the subcommittee's active advocacy and intervention with members and
    leaders of the Finance Committee.
        Deductibility of Health and Dental Premiums
        Many uniformed services beneficiaries pay annual enrollment fees
    for TRICARE Prime, TRS, and premiums for supplemental health insurance,
    such as a TRICARE supplement, the TRICARE Dental and Retiree Dental
    Plans, or for long-term care insurance. For most military
    beneficiaries, these premiums are not tax-deductible because their
    annual out-of-pocket costs for healthcare expenses do not exceed 7.5
    percent of their adjusted gross taxable income.
        In 2000, a Presidential directive allowed Federal employees who
    participate in FEHBP to have premiums for that program deducted from
    their pay on a pre-tax basis. A 2007 court case extended similar pre-
    tax premium payment eligibility to certain retired public safety
    officers. Similar legislation for all active, Reserve, and retired
    military and Federal civilian beneficiaries would restore equity with
    private sector employees and retired public safety officers.
        The Coalition urges all Armed Services Committee members to seek
    the support of the Finance Committee to approve legislation to allow
    all military beneficiaries to pay TRICARE-related insurance premiums in
    pre-tax dollars, to include TRICARE dental premiums, TRS premiums,
    TRICARE Prime enrollment fees, premiums for TRICARE Standard
    supplements, and long-term care insurance premiums.
                                   conclusion
        TMC reiterates its profound gratitude for the extraordinary
    progress this subcommittee has made in advancing a wide range of
    personnel and health care initiatives for all uniformed services
    personnel and their families and survivors. The Coalition is eager to
    work with the subcommittee in pursuit of the goals outlined in our
    testimony. Thank you very much for the opportunity to present the
    Coalition's views on these critically important topics.

        Senator Ben Nelson. With that, Dr. Chu, would you like to
    begin?

    STATEMENT OF HON. DAVID S. CHU, UNDER SECRETARY OF DEFENSE FOR
                        PERSONNEL AND READINESS

        Dr. Chu. Thank you, Mr. Chairman and Senator Graham. It's a
    great privilege to be testifying before you again, and I thank
    you for your kind words.
        I am honored to be joined by my colleagues, the Deputy
    Chiefs of Staff for Manpower and Personnel of the four
    Services. We each have a formal statement, which we would like
    to submit for the record, if we may.
        Senator Ben Nelson. That will be permitted.
        Dr. Chu. Thank you, sir.
        As you suggested in your opening comments, Mr. Chairman,
    this is a joint force. It's composed of our civilians, our
    Active-Duty military, and our Reserve components. It's a force
    composed entirely of volunteers, and that All-Volunteer Force,
    I would argue, has served us very well. We do set high
    standards for quality and entrance. We set high standards for
    motivation. I think we've seen the rewards of those high
    standards in the exemplary performance of American forces in
    the field, as celebrated in Senator Graham's comments, and we
    intend to maintain those high standards for this Department as
    we go forward.
        The fact that we've been successful in sustaining this All-
    Volunteer Force across the last 7 years is due, I think, to the
    strong partnership between the executive and legislative
    branches to which you referred in your opening statements. You
    have given us authority for a new National Security Personnel
    System (NSPS) for civilians. That's of extraordinary value to
    us as we try to reshape the civil workforce toward one that is
    more deployable, willing to go forward. Just yesterday, I had
    the privilege of participating in the ceremony in which the
    first of the Secretary of Defense Global War on Terrorism
    medals for civilians was awarded to 15 representative civilians
    of the 16,000 who have served forward in the current conflict.
        Across the board, for both military and civilian personnel,
    you have given this Department increased flexibility. You've
    enlarged the scope of our authority. You've given us greater
    limits, for example, in terms of age for entrance to military
    service; higher ceilings, in terms of bonuses and reenlistment
    incentives; you've given us broad authority to reform the
    special incentive pays that we use to direct personnel to the
    high-priority and critical occupations of the Department.
        If there is one single explanation that undergirds the
    success, I think it is this willingness to accord a substantial
    measure of flexibility to the Department. As you look at our
    fiscal year 2009 proposals, I think you'll see that theme
    repeated, in terms of specific areas where we think there are
    remaining issues that it would be constructive to address.
        You spoke about families in your opening statement. We
    could not agree more about their importance to our success. As
    is observed frequently, it is really the family that makes the
    retention decision together. If the family is not satisfied
    with the military lifestyle, the military person is going to
    find it very hard to continue serving our country. We recognize
    that we ask a lot of the families, and we also recognize that
    it's our responsibility to, in turn, support them in the
    burdens that they are asked to carry--the most important
    burden, of course, being the absence of their loved one in a
    risky and dangerous environment.
        The President, in his State of the Union Address, as I know
    you appreciate, addressed two elements that we believe are most
    important to contemporary military families in terms of their
    willingness to serve and see their family member don the
    Nation's uniform. Those two elements are the education of their
    children and the opportunity for a career for the spouse--not
    just a job, but a career. Something that has growth and aspires
    to more important responsibilities over time. The President
    advocated for a series of changes that we hope Congress will
    enact, to allow, for example, the transferability of the
    individual member's GI Bill benefits to the spouse and children
    if that family should so desire, to give spouses a preferred
    status, in terms of Federal hiring and Federal career
    opportunities; and to accelerate our already strong program of
    daycare for the children of military families by accelerating
    the construction of our daycare centers, which will require, we
    believe, some modest adjustment of statute, and by encouraging
    us to enter public/private partnerships for off-post daycare
    that would meet the same high standards that we set in the
    military, which again would require some changes to current
    authorities the Department enjoys.
        Mr. Chairman, Senator Graham, we very much appreciate the
    partnership with this subcommittee, and Congress as a whole,
    that has allowed us to continue to have, for this country, the
    finest military the world has seen.
        Thank you, sir.
        [The prepared statement of Dr. Chu follows:]
                   Prepared Statement by Hon. David S.C. Chu
                          military personnel policies
    Active Duty Recruiting
        Never in the history of the All-Volunteer Force (AVF) have our
    Armed Forces faced as challenging a recruiting environment as they have
    during the past several years. First, the global war on terrorism has
    placed unprecedented demands on the Services as our volunteer military
    is now into its 7th year of a protracted war in Iraq and Afghanistan.
    Second, youth willingness to serve, the heart of our AVF, has declined
    and influencers of youth (e.g., parents, teachers) are less likely to
    recommend military service today than in recent years. Third, the
    economy has remained strong and labor markets tight. Unemployment
    (currently at 4.9 percent) is relatively low by historical standards,
    and earnings are up--providing youth with lucrative post-secondary high
    school choices. Fourth, recruiting goals for the Army and Marine Corps
    have increased as they grow their forces.
        Despite these challenges, the Services have met, and continue to
    meet, their recruiting goals--thanks to significant legislative
    initiatives and new authorities granted by Congress and the hard work
    of the recruiting commands and recruiters in the field. During fiscal
    year 2007, the Active-Duty components recruited 166,302 first-term
    enlistees and an additional 14,870 individuals with previous military
    service, attaining over 100 percent of the Department of Defense (DOD)
    goal of 180,377 accessions.
        While meeting our quantitative goals is important, we also need to
    have the right mix of recruits--recruits who will complete their term
    of service and perform successfully in training and on the job. The
    ``quality'' of the accession cohort is critical, and we have long
    reported recruit quality along two dimensions--aptitude test scores and
    educational attainment. Both are important, but for different reasons.
        Aptitude test scores are used to select recruits who are most
    likely to perform satisfactorily in training and on the job. All
    military applicants take a written enlistment test, the Armed Services
    Vocational Aptitude Battery. One component of that test is the Armed
    Forces Qualification Test (AFQT), which measures math and verbal
    skills. Those who score above average on the AFQT are in Categories I-
    IIIA. We value these higher-aptitude recruits because they do better in
    training and perform better on the job than their lower-scoring peers
    (Categories IIIB-IV).
        We also value recruits with a high school diploma. The high school
    diploma has long been the best single predictor of successful
    adjustment to military life. About 80 percent of recruits with
    traditional high school diplomas complete their first 3 years, while
    only about 50 percent of those without a traditional diploma do so. The
    first-term attrition of those holding an alternative educational
    credential, such as a high school equivalency or a General Educational
    Development certificate, falls between those two statistics. In short,
    enlisting youth with traditional high school diplomas is a good
    investment. Studies have estimated the attrition at over $50,000 for
    each person who leaves service early.
        In conjunction with the National Academy of Sciences, the
    Department reviewed how best to balance educational attainment,
    aptitude, recruiting resources, and job performance. With an optimizing
    model, we established recruit quality benchmarks of 90 percent high
    school diploma graduates (HSDGs) and 60 percent scoring above average
    on the AFQT. Those benchmarks are based on the relationship among costs
    associated with recruiting, training, attrition, and retention, using
    as a standard the performance level obtained by the enlisted force
    cohort of 1990--the force that served in Operations Desert Shield/
    Desert Storm. Thus, the benchmarks reflect the aptitude and education
    levels necessary to minimize personnel and training costs while
    maintaining the required performance level of that force.
        For over 20 years, the Services have met or exceeded the
    Department's quality benchmarks for active duty recruits (Figure 1).
    Although the Army missed its HSDG benchmark in 2007, DOD met its
    overall goal: 90 percent of active duty new recruits were HSDGs. This
    compares favorably to the national average in which about 70 percent to
    80 percentate from high school with a diploma. In addition, DOD
    exceeded its aptitude quality benchmark, with 68 percent of new Active
    recruits scoring at the top half of the AFQT, well above the DOD
    benchmark of 60 percent.

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        Fiscal year 2008 active duty recruiting efforts are positive to
    date. Through January, all Services met or exceeded numerical
    recruiting objectives for the Active Force, and the Army achieved
    18,829 of its 18,600 recruiting goal, for a 101 percent year-to-date
    accomplishment (Table 1). However, the active Army fell short of the
    HSDG goal, accessing 82 percent recruits with a high school diploma
    versus the standard of 90 percent. Although the Army accessed 58
    percent of new recruits who scored at or above the 50th percentile on
    the AFQT--slightly below the DOD benchmark of 60 percent--we expect the
    Army to achieve this DOD benchmark by the end of fiscal year 2008.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We should not lose sight of the fact that, although the youth
    population is large, a relatively small proportion of American youth is
    qualified to enlist when we consider other factors besides education
    and aptitude. It is an unfortunate fact that many of the contemporary
    youth population are currently ineligible to serve. About 35 percent
    are medically disqualified (with obesity a large contributing factor),
    18 percent abuse drugs and alcohol, 5 percent have conduct/criminal
    issues, 6 percent have dependents, and 9 percent are in the lowest
    aptitude category (Figure 2). Another 10 percent are qualified, but
    attending college. That leaves less than 5 million--or about 15 percent
    of the roughly 31 million youth ages 17-24--who are available to
    recruit (25 percent including those in college).
        Our recruiting success has not come easily. It has been the result
    of long hours and hard work by the 15,000 dedicated and professional
    military recruiters. These recruiters often stand as the sole
    representative of our military forces in local communities, and they
    have my most sincere respect and gratitude. Equally important has been
    the unwavering support from Congress for our recruiting efforts.
    Throughout my time in this office, you have assisted us with
    authorities and programs that have helped the Services to expand the
    recruiting market in responsible ways.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We appreciate your assistance expanding military recruiter access
    to high schools. The No Child Left Behind Act of 2001 opened the doors
    for military recruiters to provide information on military service
    opportunities to juniors and seniors in over 22,600 high schools
    nationwide. Through the enforcement of these laws, the Services report
    that all high schools have complied with the provision of student
    directory information to military recruiters, who, in turn, provide
    information to young people about the opportunities and nobility of
    military service.
        The establishment of a National Call to Service program has been
    very helpful. This shorter-than-normal, 15-month enlistment option
    allows us to offer military service options to youth who, due to the
    length of traditional enlistment terms, would choose not to serve. Over
    9,000 young Americans have enlisted under this option.
        The new $2,500 bonus for those transferring between Armed Forces
    components has been a helpful incentive in getting members to transfer
    from one Service to another and serve a minimum of an additional 3
    years. This program has helped the Army access over 1,500 new soldiers
    from other Services that otherwise may have left the military--saving
    over $50,000 in recruiting and training costs per experienced
    transferee.
        We also thank you for helping us to increase the maximum age for
    enlistment. This has expanded the recruiting market by raising the
    maximum age for enlistment in a regular component from 35 to 42 years.
        In addition, we appreciate the new accession bonus for Officer
    Candidate School (OCS). Creating a new officer through either the
    Service Academies or Reserve Officer Training Corps is a 4-year
    process. The Services use OCS not only to produce a portion of their
    new officers annually, but in times of growth, this valuable program
    provides a surge capacity that cannot be duplicated. The accession
    bonus provides the Services an incentive to attract recent college
    graduates for these programs--particularly important as we grow the
    force in the Army and Marine Corps.
        Most important, you provided us the opportunity to conduct the Army
    Recruiting Demonstration Program. This authority is permitting the Army
    to test innovative marketing and incentive programs in support of
    recruiting efforts not otherwise permitted in law, and we plan to work
    with you to expand this initiative to the other Services for the
    purpose of addressing the continuing challenges in the recruiting and
    retention environment.
    Active Duty Retention
        Retention programs help shape the force to ensure we have the right
    numbers and mix of active duty personnel with the right experience.
    This is particularly challenging during this era of changing force
    structures. Thus, we thank you for your substantial assistance over the
    past several years in obtaining new and enhanced programs and
    authorities for the military departments to encourage military
    personnel to remain in Service.
        Notably, the National Defense Authorization Act (NDAA) for Fiscal
    Year 2006 increased the maximum reenlistment bonus from $60,000 to
    $90,000, and it expanded eligibility for the bonus from 16 to 20 years
    of active duty, and 18 to 24 years of service. It also amended the
    critical skills retention bonus (CSRB) authority to include Reserve
    component members and members assigned to high priority units. The
    amended statutory authority for the CSRB established eligibility to
    Reserve component members with a designated skill or who volunteer to
    serve in a designated high priority unit, not to exceed $100,000. It
    also established an exception to allow members in designated Special
    Operations Forces and nuclear critical skills to receive a CSRB beyond
    25 years of service; and we appreciate your extending that authority to
    all qualifying members in the NDAA for Fiscal Year 2008. The incentive
    bonus for transfer between Armed Forces and the increase in the maximum
    amount of the bonus for such transfer--from $2,500 to $10,000--all have
    been very helpful. Finally, authorizing pay and benefits to facilitate
    voluntary separation of targeted populations of servicemembers have
    proven invaluable.
        For almost 7 years--since September 11--retention has remained
    relatively strong in the Active-Duty Force. The Marine Corps and Army
    met or exceeded their overall reenlistment goals each year. While the
    Air Force and Navy did relatively well, they did not always meet all
    retention goals, which were often complicated by force shaping goals.
    Both Services have adjusted their retention bonus programs to target
    deficient skills better.
        In fiscal year 2007, all four Active-Duty Services met or exceeded
    their aggregate reenlistment targets. The Marine Corps surpassed its
    overall aggregate reenlistment mission (110 percent), exceeding its
    fiscal year 2007 targeted end strength by a comfortable margin. The Air
    Force fell short of its Zone B (mid-career) reenlistments mission and
    will use the Selective Reenlistment and CSRB programs to maximize mid-
    grade retention in fiscal year 2008. The new, expanded CSRB authorities
    are helping to provide the Services with additional flexibility to
    better target specific critical skills for retention.
        Through January 2008 (Table 2), the Army, Navy, and Marine Corps
    exceeded their retention missions. The Air Force is fairing well in
    Zone B and has recently adjusted its retention bonus programs in order
    to counter some challenges in Zones A (initial) and C (career). Force
    shaping efforts within the Air Force, along with its fiscal year 2008
    funding priorities, could complicate Air Force's overall retention
    effort.

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        As always, our retention efforts ultimately support the delivery of
    experienced performers to higher ranks. In recent years, the grade
    proportions have shifted upward slightly as we continue to field weapon
    systems and units with fewer lower-grade positions, and we greatly
    appreciate the new NDAA for Fiscal Year 2008 authorities--the increase
    in authorized strengths for Army officers on active duty in the grade
    of major; the increase in authorized strengths for Navy officers on
    active duty in the grades of lieutenant commander, commander, and
    captain; and the increase in authorized daily average of the number of
    members in paygrade E-9--that will facilitate our adjustments to these
    grade structure changes.
        The Army continues to use Stop Loss; as of December 2007, the Army
    Stop Loss program affected less than half of 1 percent of the total
    force (7,404 Active, 1,370 Reserve, and 2,027 National Guard soldiers).
    The Active Army Unit Stop Loss program takes effect 90 days prior to
    unit deployment or with official deployment order notification, if
    earlier, and remains in effect through the date of redeployment to
    permanent duty stations, plus a maximum of 90 days. Reserve component
    Unit Stop Loss begins 90 days prior to mobilization, or with the
    official mobilization alert deployment order notification, if later,
    and continues through mobilization, and for a period up to 90 days
    following unit demobilization. The Army shares the Secretary of
    Defense's goal of minimizing the use of Stop Loss.
        The retention of Army company grade officers (lieutenants and
    captains) must be significantly enhanced to meet new force
    requirements. Although the fiscal year 2007 company grade loss rates
    were 8.1 percent--below the historical average of 8.5 percent, and well
    below the pre-September 11 loss rates of 9.1 percent--the Army
    increased its promotion rate to captain to 98 percent in order to meet
    its growth demand. Additionally, the Army implemented an innovative
    incentives program that offers captains in specified year groups a
    ``menu'' of incentives. Officers may choose from five different
    programs, which include up to a $35,000 bonus or graduate school, in
    return for an additional 3-year service commitment.
    Shaping the Force
        We are balancing our end strength needs--increasing where we must,
    decreasing where it makes sense. To that end, the permanent end
    strength increases of the Army and Marine Corps focus on combat
    capability, while continued planned reductions from transformation
    efforts in the active Air Force and Navy manpower programs, and the
    Navy Reserve, balance risk with fiscally responsible manpower program
    decisions.
        To support these programmed strength reductions, we developed an
    integrated package of voluntary separation incentives and coupled these
    with the targeted incentive authority Congress recently provided,
    allowing us to offer monetary incentives to shape the Services by
    offering incentives to non-retirement eligible officer and enlisted
    personnel in specific grades, skills, and year-of-service cohorts. We
    plan to continue the judicious use of these tools to ensure our forces
    meet readiness needs and are effective, flexible, and lethal.
    Force Development
        Over the past year, we embarked on the second leg of a journey that
    began over two decades ago with the enactment of the Goldwater-Nichols
    legislation. This continuing journey, empowered with special
    authorities contained in the NDAA for Fiscal Year 2007, allowed the
    Department to recognize joint experience whenever and wherever it
    occurs in an officer's career. Implementation of these authorities
    helps build an officer corps with the critical competencies required
    for counterinsurgency warfare, peace making/keeping, and nation
    building.
        The Department is implementing a Joint Qualification System that is
    a true total force system. Reserve component officers, full partners in
    this system, have the opportunity for the first time to have their
    joint experiences recognized and earn the same qualifications as their
    Active component counterparts.
        Joint officer management is not the only area of significant
    improvement for the officer corps. Mandatory retirement age
    limitations, with origins dating back over 150 years, were amended to
    account for increased longevity and, as a result, valuable military
    experience was retained across the DOD. The Department also redoubled
    efforts to develop a credible and sustainable cadre of senior military
    intelligence leaders by working with the Director of National
    Intelligence to create a viable National Intelligence Structure and to
    provide general and flag officers to fill critical positions in each
    major intelligence organization.
        Now, as we look to the future, the next steps are clear; we must
    capitalize on the momentum gained and deliver general and flag officer
    management systems that seamlessly integrate with the changes to joint
    officer management. The numerous controls put in place over the years
    to address a myriad of issues must be reassessed. The statutory
    framework supporting the management of our senior leaders must be at
    least as flexible as that of the joint officer management system and
    the Senior Executive Service. We need the flexibility to develop
    general and flag officers with competencies and experience necessary to
    lead and counter emerging threats. We intend to work diligently with
    Congress on this subject.
    Reserve Component Recruiting and Retention
        With the initial mobilization of Reserve component members for the
    global war on terrorism, the Department established a policy of
    judicious and prudent use of the Reserve components in order to sustain
    them during the war. We continue to assess the impact of mobilization
    and deployments on the National Guard and Reserve, and adjust policies
    as needed to sustain a strong Reserve Force. The most recent change
    occurred last January, when Secretary Gates published a new utilization
    for the force.
        It is evident that Reserve component contributions to the war
    effort are significant, with almost 600,000 Selected Reserve members
    mobilized in support of global war on terrorism operations since
    September 2001. This represents about 44 percent of the 1.3 million who
    served in the Selected Reserve during that period. These data do not
    include the 14,500 members of the Individual Ready Reserve (IRR), who
    have been mobilized during the past 6\1/2\ years. The use of the IRR is
    modest compared to Operation Desert Storm, when we mobilized 30,000 IRR
    members.
    Military Compensation
        The current administration, with your support, has improved overall
    compensation significantly, helping the Department sustain our highly
    skilled AVF. Since 2001, as a direct result of the close cooperation
    between the Department and Congress, average basic pay has increased 32
    percent and housing allowances by nearly 70 percent, eliminating out-
    of-pocket housing costs. Together, we have more than doubled hardship
    duty pay, provided Combat-Related Injured Rehabilitation Pay,
    established traumatic injury protection insurance, and increased the
    maximum for Servicemember's Group Life Insurance to $400,000, as well
    as increasing the Death Gratuity from $6,000 to $100,000. The increases
    to Family Separation Allowance and our Hostile Fire/Imminent Danger
    pays were made permanent, and our military members are now able to
    participate in the Federal Thrift Savings Plan.
        The Department continues its strong commitment to provide a secure
    standard of living to those who serve in uniform by requesting a 3.4
    percent increase in military pay for all servicemembers in the fiscal
    year 2009 budget. This increase is equal to earnings increases in the
    private sector as measured by the Employment Cost Index.
        To better manage our force, you established CSRB and increased
    enlistment and reenlistment bonuses from $12,000 maximum to $40,000,
    along with establishing, and later increasing, Assignment Incentive
    Pay. These tools are flexible and allow precise targeting to help us
    sharply focus on specific needs, rather than casting a wide net.
        To further refine our tool set, the 10th Quadrennial Review of
    Military Compensation (QRMC) initially focused on consolidating special
    pays, bonuses, and recruiting and retention incentives into fewer,
    broader, and more flexible authorities which you have adopted in the
    NDAA for Fiscal Year 2008. I will be sending the first volume of the
    QRMC report to you shortly. By consolidating over 60 separate pays into
    8 broad pay categories, the Department now has increased flexibility to
    target specific skills, and the quantity and quality of personnel
    filling those positions.
        One of our remaining tasks is to rebalance compensation for our
    single military personnel. Based on recommendations from the QRMC, the
    Department set the ``without dependents'' Basic Allowance for Housing
    rate to a minimum of 75 percent of the ``with dependents'' rate. The
    Department will review the QRMC report and determine if additional
    improvements are warranted.
        The QRMC helped the balance of entitlements and discretionary
    bonuses and incentive pays. We are convinced that the expansion of
    entitlements, and the creation of new ones that do not directly and
    measurably improve recruiting, retention, or readiness in a manner
    commensurate with their cost, should be discouraged. Rather, the
    Department requests Congress provide for more discretionary funds in
    special and incentive pays. Currently, those pays account for only 4
    percent of the Military Personnel account.
        In a separate effort, and as follow-on to a 2001 comprehensive
    report to Congress on the Uniformed Services Former Spouses Protection
    Act (USFSPA), the Department is also requesting Congressional support
    for a balanced package of proposed improvements for military members
    and former spouses, and to streamline the efficiency of administering
    accounts. Our USFSPA proposals are grouped into four major areas: 1)
    retirement pay; 2) Defense Finance and Accounting Service (DFAS)
    improvements; 3) procedural improvements; and 4) Survivor Benefit Plan
    (SBP). Proposals include initiatives to prohibit court-ordered payment
    of retired pay prior to retirement; compute divisible retired pay based
    on rank and years of service at divorce; allow direct payments from
    DFAS in all cases (not just cases with more than 10 years of marriage);
    and allow split of SBP between former and current spouses.
    Defense Travel Management Office
        The Defense Travel Management Office (DTMO) was established in
    February 2006, to consolidate and synchronize disparate, stove-piped
    and independent commercial travel programs within the Department. The
    DTMO provides oversight for commercial travel management, travel policy
    and implementation, travel card program management, training,
    functional oversight of the Defense Travel System (DTS) and customer
    support, and has embarked on several major efforts to improve oversight
    and services for Defense travelers. In March 2007, we received a report
    containing recommendations resulting from a congressionally mandated,
    independent study of the DTS. This study concluded that the Reservation
    Refresh version of DTS, which was deployed in February 2007, provides
    lowest-cost routing, improves system usability, and allows travelers to
    access a more complete airline flight inventory. The study's authors,
    from the Institute for Defense Analyses, concluded that there is no
    basis to abandon the DTS in favor of another travel system or process.
    The Department has accepted all recommendations from this important
    study and we are committed to implementing them.
        We established enterprise partnerships and a governance structure
    for Defense Travel and are developing a Travel Enterprise performance
    management program. To improve customer support, we conducted a
    comprehensive review of existing travel training programs and enhanced
    our training programs by establishing 23 distance learning modules we
    will implement this year. We established a Travel Assistance Center to
    provide help to all Defense travelers. Currently, the Navy, Marine
    Corps, Defense Agencies, and the After Hours Recruit Assistance program
    have transitioned to this support concept; in addition, the Army and
    Air Force will begin using it this calendar year. We also conducted the
    first DTS Customer Satisfaction Survey, using the Department's ``Quick
    Compass'' survey vehicle, and collected feedback on various aspects of
    Defense Travel via Interactive Customer Evaluation (ICE) tool .
        In September, another key milestone for Defense travel was attained
    when the DTMO awarded an Indefinite Delivery/Indefinite Quantity
    contract for worldwide Commercial Travel Office (CTO) services. For the
    first time, the Department is leveraging an integrated management
    approach to standardize CTO requirements, establish consistent
    standards of service, and ensure consistent levels of service for the
    traveler.
        The coming months will bring even greater improvements in oversight
    and customer service for Defense travel. My office is partnering with
    the General Services Administration (GSA) and the State Department to
    conduct a comprehensive review of Federal and Department travel
    policies. This comprehensive review provides an excellent opportunity
    to ensure policies are modernized, simplified and understandable by
    travelers and managers across the Federal Government. The Department
    recently selected Citibank to provide government travel charge card
    services under the SmartPay  2 master contract administered by the GSA
    for implementation across the Department in November 2008. This
    transition will affect more than 1.2 million Defense personnel who have
    travel charge cards.
    DOD Disability Evaluation System
        In honor of the men and women of our Armed Forces, the citizens of
    the United States have a long and proud history of compensating
    servicemembers whose opportunity to complete a military career has been
    cut short by injuries or illnesses incurred in the line of duty.
    Congress mandated the development of a system of rating disabilities in
    1917. Over time, that system has been further refined to the benefit of
    servicemembers and their families. The Career Compensation Act of 1949
    formalized the code the military departments utilize today.
        In addition to DOD disability compensation, former servicemembers
    may be eligible for disability compensation through the Department of
    Veterans Affairs (VA) for service-connected disabilities and for VA
    pension for veterans who are permanently and totally disabled and meet
    certain income requirements. The key difference between the DOD and VA
    disability compensation systems is in the nature of the disabilities
    that are rated. The Military Services award disability ratings only for
    medical conditions which make the individual unfit for continued
    military service, with the intent of compensating for the loss of a
    military career, whereas VA awards ratings for service-connected
    disabilities, to compensate for the average loss of earning capacity.
    Military disability ratings are fixed upon final disposition, while VA
    ratings can vary over time, depending on how a person's condition
    progresses.
        The process of transition from servicemember to veteran has been
    fraught with duplicative and sequential steps requiring time and effort
    to navigate.
        The Department was informed over the last year by the thorough and
    thoughtful reports of the Task Force on Returning Global War on Terror
    Heroes, the Independent Review Group, the President's Commission on
    Care for America's Returning Wounded Warriors (Dole/Shalala
    Commission), the Veterans Disability Benefits Commission (Scott
    Commission), and the DOD Task Force on Mental Health. We have reviewed
    these reports and, where possible, are making changes within policy and
    where supported by legislative revisions.
        A fundamental goal of our efforts is to improve the continuum of
    care from the point-of-injury to community reintegration. To that end,
    in November 2007, a DOD and VA collaborative DES Pilot was implemented
    for disability cases originating at the three major military treatment
    facilities in the National Capitol Region (Walter Reed Army Medical
    Center, Bethesda National Naval Medical Center, and Malcolm Grow
    Medical Center).
        The DES Pilot is a servicemember-centric initiative designed to
    eliminate the often confusing elements of the current disability
    processes of our two Departments. Key features include a single medical
    examination and a single-source disability rating. A primary goal is to
    reduce by half the time required for a member to transition to veteran
    status and receive VA benefits.
        To ensure a seamless transition of our wounded, ill, or injured
    from the care, benefits, and services of DOD to the VA system, the
    pilot is testing enhanced case management methods, identifying
    opportunities to improve the flow of information, and identifying
    additional resources for servicemembers and their families. VA is
    poised to provide benefits to the veterans participating in the pilot
    as soon as they transition out of the military.
                                reserve affairs
    National Guard and Reserve Forces
        In recent years we have seen an unprecedented reliance on the
    Reserve components--since September 11, over 623,000 Reserve component
    members (including Selected Reserve and IRR) have been mobilized; of
    that number 164,000 have served more than once. Looking at recent
    trends, and looking to the future, it is clear that we have left behind
    the old model of ``maybe once in a lifetime mobilization.'' Recognizing
    that transformation, this administration has presided over the largest
    set of changes in policy and statute, arguably since the inception of
    the AVF, to transform the Guard and Reserve from a purely strategic
    force to a sustainable Reserve Force with both operational and
    strategic roles.
        The Department began this transformation in 2002 with the
    publication of ``Reserve Component Contributions to National Defense,''
    as part of that year's Quadrennial Defense Review (QDR). That document
    provided the seminal intellectual foundation for transitioning to an
    Operational Reserve, proposing new ideas for building force
    capabilities and creating flexibility in force management to sustain an
    All-Volunteer Operational Reserve. The proposals addressed included
    changes to Active/Reserve Force structure, potential roles and missions
    in overseas conflicts and in homeland defense, and a new approach to
    personnel management entitled ``continuum of service.''
        Since that time, with the support of Congress, legislation was
    enacted and we implemented numerous initiatives that facilitated the
    successful transition to an Operational Reserve. Although we have
    clearly accomplished much, we still have much to do. The following will
    briefly summarize the considerable progress that has been made and
    efforts that are continuing.
    Utilization
        When I started my tenure as the Under Secretary, the Department had
    inherited an Active/Reserve Force structure that was not designed for
    the extended conflict of the kind we now face. The military was
    designed to maximize immediate combat power in the active force while
    using Reserve components as a repository for capabilities needed in the
    later phases of major theater war, combat augmentation and combat
    support/combat service support (CS/CSS), such as military police,
    engineers, and civil affairs.
        In the 1990s, force downsizing, along with reduced budgets and
    rising tempo of operations, spurred an increase in the use of the
    Reserve components, particularly in CS/CSS. Demand for these skills has
    sky-rocketed in the current conflict, to include Reserve component
    combat power, and the Guard and Reserve have proven essential to
    success in the conflict.
        As events unfolded following the attacks of September 11, we
    recognized this increasing reliance would require a different kind of
    Reserve component with changed expectations and policies. Our policies
    on mobilization, force structure rebalancing, personnel management,
    training, readiness, equipping, and family and employer support have
    changed significantly during what is now the largest mobilization of
    the Guard/Reserve since the Korean War--in a war that has lasted longer
    than World War II.
    Mobilization Policies
        We authored mobilization policies that institutionalized judicious
    use as the core principle of Reserve component utilization to include
    the latest mobilization policy issued by the Secretary on January 19,
    2007. This document is the underpinning of predictability (1-year
    mobilization, 1:5 utilization) for the Operational Reserve, and it is
    widely supported by military members, families, and employers alike. In
    addition, we set a standard of notifying members a minimum of 30 days
    prior to mobilization. We routinely exceed this goal, now providing
    alerts to units 1 year or more in advance. We now foresee notifying
    units up to 2 years prior to mobilization. We have streamlined the
    mobilization process. These and other changes have sustained the
    Reserve components during a period of extensive mobilizations. Our
    success is reflected in recruitment and retention of Reserve component
    members. (The six DOD Reserve components combined achieved 108 percent
    of their recruiting goals in the first 4 months of fiscal year 2008,
    and attrition during the last 6 years--the global war on terrorism
    years--has been lower than the previous 10 years.) Clearly, the changes
    in compensation and benefits that recognized the increased operational
    role of the Guard and Reserve, as well as the pride guardsmen and
    reservists take in serving their country in these challenging times,
    are major factors in these achievements. It is also fairly evident that
    our policies needed to evolve to sustain a reasonable level of
    utilization of an Operational Reserve Force. The principles established
    in January 2007 that now guide this utilization appear to be serving us
    well:

             Involuntary mobilization for members of the Reserve
            Forces will be for a maximum 1 year at any one time
             Mobilization of ground combat, combat support and
            combat service support resources will be managed on a unit
            basis
             The planning objective for involuntary mobilization of
            Guard/Reserve units will remain a 1 year mobilized to 5 years
            demobilized ratio and we will move to the broad application of
            1:5 as soon as possible
             The planning objective for the Active Force remains 1
            year deployed to 2 years at home station
             A new program was established to compensate or
            incentivize individuals who are required to mobilize or deploy
            early or often, or to extend beyond the established rotation
            policy goals
             All commands and units have been directed to review
            how they administer the hardship waiver program to ensure they
            are properly taking into account exceptional circumstances
            facing military families of deployed servicemembers
             Use of Stop Loss will be minimized for Active and
            Reserve component forces

        Our policy has set the standard for judicious and prudent use,
    provides predictability, and ensures Reserve component members are
    treated fairly, and allows for their individual circumstances to be
    taken into consideration.
    Rebalancing
        Using personnel data to analyze utilization of individual
    servicemembers by occupation and skill from September 11 to the
    present, we have instituted policies and practices that significantly
    improve how we manage people to ensure the burden is shared more
    equally across the force and to alleviate stress on the force. We found
    which skill sets were in much higher demand and those that were not.
    Some were weighted so heavily toward Reserves that it put Reserve
    component members in jeopardy of repeated, extensive mobilization. New
    force management approaches were developed to achieve a better
    allocation and mix of capabilities in our Active and Reserve components
    to meet the demands of the global war on terrorism and sustain an
    Operational Reserve.
        Over the past 5 years, we developed a rebalancing effort in the
    Services that initially transitioned 89,000 billets in less-stressed
    career fields to more heavily used specialties--such as military
    police, civil affairs, and others. As of this year, we have rebalanced
    about 106,000 billets and working with the Services, they have planned
    and programmed an additional 99,000 billets for rebalancing between
    fiscal years 2008 and 2012. Although the amount and type of rebalancing
    varies by Service, key stressed capability areas include: engineers,
    intelligence, special operations, military police, infantry, aviation,
    space and combat air superiority. By 2012, we expect to have rebalanced
    about 205,000 billets. Rebalancing is a continuous and iterative
    process. The Department will continue to work closely with the Services
    as they review and refine their rebalancing plans to achieve the right
    mix of capabilities and alignment of force structure. This will greatly
    help reduce stress and support the Operational Reserve by providing a
    deeper bench for those skills that are in high demand. However, easing
    the stress on the force is more than just rebalancing the military.
    Personnel Management
        At the outset of the conflict, it also became clear that many of
    our Reserve personnel management policies and practices were too rigid
    and inflexible. We knew that we could employ better practices in
    managing personnel.
        One of our signature initiatives is transforming personnel
    management to create a ``continuum of service.'' This approach provides
    greater opportunities for reservists to volunteer for extended periods
    of active duty and additional flexibility in managing Reserve
    personnel. It offers innovative accession and affiliation programs to
    permit individuals with specialized skills to contribute to military
    mission requirements. This supports the Operational Reserve because it
    considerably widens the aperture in how people can serve. Working with
    the members of this committee and your staffs yielded many legislative
    proposals related to the continuum of service, the cornerstone of our
    efforts.
        Reserve Affairs has been leading a continuum of service working
    group to collaborate with the Services to make the changes necessary to
    Department policy and legislation to improve the continuum of service
    for all Services. The record shows that between 2002 and 2007, over 164
    separate legislative changes directly affecting Reserve personnel
    management were enacted, establishing the statutory basis and support
    for the transition to the Operational Reserve. Together, Congress and
    the Department established a new personnel strength accounting
    category, ``reservists on active duty for operational support,'' which
    permits Reserve component members to serve up to 3 years out of 4 on
    active duty, without counting against active duty strength or grade
    ceilings, and always being treated as reservists for promotion
    purposes. Legislative accomplishments also include elimination of
    perceived and real limits on service for reservists; (179 days before a
    member counts against limits of reservists serving on active duty)
    artificial eligibility thresholds (140 days on active duty) to qualify
    for the same housing allowance as active duty members receive, and
    TRICARE Prime; expansion of critical skill and other bonuses for
    reservists; and access to a world-class medical benefit (TRICARE) for
    Selected Reserve members and their families, regardless of the duty
    status of the member.
        We have work left to do, particularly with some of our educational
    assistance programs, and in our continuing efforts to remove
    impediments and barriers to transitioning Reserve component members
    between Reserve and Active service. But we have made tremendous
    progress in cementing the underpinnings of the Operational Reserve with
    a manpower management system vastly different than the one that
    supported once-in-a-lifetime mobilization. One of our final steps will
    be implementation of the Defense Integrated Military Human Resources
    System, which beginning this year will provide transparent, single-
    system personnel management.
    Training, Readiness, and Equipping
        Our Reserve Forces, which now have more combat veterans than at any
    time since World War II, are the best-equipped and best-trained that
    our Nation has ever had. We recognized the old mobilization/training
    model for a Strategic Reserve of ``mobilize, train, deploy'' would not
    work in a world requiring a more agile and quick response to rapidly
    developing operations. We have transformed from this old model to a new
    mobilization/training model of ``train, mobilize, deploy.'' Your help
    in crafting the NDAA for Fiscal Year 2005 authorizing the mobilization
    of reservists for individual training, makes unit post-mobilization
    training more efficient.
        During pre-mobilization, units certify individual medical, dental
    and administrative readiness and certify certain individual and theater
    specific skills in order to minimize time at the mobilization station
    to maximize ``Boots on the Ground.'' The standardization of processes,
    procedures, and applications for units at home station will allow the
    transfer of certification documentation to the mobilization station and
    significantly reduce the need to recertify pre-mobilization processing
    and training.
        Training transformation is a dynamic and constantly evolving
    process that will ensure all individuals, units and organizations of
    the Total Force receive the education and training needed to accomplish
    tasks that support the combatant commanders. The combination of web-
    based technologies and distance-learning methodologies are cost-
    effective alternatives to sending individuals away to resident courses
    and units off to live-training events. In many cases, units can train
    at their home stations and individuals can complete required courses on
    their home computers. While these training technologies can never
    completely replace the need for some forms of face-to-face education
    and training, they do help reduce post-mobilization time spent
    preparing for deployment overseas by allowing individuals and units to
    complete more pre-deployment requirements before they mobilize.
    Likewise, Innovative Readiness Training allows units and individuals to
    carry out training that improves their mobilization readiness while at
    the same time undertaking projects that serve the larger community.
        We are also looking at increased Active/Reserve component
    integration to improve Reserve component availability to the warfighter
    as a critical step in the continuing evolution of the Operational
    Reserve. Integration of the active and Reserve components support the
    Department's transformation to a capabilities-based force that will
    help relieve stress on the force. Integration will increase warfighter
    capability, facilitate equipment utilization, and provide a method to
    increase deployment predictability.
        Furthermore, we have supported the development of force-generation
    models by the Services, which ultimately provide predictability for an
    Operational Reserve Force, accompanied by a training and equipping
    strategy that will provide more first-line equipment to be positioned
    in the Reserves and which will also allow more training be conducted in
    the pre-mobilization phase at home station. We have achieved major
    progress in programming funds and equipping our Reserve components for
    an operational role. We are progressing in changing equipping
    priorities to align better with Service force generation models and to
    raise the importance of homeland defense in equipping considerations.
    Equipping Strategy
        The Reserve components of each military department need to be
    properly equipped not only when deploying, but in order to stay
    trained. The design of the Reserve component equipping strategy is
    envisioned to procure and distribute equipment to maintain a degree of
    readiness that is responsive to the combatant commanders' request while
    sustaining capabilities to respond when called upon here at home. The
    strategy also must take into account the Department's support to State
    Homeland Defense missions, while maximizing equipment availability
    throughout the force.
        The Department's goal is to analyze what and where the greatest
    needs lie and design and achieve the strategy that is the best fit for
    today's Operational Reserve--rather than relying on an outdated
    equipping strategy for a purely Strategic Reserve Force. Major changes
    in current thinking as well as new concepts are needed for equipping
    the Reserve component force. Focusing on availability, access, and
    transparency in distribution of equipment and resources must be
    paramount. The Department's ultimate goal is to fully equip units using
    a transitional approach designed to provide an equipped, trained, and
    ready force at various stages of a Service's rotation policies, while
    factoring in our Homeland Defense mission.
    Families, Healthcare, and Employers
        During this time of transition to an Operational Reserve, we
    recognized that support of families and employers is vital to success.
    The Department has devoted substantial resources and efforts toward
    expanding the support for our families. The challenge is particularly
    acute for widely-dispersed Reserve families, most of who do not live
    close to major military installations. Thus, we have developed and
    promoted Web sites and electronic support for families, have promoted
    use of the 700 military family service centers for all Active, Guard,
    and Reserve families to provide personal contact, and have hosted and
    attended numerous family support conferences and forums. Reintegration
    training and efforts to support members and families following
    mobilization, particularly for service in the combat zones, are vital.
    The reintegration program in Minnesota forms a basis for the Yellow
    Ribbon Reintegration Program for all Guard and Reserve members required
    in the NDAA for Fiscal Year 2008 . The Department is fully committed to
    implementing this program, which will provide Guard and Reserve
    members, and their families, the support that will help them during the
    entire deployment cycle--from preparation for active service to
    successful reintegration upon return to their community and beyond. We
    are moving quickly to stand up an interim Office for Reintegration
    Programs, which will operate until permanent staff, facilities and
    required resources are determined. We will continue to work with State
    Governors, their Adjutants General, the State family program directors
    as well as with the Military Services and their components to ensure an
    integrated support program is delivered to all Guard and Reserve
    members and their families.
        The Defense Management Data Center is creating a website for
    Reserve personnel to check the status of all of their benefits. This
    website is in the final stages of approval and should go live in the
    very near future.
        The Department has fully implemented the TRICARE Reserve Select
    (TRS) program, which offers an affordable healthcare program to all
    Selected Reserve members and their families (unless they are covered
    under the Federal Employee Health Benefit Program). This is a valuable
    benefit that our members and their families appreciate. The transition
    from the three-tiered TRS program to the comprehensive program
    authorized in the NDAA for Fiscal Year 2007 has been very smooth and we
    continue to publicize this much improved benefit.
        We implemented a policy requiring Reserve component members to
    complete a periodic Health Assessment annually. In addition, Guard and
    Reserve members complete a predeployment health assessment to identify
    nondeployable health conditions and a post-deployment health assessment
    to identify deployment related conditions prior to releases from active
    duty. Those members identified with health related conditions post-
    deployment are provided evaluation and treatment.
        Because health and adjustment concerns may not be noticed
    immediately after deployment, a Post-Deployment Health Reassessment
    (PDHRA) is provided within 90 to 180 days after redeployment to address
    mental health and physical health concerns that may develop. The PDHRA
    is designed to identify conditions that emerge later and facilitate
    access to services for a broad range of post-deployment concerns.
    Establishing the Yellow Ribbon Reintegration Program across all Guard
    and Reserve units and commands will facilitate identifying symptoms and
    conditions, and ensuring members receive the care and treatment they
    need and deserve.
        The support for employers over the past 6 years mirrors the
    increased support for families. We doubled the budget of the National
    Committee for Employer Support of the Guard and Reserve (ESGR). We
    developed an employer database which identifies the employers of Guard/
    Reserve members, expanded the ESGR State committees and their support
    (over 4,500 volunteers are now in these committees) and are reaching
    out to thousands more employers each year. The Freedom Awards program
    and national ceremony to recognize employers selected for this award
    has become a capstone event, in which the President has recognized in
    the Oval Office in each of the past 2 years the annual Freedom Award
    winners (15 recipients per year from more than 2000 nominees). Never in
    the history of the Guard and Reserve have families and employers been
    supported to this degree and they appreciate it, as this effort is
    critical to sustaining an Operational Reserve.
    Commission on the National Guard and Reserves
        The Commission tendered a report in March 2007 evaluating the
    ``National Guard Empowerment Act'' as directed by Congress. The
    Secretary responded quickly to the recommendations of the Commission
    and directed development of plans to implement the Commission's
    recommendations. Of the 22 plans developed:

             Eight are complete or now embedded in DOD processes
             Nine have met their objective of producing directives,
            memoranda, recommendations, or policies, and are progressing
            through the staffing process
             Work is on schedule for the five remaining plans that
            have longer implementation objectives

        We have completed a preliminary review of the Commission's final
    report and we are pleased that the Commission supported two of our
    major strategic initiatives--an Operational Reserve and the Continuum
    of Service. We disagree, however, with the Commission's views on the
    Department's ability to respond to homeland operations. I was
    disappointed that the Commission downplayed the many, significant
    changes that the Department and Congress have made to facilitate the
    transition to an Operational Reserve and institutionalize the Continuum
    of Service. Much has already been accomplished.
        We will conduct a comprehensive review of the Commission's
    recommendations and propose courses of action for the Secretary to
    consider.
        Because our Reserve components will be asked to continue their role
    as an operational force, we are developing a DOD directive to provide
    the framework for an Operational Reserve in a single document. The
    National Guard and Reserve continue to be a mission-ready critical
    element of our National Security Strategy.
        Working together, we can ensure that the Reserve components are
    trained, ready, and continue to perform to the level of excellence they
    have repeatedly demonstrated over the last 6\1/2\ years.
                   foreign language and regional proficiency
        Foreign language and regional proficiency, which includes cultural
    awareness, have emerged as key competencies for our 21st century Total
    Force. Skills in foreign language and cultural understanding are
    increasingly important ``soft'' skills in the DOD. Our forces are
    operating with coalition and alliance partners and interact with
    foreign populations, in a variety of regions, with languages and
    cultures different from ours. Past experience has proven repeatedly
    that we enhance partnerships with our allies and coalition partners
    when we are able to communicate and when we demonstrate an
    understanding and respect for the cultures of our allies and coalition
    partners.
        Our challenge lies in the reality that language and regional
    proficiency take time to develop and sustain. Even when we devote that
    time, the next threat to security will very likely require different
    language and cultural capabilities, in an entirely different region of
    the world. Any solution, whether it is policy-driven, programmatic,
    scientific, or pedagogic, must be adaptable and agile to meet the
    challenges of tomorrow as well as the requirements of today.
    Essential Soft Skills
        Three years ago, the Department did not have policies in place to
    effectively manage a true Defense enterprise-wide approach to
    establishing foreign language skills and regional knowledge. These
    skills were not core competencies within the Total Force, but resided
    mostly within the Intelligence Community professionals, Special Forces,
    and the Foreign Area Officer program. Now we have DOD directives and
    instructions that institutionalize attention to these needs. Three
    years ago, cultural training was sporadic across the Department. Now
    this vital training, referred to as Regional Area Content, is
    incorporated into all aspects of our officer Professional Military
    Education, and the Services are extending it to all enlisted
    professional military education as well.
    Strategic Guidance
        The Strategic Planning Guidance (fiscal year 2006 through fiscal
    year 2011) directed development of a comprehensive roadmap to achieve
    the full range of language capabilities necessary to carry out national
    strategy. The resulting 2005 Defense Language Transformation Roadmap,
    through its 43 specific actions, has guided the Department in building
    language, regional and cultural knowledge skills required to meet our
    many and diverse mission requirements. The Roadmap provides broad goals
    that ensures a strong foundation in language, regional and cultural
    proficiency, a capacity to surge to meet unanticipated demands, and a
    cadre of language professionals--our ability to provide the right
    resource, at the right level of competency, at the right place, at the
    right time.
        The 2006 QDR drove an increase in funding of approximately 50
    percent through the Future Years Defense Program for initiatives to
    strengthen and expand our Defense Language Program. These initiatives
    span technology, training, education, recruitment, and outreach
    programs to our Nation. The Strategic Planning Guidance for fiscal year
    2008 through 2013 outlines the national commitment to developing the
    best mix of capabilities within the Total Force and sets forth a series
    of additional roadmaps that coincide with the goals of the Defense
    Language Transformation Roadmap.
        To unify Department efforts to ensure oversight, execution, and
    direction for DOD language and culture transformation, the Deputy
    Secretary of Defense assigned the Under Secretary of Defense for
    Personnel and Readiness responsibility for the overall Defense Language
    Program. The Deputy Secretary then created a board of senior leaders to
    oversee this effort. The Deputy Under Secretary of Defense for Plans
    was appointed the DOD Senior Language Authority. We now have Senior
    Language Authorities for each Combatant Command, in each of the four
    Services, the Joint Staff, Defense Agencies, and Defense Field
    Activities. The Defense Language Steering Committee, composed of these
    members and principal Office of the Secretary of Defense (OSD) staff,
    serves as an advisory board and guides the execution of the Roadmap.
    The Defense Language Office is now in place to ensure oversight and
    execution of the Defense Language Transformation Roadmap and to
    institutionalize the Department's commitment to these critical and
    enduring competencies.
    Screening and Assessment
        A critical initiative of the Defense Language Transformation
    Roadmap is to identify the capabilities and resources needed across the
    Department to meet mission requirements. We have nearly completed a 3-
    year effort to identify the language and regional proficiency
    requirements necessary to support operational and contingency planning
    and day-to-day mission requirements. Simultaneously, we initiated
    reviews of all relevant doctrine, policies, and planning guidance to
    ensure that they include where appropriate the need for language,
    regional and cultural capabilities.
        Before 2004, we had never conducted a comprehensive assessment to
    identify the specific languages and proficiency levels of the Total
    Force. We are now asking every servicemember and inviting every
    civilian employee to indicate language proficiency beyond English. We
    are pleased to report that we have over 280,000 foreign language
    capabilities in-house. As you would expect, it consists primarily of
    the foreign languages traditionally taught in the United States such as
    French, German and Spanish. However, a surprising number are proficient
    in languages of contemporary strategic interest ranging from Chinese to
    Tagalog to Igboo. Individuals are now routinely screened as part of the
    military accession and civilian hiring process and we now have database
    capabilities that allow us to identify needs and match them to existing
    resources.
        In order to encourage servicemembers to identify, improve, and
    sustain language capability, we implemented a revised Foreign Language
    Proficiency Bonus (FLPB) policy, and, with the support of Congress,
    increased the proficiency bonus from $300 maximum per month, up to
    $1,000 maximum per month for military personnel. The number of enlisted
    personnel who currently receive this incentive pay has increased about
    21 percent since implementation of this policy change. Congressional
    support now provides equitable language proficiency bonus policies for
    both the Active and Reserve components.
        In an effort to identify gaps in capability, we are developing a
    Language Readiness Index (LRI), which will be integrated into the
    Defense Readiness Reporting System's network of software applications.
    The LRI will compare foreign language requirements to the language
    capability of individuals available to perform missions across the
    Total Force, resulting in the identification of the gaps in the
    language capability. The LRI is designed to be used by DOD agencies,
    combatant commands, and the Services to provide decisionmakers with the
    tools necessary to assess language risk and take appropriate action.
    Foreign Area Officers
        High levels of language, regional and cultural knowledge and skills
    are needed to build the internal and external relationships required
    for coalition/multi-national operations, peacekeeping, and civil/
    military affairs. In 2005, the Department began building a cadre of
    language specialists possessing high-level language proficiency (an
    Interagency Language Roundtable (ILR) Proficiency Level 3 in reading,
    listening, and speaking ability, or 3/3/3) and regional expertise. We
    are working to identify the tasks and missions that will require this
    professional-level proficiency and determine the minimum number of
    personnel needed to provide this language capability.
        The Foreign Area Officers (FAOs) program fulfills the Department's
    need for this cadre of language and regional professionals. FAOs are
    highly educated, have professional-level fluency in at least one
    regional language, and have studied and traveled widely in their region
    of expertise. In 2005, there was no unified approach to fielding FAOs.
    Two Services did not have FAO programs. The Department now requires all
    Services to establish formal FAO programs, standardizing the
    requirements that one must meet to become a FAO. Our FAOs must have, in
    addition to a broad range of military skills, experience with the
    political, cultural, sociological, economic, and geographical factors
    of the countries and regions in which they are stationed; knowledge of
    political-military affairs; and must be professionally proficient in
    one or more of the dominant languages in their region of proficiency.
    The Services have dramatically increased the number of FAO positions to
    approximately 1,600.
    Preaccession
        We start building language skills in future officers prior to
    commissioning. The 2006 QDR recognized that there is insufficient time
    available during most military careers to build advanced language
    capabilities throughout the Force for other than FAOs and those
    specialties that require the use of language full-time. The three
    Military Service Academies have enhanced their foreign language study
    programs to develop language and cultural knowledge. They now require
    all nontechnical degree cadets and midshipmen to take four semesters of
    foreign language study. The United States Military Academy and the
    United States Air Force Academy have established language majors in
    Arabic and Chinese. The United States Naval Academy, for the first time
    in history, will offer midshipmen the opportunity to major in a foreign
    language beginning with the Class of 2010.
        We are expanding opportunities for members of the Reserve Officers'
    Training Corps (ROTC) to learn a foreign language. Of the 1,322
    colleges and universities with ROTC programs, 1,149 offer foreign
    language study, but many of the languages we need for current
    operations are not widely offered at this time. Therefore, the
    Department has launched a program to award grants to colleges and
    universities with ROTC programs to expand opportunities for ROTC cadets
    and midshipmen to study languages and cultures critical to national
    security. Increasing the number of what we call ``less commonly taught
    languages'' in college curricula remains a challenge in which we are
    actively engaged. We seek your support for a fiscal year 2009
    legislative proposal to support the Secretary's goal of encouraging
    ROTC cadets and midshipmen in Senior ROTC to study foreign language
    courses of strategic interest to the Department. The proposal would
    award up to $3,000 per year to a ROTC student studying a language of
    interest.
    Post Accession
        Since the September 11 terrorist attacks, we have redirected
    training toward the strategic languages, such as Arabic, Chinese and
    Persian Farsi. The Defense Foreign Language Institute Foreign Language
    Center is the Department's schoolhouse for training military personnel.
    Over 2,000 servicemembers graduate each year having studied 1 of 24
    languages. In 2006 we implemented the Proficiency Enhancement Program
    designed to graduate 80 percent of the students at increased language
    proficiency levels. We are well on our way to achieving this goal.
    Changes include reducing the student-to-instructor ratio, increasing
    the number of classrooms, creating improved expanded curricula,
    retooling faculty training, deploying classroom technology integration,
    and expanding overseas training. Cultural awareness has also been added
    to every language course.
        The Defense Language School's foreign language and cultural
    instruction extends beyond the classroom, offering Mobile Training
    Teams, video tele-training, Language Survival Kits, and online
    instructional materials. Since 2001, the Defense Language School has
    dispatched over 434 Mobile Training Teams to provide targeted training
    to more than 50,000 personnel. Deployed units have received over
    800,000 Language Survival Kits--mostly Iraqi, Dari, and Pashto.
    Increasing the Capacity to Surge
        Ensuring that we have a strong foundation in language and regional
    proficiency involves reaching out to personnel who already possess
    these skills to employ in our workforce. All of our military Services
    have developed heritage-recruiting plans to bring personnel into the
    Force with key language skills and regional proficiency. These plans
    focus on reaching out to our heritage communities and their children
    who possess near-native language skills and knowledge of the culture.
    One particularly successful program is the Army Interpreter/Translator
    (09L) Program. This pilot program was launched in 2003 to recruit and
    train individuals from heritage Arabic, Dari, and Pashto communities to
    support operations in Iraq and Afghanistan. The program was so
    successful that in 2006, it was formally established as a permanent
    military occupational specialty with a career path from recruit through
    sergeant major. More than 450 native/heritage speakers have
    successfully graduated; an additional 150 personnel are currently in
    the training pipeline.
    Defense Language Testing
        Another critical component of our effort to improve language
    capability is to validate and deliver tools for measuring language
    proficiency. We have taken steps to strengthen our Defense Language
    Testing System by updating test content and delivery. Delivering these
    tests over the Internet greatly increases the availability and
    accessibility of these tests to Defense language professionals
    worldwide.
    Supporting the National Agenda
        In January 2006, the President of the United States announced the
    National Security Language Initiative. The Initiative was launched to
    dramatically increase the number of Americans learning critical need
    foreign languages such as Arabic, Chinese, Russian, Hindi, and Farsi.
    The Secretary of Defense joined the Secretaries of State and Education,
    and the Director of National Intelligence to develop a comprehensive
    national plan to expand opportunities for United States students to
    develop proficiencies in critical languages from early education
    through college. The White House provides ongoing coordination as
    partner agencies work to implement this plan.
        The focal point for the Department's role in the National Security
    Language Initiative is the National Security Education Program (NSEP).
    NSEP represents a key investment in creating a pipeline of
    linguistically and culturally competent professionals into our
    workforce. NSEP provides scholarships and fellowships to enable
    American students to study critical languages and cultures in return
    for Federal national security service. NSEP partners with universities,
    providing grants for the development and implementation of National
    Flagship Language Programs, specifically designed to graduate students
    at an ILR Level Three (3/3/3) language proficiency (in reading,
    listening and speaking modalities) in today's critical languages. These
    programs provide a major source of vitally needed language proficiency
    in the national security community. As part of the DOD's contribution
    to the National Security Language Initiative, we have expanded the
    National Language Flagship Program to establish new flagship programs
    in Arabic, Hindi, and Urdu and to expand the Russian flagship to a
    Eurasian program focusing on critical central Asian languages. The
    flagship effort serves as an example of how the National Security
    Language Initiative links Federal programs and resources across
    agencies to enhance the scope of the Federal Government's efforts in
    foreign language education. For example, the flagship program is
    leading the way in developing programs for students to progress through
    elementary, middle, and high school and into universities with more
    advanced levels of language proficiency. This enables our universities
    to focus more appropriately on taking a student from an intermediate or
    advanced level to the professional proficiency. While focusing on early
    language learning, this effort has already succeeded in enrolling 10
    students, as freshmen, from Portland, OR, high schools in an
    experimental advanced, intensive 4-year Chinese program at the
    University of Oregon. We have also awarded a grant to the Chinese
    flagship program at Ohio State University to implement a State-wide
    system of Chinese programs. Finally, we awarded a grant to Michigan
    State University to develop an Arabic pipeline with the Dearborn, MI,
    school district, announced in conjunction with the Department of
    Education's foreign language assistance program grant.
    National Language Service Corps
        Our second commitment to the President's National Security Language
    Initiative is the launching of the National Language Service Corps
    pilot program. This effort will identify Americans with skills in
    critical languages and develop the capacity to mobilize them during
    times of national need or emergency. The National Language Service
    Corps represents the first organized national attempt to capitalize on
    our rich national diversity in language and culture. This organization
    has a goal of creating a cadre of 1,000 highly proficient people, in 10
    languages by 2010 and began recruiting in January 2008.
        Recently, the department coordinated a series of regional summits
    to engage State and local governments, educational institutions, school
    boards, parents, and businesses at the local level in addressing
    foreign language needs. The NSEP reached out to the proficiency of its
    three flagship universities--in Ohio, Oregon, and Texas to convene
    these summits and to develop action plans that reflect an organized and
    reasonable approach to building the infrastructure for language
    education at the State and local level.
        Industry, academia, Federal, State, and local governments,
    business, nongovernmental organizations and our international partners
    must continue to work together in order to achieve our mutual goals.
    The United States continues to seek out and increase collaboration in
    today's global world. The DOD is leading an effort in the public and
    private sectors of the United States to develop a globalized workforce
    through the development of language, regional and cultural capabilities
    and is deeply committed to this initiative. We have fundamentally
    transformed our approach to foreign language and cultural capabilities
    and in doing so have ignited a spark across the Nation that is
    resulting in increased language and international education programs in
    schools and colleges. The need for language, regional and cultural
    competence is real and critical and is not confined to the DOD or the
    shores of the United States. We clearly face a world challenge that
    will require that we embrace the diversity that makes us who we are,
    while at the same time, enable us to work together to solve the complex
    global challenges that we face.
        The Department has, since 2001, led a national effort to address
    serious national shortfalls in foreign language expertise. The context
    for languages has changed dramatically in less than a decade--we need
    to address more and more languages at higher levels of proficiency. We
    recognize that we cannot address our own language needs or those of the
    broader national security community and Federal sector without a
    strategic investment in the development of a more globalized
    professional workforce--one that is multi-lingual and multi-cultural.
    The results of our own Department language transformation roadmap are
    impressive. But we also recognize that in order to successfully address
    our ever-expanding needs we simply must invest long-term in key
    ``leverage points'' in the U.S. education system. Enlarging the
    recruitment pool will serve to lower the costs and allow the Department
    to devote more time to mission-critical skills. As a side benefit it
    will serve to change attitudes and increase the national capability to
    respond to military, diplomatic, economic and social needs.
                                 defense health
        A crucial part of my portfolio as the Under Secretary of Defense
    for Personnel and Readiness is the health of our servicemembers. Over
    the last 7 years the Military Health System (MHS) has implemented
    significant new programs for its more than 9 million beneficiaries,
    overhauled contracts, leveraged new technology, provided global health
    and support around the world, and made dramatic improvements in
    battlefield medicine and care of the wounded, injured and ill.
    Force Health Protection
        Force Health Protection embraces a broad compilation of programs
    and systems designed to protect and preserve the health and fitness of
    our servicemembers--from their entrance into the military, throughout
    their military service to their separation or retirement, and follow-on
    care by the VA. Our integrated partnership for health between
    servicemembers, their leaders and health care providers ensures a fit
    and healthy force and that the continuum of world-class health care is
    available anytime, anywhere.
        In 2007, we recorded remarkable war-wounded survival rates, the
    lowest death-to-wounded ratio in the history of American military
    operations, and the lowest disease non-battle injury rate.

             Lowest Disease, Non-Battle Injury Rate. As a testament
            to our medical readiness and preparedness, with our preventive-
            medicine approaches and our occupational-health capabilities,
            we are successfully addressing the single largest contributor
            to loss of forces--disease.
             Lowest Death-to-Wounded Ratio. Our agility in reaching
            wounded servicemembers, and capability in treating them, has
            altered our perspective on what constitutes timeliness in
            lifesaving care from the golden hour to the platinum 15
            minutes. We are saving servicemembers with grievous wounds that
            were likely not survivable even 10 years ago.
             Reduced time to evacuation and definitive tertiary
            care. We now expedite the evacuation of servicemembers
            following forward-deployed surgery to stateside definitive
            care. We changed our evacuation paradigm to employ airborne
            intensive-care units. Wounded servicemembers often arrive back
            in the United States within 3-4 days of initial injury.

        One of our most important preventive health measures in place for
    servicemembers today--immunization programs--offer protection from many
    diseases endemic to certain areas of the world and from diseases that
    can be used as weapons. These vaccines are highly effective, and we
    base our programs on sound scientific information verified by
    independent experts.
        The Department has programs to protect our servicemembers against a
    variety of illnesses. We continue to view smallpox and anthrax as real
    threats that may be used as potential bioterrorism weapons against our
    soldiers, sailors, airmen, and marines. To date, through the use of
    vaccines we have protected almost 1.6 million servicemembers against
    anthrax spores and more than 1.1 million against the smallpox virus.
    These vaccination programs have an unparalleled safety record and are
    setting the standard for the civilian sector. Since the Food and Drug
    Administration published the Final Order confirming that the anthrax
    vaccine absorbed is safe and effective for its labeled indication to
    protect individuals at high risk for anthrax disease, we restarted the
    mandatory anthrax vaccination program.
        Insect-repellant-impregnated uniforms and prophylactic medications
    also protect our servicemembers from endemic diseases, such as malaria
    and leishmaniasis, during deployments. Since January 2003, DOD
    environmental health professionals have analyzed more than 6,000
    theater air, water, and soil samples to ensure that forces are not
    unduly exposed to harmful substances during deployments.
        We published a new DOD Instruction, ``Deployment Health,'' in 2006.
    Among its many measures to enhance force health protection is a
    requirement for the Services to track and record daily locations of DOD
    personnel as they move about in theater and report data weekly to the
    Defense Manpower Data Center. We can use the data collected to identify
    populations at risk for exposure, to easily assign environmental
    exposures on a population basis, to study long-term health effects of
    deployments, and to mitigate health effects in future conflicts.
        Among the many performance measures the MHS tracks is the medical
    readiness status of individual members, both Active and Reserve. The
    MHS tracks individual dental health, immunizations, required laboratory
    tests, deployment-limiting conditions, Service-specific health
    assessments, and availability of required individual medical equipment.
    We are committed to deploying healthy and fit servicemembers and to
    providing consistent, careful post-deployment health evaluations with
    appropriate, expeditious follow-up care when needed.
        Medical technology on the battlefield includes expanded
    implementation of the Theater Medical Information Program and
    enhancements to the Theater Medical Data Store in support of Operations
    Iraqi Freedom and Enduring Freedom. These capabilities provide a means
    for medical units to capture and electronically disseminate near-real-
    time information to commanders. Information provided includes in-
    theater medical data, medical surveillance analysis and reports,
    environmental hazards and exposures, and such critical logistics data
    as blood supply, beds, and equipment availability. Theater Medical
    Information Program enhancements, particularly in the capture,
    distribution, and expanded access to inpatient and outpatient medical
    information, enables DOD and VA health care providers to have complete
    visibility into the continuum of care across the battlefield, from
    theater to sustaining base.
        With the expanded use of the Web-based Joint Patient Tracking
    Application, our medical providers also will have improved visibility
    into the continuum of care across the battlefield, and from theater to
    sustaining base. New medical devices introduced to OIF provide field
    medics with blood-clotting capability; light, modular diagnostic
    equipment improves the mobility of our medical forces; and individual
    protective armor serves to prevent injuries and save lives.
        DOD has been performing health assessments on servicemembers prior
    to and just after deployment for several years now. These assessments
    serve as a screen to identify any potential health concerns that might
    warrant further medical evaluation. This includes screening the mental
    well-being of all soldiers, sailors, airmen, and marines in the Active
    Force, Reserves, and National Guard.
        We are also ensuring our servicemembers are medically evaluated
    before deployments (through the Periodic Health Assessment), upon
    return (through the Post-Deployment Health Assessment) and then again
    90-180 days after deployment (through the PDHRA). These health
    assessments provide a comprehensive picture of the fitness of our
    forces and highlight areas where we may need to intervene. For example,
    we have learned that servicemembers do not always recognize or voice
    health concerns at the time they return from deployment, but may do so
    after several months back home.
        For the period of June 1, 2005 to January 8, 2008, 466,732
    servicemembers have completed a PDHRA, with 27 percent of these
    individuals receiving at least one referral for additional evaluation.
    By reaching out to servicemembers 3 to 6 months post-deployment, we
    have learned their concerns are physical-health concerns, e.g., back or
    joint pain, and mental health concerns. This additional evaluation
    gives medical staff an opportunity to provide education, reassurance,
    or additional clinical evaluation and treatment, as appropriate.
    Fortunately, as these clinical interactions occur, we have learned that
    only a fraction of those with concerns have diagnosed clinical
    conditions.
        Mental health services are available for all servicemembers and
    their families before, during, and after deployment. Servicemembers are
    trained to recognize sources of stress and the symptoms of depression,
    including thoughts of suicide, in themselves and others, that might
    occur because of deployment. Combat-stress control and mental health
    care are available in theater. In addition, before returning home, we
    brief servicemembers on how to manage their reintegration into their
    families, including managing expectations, the importance of
    communication, and the need to control alcohol use.
        During the return from deployment process, we educate
    servicemembers and assess them for signs of mental health issues,
    including depression and Post Traumatic Stress Disorder (PTSD), and
    physical health issues. During the post-deployment reassessment, we
    include additional education and assessment for signs of mental and
    physical health issues.
        After returning home, servicemembers may seek help for any mental
    health issues that may arise, including depression and PTSD, through
    the MHS for active duty and retired servicemembers, or through the VA
    for non-retired veterans. TRICARE is also available for 6 months post-
    return for Reserve and Guard members. To facilitate access for all
    servicemembers and family members, especially Reserve component
    personnel, the Military OneSource Program--a 24/7 referral and
    assistance service--is available by telephone and on the Internet.
    Additionally, we have fielded the DOD Deployment Health and Family
    Readiness Library (http://deploymenthealthlibrary.fhp.osd.mil/) to
    provide a convenient source of deployment health and family readiness
    information for servicemembers, family, health care providers and
    commanders. We also provide face-to-face counseling in the local
    community for all servicemembers and family members. We provide this
    nonmedical counseling at no charge to the member, and it is completely
    confidential.
        To supplement mental health screening and education resources, we
    added the Mental Health Self-Assessment Program in 2006. This program
    provides military families, including National Guard and Reserve
    families, Web-based, phone-based and in-person screening for common
    mental health conditions and customized referrals to appropriate local
    treatment resources. The program also includes parental screening
    instruments to assess depression and risk for self-injurious behavior
    in their children, along with suicide-prevention programs in DOD
    schools. Spanish versions of the screening tools are available, as
    well.
        Pandemic influenza represents a new threat to national security.
    With our global footprint and far-reaching capabilities, we are
    actively engaged in the Federal interagency effort to help effectively
    prevent, detect, and respond to the threat of avian influenza,
    domestically and internationally. The President's National Strategy for
    Pandemic Influenza includes the DOD as an integral component in our
    Nation's response to this threat. One example of this integrated
    response is DOD's medical Watchboard website, established in 2006, to
    provide ready access to pandemic influenza information for DOD
    servicemembers, civilians, and their families, DOD leaders, and DOD
    health care planners and providers. The DOD Watchboard is linked to
    PandemicFlu.gov for one-stop access to U.S. Government avian and
    pandemic influenza information.
    Then and Now--Traumatic Brain Injury (TBI)
        Seven years ago, TBI was not part of our Nation's vernacular.
    Today, the MHS is working on a number of measures to evaluate and treat
    servicemembers affected or possibly affected by TBI. Our new Defense
    Center of Excellence for Psychological Health and Traumatic Brain
    Injury will integrate quality programs and advanced medical technology
    to give us unprecedented expertise in dealing with psychological health
    and TBI. In developing the national collaborative network, the Center
    will coordinate existing medical, academic, research, and advocacy
    assets within the Services, with those of the VA and Health and Human
    Services, other Federal, State, and local agencies, as well as academic
    institutions. The Center will lead a national effort to advance and
    disseminate psychological health and traumatic brain injury knowledge,
    enhance clinical and management approaches, and facilitate other vital
    services to best serve the urgent and enduring needs of our wounded
    warriors and their families.
    Then and Now--Extremity Injury
        Under the leadership at Walter Reed, the Military Advanced Training
    Center opened in September 2007 to accelerate improvements in amputee
    care. Together with prosthetics research and innovations developed and
    tested at the Center for the Intrepid in San Antonio--a great gift from
    the Fisher family--nearly 15 percent of amputees can now remain on
    active duty. Many others are helped by the Computer/Electronic
    Accommodations Program.
    Then and Now--Health Informatics
        Over the last 7 years, the MHS developed and implemented Armed
    Forces Health Longitudinal Technology Application (AHLTA), DOD's global
    electronic health record and clinical data repository. The MHS
    continues to add capabilities to AHLTA, which does not yet have an
    inpatient record. The MHS will have requirements for a joint DOD-VA
    inpatient record, and work on that will soon begin.
        AHLTA, DOD's global electronic health record and clinical data
    repository, significantly enhances MHS efforts to build healthy
    communities. AHLTA creates a life-long, computer-based patient record
    for each military health beneficiary, regardless of location, and
    provides seamless visibility of health information across our entire
    continuum of medical care. This gives our providers unprecedented
    access to critical health information whenever and wherever care is
    provided to our servicemembers and beneficiaries. In addition, AHLTA
    offers clinical reminders for preventive care and clinical-practice
    guidelines for those with chronic conditions.
        In November 2006, we successfully completed worldwide deployment of
    AHLTA Block 1 at all DOD MTFs. Our implementation-support activities
    spanned 11 time zones and included training for 55,242 users, including
    18,065 health care providers. DOD's Clinical Data Repository is
    operational and contains electronic clinical records for more than 9
    million beneficiaries. AHLTA use continues to grow at a significant
    pace. As of January 4, 2008, our providers had used AHLTA to process
    66,491,855 outpatient encounters, and they currently process more than
    124,000 patient visits per workday.
        The MHS is accelerating AHLTA's responsiveness with version 3.3,
    which will be appreciably faster and more user friendly.
    Then and Now--Health Care Communications
        Seven years ago, MHS communications were mostly one-way. Today,
    with the arrival of web 2.0, the MHS has an opportunity to be
    transparent about quality, satisfaction and cost effectiveness. TRICARE
    launched a new Web site in 2007 with a new approach to delivering
    information to its beneficiaries that is based on extensive user
    research and analysis. A key feature of the redesign is that users now
    receive personalized information about their health care benefits by
    answering a few simple questions about their location, beneficiary
    status and current TRICARE plan.
        Recently, the MHS launched a new Web site, www.health.mil. Its
    purpose is to inspire innovation, creativity, and information sharing
    among MHS staff.
    Then and Now--Health Budgets and Financial Policy
        The TRICARE benefit has been enhanced through the implementation of
    TRICARE for Life, expansion of covered services and new benefits for
    the Reserve component. These benefit enhancements have come at a time
    when private-sector employers are shifting substantially more costs to
    employees for their health care. TRICARE has actually moved in the
    other direction.
        At the direction of Congress, we executed new health benefits which
    extend TRICARE coverage to members of the National Guard and Reserve.
    We implemented an expanded TRS health plan for Reserve component
    personnel and their families, as mandated by the NDAA for Fiscal Year
    2007. Today, more than 61,000 reservists and their families are paying
    premiums to receive TRS coverage. In addition, we made permanent their
    early access to TRICARE upon receipt of call-up orders and their
    continued access to TRICARE for 6 months following active duty service
    for both individuals and their families. Our fiscal year 2009 budget
    request includes $407 million to cover the costs of this expanded
    benefit.
        The Department is committed to protecting the health of our
    servicemembers and providing the best health care to more than 9
    million eligible beneficiaries. The fiscal year 2009 Defense Health
    Program funding request is $23.6 billion for Operations and
    Maintenance, Procurement and Research, and Development, Test and
    Evaluation Appropriations to finance the MHS mission. Total military
    health program requirements, including personnel expenses, is $42.8
    billion for fiscal year 2009. This includes payment of $10.4 billion to
    the DOD Medicare Eligible Retiree Health Care Fund, and excludes
    projected savings of $1.2 billion, based on recommendations provided by
    the DOD Task Force on the Future of Military Health Care for benefit
    reform.
        As the civil and military leaders of the Department have testified,
    we must place the health benefit program on a sound fiscal foundation
    or face adverse consequences. Costs have more than doubled in 7 years--
    from $19 billion in fiscal year 2001 to $39.9 billion in fiscal year
    2008--despite MHS management actions to make the system more efficient.
    Our analysts project this program will cost taxpayers at least $64
    billion by 2015. Health care costs will continue to consume a growing
    slice of the Department's budget, reaching 12 percent of the budget by
    2015 (versus 6 percent in 2001).
        Simply put, the Department and Congress must work together to agree
    on necessary changes to the TRICARE benefit to better manage the long-
    term cost structure of our program. Failure to do so will harm military
    health care and the overall capabilities of the DOD--outcomes we cannot
    afford.
    Budgeting for the Defense Health Program (DHP)
        The MHS utilizes a collaborative, disciplined process to develop
    the DHP budget. Throughout the process, the MHS analyzes and validates
    requirements identified for funding by the three Service Medical
    Departments and the TRICARE Management Activity (TMA). We balance
    resource priorities to achieve an integrated, effective budget that
    reflects senior leader guidance and allocates required resources to
    sustain operational readiness while continuing to provide high-quality,
    accessible health care. The following MHS committees review and make
    recommendations on issues pertaining to the development and execution
    of the DHP budget:

             The Resource Management Steering Committee, includes
            the senior resource managers for the Service Surgeons General
            and the TMA Private Sector Care Program.
             The Chief Financial Officer Integration Council,
            includes the Service Deputy Surgeons General and the TMA Deputy
            Director.
             The Senior Military Medical Advisory Council, includes
            the Service Surgeons General and the Assistant Secretary of
            Defense (Health Affairs), Deputy Assistant Secretaries of
            Defense within Health Affairs and the TMA Deputy Director.

        Issues that cannot be resolved within the MHS are addressed in the
    Department-wide Budget Review. A medical issue team is established and
    includes representation from DOD staff, as well as representatives from
    the Military Departments (medical and line), the Under Secretaries of
    Defense, and the Joint Staff. The team thoroughly evaluates all
    outstanding issues, develops alternatives, and provides recommendations
    for coordination within the Department. Final decisions are made by the
    Secretary of Defense and incorporated into the President's budget
    request.
        The DHP budget enacted by Congress is distributed to the Army,
    Navy, Air Force medical components and TMA. The Service Surgeons
    General approve the allocation of funding provided to the military
    treatment facilities and oversee the execution of the funds used during
    the fiscal year. In addition to the funding included in the President's
    Budget, unbudgeted requirements, such as global war on terrorism
    emergencies, such as Humanitarian Relief activities, are included in
    the DOD's request for supplemental funding for validated, essential
    requirements. During execution of the budget, we use resources that may
    become available to fund emerging, priority requirements, primarily in
    the in-house care system. Budgeting for health care benefits is an
    imprecise science--the 1 percent (previously 2 percent through fiscal
    year 2007) carryover authority authorized by Congress for the DHP has
    served as an invaluable tool to manage DHP resources appropriately
    within the enacted budget.
    Management
        The Department has initiated several management actions to use
    resources more effectively and help control the increasing costs of
    health care delivery. The MHS continues to implement a prospective-
    payment system in a phased, manageable way that provides incentives for
    local commanders to focus on outcomes, rather than on historical
    budgeting. We are confident this budgeting approach will ensure our
    hospitals and clinics continue to deliver high-quality, efficient
    health care to our patients within the military medical institutions.
        In addition, the MHS is instituting a new strategic plan that
    includes actionable metrics. Through this plan, the MHS is
    strengthening its commitment to military medical forces, to our war
    fighters, and to our Nation's security. The MHS strategic plan takes
    important steps toward consolidating administrative and management
    functions across the MHS, and it will strengthen joint decisionmaking
    authorities.
        With implementation of the base realignment and closure (BRAC)
    recommendations, the major medical centers in San Antonio and the
    national capital area will be consolidated. These BRAC actions afford
    us the opportunity to provide world-class medical facilities for the
    future while streamlining our health care system and creating a culture
    of best practices across the Services.
        Under the BRAC recommendations, we are also developing a medical
    education and training campus that will colocate medical basic and
    specialty enlisted training at Fort Sam Houston, TX. By bringing most
    medical enlisted training programs to Fort Sam Houston, we will reduce
    the overall technical-training infrastructure while strengthening the
    consistency and quality of training across the Services.
        In the meantime, we are doing everything possible to control our
    cost growth. We are executing our new TRICARE regional contracts more
    efficiently, and we are demanding greater efficiency within our own
    medical facilities. However, one area--pharmacy--is particularly
    noteworthy. Nearly 6.7 million beneficiaries use our pharmacy benefit,
    and in fiscal year 2007, our total pharmacy cost was more than $6.8
    billion. If we did nothing to control our pharmacy cost growth, we
    project pharmacy costs alone would reach $15 billion by 2015.
        To address this issue, we are taking every action for which we have
    authority: promoting our mandatory generic substitution policy, joint
    contracting with Veterans Affairs, promoting home-delivery, and making
    voluntary agreements with pharmaceutical manufacturers to lower costs.
    We also continue to effectively manage the DOD Uniform Formulary. We
    avoided approximately $450 million in drug costs in fiscal year 2006,
    and more than $900 million in drug costs in fiscal year 2007 due to key
    formulary-management changes and decisions.
        We have worked with industry experts to design and develop the
    government requirements for TRICARE's third generation of contracts (T-
    3). The Managed Care Support Contracts are TRICARE's largest and most
    complex purchased-care contracts. Others include the TRICARE Pharmacy
    Program (TPharm), the active duty Dental Contract, and the TRICARE
    Quality Monitoring Contract. Request for Proposals have either been, or
    will soon be, released for these contracts. Recent successful T-3
    awards include the TRICARE Retiree Dental Contract to Delta Dental of
    California, and the new TRICARE Dual Eligible Fiscal Intermediary
    Contract (TDEFIC) to Wisconsin Physicians Services, Inc.
        The three TRICARE Regional Directors are actively engaged in
    managing and monitoring regional health care with a dedicated staff of
    both military and civilian personnel. They are strengthening existing
    partnerships between the active duty components and the civilian
    provider community to help fulfill our mission responsibilities.
        The Balanced Scorecard has guided the MHS through the strategic
    planning process over the last 5 years and helped the MHS manage
    strategy at all levels of the organization. Using this strategic
    planning tool, the MHS is identifying the most critical mission
    activities, and then applying Lean Six Sigma methodology to create a
    data-driven, decision-making culture for process improvement. The
    Service Surgeons General have aggressively incorporated this
    methodology into their business operations, and we are already
    witnessing the fruits of this commitment to building better processes.
    We also have hired a nationally recognized expert in Lean Six Sigma to
    help facilitate integration of the National Capital Area and San
    Antonio under our BRAC work.
    Defense Mishap Reduction Initiative
        As a world-class military, we do not tolerate preventable mishaps
    and injuries. The direct cost of mishaps is more than $3 billion per
    year, with estimates of total costs up to $12 billion. We have
    rededicated ourselves to achieve a 75 percent accident-reduction goal
    and are aggressively working toward it. For example, the Marine Corps
    has reduced its civilian lost-day rate by 62 percent, and last fiscal
    year, the Air Force achieved the best aviation class ``A'' mishap rate
    in its history.
        To reach the next level in military and civilian injury reductions,
    safety is now a performance element under the new National Security
    Personnel System (NSPS) and in military evaluations. The Department is
    implementing Occupational Safety and Health Administration's Voluntary
    Protection Program (VPP) at more than 80 installations and sites. This
    program brings together management, unions, and employees to ensure
    safe working conditions. VPP and our other accountability programs have
    the highest visibility and support within the Department.
        We also technology can address many safety issues. Safety
    technologies include both systems and processes. For example, we are
    pursuing the Military Flight Operations Quality Assurance process to
    reduce aircraft flight mishaps. We are exploring the use of data
    recorders and roll-over warning systems as tools to help drivers avoid
    wheeled vehicle accidents. Our plan is for DOD components to include
    these and other appropriate safety technologies as a standard
    requirement in future acquisition programs.
    Taking Proper Care of the Wounded
        The Department is committed to providing the assistance and support
    required to meet the challenges that confront our severely injured and
    wounded servicemembers, and their families. The new Post-Deployment
    Health Assessment and PDHRA forms with the TBI screening questions and
    other improvements were officially published September 11, 2007.
        The Department is working on a number of additional measures to
    evaluate and treat servicemembers affected or possibly affected by TBI.
    In August 2006, we developed a clinical-practice guideline for the
    Services for the management of mild TBI in theater. We sent detailed
    guidance to Army and Marine Corps line medical personnel in the field
    to advise them on ways to look for signs and to treat TBI.
        The ``Clinical Guidance for Mild Traumatic Brain Injury (mTBI) in
    Non-Deployed Medical Activities,'' October 2007, included a standard
    Military Acute Concussion Evaluation (MACE) form for field personnel to
    assess and document TBI for the medical record. The tool guides the
    evaluator through a short series of standardized questions to obtain
    history, orientation (day, date, and time), immediate memory (repeat a
    list of words), neurological screening (altered level of consciousness,
    pupil asymmetry), concentration (repeat a list of numbers backwards),
    and delayed recall (repeat the list of words asked early in the
    evaluation). The evaluator calculates and documents a score, which
    guides the need for additional evaluation and follow-up. The MACE also
    may be repeated (different versions are available to preclude
    ``learning the test'') and scores may be recorded to track changes in
    cognitive functioning.
        U.S. Central Command (USCENTCOM) has mandated the use of clinical
    guidelines, which include use of the MACE screening tool, at all levels
    of care in theater, after a servicemember has a possible TBI-inducing
    event. Furthermore, Landstuhl Regional Medical Center is using MACE to
    screen all patients evacuated from the USCENTCOM area of responsibility
    with polytrauma injuries for co-morbid TBI. In addition, MACE is used
    in MTFs throughout the MHS.
        Each Service has programs to serve severely wounded from the war:
    the Army Wounded Warrior Program (AW2), the Navy Safe Harbor program,
    the Air Force Helping Airmen Recover Together (Palace HART) program,
    and the Marine4Life (M4L) Injured Support Program. DOD's Military
    Severely Injured Center augments the support provided by the Services.
    It reaches beyond the DOD to other agencies, to the nonprofit world and
    to corporate America. It serves as a fusion point for four Federal
    agencies--DOD, the VA, the Department of Homeland Security's
    Transportation Security Administration (TSA), and the Department of
    Labor.
        The Military Severely Injured Center unites Federal agencies
    through a common mission: to assist the severely injured and their
    families. The VA Office of Seamless Transition has a full-time liaison
    assigned to the Center to address VA benefits issues ranging from
    expediting claims, facilitating VA ratings, connecting servicemembers
    to local VA offices, and coordinating the transition between the
    military and the VA systems. The Recovery and Employment Assistance
    Lifelines (REALifelines) initiative is a joint project of the U.S.
    Department of Labor, the Bethesda Naval Medical Center, and the Walter
    Reed Army Medical Center. It creates a seamless, personalized
    assistance network to ensure that seriously wounded and injured
    servicemembers who cannot return to active duty are trained for
    rewarding new careers in the private sector. The Department of Labor
    has assigned three liaisons from its REALifelines program, which offers
    personalized employment assistance to injured servicemembers to find
    careers in the field and geographic area of their choice. REALifelines
    works closely with the VA's Vocational Rehabilitation program to ensure
    servicemembers have the skills, training, and education required to
    pursue their desired career field. The Department of Homeland
    Security's TSA has a transportation specialist assigned to the Center
    to facilitate travel of severely injured members and their families
    through our Nation's airports. The Center's TSA liaison coordinates
    with local airport TSA officials to ensure each member is assisted
    throughout the airport and given a facilitated (or private) security
    screening that takes into account the member's individual injuries.
        The Military Severely Injured Center has coordinated with more than
    40 non-profit organizations, all of which have a mission to assist
    injured servicemembers and their families. These non-profits offer
    assistance in a number of areas from financial to employment to
    transportation to goods and services. Many are national organizations,
    but some are local, serving service men and women in a specific region
    or at a specific military treatment facility.
        The American public's strong support for our troops shows
    especially in its willingness to help servicemembers who are severely
    injured in the war, and their families, as they transition from the
    hospital environment and return to civilian life. Heroes to Hometowns'
    focus is on reintegration back home, with networks established at the
    national and State levels to better identify the extraordinary needs of
    returning families before they return home. They work with local
    communities to coordinate government and non-government resources
    necessary for long-term success.
        The Department has partnered with the National Guard Bureau and the
    American Legion, and most recently the National Association of State
    Directors of Veterans Affairs, to tap into their national, State, and
    local support systems to provide essential links to government,
    corporate, and non-profit resources at all levels and to garner
    community support. Support has included help with paying the bills,
    adapting homes, finding jobs, arranging welcome home celebrations, help
    working through bureaucracy, holiday dinners, entertainment options,
    mentoring, and very importantly, hometown support.
        The ability of injured servicemembers to engage in recreational
    activities is an important component of recovery. We continue to work
    with the United States Paralympics Committee and other organizations so
    that our severely injured have opportunities to participate in adaptive
    sports programs, whether those are skiing, running, hiking, horseback
    riding, rafting, or kayaking. We are also mindful of the need to ensure
    installation Morale Welfare and Recreation (MWR) fitness and sports
    programs can accommodate the recreational needs of our severely injured
    servicemembers. At Congressional request, we are studying the current
    capabilities of MWR programs to provide access and accommodate eligible
    disabled personnel.
        Over the last year we have addressed important issues that deserved
    and received our immediate and focused attention. First and foremost,
    we are listening. We are actively surveying (by telephone, on the web,
    and in person) our wounded servicemembers and their families, and we
    are acting on the answers they provide. Our goal is to improve patient
    satisfaction, and these surveys let us know where we need to put
    resources to continuously improve. In addition to surveys, we encourage
    leadership to spend time with servicemembers and their families who are
    receiving long-term rehabilitative care. On February 14, we held our
    first webcast town-hall meeting on our new website www.health.mil to
    receive additional, anonymous feedback from the wounded, injured, ill
    and their families. We are taking all of this input back to DOD
    leadership--where we have clear leadership--as we develop and implement
    solutions.
        DOD and VA are working together through a Senior Oversight
    Committee (SOC), co-chaired by the Deputy Secretaries of each
    Department. It builds on the earlier and continuing word of the Joint
    executive Council. The SOC is developing implementation plans and
    future funding requirements for eight ``lines of action'' that address
    the disability system, case management, data sharing between the
    Departments, facilities requirements, personnel and pay support, as
    well as such wounded warrior health issues as TBI and psychological
    health. The recommendations and decisions from this group are being
    implemented now and will drive future funding requests for both
    Departments.
        We can best address the changing nature of inpatient and outpatient
    health care requirements, specifically the unique health needs of our
    wounded servicemembers and the needs of our population in this
    community through the planned consolidation of health services and
    facilities in the National Capital Region. The BRAC decision preserves
    a precious national asset, Walter Reed, by sustaining a high-quality,
    world-class military medical center with a robust graduate medical
    education program in the Nation's Capital. The plan is to open this
    facility by 2011. In the interim, we will sustain the current Walter
    Reed Army Medical Center (WRAMC) as the premier medical center it is.
    Process of Disability Determinations
        We know that both the servicemember and the Department expect:

             Full rehabilitation of the servicemember to the
            greatest degree medically possible
             A fair and consistent adjudication of disability
             A timely adjudication of disability requests--neither
            hurried nor slowed due to bureaucratic processes.

        We currently have a pilot program in place to improve the
    disability process and implement one system that is jointly
    administered by both DOD and VA. Our goal is to create a process that
    requires one exam and one rating, binding by both DOD and VA within
    current law. The new Disability Evaluation System pilot program, which
    began in late November, will provide smoother post-separation
    transition for veterans and their families--including medical
    treatment, evaluation, and delivery of compensation, benefits and
    entitlements.
    Process of Care Coordination
        The quality of medical care we deliver to our servicemembers is
    exceptional; independent review supports this assertion. Yet, we need
    to better attend to the process of coordinating delivery of services to
    members in long-term outpatient, residential rehabilitation.
        The Army's new Warrior Transition Brigade became operational at
    WRAMC on April 26, 2007. As of February 4, 2008, the 35 Warrior
    Transition Units throughout the Army had 9,774 wounded warriors
    assigned to them (this number includes Active and Reserve component
    members). Many of the Warrior Transition Unit cadres have volunteered
    for their assignments, and each officer or noncommissioned officer goes
    through an interview process before he or she is selected.
        Each wounded warrior is also assigned a primary care manager, a
    nurse case manager and a squad leader. They follow up with soldiers
    after they return to their units or transfer to the VA.
        The Federal Recovery Coordination program began in November 2007.
    The role of Federal Recovery Coordinators is to be the ultimate
    resource to oversee the development and implementation of services
    across the continuum of care from recovery through rehabilitation to
    reintegration, in coordination with relevant governmental, private, and
    non-profit programs.
    DOD-VA Collaboration.
        The 2008-2010 DOD-VA Joint Strategic Plan will improve the quality,
    efficiency, and effectiveness of the delivery of benefits and services
    to veterans, servicemembers, military retirees, and their families
    through an enhanced VA and DOD partnership. The plan incorporates
    concrete performance measures and strategies that link directly to the
    actions of the SOC, joint communications, improved case management,
    better information sharing, and collaborative training and continuing
    education for health care providers.
        We are committed to working with the VA on appropriate electronic
    health information exchanges to support our veterans. The Federal
    Health Information Exchange (FHIE) enables the transfer of protected
    electronic health information from DOD to the VA at the time of a
    servicemember's separation. We have transmitted messages to the FHIE
    data repository on more than 4.1 million retired or separated
    servicemembers.
        Building on the success of FHIE, we also send electronic pre- and
    post-deployment health assessment and PDHRA information to the VA. We
    began this monthly transmission of electronic pre- and post-deployment
    health assessment data to the FHIE data repository in September 2005,
    and the PDHRA in December 2005. As of January 2008, VA had access to
    more than 2 million pre- and post-deployment health assessments and
    post-deployment health re-assessment forms on more than 838,000
    separated servicemembers and demobilized National Guard and Reserve
    members who had been deployed.
        The Bidirectional Health Information Exchange (BHIE) enables real-
    time sharing of health data for patients being treated by DOD and VA.
    Access to BHIE data is available through AHLTA and through VistA, the
    VA's electronic health record, for patients treated by both
    departments.
        To increase the availability of clinical information on a shared
    patient population, VA and DOD have collaborated to further leverage
    the BHIE functionality to allow bidirectional access to inpatient
    documentation from DOD's Essentris System. In December 2007, we
    announced the enterprise-wide release of enhancements to the BHIE and
    the Clinical Data Repository/Health Data Repository (CHDR) interfaces.
    With these enhancements, DOD and VA are now able to view each other's
    clinical encounters, procedures, and problems lists on shared patients
    using the BHIE. This adds to the pharmacy, allergy, microbiology,
    chemistry/hematology data, and radiology reports we made available
    previously.
        Additionally, DOD and VA providers may now view theater data
    (including inpatient data) from the Theater Medical Data Store (TMDS).
    OD providers no longer have to log out of AHLTA and into another
    application to see it.
        To support our most severely wounded and injured servicemembers
    transferring to VA Polytrauma Centers for care, DOD continues to send
    radiology images and scanned paper medical records electronically to
    the VA Polytrauma Centers.
        We have worked closely with our partners in the VA, in our shared
    commitment to provide our servicemembers a seamless transition from the
    MHS to the VA. DOD implemented a policy entitled ``Expediting Veterans
    Benefits to Members with Serious Injuries and Illness,'' which provides
    guidance for collecting and transmitting critical data elements for
    servicemembers involved in a medical or physical evaluation board. DOD
    began electronically transmitting pertinent data to the VA in October
    2005 and continues to provide monthly updates, allowing the VA to
    better project future workload and resource needs.
        We have provided information for more than 28,000 servicemembers
    while they were still on active duty, allowing the VA to better project
    future workload and resource needs. When the VA receives these data
    directly from DOD before servicemembers separate, it helps to reduce
    potential delays in developing a benefits claim. This process ensures
    that the VA has all the relevant information to decide claims for
    benefits and services in a timely manner.
        We are committed to discharging well the joint responsibilities of
    the DOD and VA. The VA/DOD Joint Executive Council, that I co-chair
    with DVA Deputy Secretary Gordon Mansfield, provides guidance and
    policy for our collaborative efforts. Much has been accomplished, but
    much remains to be done.
                       military community & family policy
        The Department has long-recognized that families also serve. Since
    the beginning of the AVF in the 1970s, the Department forged programs
    to meet the needs of young military families.
        As the American standard of living has changed, military programs
    and policies have been updated to match improvements and cultural
    changes going on in the Nation as a whole. In 2002, we published the
    first DOD Social Compact, recognizing the three-way relationship among
    the servicemember, the family, and the Department.
        In the President's State of the Union Address this January, he
    addressed the sacrifices military families make for America. He
    acknowledged the responsibility of the Nation to provide for our
    military families, and asked that Congress support military families'
    need for more child care for well deserved educational opportunities,
    and for support to spousal careers.
    Child care
        We have a robust child care program in DOD and our child
    development services continue to be a national model. Yet, we still
    have unmet demand for thousands of children. The President directed the
    Department to build more centers and provide more care.
        To increase the availability of child care, the Department proposes
    to accelerate the child development center construction program and to
    increase public-private ventures with nationally recognized
    organizations. Our plan would result in an additional 58,000 child care
    spaces.
    Spousal careers and education
        Our survey of active duty military spouses in 2006 not only
    confirmed that the vast majority of military spouses want to work (over
    77 percent), but that they want a career--a portable career. An
    overwhelming 87 percent of military spouses would like to further their
    education, but the cost of education is their primary reason for not
    enrolling in school or training.
        In an effort to meet the educational needs of military spouses, the
    Department partnered with the Department of Labor to make Career
    Advancement Accounts available to military spouses at 18 installations
    as a pilot program. These accounts enable spouses to pursue college or
    technical training and credentials or licenses to advance them into
    high-demand occupations in health services, education, information
    technology, financial services or trades (e.g., electrician, plumber).
    Spouses will be able to obtain recertification or licensure training as
    they move from State to State. Congressional authority to include
    spouses in a nationwide program is required for fiscal year 2009
    implementation.
        The President also proposed that a servicemember's unused
    Montgomery GI Bill benefits be made transferable to the spouse or
    dependent children. This will provide further support to our military
    families in an area of great concern to them. While the Department
    enjoys limited existing authority to offer such transferability in
    critical skills in return for an extension of service, we anticipate
    soon forwarding proposed legislative language that would grant broader
    authority to carry out the President's initiative.
    Family support of the National Guard and Reserves
        Reaching the geographically dispersed families of the National
    Guard and Reserves has always been a challenge. In response to
    Congressional direction, we established the Joint Guard and Reserve
    Family Assistance Program in 15 States. Partnering with the Red Cross,
    this program facilitates a Federal, State, and local team that can
    offer benefits and transition assistance throughout each of the
    participating States.
    Morale, Welfare, and Recreation (MWR)
        Recognizing that participation in recreation, fitness, sports,
    cultural arts programs are key to active living which leads to improved
    personal health and well-being and helps build strong families and
    healthy communities, the Department plans to explore ways to expand the
    military MWR benefit to those who do not have access to installation
    MWR programs. This will include pursuing national partnerships to
    provide discounts for fitness and other recreation programs. We are
    working with many non-profit organizations that provide recreation
    opportunities and also the National Recreation and Park Association to
    partner with State and local community parks, recreation and library
    departments to enlist their support in meeting the needs of our
    military personnel, particularly the National Guard and Reserve
    members.
        An additional component of family well-being is the ability to stay
    in touch. Military spouses indicate that being able to communicate with
    their servicemember is a primary factor in being able to cope with
    deployments. Affordable phone rates ease the burden of deployment and
    we've been aggressively working to reduce phone rates. We've provided
    access to computers and Internet service in our family support centers,
    recreation centers, installation libraries, and youth centers to help
    families stay connected.
        Servicemembers have free access to the military internet by using
    their military e-mail address, including aboard ships. They also have
    free internet access at 610 MWR-operated internet cafes in Iraq and 43
    MWR-operated internet cafes in Afghanistan--an increase of 478 cafes
    over the last year. MWR Internet cafes offer voice over internet
    protocol phone service at less than $.04 per minute.
        The Exchanges also provide unofficial telephone service at low
    international rates for both land and sea based deployed members. The
    Army and Air Force Exchange Service operates 73 call centers with 1,664
    telephones in Iraq, Afghanistan, and Kuwait. The Navy Exchange Service
    Command (NEXCOM) supports most ships in theater with 1, 10, or 20
    telephone lines depending on the size of the ship.
    Military OneSource (1-800-342-9647 and www.militaryonesource.com)
        Launched in 2002, Military OneSource provides support services 24/7
    for our troops and their families. Military OneSource is one of the
    Department's resounding successes, proven especially useful during
    Hurricane Katrina. Military OneSource offers free, convenient access to
    confidential resource and referral support for servicemembers and their
    families. When a Service or family member calls or emails, a master's
    level consultant provides assistance. Military OneSource is especially
    beneficial to those geographically separated from installation services
    or those who are unable to seek assistance during traditional working
    hours.
    MilitaryHOMEFRONT Web portal (www.militaryhomefront.DOD.mil)
        This portal is the Department's ``Google'' for quality of life
    information. As a sister site to Military OneSource, the HOMEFRONT
    provides the library of DOD information on quality of life issues,
    useful to installation staff and policymakers. In fiscal year 2007
    there were over 1.7 million visits to the site.
        To help our servicemembers and their families plan smooth
    relocations, usually every 3 years, to their next duty locations, we
    have developed a new online tool called Plan My Move. Plan My Move
    provides a fully customizable calendar and 'to do' list that links
    individual moving tasks with related installation information and
    points of contact.
        A second new tool is MilitaryINSTALLATIONS. From any page on the
    MilitaryHOMEFRONT users can access information about military
    installations throughout the world. MilitaryINSTALLATIONS includes
    specifics about 23 different topics of interest on each installation
    (such as child care, check in procedures or housing).
        In the past 2 months, MilitaryHOMEFRONT, in coordination with the
    Joint Guard and Reserve Family Support Assistance Program, has
    introduced MySTATE (www.mystate.mhf.DOD.mil), a powerful new tool
    providing State and local servicemembers and their families across the
    Nation with access to various organizations and businesses that offer
    special discounts and services specifically for military personnel and
    their families. MySTATE includes State directories, locations of
    programs and services, maps, directions, and much more. It also gives
    users the opportunity to provide feedback on the organizations or
    businesses listed.
        Another important communication tool is the military spouse career
    network Web portal, www.military.com/spouse. Spouses can use this site
    to search for employment opportunities at their new installation. Over
    400 spouse-friendly employers are actively recruiting military spouses
    for their vacant positions; these organizations can post jobs at no
    cost and can search this exclusive database for military spouse
    candidates. Since this site was opened in 2005, there have been 3.6
    million spouses who have visited the site, and over 7.2 million job
    searches have been conducted. Over 36,000 spouses have posted resumes.
    Financial Readiness Campaign
        We aggressively promote a culture within the military that values
    financial competency and responsible financial behavior. The eight
    ``pillars'' of the Campaign represent the personal financial readiness
    objectives for military personnel. Mission success will be determined
    by all servicemembers and their families meeting each pillar's
    objective. The pillars are:

             To protect valuable security clearances by resolving
            financial issues early
             To establish, maintain, and protect good credit
             To develop financial stability by living within one's
            means
             To establish routine savings
             To participate in military benefit programs such as
            the Thrift Savings Plan and the Savings Deposit Program
             To maintain enrollment in Servicemember's Group Life
            Insurance
             To utilize legitimate, low-percentage alternative loan
            products and avoid predatory lenders
             To take advantage of military MWR Programs as a
            healthful option to spending money

        From February 24 to March 3, 2007, the Department held its first
    ``Military Saves'' Week Campaign, a social marketing campaign to
    encourage military members and their families to start a savings plan
    and to ``Build Wealth, Not Debt.'' The Military Services each engaged
    with this first Military Saves Week and had over 50 on-installation
    credit unions and banks participating, nearly 1 million public affairs
    items sponsored, almost 80,000 saving events/actions held, and 8,500
    new ``Military Savers'' enrolled. Defense Credit Unions reported nearly
    a 10-fold increase in the number of special certificates opened during
    this week thanks to savings account incentive programs and a nearly 5-
    fold increase in deposits. This year's Military Saves Week will take
    place February 24 to March 2, 2008, and we are expecting even greater
    success at enrolling servicemembers and their families to become part
    of what the Campaign calls the ``Military Savings Community.''
        Military OneSource now features telephonic financial counseling to
    augment those programs provided by the Services. At the request of
    National Guard and Reserve units, the Department dispatched Military
    Family Life Consultants with financial readiness specialties to attend
    special events such as drill weekends and reunion ceremonies to meet
    with Guard and Reserve members and families and provide education on
    many aspects of financial readiness.
    TURBO TAP
        The key to a successful transition is understanding military
    benefits earned during service in the military. The TURBO TAP web
    portal is a joint initiative between the DOD, the Department of Labor,
    and the VA and allows each servicemember to obtain a lifelong account
    to connect them to veteran benefits' information. This portal was
    launched in 2007. The key partners in the TurboTAP effort are currently
    assisting DOD in expanding and promoting the new TurboTAP.org website
    and online Individual Transition Plan Accounts system which link
    servicemembers to transition assistance services and benefits, many of
    which have significant cash value. Examples include the Montgomery GI
    Bill, the Thrift Savings Plan and the Savings Deposit Program.
        In the fall, DOD TurboTAP Mobile Training Teams began training the
    National Guard and Reserves. This highly specialized outreach team
    travels to State level deployment support and reintegration programs at
    the request of National Guard and Reserve component leaders to connect
    servicemembers to the benefits they have earned through military
    service. The TurboTAP Mobile Training Team provides information about
    transition assistance, service-related benefits, and related on-demand
    counseling services. By the end of 2009, it is our goal to have
    TurboTAP fully integrated into deployment support, transition
    assistance and financial awareness programs in all 50 States.
    Predatory Lending Regulation
        On October 1, 2007, the congressionally-mandated Predatory Lending
    Regulation went into effect, capping the annual percentage rate on
    three specific types of loans to 36 percent, these include payday
    loans, vehicle title loans, and tax refund anticipation loans. I thank
    Congress for its support of this critical piece of legislation; it is
    already showing positive results in protecting our servicemembers and
    families from unscrupulous practices within the fringe banking
    industries. Feedback from the field indicates that lenders are
    refraining from offering these loans to servicemembers and their
    families. State regulators have said that their examinations of payday
    stores have shown general compliance. A few lenders have developed
    products that comply with the restrictions in the regulations and we
    have heard of only one lender modifying a payday loan product in an
    attempt to evade these restrictions. The trade group representing
    military banks reported that one major member has seen a significant
    increase in the use of alternative loan products by servicemembers and
    their families.
        Since the implementation of the regulation, the Department has
    continued to work with the Federal regulators on interpretations and
    answers to questions. Additionally, the Department is developing
    relationships with State regulators. In November, we sent letters to
    Governors expressing the Department's interest in working together to
    ensure the protections afforded to servicemembers and their families
    are enforced. Our initial review of States indicates at least 28 are
    committed to working with the Department on the oversight and
    enforcement issue.
    The Department of Defense Education Activity (DODEA)
        DODEA has provided military students with an exemplary education
    for over 60 years. It recently received expanded authority to create
    educational partnerships with local education agencies that educate
    military students to complement the work of the National Governors
    Association. The ongoing relocation of thousands of military students
    through BRAC, global rebasing, and other force structure changes, has
    created an urgent need and obligation to partner with military-
    connected communities to ensure the best possible educational
    opportunities for students. On October 1, 2007, DODEA launched the
    Educational Partnership Directorate (EPD) to fulfill this mission.
        There are many facets to improving the education of school-age
    military students. From the strictly education perspective, EPD will
    develop partnerships with schools and districts to focus on educational
    best practices and to provide online/alternative learning opportunities
    for students worldwide. From the transition support perspective, EPD
    will facilitate agreements at the local, State, and Federal levels to
    reduce the many transition and deployment issues that military students
    face. Other facets of EPD's mission and strategy are to:

             Gather, disseminate, and promote research-based
            educational best practices
             Manage the MilitaryStudent Web site, the primary
            vehicle for communication to parents, students, service
            representatives, and local schools
             Support and influence foreign language education, to
            include strategic languages, in partner schools and districts
             Establish a virtual school district for military
            students that can be accessed by school districts nationwide
            and homeschoolers worldwide
             Provide information to parents and commands about
            school choice, including information and, upon request,
            assistance in establishing charter schools
             Marshall resources to meet the unique educational and
            transition needs of military-connected schools and districts
             Administer the DOD Supplement to Impact Aid to
            eligible schools nationwide

        The Department has also recognized that some of the key issues
    important to the quality of life of servicemembers and families require
    more than individual State effort. For example, school transition
    issues that impact military children, such as differing enrollment,
    placement and graduation rules, require interstate cooperation.
    Consequently, the Department sought out the assistance of the Council
    of State Governments (CSG), which among other services, works with
    State governments on issues that are inherently the responsibility of
    the State, but require an interstate effort. CSG has developed an
    interstate compact, with the assistance of a variety of national and
    State-based education stakeholders, which will resolve many of these
    transition issues confronting military children. The interstate compact
    is now being reviewed by States for consideration during their 2008
    legislative sessions. At last count, 24 States were actively
    considering the compact and 15 State legislatures have bills under
    review. We are working with States to have a minimum of 10 adopt the
    compact, at which time the compact will be enforceable.
        State assistance to accommodate the transient nature of military
    life is equally impressive. A total of 48 States are supporting the
    educational needs of active duty service families by extending in-State
    tuition rates while the family resides within the State regardless of
    residency, and 34 of these States continue that coverage for family
    members after the servicemember has reassigned out of the State, as
    long as the family member stays enrolled in a State institution of
    higher learning. As another example, 21 States now provide a departing
    spouse unemployment compensation as a result making a military move--an
    increase of 11 States since 2004.
    Sexual Assault Prevention
        In 2004, I was directed to review the Department's sexual assault
    prevention and response policies and programs. As a result, we quickly
    assembled the Care for Victims of Sexual Assault Task Force and charged
    it with recommending changes that would enhance the quality of care and
    support for victims. The Sexual Assault Prevention and Response Joint
    Task Force followed and focused victim care, prevention, improved
    reporting, and accountability for offenders. Both Task Forces published
    a report with a series of recommendations and findings. We have acted
    on these recommendations. One of the major recommendations focused on
    the Department's need for a single point of accountability regarding
    sexual assault policy. In 2005, we established the Sexual Assault
    Prevention and Response Office, and institutionalized a research-based
    policy supported by three pillars: care and treatment for victims,
    prevention through training and education, and system accountability.
        This new policy revolutionized the Department's sexual assault
    response structure and established programs that are quickly becoming
    the benchmark for America. At the heart of the policy is a reporting
    system that respects the privacy and needs of the victim. One of the
    greatest challenges in responding to sexual assault is motivating
    victims to report the crime and get much needed medical and
    psychological care. National studies indicate that as many as 8 out of
    10 sexual assaults go unreported in the civilian sector--largely
    because victims are fearful of the life-changing consequences and loss
    of privacy that often come with a public allegation. Consequently, we
    introduced a reporting system that allows victims to make a choice
    about how they report the crime of sexual assault. Our policy
    encourages victims to make an Unrestricted Report--that is a report to
    military law enforcement and command--that allows the Department to
    investigate and hold perpetrators accountable. However, should victims
    feel unready to participate in the military justice system, they may
    choose to make a Restricted Report. This option enables victims to
    receive medical care, mental health care, and other support services
    without initiating a criminal investigation or alerting their command
    structure. This flexible reporting system is designed to respect the
    needs of victims and encourage them to get care quickly. Experts in
    this area inform us that quicker entry into care often translates into
    a healthier recovery and improved coping by victims.
        Our policy also created a new and unique framework for an expanded
    and comprehensive response system. We now have 24/7 support network at
    all military installations and for deployed units worldwide. Sexual
    Assault Response Coordinators and Victim Advocates are now available to
    provide consultation and support so that our military members
    understand their options and get the care and support they need. We
    believe the response structure we have now institutionalized will
    continue to instill trust and confidence in servicemembers who are
    victims of sexual assault and spur them to come forward for assistance.
        Responding to these horrible crimes is only half the battle.
    Clearly, we owe it to our people to eradicate sexual assault from
    military service. Toward this goal, the Department implemented an
    aggressive and wide-reaching education program in 2006. Mandatory
    training about sexual assault and its prevention is now required at
    every rank and in all professional military education programs. In
    addition, Sexual Assault Prevention and Response Office (SAPRO)
    conducted a worldwide Sexual Assault Response Coordinator Conference in
    June 2006, training more than 350 professional from installations
    worldwide. The military Services have also expanded their training
    programs to adapt training curricula to their unique needs, providing
    prevention training to over 1 million Active Duty and Reserve
    servicemembers.
        We have only just begun our efforts to prevent sexual assault.
    SAPRO is currently developing a strategic plan to guide the military
    Services' efforts to stop this crime before it happens. Again, we are
    tapping the experts in this field to guide our path. Last July, SAPRO
    partnered with the National Sexual Violence Resource Center to convene
    a Prevention Summit with leading military and civilian advocacy
    experts. As a result of this summit, SAPRO is continuing to work with
    the Services and the national experts to develop a prevention policy
    that fosters a research based, measurable, and effective approach to
    stopping this crime. The expert consensus is that bystander
    intervention should be a major focus on our efforts. We have discovered
    that by teaching people how and when to act, we may be able to turn
    bystanders into actors. This bystander intervention approach, augmented
    by a powerful social messaging campaign, holds great promise. No sexual
    assault prevention effort has ever occurred on such a widespread level.
    We hope to provide a benchmark for the Nation.
        Our aggressive training and outreach program, coupled with the new
    reporting option, has sent an unmistakable message: The Department
    cares about its active duty servicemembers. I believe our
    servicemembers are hearing us. After 2 full years of the new policy
    being in effect, we are seeing victims making both Restricted and
    Unrestricted reports and entering care. While we are saddened when even
    one sexual assault occurs, we see members use of the Restricted Report
    process as a very positive indicator of confidence in the program. We
    believe that these military members would never have sought this
    service had they not had the ability to select how and when to engage
    our support system.
    What is the future of Family Support?
        Along with the common stressors of daily living, there are
    stressors unique to military service--and the global war on terrorism
    places new demands on every aspect of military life. From the anxieties
    of nation building in hostile environments to the significant number
    and length of family separations, the stress currently affecting the
    military has not been of this magnitude since the inception of the AVF.
        The Department has made family support a priority and redesigned
    and boosted family support in a number of ways to recognize the crucial
    role families play in supporting servicemembers deployed worldwide.
    While outstanding support is provided through installation family
    centers, family and spousal support groups, and family assistance
    centers, we know more needs to be done. Looking to the future:

             We must address how the Department defines ``family''
             We must build programs and resources to deliver family
            support to meet wartime levels of engagement to recognize the
            sacrifices families endure
             We must provide equitable family support programs and
            services for Reserve component families
             We must reach out to the community to augment support
            programs to meet the needs of the military who live off the
            installation and Reserve component families
             We must resource joint family programs to meet the
            needs of the total population to be served, regardless of
            Service and component
             We must provide high quality support programs that
            servicemembers and their families can expect to receive,
            regardless of their location
             We must address the needs of special interest groups:

                     Severely injured servicemembers and their
                    families
                     Family members of the deceased
                     Family members with special needs
                     Family members with incarcerated
                    servicemembers
                     Extended family members who care for children
                    of deployed single and dual military parents
                     Individual Augmentees, AGRs, IRRs, ROTC

             We must develop effective partnerships with Federal,
            national, State, local, and private agencies to meet the needs
            of military members and their families regardless of where they
            reside
             We must synergize our efforts to build systems instead
            of silos. Our work will not be effective if it is done in a
            vacuum--it requires integration, collaboration and
            communication with all helping professionals--including a
            partnership with our clinical colleagues
             We must leverage technology to meet the communication
            needs of the ``digital generation''
                             readiness and training
    Improving Readiness Assessment and Reporting
        Since 2000, the Department has fundamentally changed the way we
    view and assess readiness. We have come from an inflexible, Cold War
    approach which was based on the prescribed resources assigned to a
    unit. Our old view of readiness was a static analysis with known
    adversaries based on plans that changed little over the years. We
    assessed ourselves as ready against a stationery target.
        Today, we have, for the first time, given the Department the
    ability to answer the question, ``Ready for what?'' We have worked with
    the Services, Joint Staff, Combatant Commands, and Combat Support
    Agencies to address the bureaucratic intransigence and opposition to
    reform cited by Congress to bring about a new readiness reporting
    system. Combatant Commanders now have a view of their resources and
    capabilities for assigned missions which did not exist before. Because
    the new Defense Readiness Reporting System (DRRS) allows the user to
    ``drill down'' to root causes impacting the ability to perform
    missions, it enjoys the support of commanders and the leadership of the
    joint community. DRRS is a major transformation, moving the focus of
    force managers from reporting and assessing unit resources to managing
    force capabilities. We continue to expand the concept of this readiness
    system through our work with the Department of Homeland Security to
    develop the National Preparedness System. This system will provide
    increased situational awareness and assist the Department to integrate
    and coordinate our response to domestic crisis. Development and
    implementation of DRRS will continue through 2009.
    Joint Training--The Engine of Force Transformation
        The senior leadership of the department concluded just prior to
    September 11, in the QDR, that while the military departments had
    established operationally proven processes and standards, it was clear
    that further advances in joint training and education were urgently
    needed to prepare for complex multinational and interagency operations
    in the future. Our ability to successfully defend our Nation's
    interests relies heavily upon the Department's Total Force--its Active
    and Reserve military components, its civil servants, and its
    contractors--for its warfighting capability and capacity. The Total
    Force must be trained and educated to adapt to different joint
    operating environments, develop new skills and rebalance its
    capabilities and people if it is to remain prepared for the new
    challenges of an uncertain future. Our forces must be capable of
    adapting to rapidly changing situations, ill-defined threats, and a
    growing need to operate across a broad spectrum of asymmetric missions,
    to also include stability and support operations and disaster response.
        Since September 11 we have transformed DOD training (T2) to meet
    the national security needs of the 21st century. With your
    encouragement and direction we expanded the heretofore successful open,
    collaborative, transparent and incentivized business process to include
    a wider array of joint training programs through the Department-wide
    Combatant Commander Exercise and Engagement Training Transformation
    initiative. We created three new joint training capabilities: Joint
    Knowledge Development and Distribution Capability (JKKDC--joint
    training and education for individuals), Joint National Training
    Capability (JNTC--joint unit and staff training), and Joint Assessment
    and Enabling Capability (JAEC--metrics development and assessments to
    answer the question are we truly transforming training). Collectively
    these joint capabilities have created a globally distributed and
    persistent ability to distribute and access knowledge, reach back for
    subject matter expertise, and immerse units, staffs and individuals in
    to a live-virtual-constructive training environment that replicates the
    rigor and reality of real-world operations with ground truth, realism,
    a dedicated opponent and feedback prior to deployment.
        Today the focus of joint training is on the deploying joint force
    prior to deployment with robust mission rehearsals. Our goal is to
    ensure that no member of the deployed joint force will experience a
    joint task for the first time in combat. Lessons learned are garnered
    on a weekly basis with operational forward deployed commands sharing
    real-time subjects with stateside training counterparts at Service
    training centers and schoolhouses. Mission rehearsal exercises now
    routinely integrate Afghan, Iraqi, and coalition partner personnel as
    participants, mentors, and advisors. Cultural and language concerns and
    matters receive prominent consideration through role-playing.
    Intergovernmental and nongovernmental and international organizations
    and personnel are habitually included in mission rehearsals.
        Ten years ago the DOD had not harnessed the power of individual
    learning technologies. In great part this was due to the plethora of
    proprietary software or computing systems that did not allow the
    exchange of courseware in an interoperable manner. Another Service
    could not discover learning content developed by one Service for
    repurpose and reuse for its own needs. In effect, this lack of
    capability created an inefficient, duplicative, and costly development
    cycle for learning content and courseware while precluding its global
    exchange.
        Since 2001, in collaboration with academia and industry we have
    made great strides in expanding the Department's Advanced Distributed
    Learning (ADL) Initiative and the ADL Co-Laboratory System. The vision
    remains constant--to provide access to the highest quality education
    and training, tailored to individual needs, delivered cost effectively,
    anywhere and anytime.
        The ADL Initiative is recognized across the Department and Federal
    agencies for having developed the standards and guidelines that define,
    and are being used to develop, the technology-based global digital
    learning environment. ADL is a global movement, for example, in use by
    NATO, Partnership for Peace countries, the United Kingdom, Korea,
    Singapore, Norway, numerous Federal agencies, and industry leaders such
    as Boeing, Chrysler, and FedEx/Kinko. ADL is the technology enabler of
    JKDDC. Available courses anywhere and anytime to members of the Armed
    Forces, interagency or international partners and to the general public
    grew from zero available courses to over 157 course to include, for
    example, Joint Antiterrorism Course, Global Command and Control System,
    Interagency Coordination, Contractors on the Battlefield, Pre-
    Deployment Cultural Awareness--Afghanistan, and Combating Trafficking
    in Persons.
        We owe a debt of gratitude to Congress for enacting legislation
    providing authority for the DOD to distribute to certain foreign
    military personnel education and training materials and information
    technology to enhance military interoperability with our allies and
    partners. I ask that Congress support the administration's proposed
    Building Global Partnerships Act. I ask that Congress extend to
    permanent authority section 1207 of the NDAA for Fiscal Year 2007.
        Another achievement is the designation of training as a Selective
    Key Performance Parameter in Defense systems acquisitions there by
    strengthening the process of training our service men and women in the
    proper employment of new equipment in task performance, and educating
    commanders in the proper doctrinal application of the equipment in
    operations and combat.
    Range Sustainment--Training
        Over the last 10 years our existing training infrastructure, bases
    and ranges, have come under increasing pressure. Continued and assured
    access to high-quality test and training ranges and operating areas
    plays a critically important role in sustaining force readiness.
    However, the Department finds itself in growing competition with a
    broad range of interests for a diminishing supply of land, air and sea
    space and frequency spectrum that we use to test and train effectively.
    Exacerbating the encroachment challenge, the demands of the military
    mission are also very dynamic. The increased complexity and integration
    of training opportunities necessary to satisfy joint mission
    requirements, combined with the increasing testing and training
    battlespace needs of new weapons systems, evolving tactics and end-
    strength growth associated with force transformation, point to a
    military need for more, rather than less, range and operating area
    space. The confluence of these competing trends demonstrates a
    continuing challenge to preserving test and training flexibility and
    military readiness. Successful range sustainment clearly requires a
    comprehensive and continuing response.
        Since 2001, the Department's Range Sustainment Integrated Product
    Team has actively worked to mitigate encroachment impacts on readiness
    and coordinated OSD and Service efforts to ensure the long-term
    sustainability of military readiness and the resources entrusted to our
    care. Congressional action on selected DOD legislative clarifications,
    in conjunction with DOD policy and comprehensive planning initiatives,
    have provided increased mission flexibility, and at the same time have
    enabled improved environment management on DOD lands. The Department is
    increasing working beyond our fence lines to engage with local, State,
    regional, and national stakeholders to address shared interests and
    build effective partnerships both enhancing the environment and
    advancing range sustainment and the military mission.
                          civilian personnel policies
    Human Capital Planning
        The Department civilian strategic human capital planning focuses
    human capital investments on long-term issues. Guiding principles are
    continually reviewed and refreshed in the Department's Human Capital
    Strategic Plan (HCSP). Our 2006-2011 HCSP recognizes the need to
    refocus civilian force capabilities for the future--a civilian
    workforce with the attributes and capabilities to perform seamlessly in
    an environment of uncertainty and surprise, execute with a wartime
    sense of urgency, create tailored solutions to multiple complex
    challenges, build partnerships, shape choices, and plan rapidly.
        Our HCSP is based upon the 2006 QDR and the 2006 NDAA, and calls
    for an updated, integrated human capital strategy for the development
    of talent that is more consistent with 21st century demands. The QDR
    and the Secretary's leadership and transformation requirements called
    for a human capital strategy that is competency-focused, performance
    based, and links compensation and rewards to individual employee
    performance. Our human capital strategy aims to ensure DOD has the
    right people, doing the right jobs, at the right time and place, and at
    the best value. The HCSP is delineated by a DOD enterprise-wide set of
    human resources goals and objectives that focus on leadership and
    knowledge management, workforce capabilities, and a mission-focused,
    results-oriented, high-performing, diverse workforce. These goals and
    objectives incorporate a competency-based occupational system, a
    performance-based management system, and enhanced opportunities for
    personal and professional growth. The Department's Civilian Human
    Capital Strategic Plan has four goals, which are helping to produce and
    maintain a future civilian workforce that is decisive, agile, and
    integrated with the total force and is capable of supporting the
    warfighter in carrying out DOD's mission.
        The Department's approach to workforce planning, a continuous
    process that ensures the right number of people in the right jobs at
    the right time, has become more deliberate and systematic with the
    publication of QDR 2006. I want to be clear on this point--the
    Department conducts workforce planning on both the military side and
    civilian side. However, on the civilian side, workforce planning has
    been done by each individual component. The Department developed a new
    model for workforce planning that will provide both DOD-level workforce
    planning and component level workforce planning based upon the
    requirements of QDR 2006.
        Now, I would provide some specifics about our new workforce
    planning efforts. QDR 2006 set the mission direction for reshaping the
    Defense enterprise for the 21st century, and required the new human
    capital strategy to be ``competency-focused'' and ``performance-
    based.'' \1\ This section of my statement will discuss the Department's
    efforts to reorient its workforce planning to a ``competency-focused''
    approach. Later sections will describe the Department's ``performance-
    based'' workforce planning approach.
    ---------------------------------------------------------------------------
        \1\ Quadrennial Defense Review Report, ``Developing a 21st Century
    Total Force,'' 2006, page 80.
    ---------------------------------------------------------------------------
        Recognizing that each DOD component has a discrete mission with
    unique occupational series and occupational emphasis, the Department's
    strategy provides an overarching framework for the components to plan,
    identify and assess workforce requirements and to integrate their own
    workforce requirements. The strategy also provides for a set of core or
    common workforce planning requirements which will provide new
    foundational competencies for the civilian workforce, such as knowledge
    of joint matters, and enhance any component mission. It is the
    combination of DOD and component workforce planning that will provide
    the Department with important information about its talent needs in the
    21st century.
        The workforce planning strategy consists of the following elements
    which cascade from the Department-level to the component level:

              Phase 1: Setting the Direction: Uses the QDR 2006, the CHSP,
            and other component goals and objectives to identify the
            mission requirements for the next 5 years and beyond.
              Phase 2: Identifying the core competencies for DOD Mission
            Critical Occupations. Uses surveys, focus groups, research,
            etc., to validate the essential workforce knowledge, skills,
            abilities, and behaviors required in the updated mission
            critical occupations.
              Phase 3: Assessing the workforce talent against the Core DOD
            Mission Critical Competencies. Uses a gap analysis process to
            compare the current and desired state of workforce talent
              Phase 4: Implement the Strategy across the employment
            lifecycle. Uses enterprise tools to bring the workforce plan to
            life and defines the measures/milestones to deliver the
            information, trains and equips the workforces, recruits and
            retains a workforce.
              Phase 5: Monitor, Evaluate, and Adjust. Uses performance
            measurement for ongoing evaluation and adjustments.

        We are also working diligently to create and institutionalize a
    comprehensive competency management framework that can be used across
    the enterprise. To that end, we have established a multi-faceted
    component work group to develop common competency taxonomies, job
    analysis methodologies, workforce planning strategies and tools,
    competency gap assessment methodologies and common reporting
    requirements. Our goal is to have a number of these deliverables
    completed by the end of fiscal year 2008, with the remaining completed
    during fiscal year 2009.
        While this strategic work of building an enterprise-wide competency
    approach evolves, the Department, and its components and Defense
    Agencies are addressing immediate competency requirements for those
    occupations which will be the key to meeting future mission
    requirements. Thus far, enterprise-wide competency/skill gap
    assessments have been conducted on the following occupations: human
    resources; information technology; civil engineers; pharmacists;
    logistics; and contracts. Additionally, the Department of the Army has
    completed a full competency gap assessment for 75 of its occupations,
    starting with its mission critical occupations, and plans on the
    completion of a full competency gap assessment for 157 of its
    occupations by the end of fiscal year 2008.
        The Department of the Navy (DON) is approaching its competency gap
    assessment initiative from a total force perspective. Under the
    leadership of the Assistant Secretary of the Navy (Manpower & Reserve
    Affairs), the DON is embarking on an aggressive, comprehensive approach
    that will identify key competencies for critical positions, along with
    career roadmaps for competency development for those competencies for
    which gaps have been identified. The Air Force is also conducting
    competency gap analyses for both those competencies which are
    institutional, i.e., behavioral competencies that should be present
    across the enterprise, and those that are technical or functional for
    their mission critical occupations. Similarly, the Defense Agencies are
    also conducting competency gap analyses for their mission critical
    occupations, as is evidenced by the efforts of the DFAS, the Defense
    Information Systems Agency, and the Defense Logistics Agency.
        With the development of an enterprise approach to competency
    management underway and the conduct of competency assessments ongoing,
    the Department is now embarking on how best to forecast its future
    workforce needs. We have formed a work group of component subject
    matter experts to develop a Department approach to workload/workforce
    projections and succession planning, and to gather information on those
    workload projections initiatives already underway to leverage best
    practices. We will also discuss with the VA and the Social Security
    Administration the methodologies they are using to determine their
    applicability to the Department's needs.
        Many efforts are underway within the Department to ensure we have a
    healthy pipeline in place. We are using a variety of recruitment and
    compensation programs to meet our talent needs and develop the skills
    needed for the future. These include intern and career development
    programs, student employment programs, recruitment at job fairs with
    diverse candidates, and establishing liaisons with professional
    organizations to leverage their candidate pools. There are also
    numerous fellowship and scholarship programs in operation throughout
    the Department, providing us a pipeline for those positions deemed
    critical. Two such examples are the NSEP, through which the Department
    grants scholarships in the study of language and cultures in return for
    service, which are especially important to the Department as it
    conducts its Stability/Reconstruction efforts throughout the world; and
    the Science, Mathematics, and Research for Transformation Program,
    through which the Department assists students with tuition in the
    Science, Technology, Engineering and Mathematics arena in return for
    service, ensuring we keep our edge in these most vital of career
    fields.
        Pipeline/succession planning efforts also include a wide array of
    education and training, and professional development programs, such as
    the: Army Fellows Program, Training-With-Industry, Army Comptrollership
    Program, Graduate Cost Analysis Program, DOD Professional Enhancement
    Program, Logistics and Acquisition Management Program, Logistics
    Executive Development Program and the DOD Professional Enhancement
    Program. This is not an all inclusive list but provides a flavor of the
    type of education and training the Department provides to ensure it has
    the current and future talent it needs.
        The Department is also exploring new recruitment methodologies,
    such as ``Boutique Recruiting,'' which was successfully used to recruit
    and hire large numbers of positions in the medical arena, to include
    pharmacists, one our mission-critical occupations. This is in addition
    to the more standard recruitment sources, such as Federal Career
    Interns and veterans.
        We are also looking at the Department's compensation systems to
    ensure all needed compensation strategies are available to our managers
    to recruit and retain the talent needed. We are in process of
    developing a new ``Hybrid'' compensation plan for our doctors and
    dentists that will leverage the best of Title 5 and Title 38 hiring
    flexibilities. By so doing, we will be able to remain competitive in
    reaching and keeping those critical medical skills. We also recently
    obtained approval from the Office of Personnel Management (OPM) to
    offer retention incentives for moves within the Federal Government for
    mission critical personnel at BRAC bases. This new compensation
    flexibility will enable us to retain needed skills as we deploy the
    current BRAC recommendations. These compensation flexibilities are in
    addition to those currently in use, such as student loan repayment,
    special salary rates; recruitment, retention and relocation incentives,
    and the flexibilities offered by the NSPS compensation system.
        As evidenced in the last several years, DOD civilian employees
    continue to support the global war on terrorism at home and on the
    front-lines to help build democracies in Afghanistan and Iraq. Just as
    agile military forces are needed to meet a mission characterized by
    irregular, catastrophic and disruptive challenges, the Department needs
    agile and decisive support from our DOD civilians. It is only through
    the integration of DOD civilian employees that we can realize the
    potential of a Total Force. The Department's civilian employees are a
    critical component as DOD works with the various other Federal
    agencies, including the Department of State to place expanded
    Provincial Reconstruction Teams in Iraq and staff the new formed Africa
    Command.
        At the same time, it is important to ensure that benefits remain
    balanced and commensurate with the commitments we are requesting of our
    DOD civilians. In that lane, I want to thank Congress for reauthorizing
    the authority to waive the annual limitation on total compensation paid
    to Federal employees working overseas under the auspice of the CENTCOM
    and for enacting the a death gratuity of $100K for those brave Federal
    civilians who die of injuries incurred in connection with their service
    in support of a military contingency operation
        Additionally, the NSPS improves the way the Department compensates
    and rewards its civilian employees covered by NSPS and provides a
    performance management system that aligns performance objectives with
    DOD's mission and strategic goals. To date, the Department has
    converted 135,000 employees under NSPS with another 75,000 slated for
    conversion in fiscal year 2008. .
    Acquiring, Developing, and Retaining Civilians
        The Department's civilian workforce supports DOD's national
    security and military missions. Technological advances, contract
    oversight, and complex missions have generated the need for more
    employees with advanced education and more sophisticated technical
    skills. Additionally, there must be a very active campaign to recruit,
    train, and develop a diverse workforce. We take seriously the
    responsibility to foster and promote an environment that is attractive
    to individuals from all segments of society.
        The Department is committed to providing disabled veterans who want
    to serve our country as DOD or Federal civil servant the opportunity to
    do so. The Hiring Heroes campaign demonstrates this commitment. The
    Hiring Heroes job fairs concept is a collaborative initiative to inform
    and educate our wounded servicemembers on the various employment
    opportunities available to them within the Department and private
    sector after they complete their military Service. Generally lasting 2
    days, the job fairs offer servicemembers an opportunity to attend
    technical workshops covering a variety of topics such as resume
    writing, job interview skills, dressing for success, and learning about
    social security and veterans' benefits. Additionally, the job fairs
    also provide a unique opportunity for wounded servicemembers to meet
    with potential employers, veterans' organizations and government
    agencies. Over 50 organizations usually attend the job fairs.
        Through the Hiring Heroes campaign, we offer wounded servicemembers
    the opportunity to find new careers, as DOD civilian employees, in over
    700 diverse, challenging, and rewarding occupations. Since 2005, the
    Department has hosted 13 Hiring Heroes career fairs at various major
    medical facilities including Walter Reed, Madigan Army Medical Center,
    Balboa Naval Hospital and Brooke Army Medical Center. Five more Hiring
    Heroes are scheduled between March and September 2008. Additionally, we
    maintain the Defense website specifically designed for our disabled
    veterans--www.DODVETS.com. This web portal serves as a resource of
    employment information for veterans, their spouses, and managers.
    Through our efforts, many servicemembers have been offered positions at
    various DOD and Federal agencies, but more important, they have been
    exposed to a network of both DOD and Federal recruiters dedicated to
    helping them transition back to productive employment where and when
    they are ready. We continue work with other Federal agencies, including
    the VA and the Department of Labor, to provide job training,
    counseling, and reemployment services to seriously injured or wounded
    veterans.
        We have dedicated an office within the Department to help us
    transform the way we attract and hire talented civilian employees.
    Under its lead, we have developed a comprehensive outreach program with
    colleges, universities and professional and heritage associations,
    reenergized our branding and marketing materials, and revamped our
    website to align with the interests of those whom we are trying to
    attract. Our nationwide recruitment campaign takes us to college and
    university campuses where we personally invite talented individuals to
    serve the Department. Since the fourth quarter of fiscal year 2007
    through the end of February 2008, our DOD recruiters made 50
    recruitment visits. An additional 25 visits are planned through fiscal
    year 2008, budget permitting. In one of these visits alone, the
    Department made 60 job offers to engineering students, primarily of
    Hispanic origin. Efforts such as these help ensure the Department has
    the diverse, talented workforce it needs to meet the challenges of the
    21st century.
        The Department launched another innovative program in fiscal year
    2007, known as the DOD Student Training Academic Recruitment program.
    Under this program, DOD has hired four honors-level student who are
    responsible for developing and executing a marketing plan, through
    which students with academic studies match DOD mission critical skills
    are made aware of and are encouraged to consider employment with the
    Department. We continue to leverage technology including, importantly,
    the Internet, to educate and interest talent from a variety of sources.
    Our website showcases vignettes of current Department employees who
    discuss their work and the satisfaction they realize from it, as well
    as the benefits of working for the Department. We believe these
    testimonials will further our efforts to have the Department viewed as
    an ``Employer of Choice''. In addition, we routinely sponsor live web
    chats with DOD career functional managers who can answer questions from
    potential employees about working for DOD as well as provide them with
    the tools they need to successfully apply for DOD jobs.
        Our outreach is not only to those young men and women who are about
    to graduate from college. In recognition of the OPM's Career Patterns
    initiative, in which recruitment strategies are developed to target
    candidate sources in entry, mid and senior points of their careers, we
    are collaborating with the Partnership for Public Service (PPS) in a
    pilot program to reach retirees from the corporate world who are
    looking for challenging work and the opportunity to share their
    knowledge and talent, while serving the public good. PPS has
    established the initial pilot with retirees from IBM. Within the DOD,
    we will be working with PPS and IBM to identify possible placement
    opportunities in the acquisition community. Although the pilot is in
    its infancy stage, we are hopeful it may produce yet another source of
    diversified, qualified talent to fill some of the most critical
    positions in the Department.
        The ``Career Patterns'' initiative also suggests that the use of
    different work life dimensions will enhance the success of recruitment
    efforts. To that end, the Department continues its analysis of our
    workforce to identify the recruitment strategies that will engender the
    talent we need for the 21st century.
        We have paid special attention this year on improving recruitment
    and retention strategies for our health care practitioners, especially
    those caring for our wounded warriors. I'd like to thank you for
    providing us additional direct hire authority for both our medical and
    mental health care practitioners. Through this authority, we will be
    able to compete more readily with our private sector counterparts and
    more expeditiously hire the critical care givers we so urgently need.
    Coupled with this direct hiring authority, we have developed some
    innovative, enterprise-wide recruitment approaches, gleaned from
    literature research and industry best practices, to further enable us
    to recruit the numbers and quality of candidates we need. We have also
    structured some new salary schedules to enable us to remain competitive
    in some of our more critical occupational needs, such as nurses and
    professors at our Health University. Although medical recruitment is a
    challenge across the Nation, both in the public and private sector, you
    can be assured we are using a variety of innovative recruitment and
    compensation approaches to meet this challenge as aggressively as
    possible. Our wounded warriors deserve no less.
        As the Chair of the Federal Chief Human Capital Officer's
    Subcommittee for Hiring and Succession Planning, I personally work with
    a number of other Federal agencies and the OPM to streamline and
    improve the Federal hiring process. The subcommittee has made a number
    of recommendations, the benefits of which we hope to see over the next
    several years. Additionally, over the next coming months, my
    Subcommittee will be working closely with OPM on a new project
    entitled, ``Improve the Federal Hiring Experience,'' which will explore
    new recruitment methodologies, and strategies for improving end-to-end
    recruitment cycle time and candidate quality.
        While recruiting and supporting the civilian workforce which we
    need to meet our mission demands, we are also cognizant of our need to
    support our military families. At the direction of the President in his
    State of the Union Address, we are pursuing strategies to support the
    spouses of our active duty military. We are exploring three approaches
    to meeting the President's request. When taken together, these three
    approaches will address the hiring, training and career portability
    requirements that are the key to keeping spouses employed as they
    accompany their military husbands/wives to their different posts of
    duty.
        The first approach is a non-competitive appointing authority for
    military spouses, which would allow an agency in the executive branch
    to noncompetitively appoint to the competitive service a spouse of an
    active duty military member. Such an authority would facilitate the
    hiring of spouses into Federal positions and would provide a vehicle
    for spouses to access Federal employment upon completion of training
    under the Career Advancement Account Program, which together with the
    Department of Labor, we began piloting in January 2008. The Department
    is working jointly with OPM in developing legislation that we hope to
    submit to you very shortly for your consideration. In recognition of
    the benefits such an appointing authority would engender, I hope it
    will receive your favorable attention and action.
        The second initiative would assist spouses in obtaining Federal
    positions that provide training for advancement into journey positions,
    i.e., a military spouse Federal intern program. Under this program, the
    DOD would fund the salary and benefits of a set number of military
    spouses as they participate in the career intern programs of other
    Federal agencies. The spouse would be permanently employed at the host
    Federal agency, but first year costs would be borne by DOD. We believe
    such a program will encourage other Federal Agencies to hire military
    spouses into their intern programs, thereby giving the military spouse
    the ability to again experience and training in a portable career
    field.
        The third initiative being explored is the expansion of the current
    DOD Military Spouse Preference Program throughout the Federal
    Government. This program facilitates spouses being able to maintain
    their careers as they accompany their sponsors to new posts of duty, by
    affording them preference for vacant positions for which they are
    considered well qualified. The third initiative being explored is the
    expansion of the current DOD Military Spouse Preference Program
    throughout the Federal Government. This current program facilitates
    spouses being able to maintain their careers as they accompany their
    sponsors to new posts of duty, by affording them preference for vacant
    positions for which they are considered well qualified.
    World Class Leaders
        Our HCSP ensures the continuity of world class, civilian leaders
    who are fully capable of leading DOD's efforts within a larger national
    security context. To meet this goal, the Department launched an
    initiative aimed at the deliberate identification, development,
    management, and sustainment of senior executive leadership for the
    Department's 21st century requirements. This effort will expand the
    current, enduring executive leadership competencies to include
    knowledge of joint matters and building an enterprise-wide perspective
    acquired through a portfolio of diverse experiences. The definition of
    ``joint matters'' expands beyond that prescribed in Goldwater-Nicholas
    Act to recognize the realities of today's multinational and interagency
    operating environment. Further, cultural awareness and regional
    expertise are part of the required core competencies. In the conflicts
    and wars faced by the Department, cultural awareness, language and
    regional expertise become key skills needed by every leader.
        To build a qualified and talented pipeline to sustain leadership
    continuity, the HCSP provides for the identification and closing of
    leadership competency gaps and strengthening of the talent pipeline to
    ensure continuity of diverse and capable leaders. To ensure the
    deliberate development of our current and future leaders, we are
    instituting a new joint civilian leader development system that will
    have at its core a future-focused framework of competencies based on
    the OPM Executive Core Qualifications, but strengthened with the DOD-
    unique requirements that will enable the Department to accomplish its
    national security mission in today's complex environment and beyond.
        Our DOD joint civilian leader development framework is designed to
    produce world-class leaders with an enterprise-wide perspective for
    leadership positions across the continuum from entry to executive
    level. It will be implemented across the Department later this year,
    upon completion of our ongoing work to formally validate the Defense-
    unique competencies, define proficiency benchmarks, and identify
    targeted proficiency levels needed for successful performance at
    successive leadership levels. This year, we will also complete the
    initial assessment of the proficiency of our current leadership cadre
    against the new competency framework. This baseline analysis will
    identify any systemic competency gaps, and guide future leader
    development initiatives as needed to close those gaps.
        Building upon existing programs, the framework ultimately will
    include a series of DOD-sponsored courses, programs and other learning
    opportunities, designed to meet the specific competency requirements of
    the civilian Defense leader. These opportunities will serve as
    retention incentives for high performing DOD employees and will also
    support DOD initiatives to increase diversity in the senior ranks.
        Two highly competitive DOD-wide leader development programs are key
    building blocks of the new leader development framework. The Executive
    Leadership Development Program (ELDP) and the Defense Leadership and
    Management Program (DLAMP) have been thoroughly reviewed for alignment
    to the competency framework. ELDP, with over 20 years of success, will
    remain as the premier program for high potential mid-level leaders.
    ELDP provides participants with an extensive exposure to the roles and
    missions of the entire Department and an increased understanding and
    appreciation of today's warfighter. The curriculum features immersion
    weeks of hands-on experiential training with each of the military
    Services, an overseas command, a unified command, and the National
    Guard; and topical seminars.
        Our review of DLAMP against the framework resulted in the decision
    to significantly restructure and rename the premier program for high
    potential senior civilian leaders. Accordingly, the new Defense Senior
    Leader Development Program (DSLDP) will be fully developed this year
    and will admit its first class in early fiscal year 2009. Complementing
    component leader development efforts, DSLDP will focus on strengthening
    individuals' enterprise-wide perspective, through a robust program of
    professional military education, targeted developmental assignments,
    and Defense-focused leadership seminars, designed to ensure application
    of critical leader competencies in the joint environment. The
    transition DSLDP will be complete by the end of fiscal year 2010.
    Workforce analysis and modeling tools will further ensure the
    Department's leadership succession plan and strategy is sound, future-
    focused, and adaptive to mission requirements. We are confident that
    ensuring alignment of our programs with the DOD-wide competency model
    and best practices in private and public sector leader development will
    further position us for strong civilian leadership in the decades
    ahead.
    Senior Executive Service Pay for Performance
        The NDAA for Fiscal Year 2004 established a new performance-based
    pay system for members of the Senior Executive Service (SES). OPM
    approved the design of DOD's performance management system on April 1,
    2005 and on October 9, 2007, fully certified the system for calendar
    years 2007 and 2008. This relatively new performance system is a
    critical tool in building a results-oriented performance culture within
    the Department.
        The system expects excellence in senior executive performance,
    links individual performance with the DOD's strategic goals and
    priorities, sets and communicates individual and organizational goals
    and expectations, systematically appraises executives using measures
    that balance organizational results with customer, employee, and other
    perspectives, and uses the performance results as a basis for pay and
    performance rewards.
        DOD strengthened performance management training to help build a
    performance management culture--one with rigorous performance
    requirements, greater accountability, and deliberate focus on results.
    The training has focused on the five stages of the Federal performance
    evaluation process, planning, monitoring, developing, appraising, and
    rewarding.
        The Department also strengthened the alignment of individual
    performance plans to DOD-wide goals. For the second year, the Secretary
    of Defense issued DOD's top organizational priorities for the
    performance year. These priorities then are embedded in each
    component's strategic plans and translated to specific, measurable, and
    results-oriented performance requirements for executives. Annually, the
    Department issues an organizational assessment, which supplements that
    which may be issued by individual components, to help inform executive
    rating decisions.
        The Department performed its first longitudinal study of the
    performance management system upon completion of the 2006-2007
    performance cycles to determine the impact of the performance
    management system on building a high performing, results-oriented
    performance culture in DOD over time. Additionally, the Department
    implemented a common ``Tier Structure'' for its SES members. The tier
    structure establishes common pay ranges and associated business rules
    to support transparency and comparability in executive position and
    compensation management.
    International Workforce Programs
        The Department recently reviewed the foreign national (FN) human
    resources program, which covers over 70,000 workers in some 22
    countries to ensure alignment with the Department's 21st century
    requirements. The Department employs the FN workforce under various
    laws, treaties, and international agreements, host nation labor
    policies and labor union contracts. The current FN human resources
    policies have evolved over many decades. It has been over 20 years
    since there was a comprehensive review of the FN human resources
    program. To launch the review, the Department hosted a worldwide
    conference of U.S. and FN human resources personnel. They offered
    enlightened thinking and a set of recommendations to help refine the
    current FN human resources program. The Department is considering these
    recommendations.
        The Department continues to be engaged in establishing Status of
    Forces Agreements (SOFAs) with new NATO partners, such as Romania,
    Poland, Bulgaria, and the Czech Republic. As part of these SOFAs, the
    Department has developed a new framework for FN employment which will
    ensure a ready, capable, and agile FN workforce.
    Pipeline Reemployment Program
        The Pipeline Reemployment program enables partially recovered
    employees with job related injuries and illnesses to return to work.
    The program supports the President's Safety, Health, and Return-to-
    Employment initiatives by assisting each Department installation in
    reducing lost days resulting from injuries. DOD organizations will have
    resources and funding to reemploy partially recovered injured employees
    for up to 1 year. Returning injured employees to suitable productive
    duty, as soon as they are able, improves that employee's sense of value
    to the organization while minimizing the cost of workers' compensation
    disability payments. To date, the Pipeline program has returned 500
    employees to productive positions; 91 employees refused valid job
    offers and were removed from compensation rolls. This saves the
    Department approximately $427.5 million in lifetime cost charges.
        In addition to bringing employees back to work, we are striving to
    improve injury compensation program management across the Department.
    We have embarked on a program to renew the skills of our field
    personnel through the development of a comprehensive e-learning
    curriculum, which provides program managers a thorough knowledge base
    from which to manage their programs. Additionally, we are collecting
    the best practices of our field personnel, especially in regard to case
    management with the Department of Labor, and will be instituting those
    practices across the enterprise. By so doing, we hope to further reduce
    costs that the Department may be accruing.
    Civilian Force Shaping
        A number of initiatives influence the size and shape of the
    Department's civilian workforce. The most significant are upcoming BRAC
    actions, global repositioning of deployed military and civilians,
    competitive sourcing, and military-to-civilian conversions. The DOD is
    committed to providing comprehensive transition tools and programs to
    assist our valued employees and their families as these force shaping
    initiatives are implemented.
        Since the first BRAC round in 1988, the Department has reduced the
    civilian workforce by more than 400,000, with less than 10 percent of
    that number involuntarily separated. To mitigate the impact of these
    force shaping initiatives on our civilians, the Department has
    aggressively sought and obtained authority for several essential
    transition tools assuring that drawdowns or reorganizations are handled
    in the most efficient and humane manner possible, while ensuring we
    have the talent needed to effectively continue Department operations.
    Employees adversely affected by BRAC may be offered the opportunity to
    separate voluntarily under the Voluntary Early Retirement Authority or
    the Voluntary Separation Incentive Payment program, or both.
    Involuntarily separated employees are also eligible for a number of
    post-separation benefits and entitlements, including: temporary
    continuation of health insurance for 18 months with the Department
    paying the employer portion of the premium, severance pay with a lump-
    sum payment option, and, unemployment compensation.
        The Department will implement legislative changes, as directed by
    section 1109 of the NDAA for Fiscal Year 2008 to assist employees
    affected by these actions in transitioning to other positions, careers,
    or to private employment. We are continuing to establish and foster
    employment partnerships with Federal agencies, State, county, and local
    governments, trade and professional organizations, local Chambers of
    Commerce, and private industry. For example, DOD is partnering with the
    Department of Labor to provide BRAC installations outplacement
    assistance under their Workforce Investment System (WIS). The WIS
    consists of over 3,000 State One-Stop Career Centers prepared to offer
    assistance such as retraining, career counseling, testing, and job
    placement assistance.
    Emergency Planning
        We have taken great strides to ensure we have plans in place to
    continue our operations and safeguard our employees in times of crisis.
    Significant planning has gone into Pandemic Influenza preparedness. We
    have developed a human resources practitioner guide for use by managers
    and human resource practitioners in planning for, and executing actions
    during emergencies, which include nuclear, chemical and biological
    attacks, and natural disasters, as well as a resource practitioner
    guide for use during a pandemic crisis. We have supported this guide
    with exercise criteria to assess our plans and refine them as needed.
    We conducted a 3-day Pandemic Influenza exercise within the OSD
    Personnel and Readiness organization. The purpose of the exercise was
    to assess our ability to carry on essential work, in light of an
    assumed 40 percent pandemic absenteeism rate, and our ability to
    ``socially distance'' while in the Pentagon, a key strategy for
    pandemic influenza avoidance. The exercise was extremely valuable in
    assessing our preparedness and indicating those areas on which
    additional preparations may be needed. The lessons learned from our
    exercise have been shared throughout the Department, as well as with
    our Federal Agency colleagues. We continue to work on our information
    technology preparedness to ensure essential work will be able to be
    performed in case a pandemic influenza should occur.
                                   conclusion
        The health of our AVF is best measured by the opinions of its
    members. Eighty percent of active duty members believe they are
    personally prepared, and two-thirds believe their unit is prepared, for
    their wartime jobs. These views have held steady from the start of OIF
    (March 2003) through the latest survey (August 2007). Although
    deployments can place a strain on servicemembers and their families,
    two-thirds of members deployed since the start of OIF indicated that
    access to the Internet and e-mail while away have greatly improved
    their quality of life. In terms of compensation, more than two-thirds
    of servicemembers reported being financially comfortable in April 2007,
    and four-fifths indicated saving a portion of their household income.
    In August 2007, more than two-thirds of servicemembers were satisfied
    with their medical (69 percent) and dental (76 percent) benefits.
    Overall, in August 2007, 56 percent of servicemembers indicated they
    are likely to stay on active duty. Based on research using prior
    surveys, 90 percent of servicemembers who indicate they are likely to
    stay actually do stay. Therefore, we feel confident that almost three-
    fifths of our current active duty force will stay in the military.
        After declining retention improved between May 2003 and November
    2004, Reserve retention intentions have stabilized and are currently at
    69 percent. Reports of family support to stay in the National Guard/
    Reserve have also stabilized. The June 2007 survey indicates that
    approximately two-thirds of members say they have not been away longer
    than expected; average nights away actually decreased from June 2006.
    Results from this survey also show that roughly three-quarters of
    reservists working for employers consider them to be supportive of
    their military obligations. Where employment problems have occurred and
    reservists have sought assistance, roughly two-thirds turned to ESGR.
    Of those who contacted ESGR, 62 percent reported they were satisfied
    with the manner in which their request for assistance was handled.
        In the past year, we also fielded special surveys to spouses so we
    could fully understand the impact of deployments on the family. Results
    indicate that 61 percent of active duty spouses and 75 percent of
    Reserve spouses support their husband or wife staying in the military.
    These results are encouraging, as spouses' reports of their support are
    even higher than members' assessments of spouse support. We plan to
    continue fielding regular surveys of spouses to better understand the
    issues facing today's military families.
        We continue to have a dynamic, energetic, adaptable All-Volunteer
    Total Force. With your help we are confident we can sustain that Total
    Force. These volunteers have performed magnificently under the most
    arduous and perilous of circumstances. They have not failed us; we must
    not fail them.

        Senator Ben Nelson. Thank you.
        General Rochelle?

      STATEMENT OF LTG MICHAEL D. ROCHELLE, USA, DEPUTY CHIEF OF
                     STAFF, G1, UNITED STATES ARMY

        General Rochelle. Thank you, sir. Thank you for the
    opportunity to appear before the subcommittee once again.
        Chairman Nelson, Senator Graham, and distinguished members
    of the subcommittee, thank you for the opportunity to report on
    the Army's personnel posture for 2008 and entering 2009. Thank
    you for your continued support of America's Army.
        Without question, our Nation's Army remains the best-
    trained, best-equipped, best-led Army in the world; and, I
    might add, quite resilient. As we enter the 7th year of
    conflict, however, the third-longest period of armed conflict
    in our Nation's history, there's little question that our Army
    is, today, out of balance. Your Army soldiers and their
    families are remarkable, having endured lengthy and repeated
    deployments and hardships. Many have been injured, and many
    have made the ultimate sacrifice.
        In spite of the tremendous burdens they bear, they remain
    resilient and committed to serving our Nation. Indeed, they are
    our Nation's heroes, truly a national treasure. I look forward
    to our dialogue today regarding how best to support and sustain
    them. Thank you for this opportunity, once again.
        Restoring balance and creating readiness is our top
    priority after winning the global war on terror. Regaining our
    boxer stance, if you will, the ability to shift our weight and
    respond decisively, requires that we apply the Chief of the
    Staff of the Army's four imperatives: sustain, prepare, reset,
    and transform.
        He is growing the Army to 547,000--point four--as soon as
    possible, and we are on track to do that by the end of fiscal
    year 2010. We are on target to meet this goal by 2010, as I
    said, thanks largely to the support from this committee. Army
    growth will help us return to shorter deployments, increased
    time at home between deployments, and greater predictability
    for soldiers and families in both the Active and Reserve
    components. We must grow, to become a modular, expeditionary
    force that is fully capable of supporting combatant commanders
    in meeting the full spectrum of contingencies.
        Our efforts to grow the Army are challenging. Only 3 in 10
    of our 18- to 24-year-olds today are fully eligible for
    enlistment. The remainder fall short in some element of
    standards for health, education, or character. Our recruiting
    mission is difficult, given the lowest propensity for military
    service in two decades, declining support from those who
    influence our youth, opportunities for post-secondary
    education, and a competitive job market. In spite of what is
    happening in the United States, we are on track to meet our
    recruiting goal for fiscal year 2008.
        I'm concerned about the Nation's ability to produce the
    highest-possible caliber of military recruits, and, I might
    add, the citizens that we will need to be competitive in the
    21st and 22nd century. Declining high school graduation rates
    and alarming rates of obesity among our young adult population
    constitute a pending human capital crisis, a crisis that not
    only has the potential to undermine military readiness, but
    threatens our Nation's well-being, as a whole. I share your
    concerns about quality, and am committed to recruiting a
    quality force with the highest-possible educational attainment
    and aptitude scores.
        Our current analysis and our commanders in the field tell
    us that soldiers assessed in fiscal years 2006 and 2007 are
    performing exceptionally, and I would emphasize exceptionally.
    Every one of these soldiers is qualified in his or her military
    occupational specialty, and their demonstrated performance on
    the battlefield speaks for itself.
        I believe that a willingness to serve in the Army today, a
    nation at war, at this place in time, portends a very unique
    aspect of quality that accession metrics simply cannot measure:
    the heart of a well-led, well-trained volunteer soldier.
        While equipment and technology are certainly vital to
    readiness and transformation, people are the Army. Retaining
    soldiers starts at home. We must sustain soldiers and their
    families, as you both have spoken to, with a quality of life
    commensurate with the quality of the service they provide. This
    is absolutely essential to both near-term and long-term
    readiness.
        With support from this committee and Congress, the Army has
    made tremendous strides in this regard, from funding for
    improved housing facilities and essential services, to
    increased pay and benefits, and all are appreciated. Our
    soldiers and their families recognize, and deeply appreciate,
    actions taken by their military and civilian leadership,
    especially Congress. These targeted improvements to policies,
    programs, and services delivery mitigate risks exacerbated by a
    prolonged conflict and the many stresses that conflict entails.
    We ask for continued congressional support for these programs
    that provide our soldiers and families with the quality of life
    they so richly deserve.
        In closing, I thank you for the opportunity to appear
    before you today. I thank you for the continued support. I look
    forward to taking your questions.
        [The prepared statement of General Rochelle follows:]
               Prepared Statement by LTG Michael D. Rochelle, USA
        Chairman Nelson, distinguished members of this subcommittee, thank
    you for the opportunity to talk today on behalf of America's Army. Our
    Army is out of balance as we enter the 7th year of the Long War. Demand
    for forces exceeds our capacity to supply them on a sustained basis. As
    a result, our soldiers and their families in both the Active and
    Reserve component have endured repeated, lengthy deployments and the
    countless stressors that accompany the many sacrifices they have made.
    In spite of this, and facing an uncertain future, they remain committed
    to serve. We have no greater heroes than America's most precious
    resource--our soldiers. These soldiers and their families, backed by
    our civilian workforce, represent the very best of American values and
    ideals. While we may be out of balance, we are not broken, a fact we
    can attribute to the inspiring resilience and dedication of these
    American heroes. The Army leadership is committed to their well-being,
    consistent with their quality of service and many sacrifices.
        The Army's number one priority is restoring balance to the All-
    Volunteer Force, while supporting the National Security Strategy.
    Restoring balance requires that we grow the Active Army by 65,000, to
    547,400, by the end of fiscal year 2010. Restoring balance also
    requires that we grow our Reserve component force, with the Army
    National Guard and Army Reserve adding 8,200 and 1,000 soldiers,
    respectively to their end strengths. We must do this if we are to
    continue to effectively support current military operations, while
    transforming the Army to meet the needs of the Combatant Commanders in
    a dynamic and lethal security environment. We must reduce deployment
    lengths from 15 months, increase time spent at home-station between
    deployments, and provide predictability across all components, if we
    are to relieve the considerable stress placed on our Army, our
    soldiers, and our Army families.
        Though facing national-level challenges, we remain committed to
    sustaining [growing] the best-trained, best-led, best-equipped Army in
    the world. While facing a number of manpower challenges, these factors
    have not decreased the resolve, nor the quality, of the American Army.
        The Army is also dedicated to caring for soldiers and families who
    have borne the burden of battle. The Army must have timely resourcing
    to ensure we are able to match the quality of life offered to soldiers
    with the quality of the tremendous service they provide the Nation.
    Through initiatives like the Army Soldier Family Action Plan, the Army
    Wounded Warrior Program, improvements to the Physical Disability
    Evaluation System, and providing soldiers with critical skills the
    ability to transfer portions of their Montgomery GI Bill benefits to
    dependents, the Army is working hard to care for soldiers and families.
    We are indebted to Congress for your tremendous support and
    leadership--they have been instrumental to the considerable progress
    made on behalf of these American heroes. With your continued support,
    we will further improve our programs and develop meaningful, effective
    new programs for the benefit of the entire Army community.
                          grow the all-volunteer force
        For the first time since the inception of the All-Volunteer Force,
    America is recruiting and retaining its military during a period of
    protracted combat. With the help of Congress and the support of the
    American people, the Army has accomplished its recruitment and
    retention milestones. However, growing the All-Volunteer Force will not
    be without challenges.
        Wartime recruiting is challenging. It is made even more challenging
    by a declining eligible population. Fewer than 3 out of 10 of America's
    youth are fully qualified to serve in our Nation's military due to
    medical, conduct, or aptitude disqualifications. Many 17-24-year-old
    men and women may want to join the Army, but are not actively recruited
    because they have disqualifying physical conditions, have committed
    crimes, or do not have a high school diploma.
        For example, the rate of obesity among youth tripled since 1980.
    Today, up to 19 percent of the Nation's 6-19-year-olds are overweight.
        The Nation's high school graduation rate is only 70 percent. For
    minorities, the graduation rate falls to 50 percent and, for youth
    living at or below the poverty level, the rate drops to an alarming 30
    percent.
        These lower capacities among our Nation's 17-24-year-old population
    are not only an Army recruitment issue--they are a national crisis.
    Fixing these problems will require concerted, long-term national
    commitment. We simply cannot afford for the American public to become
    complacent.
        To help meet these challenges, we developed a program called the
    Assessment of Recruit Motivation and Strength test. This test allows
    those who pass the physical test, but are a few percentage points over
    Army accessions body-fat standards, to serve in the Army. To ensure
    quality, participants must lose the weight within 1 year from the time
    they ship to Basic Combat Training. For fiscal year 2006 and fiscal
    year 2007 combined, over 2,500 recruits entered the Active Army under
    this program, a significant boost to our recruiting efforts.
        Another initiative is the Army's Prep School, which will provide
    high quality youth the opportunity to complete their General
    Educational Diploma (GED) prior to commencing Basic Combat Training.
    Fort Jackson, SC, will be the location for the pilot program beginning
    in third quarter, fiscal year 2008, with expansion dependent upon
    analysis of the pilot's success and through-put capacity.
        Concerns regarding graduation rates, rising rates of obesity, and
    incidents of misconduct requiring administrative review
    notwithstanding, young millennials, as they are referred to, continue
    to answer the Nation's call.
        Despite the toughest recruiting and retention environment ever
    faced by the All-Volunteer Force, the Army's accomplishments in these
    areas are noteworthy. Two key accomplishments are worth highlighting:
    (1) the Army recruited more than 170,000 soldiers in fiscal year 2007,
    and (2) the recruiting and retention success enabled America's Army to
    grow its combined end strength by almost 49,000 soldiers. By making
    prudent use of the incentive authorities granted by Congress, the
    Active component and Army Reserve exceeded their respective recruiting
    objectives of 80,000 and 26,500 in fiscal year 2007, while the Army
    National Guard achieved 96.6 percent of its 65,115 soldier objective
    before reducing recruiting effort to remain within mandated end
    strength limits.
        The propensity for America's youth to serve in our Nation's All-
    Volunteer Force is at its lowest point since the Army began surveying
    such metrics. Their willingness to do so depends on a demonstrated
    commitment on our part to reward the sacrifices of those who willingly
    accept this responsibility--one that so many others either cannot, or
    choose not to, perform.
        To ensure that military service remains an attractive career
    option, the Army continues to shape its recruiting efforts through a
    mix of innovation, incentives, and bonuses. We again thank Congress for
    providing the necessary funding to support and sustain our recruitment
    efforts.
        The Army Advantage Fund is a pilot program launched on February 4,
    2008, in Albany, Cleveland, Montgomery, San Antonio, and Seattle; it
    has already produced 17 high quality enlistments. The prospects for
    widening the pilot in the near future are excellent.
        Just as crucial as recruitment is the retention of trained, highly
    skilled soldiers in the Army, and bonuses have been a strong incentive
    for soldiers to reenlist. The Army Retention Program adjusts to meet
    the needs of the Army to ensure that the right soldiers with the right
    skills reenlist to meet Army manpower requirements.
        Army retention continues at very high levels, reflecting the
    commitment of soldiers and the quality of Army leaders. Even while
    engaged in persistent conflict, the Army surpassed its retention goals
    each year since 2002. This continued success is directly attributed to
    the talented men and women in the Army who provide ``boots on the
    ground'' around the world. It is important to note that their success
    would not be possible without great leadership, the backing of their
    families, and the tremendous support provided by Congress. The Active
    Army retained 69,777 soldiers in fiscal year 2007, finishing the year
    at 112 percent of mission. The Army Reserve finished the year achieving
    119 percent of mission and the Army National Guard finished at 100
    percent of mission.
        To achieve overall manpower levels in fiscal year 2008, the Active
    Army must retain 65,000 soldiers, the Army Reserve must retain 14,946
    soldiers, and the Army National Guard must retain 31,889 soldiers.
    Current indicators show the Army on track to meet its retention mission
    for fiscal year 2008. As of the end of January, the Active Army
    achieved 118 percent of its year-to-date mission, the Army Reserve
    achieved 103 percent of its year-to-date mission, and the Army National
    Guard achieved 113 percent of its year-to-date mission. A robust bonus
    program has been essential in enabling the Army to meet required
    retention goals.
        Careful and deliberate adjustments are made to bonus levels to
    target retention of soldiers in critical skills and grades. Retention
    of combat experienced veterans is imperative to future readiness. The
    deployed reenlistment bonus targets soldiers assigned to units in Iraq,
    Afghanistan, and Kuwait. Recently deployed units, or units currently
    deployed to these areas of operations, have reenlistment rates ranging
    between 110-120 percent of their annual goals. General Petraeus
    presided over a single reenlistment ceremony for 600 troops who
    reenlisted in Baghdad on Independence Day this past year. More than 100
    Army Reserve soldiers gathered January 18, 2008, at the Al Faw palace
    at Camp Victory, Iraq, to reenlist during a ceremony marking the 100th
    anniversary of the Army Reserve. Currently, 50 percent of all
    reenlistments occur in the deployed theater.
        The Army implemented a pilot program in 2006 to allow reenlisting
    soldiers with critical military skills to transfer their Montgomery GI
    Bill benefits to their spouses. Based on the feedback received from
    soldiers, we expanded the pilot in November 2007 to include transfer of
    benefits to their children. Reaction from soldiers indicates that these
    benefits contributed to their decision to reenlist. We are still in the
    assessment phase of this pilot.
                              quality of the force
        While the Army met recruiting quality marks mandated by law, we did
    fall short of the Department of Defense goal to have 90 percent of our
    new recruits enter with a high school diploma. The Army looks at
    quality as more than DOD quality marks and, therefore, each soldier we
    enlist with a waiver is thoroughly screened before being approved for
    entry. We have seen increases in waivers over the past few years and
    remain vigilant in our screening process. Our 2007 study of waivered
    soldiers, as compared to non-waivered soldiers from 2003 to 2006,
    showed that the waivered soldiers performed comparably. Feedback from
    commanders in the field continues to support this analysis. We do not
    envision the quality of the force or future readiness of the Army
    suffering as our goal remains focused on DOD quality benchmarks.
                               army officer corps
        The Army's greatest challenges in officer manning are the sudden
    and rapid growth of officer requirements, the conversion to new modular
    formations, and the transition in Reserve component employment from a
    strategic to operational Reserve. The Army will grow over 9,000 new
    officer billets from fiscal year 2007 to fiscal year 2010 in the Active
    component alone, with over 6,000 of those at the grades of Captain and
    Major. Combined with the longstanding Reserve component shortages, our
    officer production capability remains challenged. It will take several
    years for the Army to balance competing requirements and fully fill its
    officer corps. We are launching a strategic review of commissioned
    officer requirements, production sources, policy and legislation to set
    the conditions for future success, as recommended by the recent
    Government Accounting Office report.
        Officer retention is a critical component of ensuring our officer
    corps is adequately manned to meet these increasing requirements. While
    fiscal year 2007 officer attrition in the Active component was lower
    than the historical average, we must reduce attrition even further to
    meet increased officer requirements by fiscal year 2011. To address
    these challenges, the Army implemented a number of measures to maximize
    growth in the officer corps. Accessions have increased from all
    traditional commissioning sources. Additionally, with cooperation from
    our sister Services, we have added highly qualified officers from the
    Air Force, Navy, and our Army Reserve components. Those efforts have
    produced almost 1,500 additional commissioned officers for the Active
    Army.
        The Army also instituted an unprecedented Army Captain's Critical
    Skills Retention Bonus Retention Menu of Incentives Program. This
    program has guaranteed retention of more than 12,689 captains thru
    fiscal year 2010, nearly 90 percent of our goal of 14,184 captains
    retained from the eligible captain year groups. After review of the
    initial phase of this program, the Army plans to initiate a second
    phase of the Incentive Program beginning in the second quarter of
    fiscal year 2008 that will add additional captain year groups. The
    Office of the Secretary of Defense recently approved a similar program
    for a range of Reserve component captain specialties that should
    substantially increase officer retention in critical specialties
    required in the Reserve component.
        The Army increased officer accession missions for fiscal year 2008
    and beyond to meet requirements for captains and majors by fiscal year
    2011. The United States Military Academy (USMA), Reserve Officers'
    Training Corps (ROTC), and Officer Candidate School (OCS) will increase
    production, with heavy short-term emphasis on OCS due to its short
    lead-time. A pre-commissioning incentives program targets high-
    performing USMA and ROTC cadets to select their branch, posting, or
    graduate education, upfront, in exchange for an additional 3-year
    service obligation. This program ensures improved retention at critical
    career decision points in fiscal year 2010 and beyond and, since its
    inception in 2006, has guaranteed the retention of nearly 3,000
    additional officers from year groups 2006 and 2007. We anticipate an
    additional 1,500 officers in year group 2008 will participate in this
    program.
                       incentives and enlistment bonuses
        Incentives and bonuses are effective tools to open the door to the
    possibility of military service, but going through the door requires
    the vision of serving a greater good. During his recent appearance
    before the Senate Armed Services Subcommittee on Personnel, Major
    General Bostick, the Commanding General of the United States Army
    Recruiting Command, said, ``No amount of money would be enough to
    convince them [America's soldiers] to continue to serve if they did not
    believe in what they were doing.'' Once men and women become soldiers,
    they realize the significance of what they volunteered to do for their
    country, their families, and themselves. The incentives and bonuses
    serve, in a small way, to reinforce their choice and the Army, our
    soldiers and their families are indebted to Congress for your
    invaluable, continued support in this crucial area.
                            army civilian workforce
        Only through the integrated efforts of Army civilians and soldiers
    can the Army accomplish its assigned missions and make the most
    effective use of resources. The Army civilian workforce offers vital
    support to our soldiers and families in this era of persistent
    conflict. Short of actual combat, Army civilians share full
    responsibility for mission accomplishment by delivering combat support
    and combat service support--at home, abroad, and on the battlefield.
    More than ever, Army civilians are an absolutely invaluable component
    of readiness.
        Currently, the Army's Civilian Corps is over 265,000 strong, over
    3,500 of whom are serving in harm's way in the U.S. Central Command
    Area of Operations.
        Army civilians also serve the Nation in myriad non-combat Army
    missions such as maintaining waterways and flood control, domestic
    emergency response, and scientific research. They work in over 550
    different occupations, with the highest concentrations in logistics,
    research and development, and base operations functions.
                                 army diversity
        Diversity in America's Army assures that the Army remains relevant
    to the Nation and the demographically evolving American society it
    serves. Diversity of culture, language, gender, race, and ethnicity, as
    well as diversity of thought, contribute materially to the Army's
    unmatched warfighting effectiveness. Further, a richly diverse force
    serves as a strategic hedge against uncertainty in an increasingly
    unpredictable global security environment. The Army established the
    Army Diversity Task Force in November 2007, which is led by a general
    officer. Reporting directly to the Secretary and the Chief of Staff,
    the Task Force will conduct a holistic review and assessment of
    diversity programs and progress for military and civilian components of
    the Army, as well as the adequacy of the resources currently available
    to achieve the Army's diversity vision. An inclusive environment will
    underpin efforts to build and sustain the workforce needed for the 21st
    century environment.
                        caring for soldiers and families
        The well-being of our soldiers, civilians, and their families
    centers on life domains such as standard of living, health, career,
    community life, and personal and family life. A strong sense of well-
    being across these life domains enables our soldiers, civilians, and
    their families to focus on performing and supporting the Army's mission
    while improving a quality work-life balance. Identifying those life
    domain areas that are out of balance serves as a platform from which to
    base policy and strategy decisions in order to restore balance and
    sustain the All-Volunteer Force.
        We, as an institution, are deeply committed to providing for the
    well-being of the force. These life domains define the Army's ability
    to influence institutional outcomes of recruiting, retention, readiness
    and morale. We are leading the effort in building a comprehensive
    system of subjective and objective metrics and analytics to monitor
    potential stress and health of the force indicators that affect
    soldiers and Army families. This process will serve as a key element of
    the Well-Being Index that will assist the Army in its efforts to
    restore balance of the force.
        Our objective is to provide leaders a greater depth of
    understanding upon which to base policy and strategy decisions; develop
    a clearly defined multi-component Human Capital Strategy; strengthen
    the Army's ability to recruit and retain the right human capital; and
    reinforce the commitment of our soldiers to serve in the All-Volunteer
    Army.
        The Army is committed to continual combat readiness, but certain
    stressors can inhibit the personnel readiness of the Army. The Army
    continuously monitors data that provides indicators of the Well-Being
    of soldiers, families, and civilians. Data shows that soldiers and
    families are feeling strained by this era of persistent conflict. The
    Army is committed to providing an environment that mitigates the
    effects of the stress they experience. We will ensure that soldier and
    family programs meet the needs of our people.
        The Army remains committed to eliminating incidents of sexual
    assault from our ranks. Sexual assault is contrary to Army Values and
    degrades our readiness--it has no place in our Army. We continue to
    lead the effort to refine and improve a comprehensive sexual assault
    prevention and response program. This program serves as a key element
    of each Army leader's responsibility to create a climate that minimizes
    sexual assault, encourages victims to come forward, and takes
    appropriate action against offenders.
        While a number of trends remain steady or show a decline, there are
    some areas of great concern to Army leaders. One area of continuing
    concern is the increasing number of suicides and attempted suicides.
    The loss of any soldier is a tragedy, and we remain dedicated to
    suicide prevention. A General Officer Steering Committee is reviewing
    the Army Suicide Prevention Program with a focus on better integrating
    and strengthening our efforts to decrease the current trend. This is a
    multi-disciplined approach that includes Army researchers, behavioral
    health professionals, legal professionals, law enforcement
    professionals and chaplains. Central to the program are actions begun
    in 2007 to reduce the stigma associated with seeking help for mental
    health issues. We are also reinvigorating in small unit leaders and
    teammates the responsibility to be proactive in identifying issues and
    behaviors that may signal suicidal behavior.
        The Army Chaplain Corps' ``Strong Bonds'' Training Program is
    expanding to reach more soldiers and family members to develop
    relationship-building skills intended to reduce failed relationships,
    the leading stress factor associated with completed suicides. The
    Army's Medical Command is recruiting and hiring additional behavioral
    health providers, and screening all soldiers for possible mental health
    problems during Initial Entry Training, as well as during pre- and
    post-deployment health assessments. In addition, commanders have
    continued to emphasize Battlemind Training, which is designed to build
    resiliency for soldiers and families.
        Our plan for providing comprehensive mental health support to our
    soldiers includes continuing to expand our capacity for behavioral
    health treatment, and improving the continuity of care between medical
    facilities and providers, to include Veterans' Administration treatment
    facilities for Reserve component soldiers. Future steps include the
    development of an action plan utilizing core strategies in developing
    life-coping skills, maintaining constant vigilance, encouraging help-
    seeking behaviors, reducing stigma, maintaining constant surveillance
    of behavioral health data, and integrating and synchronizing unit and
    community programs.
        The longstanding Army Family Action Plan (AFAP) is a bottom-up
    system that also provides a means for soldiers and their families to
    inform leadership about what is working, what is not working, and what
    might be done to make improvements. As a result of AFAP input,
    servicemembers' group life insurance benefits increased, family support
    groups have been institutionalized, and new programs for single
    soldiers have been introduced.
        We are strengthening programs and services so that the well-being
    of our men and women remains at the forefront of Army life. These
    programs address personal issues around substance abuse, suicide
    prevention, and sexual assault as well as personnel issues involving
    diversity, safety, occupational health, equal employment opportunity
    and comprehensive deployment cycle support.
                            congressional assistance
        Recruiting, retaining, and providing for the well-being of the best
    Army in the world requires a significant commitment by the American
    people. The Army is grateful for the continued support of Congress for
    competitive military benefits and compensation along with incentives
    and bonuses for soldiers and their families and the civilian workforce.
        Congress recently authorized pay raises sufficient to provide 3.5
    percent increase in compensation for soldiers for fiscal year 2008. The
    Army is programming a 3.4 percent pay raise for fiscal year 2009 and
    would appreciate Congress' support in this plan.
        The Army also thanks Congress for new ability to consolidate
    special pay, incentive pay and bonuses authorities which will give the
    Army the necessary flexibility to direct programs at specific needs,
    such as a Warrior Pay program to pay Soldiers who are frequently
    deployed.
        I would like to emphasize that your tremendous support has proven,
    and will continue to prove, absolutely essential to Army readiness.
    From recruiting and retention piloting authorities, to funding directed
    at caring for soldiers and families, your yeoman efforts serve as a
    catalyst for success--be it on the battlefield, or at home stations
    across the Army. We are Growing and Transforming the Army in a period
    of prolonged war. We will do so with young men and women of the highest
    caliber whose willingness to serve portends an immeasurable aspect of
    quality and commitment. We look forward to meeting the challenges ahead
    with your continued leadership and support for the Army.

        Senator Ben Nelson. Thank you, General.
        Admiral Harvey?

      STATEMENT OF VADM JOHN C. HARVEY, JR., USN, DEPUTY CHIEF OF
         NAVAL OPERATIONS (MANPOWER, PERSONNEL, TRAINING, AND
                     EDUCATION), UNITED STATES NAVY

        Admiral Harvey. Yes, sir. Chairman Nelson, Ranking Member
    Graham, distinguished members of this subcommittee, I
    appreciate the opportunity to appear before you today on behalf
    of the 330,000 Active Duty and 70,000 Reserve component sailors
    currently serving our Nation.
        Thanks in no small part to the extraordinary support and
    work of this committee and its professional staff, your Navy
    today is ready, relevant, and responsive. We are recruiting a
    high-quality force, and we are retaining those sailors we need
    to sustain a high-quality force, and we intend to keep it that
    way.
        We're sustaining our Nation's engagement in Iraq and
    Afghanistan, both directly and in support of Army and Marine
    ground forces, and we are simultaneously strengthening our
    engagement around the world, in keeping with the guidance in
    our new Cooperative Maritime Strategy for the 21st Century.
        I would like to give you an example of what your Navy is
    doing on any given day. Last week, on February 20, the Nation's
    attention was focused on the U.S.S. Lake Erie, one of our Aegis
    cruisers, as it successfully engaged a failing satellite with a
    Navy standard missile launched by Fire Controlman Second Class
    Andrew Jackson of Raytown, MO. But, also on February 20, just
    as Lake Erie was engaging the satellite in an extremely
    challenging and complex real-world scenario, our Navy was also
    operating newly developed riverine forces in the Euphrates
    River, near the Haditha Dam. Navy SEALs were pursuing al Qaeda
    deep in Afghanistan and throughout Iraq, and the Harry S.
    Truman Carrier Strike Group and the Tarawa Expeditionary Strike
    Group, just entered through the Straits of Hormuz into the
    Gulf, supporting Operation Iraqi Freedom (OIF) and Operation
    Enduring Freedom (OEF).
        February 20 was a day on which 127 of our 279 ships--about
    46 percent--were underway or deployed, including 2 aircraft
    carriers and 5 big-deck expeditionary warfare ships. That day,
    your Navy had 54,000 sailors forward deployed overseas,
    including about 24,000 sailors in the Central Command (CENTCOM)
    area of operations (AOR), of whom 10,000 were afloat and 14,000
    were boots-on-ground in various capacities. On that day, 1,700
    sailors from our Navy medical team--doctors, nurses, and
    corpsmen, of whom 400 are reservists--were deployed to the
    European Command and CENTCOM AOR in support of OIF and OEF,
    from Landstuhl to Balad.
        On February 20, we had approximately 10,000 sailors on
    individual augmentation missions, serving in roles ranging from
    our traditional areas of expertise in intelligence, medical
    support, explosive ordnance disposal, and combat-zone
    construction, to delivering new capabilities in areas like
    civil affairs, Provincial Reconstruction Teams, running
    detainee operations, and combating improvised exposive devices
    while embedded in Army and Marine tactical units.
        Also in the CENTCOM AOR on 20 February, three of our
    surface combatants were engaged in anti-piracy operations in
    and around the Horn of Africa, attempting to ensure the flow of
    relief for famine and drought conditions in those bereaved
    countries.
        Sailors in the Naval Forces, Europe, region supported
    President Bush's trip to Africa with Operation Nomad Fire,
    while the U.S.S. Fort McHenry and highspeed vessel Swift
    continued the inaugural deployment in support of Africa
    partnership stationing in the Gulf of Guinea, where 14 percent
    of our Nation's oil is generated.
        On February 20, we had frigates and P-3s partnering with
    the Coast Guard, conducting counternarcotics operations in the
    Caribbean and off the coast of South America, an operation
    which has resulted in seizing 4.4 metric tons of drugs, just
    since December and January.
        Closer to home, in Newport News, on the 20th, we saw
    construction continuing on our newest nuclear-powered aircraft
    carrier, the U.S.S. George H.W. Bush. Finally, on that day, we
    had about 870 of our newest recruits conducting the battle
    stations-21 exercise at Great Lakes, the culminating experience
    of their initial training at boot camp.
        On February 20, the common element in all these missions,
    from the high-end operations of our Aegis weapon system, to the
    low-tech, but far more demanding, riverine mission in the
    combat zone, was our people. It is the Navy's people who are
    making it all happen, executing these important missions and
    achieving great success. It is that same Navy that accomplishes
    all these diverse tasks; and our Navy's people--our young men
    and women who have volunteered to serve a cause much larger
    than themselves, deserve all the credit and our gratitude for
    the immeasurable achievements made in the defense of our
    Nation.
        In the years that have passed since September 11, your Navy
    has undertaken a truly significant reshaping in order to
    develop the capability to engage worldwide at every level of
    warfare and peace maintenance, while still maintaining our
    ability to dominate the blue water anywhere around the globe.
        So as we approach our steady-state force levels of about
    322,000 sailors in the Active component and 68,000 sailors in
    the Reserve component, it is clear we will not become just a
    smaller Navy, we will be a different Navy. To get the essential
    manpower, personnel, training, and education pieces of this
    different Navy right, we are putting together all the component
    parts of our value chain for people to ensure we have the right
    sailor in the right job at the right time with the right
    experience, a concept we call ``Fit.'' Our efforts will ensure
    we are still ready to respond to any mission at any time,
    anywhere, from the deep ocean to well beyond the shoreline.
    Your Navy is a Service whose routine forward presence around
    the world, actively supporting friends and allies, pursuing our
    enemies, and maintaining the global maritime stability upon
    which our economic well-being depends, clearly illustrated by
    the many missions we accomplish on a typical day, is a fact
    now, and will certainly remain so for the indefinite future.
        On behalf of all our sailors, Active and Reserve, I wish to
    thank this committee for their steadfast support of all our
    Navy people who are doing so much for so many every day. I am
    standing ready to respond to your questions, sir.
        Thank you.
        [The prepared statement of Admiral Harvey follows:]
              Prepared Statement by VADM John C. Harvey, Jr., USN
                                  introduction
        Chairman Nelson, Senator Graham, and distinguished members of the
    Personnel Subcommittee, thank you for providing me with the opportunity
    to appear before you to present an overview of Navy's recruiting,
    retention, and compensation programs.
        I want to express my deep appreciation for your support of the many
    new and enhanced authorities to support sailors and their families
    included in the National Defense Authorization Act for Fiscal Year
    2008. I am particularly pleased you included Defense Officer Personnel
    Management Act (DOPMA) Control Grade Relief and an increase in senior
    enlisted strength authorization, which will prove essential to our
    ongoing efforts to properly size and shape the Navy Total Force of the
    future.
        During testimony last year, I informed this subcommittee of our
    challenge to sustain core capabilities and readiness, while
    simultaneously building the future naval fleet and developing a
    workforce capable of operating, fighting, and leading in a variety of
    challenging environments. Demands on the Navy Total Force are growing,
    and our ability to deliver sailors with the skills required to meet
    those demands is becoming increasingly challenging in an austere fiscal
    environment and ever more-competitive recruiting and retention
    marketplace.
        I expressed that recruiting, personnel management, training, and
    compensation systems which served us well in the past, would not be
    sufficient to deliver the workforce of the future. Sustaining the All-
    Volunteer Force through recruiting, developing, retaining, and taking
    care of this Nation's best and brightest young Americans is my primary
    responsibility and most solemn obligation. Upon taking the helm of the
    United States Navy, Admiral Gary Roughead established a goal that Navy
    be recognized as a top 50 employer during his tenure as Chief of Naval
    Operations (CNO). The first step toward accomplishing this goal is to
    align the life and career goals of our people with the mission
    requirements of our Navy--current and future--in a way that provides
    the greatest opportunities for personal and professional development.
    Achieving this view of our future for sustaining the high quality All-
    Volunteer Force entails providing a robust pay and benefits package,
    professional and personal fulfillment and affirmation of the value we
    place on sailors, their families, and their selfless service to our
    country.
        During congressional testimony last year, I highlighted three key
    priorities that were the focus for our efforts:

             Navy Total Force Readiness
             Sizing, Shaping, and Stabilizing the Navy Total Force
             Strategies for the Future Navy Workforce

        I want to set the stage for my testimony this year by taking a
    brief look back at each of those areas:
    Navy Total Force Readiness
        To support Navy's mission and sustain combat readiness, we focused
    on elements of readiness subjected to risk by impending recruiting and
    retention challenges, community health issues, and barriers to
    individual readiness and family preparedness.
        In 2007, recruiting and retention efforts focused on communities
    experiencing the most stress associated with the global war on terror:

             Naval Construction Force (Seabees)
             Naval Special Warfare and Special Operations (NSW/
            SPECOPS)
             Health Professionals

        While we are pleased to report significant progress in improving in
    Seabees/NSW/SPECOPS recruiting over the past year, our highest priority
    this year, and where I may need further help, is with health
    professionals.
        We implemented improvements in our Individual Augmentee/Global War
    on Terror Support Assignment (IA/GSA) process by developing a better
    understanding of the shift from an emerging to an enduring requirement.
    We established an effective management plan and process for assigning
    sailors to these critical positions, including a more integrated total
    force approach, and dramatically improved support for sailors and
    families before, during and after deployments. IA/GSA sailors also earn
    points towards advancement and officers are awarded appropriate joint
    credit.
        We made great progress in all areas of sailor readiness and family
    preparedness, focusing on issues of greatest concern, such as support
    to injured sailors, fitness, education and professional development,
    personal financial management, child and youth programs, and sea-shore
    rotation.
        We established a Special Assistant to the CNO to develop and
    implement a coherent and complete plan of action to sustain effective
    casualty care for all our sailors and their families. This plan will
    incorporate, at a minimum, all required elements of the recently
    enacted ``Wounded Warrior Act.''
    Sizing, Shaping, and Stabilizing The Navy Total Force
        Extensive work has been invested in recent years to validate Navy's
    proper force size, through a capability-based analysis of current and
    future force structure and warfighting requirements associated with a
    313-ship, 2,813-aircraft-Navy. That analysis also took into account
    present and projected global war on terror requirements. The outcome
    was an optimized steady-state Active component end strength requirement
    of 322,000, which we anticipate reaching by 2013.
        In June 2007, a Reserve recruiting and retention cross-functional
    team was stood up to address the challenges of resourcing the Reserve
    Force. In conjunction with United States Fleet Forces Command, this
    team is conducting a review of overall Reserve capabilities based on
    Active component requirements. Selected Reserve end strength of 68,000
    is about right, but this analysis will build upon the work of the 2003
    Zero-Based Review of the Reserve Force and may further refine that
    number.
        Having identified the required force size, we shifted our primary
    focus to ``FIT'', which entails force shaping (getting the right
    sailors in the right positions at the right time) and stabilizing
    (establishing a flexible and adaptable personnel management system that
    proactively responds to changing war-fighting requirements). Our goal
    is to build upon last year's efforts with greater emphasis on those
    areas most critical to our role in supporting the Maritime Strategy--
    delivery of training, focus on jointness, language skills, regional
    expertise and cultural awareness, and continued Active Reserve
    Integration efforts, particularly in leveraging Reserve capabilities
    when sourcing global war on terror assignments.
        Although the Navy manpower management system is flexible and
    capable of responding to changes in manpower requirements and force
    structure, recruiting and developing sailors takes time and
    necessitates the best alignment of sailors to the mission they are
    required to perform. Accordingly, Navy is developing a demand-based
    personnel system to better link Fleet requirements to training
    resources and pipelines necessary to fulfill a unit's mission.
             where we are today--sustaining the all-volunteer force
    Strategies for the Future Navy Workforce
        The Strategy for Our People (SFOP) provides the framework through
    which we will continue to shape our workforce into a diverse Navy. Our
    Navy has undergone tremendous change over a relatively short period of
    time, not only in terms of expanding nontraditional missions, in the
    way that we operate, fight, and lead, or in regard to force structure
    changes, but certainly from a personnel standpoint. The numbers of
    Active-Duty and Selected Reserve sailors has steadily declined since
    2002, in part due to our shift to more technologically advanced, less
    manpower-intensive platforms and weapons systems. Despite the
    technological advances, maintaining the right balance between people
    and warfighting capabilities will continue to prove challenging in an
    increasingly constrained fiscal environment. As we move to a leaner,
    more sea-centric, and technologically advanced force, we must increase
    our focus on investing in our most valuable asset--our people.
    Readiness
        By incorporating lessons learned from past experiences, sailors and
    their families are better prepared today for the range of operations
    they're asked to support. Navy Fleet and Family Support centers
    worldwide are improving support for families of deployed sailors, as
    well as supporting them during disasters such as the 2007 San Diego
    fires.
        As GSA detailing is new for most sailors and their families, Navy
    continues to tailor deployment services and support to the unique
    situations of IA sailors and families. IA sailor, family and command
    handbooks are posted on the Web and provide comprehensive information
    on GSA deployment preparation, readiness and reunion issues. Fleet and
    Family Support Centers and Command Ombudsmen distribute a monthly GSA
    Family Connection Newsletter to GSA families.
        Additionally, Navy improves sailor readiness and family
    preparedness through a number of Morale, Welfare and Recreation (MWR)
    programs, Quality of Life programs and services assessments, fitness
    development, and family financial readiness education.

             Physical Readiness is being institutionalized across
            Navy through the ``Culture of Fitness'' program, which focuses
            sailor and command attention on the entire scope of healthy and
            physically fit sailors.
             Liberty Programs are offered to sailors in alcohol and
            tobacco-free Liberty Centers, which serve as ``family rooms''
            that promote camaraderie among single and unaccompanied
            sailors, while providing healthy recreation alternatives.
             Sailor and Family Assessments solicit feedback from
            sailors, families, and command leaders on Navy life, programs,
            and services, which lead to program changes focused on
            providing an optimal level of support.
             Family Financial Readiness is important to mission
            readiness and improves retention. Navy provides educational
            programs tailored to family members and teens. We have also
            implemented a career life-cycle-based training continuum that
            directs when, where, and how sailors receive specific Personal
            Financial Management (PFM) training.
    Shaping and Stabilizing the Force
        Efforts to align the career goals of sailors, through learning and
    development, with Navy's mission requirements, are at the core of
    shaping the force. Stabilizing the force cannot be accomplished without
    changing programs, practices, policies and laws, in ways that promote
    improved life-work balance. We must align the life and career goals of
    sailors with the mission requirements of the Navy in order to sustain
    warfighting readiness; and ensure we deliver the sailor required to
    operate, fight, and lead the Fleet of the future.
        We know IA/GSA requirements will remain for the foreseeable future,
    and as such, we established long-term support processes. Additionally,
    the Cooperative Strategy for 21st Century Seapower calls for new
    capabilities and capacity. We will leverage the Reserve component to
    meet these demands; develop an enduring cultural, historical, and
    linguistic expertise in our Total Force, and further our efforts to
    maximize Navy's contribution to the global operations.
    Individual Augmentation/Global War on Terror Support Assignment
            Detailing
        Significant progress has been made in filling IA requirements,
    particularly in high demand skill sets. In many cases, Navy identified
    skill sets resident in lesser-stressed communities and fulfilled
    requirements with alternate sourcing. This flexible response, coupled
    with effective strategic communications to the Fleet, reduced some
    uncertainty of repeat IA deployments and helped provide predictability
    and stability for sailors and their families.
        Through GSA Detailing, we are filling the majority of joint
    warfighting requirements by our mainstream assignment processes.
    Sailors now have increased influence over when they choose to do an IA,
    improved management of their careers, and longer ``lead times'' for
    preparation, improving sailor readiness and family preparedness for
    these long deployments.
        GSA sailors receive Permanent Change-of-Station (PCS) orders to San
    Diego or Norfolk and Temporary Duty Under Instructions (TEMDUINs)
    orders for all training and movement. PCS orders allow for moving
    dependents to Fleet concentration areas with significant support
    services and infrastructure. Advancement boards will continue to stress
    the value of GSA and IA tours. Other benefits include advancement
    points, flexible advancement exam options, and joint credit. Execution
    of GSA detailing requires the merger of two systems currently operating
    in parallel--GSA and the Individual Augmentation Manpower Management
    (IAMM) systems. Placing global war on terror billets and IA
    requirements into the normal detailing process will improve unit
    manning stability. Navy Personnel Command and USFF will collaborate to
    balance Fleet readiness and GSA requirements. Until GSA detailing is
    fully implemented, USFF will continue to fill a portion of IA
    requirements through IAMM. The short-term goal of GSA detailing is to
    create an environment where GSA assignments are the normal business
    practice and IAs are the exception.
        In support of Central Command, we have more personnel ashore than
    afloat. Today, over 14,000 sailors support Operation Iraqi Freedom
    (OIF)/Operation Enduring Freedom (OEF) staffs and missions ashore,
    while over 12,000 sailors afloat in Central Command are performing
    their traditional Maritime Missions. As of 2007, we have deployed or
    mobilized 62,811 sailors (17,435 Active component/45,376 Reserve
    component) as IAs since OEF in 2001. Almost 75 percent of IAs are
    employed using core Navy competencies, such as electronic warfare,
    airlift support, cargo handling, maritime security, medical support,
    explosives engineering, and construction. This additional commitment of
    providing IAs comes at a cost--we are carefully monitoring the strain
    on our PCS and TEMDUINs accounts to ensure we can execute core Navy and
    global war on terror missions while also fostering the necessary
    development of our people. There is also a ``cost'' in terms of filling
    global war on terror support assignments by removing sailors from their
    primary assignments. Currently, 8,000 Active Duty sailors are on these
    assignments, requiring others to ensure their duties in the affected
    commands are carried out.
    Active-Reserve Integration
        Through Active-Reserve Integration (ARI), Navy is increasing its
    overall capability and readiness. We continue to blend units in many
    communities, including Intelligence, NSW/EOD, Medical Support,
    Helicopter Combat Support, Riverine, Maritime Expeditionary Security
    Force and Naval Construction Battalions (Seabees), as well as surface
    and aviation warfare. We are working on developing methods to smooth
    the transition between components. One of our key Task Force Life Work
    initiatives is implementing an Active component/Reserve component ``On/
    Off Ramp'' concept, which may require legislative relief.
        Personnel planning, in support of global war on terror, includes a
    sustainable operational Reserve Force with capacity to support current
    operations, while maintaining a Strategic Reserve capability.
    Additionally, Reserve sailors are now aligned with Navy region commands
    to better support a Total Force response to Homeland Defense/Security
    and natural disaster requirements. We are also more closely aligning
    Active component/Reserve component medical care and medical case
    management policies and practices. Caring for sailors mandates a Total
    Force approach that will ensure sailors receive the best possible
    medical care.
    Diversity Campaign Plan
        In the past year, we focused on implementing the CNO's Diversity
    Concept of Operations (CONOPs). We stood up the Diversity Directorate,
    growing from an office of 3 to its present size of near 20. The
    Diversity Directorate made great strides in working to improve
    diversity in our Navy. The CONOPS called for focus on five key areas:
    accountability, outreach, training, mentoring, and communication.
        We initiated an accountability regimen that identified areas Navy
    enterprises and communities can leverage to ensure the Navy's talent is
    promoted and retained. In taking a snapshot view of their diversity,
    the enterprises and communities were able to identify baseline
    diversity statistics, potential negative or positive trends, and areas
    for potential focus or study. Four Enterprises completed their initial
    review and briefed the CNO, while the remaining enterprises and
    communities are on deck this year. Once we have completed the initial
    round of reviews, we will go back annually and revisit the review,
    following up on how the enterprises and communities have worked to meet
    the challenges and goals outlined in their initial accounting.
        As part of the initiative to spread the word of Navy education and
    career opportunities, we worked to create a focused, sustained outreach
    program with identified individuals and affinity groups, such as the
    National Society of Black Engineers and the Society of Hispanic
    Professional Engineers. Additionally, we encouraged increased Flag
    level and junior officer and enlisted participation in the two Navy-
    affiliated affinity groups, the National Naval Officers Association and
    the Association of Naval Service Officers. These groups are
    instrumental in maintaining and retaining our diverse Navy force,
    particularly through their mentoring and professional development
    efforts.
        We created a Navy-wide mentoring culture by developing a consistent
    framework that will ensure all sailors have mentors and mentoring
    networks. Our draft mentoring instruction is currently in circulation
    with officer and enlisted leadership.
        From E-1 to O-7, we provide detailed training curricula to
    institutionalize the importance of diversity in the Navy. At every
    level of the Navy's training continuum, we emphasize the benefits of a
    diverse organization and how those benefits relate to our core
    principles.
        Finally, none of these efforts would be effective without a
    strategic communication plan to deliver a concise, consistent, and
    compelling message on diversity to both internal and external
    audiences. In the past year, we layered our communications by
    distributing the diversity message through a variety of internal media.
    We are also working to increase our success stories through external
    media; including those most important to members of the diverse
    affinity groups with whom we have developed relationships.
    Millennial Generation Values
        We are quickly learning that the one-size-fits-all personnel
    policies we have in place today won't work in the future. The young men
    and women of the Millennial Generation, those junior Officers and
    Enlisted under the age of 24, expect to change jobs or career fields
    multiple times over their life and expect a life-work balance that
    allows them to serve as well as explore outside interests and attend to
    personal and family needs. Their career paths, pay, and benefits must
    evolve to a more flexible system that supports mid-career off and on-
    ramps, part-time service and temporary sabbaticals.
        Inflexible Navy careers and the adverse impact to quality of life,
    particularly among junior sailors, is borne-out in recent survey data.
    Sixty-percent of respondents on a 2005/2006 survey of Surface Warfare
    Officers (SWO) reported the ability, or lack thereof, to start a family
    or plan personal activities significantly influenced their decision to
    leave active duty. Of those who decided to make Navy a career, only 26
    percent reported the current SWO continuation pay was a strong
    influence on their decision. Additionally, as of the beginning of
    December 2007, retention of SWOs in Year Group 2002 was at 19.4
    percent, against a goal of 33.3 percent. In a 2006 Naval Aviation
    Survey, 49 percent of female officers said that to be successful in the
    aviation field they have to choose their career over marriage, and 71
    percent said to be successful they have to choose their career over
    having children. However, many of the things that are important to
    women in the workplace are proving to be important to both the men and
    women of the Millennial generation--family, stability, a true sense of
    fulfillment and value from their work. Continuing retention challenges
    demonstrate a need to develop new and different ways to influence long-
    term retention decisions.
        Military service is not often first among career options
    Millennials consider. Today's influencers, most of who have never
    served in the military, are often not inclined to steer Millennials
    toward a military option. We are responding to this challenge by
    meeting Millennials on their terms, appealing to their search for
    something more, their sense of service, their spirit of volunteerism
    and their interest in the world around them. The Navy must recognize
    and respect generational traits to ensure it appeals to and competes
    with the best of industry for the talent we seek to recruit and retain.
    Initiatives such as the Navy's Diversity Campaign and Task Force Life
    Work will help us achieve that goal. Our focus in the next several
    years is building a menu of retention options for our changing
    workforce and striving to capitalize on the diversity and differences
    of our Navy Total force to ensure our Navy is a family-friendly ``Top
    50'' place to work.
                         building a path to the future
        This Nation commits our greatest talent and good will toward
    achieving peace and freedom for a better future, at home and abroad.
    The readiness we've attained, and global leadership role we hold, in
    warfighting, diplomacy, maritime security, and humanitarian assistance,
    are all dependent on the honor, courage and commitment of the men and
    women in our All-Volunteer Total Force. To maximize their potential and
    provide the most ready force to the fleet and joint warfare commanders,
    we will continue to improve upon our personnel systems, policies, and
    development tools. Our investment will offer greater life-work balance;
    place the right sailor in the right job at the right time, and prepare
    our 21st century leaders to operate adeptly in our dynamic global
    environment.
    Achieving FIT
        The concept of FIT is centered on the idea of delivering the right
    sailor to the right job at the right time. ``Right sailor'' is defined
    as an individual with the proper mix of knowledge, skills and abilities
    to match the demands of the assignment--the ``right job.'' The timing
    element refers to both the timeliness of that sailor arriving in the
    position to support the operational unit's schedule, and the right
    point in the sailor's career to provide the seniority and leadership
    required. We must assign sailors to positions that draw from and
    enhance their talents and strengths, and emphasize continued
    professional growth and development, through learning and experience.
    Achieving FIT means we enhance their development in stages that align
    to career milestones, affording them the opportunity to progress and
    remain competitive for advancement and promotion. Over the next year,
    we will continue to focus our efforts to achieve FIT by:

             Developing our people, through learning and
            experience, in a way that fulfills the promise of our people
            and aligns their careers aspirations with Navy commitments
             Meeting our recruiting and retention challenges by
            modifying our programs, policies, and incentives to meet the
            life and career goals of our people, providing an appropriate
            balance between the two, while meeting the mission requirements
            of the Navy
        Achieving FIT--Development of our People
        Training and education are the critical enablers to developing the
    knowledge, skills, and abilities of our sailors. In accordance with the
    Maritime Strategy, we will focus our efforts on delivery of training,
    emphasis on joint management, development and training continuum,
    graduate education programs, and implementing Navy's Language Skills,
    Regional Expertise and Cultural Awareness Strategy.
            Train to Qualify
        Navy ships must be designed and developed based on capability
    requirements, a sustainable CONOPs, robust Human Systems Integration,
    and sound Acquisition Strategies. These upfront deliverables drive the
    analysis to properly operate and maintain ship systems. In May 2007,
    the Vice Chairman, Joint Chiefs of Staff, approved a Systems Training
    Key Performance Parameter (KPP) establishing training thresholds and
    objectives for appropriate acquisition programs. The new KPP ensures
    performance standards and training are developed based on Personnel
    Qualification Standards, Navy Mission Essential Task Lists, and
    Objective Based Training. The Littoral Combat Ship (LCS) is one of the
    first programs to use the Systems Training KPP.
        The LCS Program makes use of many other concepts that pose new
    challenges, as well as presenting many opportunities to improve the
    effectiveness and efficiency of the Surface Force. The Navy's
    Cooperative Maritime Strategy identifies a total requirement of 55 LCS
    ships in the 313-ship Navy Shipbuilding Plan. Maintaining readiness and
    sustaining operations on these ships requires improved manpower,
    personnel, training, and education solutions.
        The LCS Train-to-Qualify training methodology sets in motion a
    challenging new training paradigm for the Surface Force critical to
    supporting the LCS manning, readiness, and sustainment. The training
    methodology is conducted in an off-ship training environment that
    trains an individual in the knowledge, skills and abilities required to
    competently perform basic tasks associated with specific shipboard
    watch stations or positions. Training delivery methods include some
    combination of classroom instruction, computer-based lessons, live and
    virtual simulations, and live evolutions, in port and, where
    appropriate, at sea. Delivery is conducted in both individual and team
    training environments and focuses on achieving qualification and
    proficiency prior to reporting on the ship.
        Sailors are prepared to join an LCS core or mission package crew
    via billet training tracks that satisfy the required knowledge, skills
    and abilities. Sailors' previous schools and qualifications are
    examined to avoid redundant training and tailored to fill in the gaps.
            Navy Learning and Development Strategy
        During the last year, a series of reviews were conducted to ensure
    our learning and development strategy for sailors would support not
    only the Cooperative Maritime Strategy, but be fully integrated with
    Navy's SFOP. Our goal was to look objectively at the impact of changes
    made in how we prepared our sailors for their Navy careers over the
    last 5 years, a period referred to as the Revolution in Navy Training.
    Tasks consisted of:

             A review of changes made to learning strategies
             A review of training organizational alignments
             Evaluation of learning technology acquisitions
             Benchmarking ourselves against projected advances in
            learning within industry, academia, and our sister Services

        The results verified efforts our Navy learning organization is
    undertaking and we have made minor adjustments to learning
    organizations and investment strategies for the future.
        We are well-positioned to train and prepare our sailors for the new
    technologies and platforms they will be tasked to operate, fight, and
    maintain in the future. The accelerating rate of technology insertion
    and new platform acquisition drives our manpower and training
    organizations to continued close collaboration with all Navy
    enterprises to ensure our learning strategy remains fully-integrated
    and resources are optimized to support current and future fleet
    training readiness. Investments in new learning technology and delivery
    systems will fully support the professional development of our sailors
    necessary to man the future fleet and further our efforts to become a
    competency-based Total Force.
            Joint Management, Development, and Joint Training Continuum
        Navy remains committed to the Chairman's vision for Joint
    Development in both the officer and senior enlisted communities across
    the Total Force. In 2007, we began developing an action plan for Joint
    Development, which will improve how we plan, prepare and assign Navy
    leaders to joint positions in a way that maximizes Navy's contribution
    to joint, interagency, and multi-national coalition partners.
        Joint Qualification System (JQS). Authorities enacted by the John
    Warner National Defense Authorization Act of Fiscal Year 2007, provided
    us with the first significant updates to the Goldwater-Nichols Act in
    over 20 years. Last August and September, the Joint Staff conducted
    Experience Review Panels under the new JQS, recognizing the changing
    nature of jointness and allowing the Services to increase the pool of
    O-6s eligible for promotion to flag via the new experience path. We are
    working diligently with DOD to continue implementing the JQS and to
    extend jointness to our Reserve Force.
        Joint Training Continuum/Professional Military Education (PME). The
    Navy continues its emphasis on PME designed to prepare its leaders for
    challenges at the tactical, operational and strategic levels of war.
    During the last year we met several key milestones in implementing the
    Navy's PME Continuum with its embedded JPME for E-1 through O-8. We
    conducted two flag-level courses to prepare future 3-star officers to
    serve effectively as Maritime Component Commanders for Joint Force
    Commanders. One of those courses was a Combined Course with flag
    officers from our partner nations in the Pacific Command. The course
    was designed to develop and deepen relationships to meet regional
    challenges and advance understanding of security issues facing the
    participating nations.
        The Naval War College (NWC) successfully completed its first
    academic year with the disaggregated intermediate and senior-level
    courses which was approved by CJCS for JPME phase II. Officer student
    throughput for the senior and intermediate-level courses, resident and
    non-resident, increased with significant numbers of graduates
    immediately assigned to follow-on joint duties in accordance with
    established assignment policies. All of these efforts directly
    contribute to Navy's continued development at the operational-level of
    war.
        The Primary PME Course for junior officers (O-1 to O-3) and Chiefs
    (E-7 to E-8) completed its first year with an enrollment of about
    10,000 sailors. In January 2008, the Navy implemented the PME Continuum
    by launching the Introductory PME Course for sailors (E-1 to E-4) and
    the Basic PME Course for leaders in the grades of E-4 to E-6. With the
    complete fielding of the Continuum, PME will become an important
    element of assignment and career progression for all sailors, officer
    and enlisted. The Navy will continue to use resident and distance
    learning options to provide the capability and flexibility to prepare
    Total Force leaders--military and civilians--for the operating
    environments of today and the future.
            Education Strategy
        In 2007, we completed the second in a series of studies on graduate
    education within the Navy. Our examination yielded some valuable
    insights into the role, timing and content of education as a key
    enabler of the Total Force. In 2008, we will apply those insights to
    the development of a strategy that addresses graduate education
    requirements to support successful execution of our joint and maritime
    missions. At the core of the Education Strategy will be an emphasis on
    the knowledge elements delivered through graduate education that will
    enable the Total Force to maximize its effectiveness. When coupled with
    the ongoing work on the Learning and Development Strategy and the PME
    Continuum, the Education Strategy will help Navy deliver enhanced
    capability to meet the challenges laid out in the Cooperative Maritime
    Strategy.
        Language Skills, Regional Expertise, and Cultural Awareness
            Strategy
        As we have seen in our recent missions with U.S.N.S. Comfort in
    Latin America and the U.S.S. Peleliu Pacific Partnership in Southeast
    Asia, our effectiveness overseas is as dependent on our ability to
    comprehend and communicate as it is on firepower and technological
    superiority. Facility with languages, expertise in regional affairs,
    and broad awareness of foreign cultures is essential to effective
    interaction with our diverse international partners and emerging
    friends. These competencies are key to theater security cooperation,
    maritime domain awareness, humanitarian efforts, and shaping and
    stability operations; they are crucial to intelligence, information
    warfare, and criminal investigations. They are a prerequisite to
    achieving the influence called for in the Maritime Strategy.
        January 2008, we promulgated Navy's Language Skills, Regional
    Expertise, and Cultural Awareness Strategy--a plan that aligns and
    transforms Language Skills, Regional Expertise and Cultural (LREC)
    across the Navy Total Force. The LREC Strategy galvanizes the following
    efforts:

             The Foreign Area Officer (FAO) Program has been
            reconstituted as a community restricted line community. FAOs
            will augment Navy Component Commands, forward-deployed Joint
            Task Forces, Expeditionary and Carrier Strike Groups, American
            embassies, and coalition partners. At full operational
            capability, Navy FAOs will number 400. To date, 138 have been
            identified with selection boards convening twice each year to
            select more.
             The Personnel Exchange Program (PEP) is being
            realigned for consistency with theater engagement strategies of
            Navy Component Commanders. PEP billets with some of our
            traditional allies will be redistributed to support new
            relationships with emerging partners. The program will be made
            more competitive and career enhancing, particularly for
            commissioned officers. As theater security cooperation is
            indeed a core Navy mission, PEP is an essential ingredient in
            global and theater engagement strategies.
             Language Instruction. We are increasing language
            instruction for non-FAO officers at the Defense Language
            Institute (DLI). Beginning in fiscal year 2008, OPNAV
            programmed 100 seats per year for officers in non-FAO
            designators. Officer Community Managers at the Navy Personnel
            Command now have greater flexibility to incorporate DLI
            training into the career paths of officers whose duty
            assignments require facility with a foreign language.
             Foreign Language Skills Screening. We continue to
            screen for foreign language skills at all Navy accession points
            and ensure the information is captured in personnel databases.
            The data allows us to identify and track these skills for
            operational purposes. As I reported last year, we executed a
            one-time Navy-wide self assessment of language capacity in
            2006, which yielded unprecedented visibility on this
            increasingly critical capability. When we rebase-lined our data
            in July 2007, we counted over 143,000 individual assessments
            (not people--some people are fluent in more than one language)
            of proficiency in more than 300 separate languages and
            dialects. As expected, approximately half the capability is in
            Spanish with large populations of French, German and Tagalog;
            however, exceptional capability--much of it native--is in
            obscure, less commonly-taught languages from remote areas of
            the world. These bi- and multi-lingual sailors are a valued
            capability woven into the fabric of the force.
             Foreign Language Proficiency Bonus (FLPB). We continue
            to enhance the FLPB to incentivize the acquisition,
            sustainment, and improvement of skill in strategic languages.
            Formerly restricted to the Navy's crypto linguists and others
            serving in language-coded billets, FLPB eligibility has
            expanded dramatically to include sailors and officers with
            qualified (i.e., tested) proficiency in critical languages,
            irrespective of billet. Consistent with National Defense
            Authorization Act for Fiscal Year 2007, we modified our
            policies to pay incentives at lower proficiency for sailors
            engaged in special or contingency operations. Eligibility is
            contingent upon successful completion of the Defense Language
            Proficiency Test.
             Navy Center for Language, Regional Expertise and
            Culture (CLREC). Through the Center for Information Dominance
            (CID) in Pensacola, we continue to expand language and culture
            training support to an increasing number of Fleet constituents.
            Conceived in February 2006, CID CLREC started as a clearing-
            house for LREC-related training, but has gradually expanded its
            portfolio to include development of individual country and
            regional studies tailored to Fleet operations. CID CLREC
            developed collaborative relationships with NWC, Naval
            Postgraduate School, and the U.S. Naval Academy, as well as
            with the DLI, in Monterey, and the language and cultural
            centers of our sister Services. These cooperative relationships
            yielded promising results to date, including dedicated pre-
            deployment training to the three Riverine Squadrons which have
            or are deploying to Iraq, as well as the aforementioned support
            to both U.S.N.S. Comfort and U.S.S. Peleliu in 2007.
             LREC Instruction. We continue to provide LREC
            instruction to the Total Force. Naval Postgraduate School's
            (NPS) Regional Security Education Program embarks NPS and U.S.
            Naval Academy faculty and regional experts in Navy strike
            groups to deliver underway instruction in regional threats,
            history, current affairs and cultural/religious awareness.
            Similarly, NWC continues to develop integrated regional content
            in its resident curricula, and developed PME modules containing
            regional content available both in resident and in non-resident
            venues, including on-line.
        Achieving FIT--Meeting the All-Volunteer Force Recruiting
            Challenges
        During 2007, Navy executed a focused, integrated Active/Reserve
    recruiting effort, attaining 101 percent of Active enlisted accession
    goals and 100 percent of Reserve enlisted affiliation goal. Officer
    recruiting, however, fell short obtaining 88 percent of the Active
    component goal and 52 percent of the Reserve component goal.
        Our goal is to position the Navy as a top employer, in order to
    gain a competitive edge in the market and provide our people the
    appropriate life/work balance, not only to attract and recruit them,
    but to retain them. Retention will be defined as providing the
    opportunity to transition between types of naval service (Active,
    Reserve, civilian, or contractor support). We aim to provide a
    continuum of service to our people, affording our Navy the maximum
    return on our most valuable investment. This year, we will focus our
    recruiting and retention efforts in the areas that pose the greatest
    risk and challenge to our ability to sustain the All-Volunteer Force.
            Medical Recruiting
        As mentioned earlier, meeting medical program recruiting goals is
    our highest recruiting priority for 2008. While overall manning levels
    within the medical department are improving, we continue to face
    retention challenges in physician critical specialties of which many
    require 3-7 years of specialty training beyond medical school. We
    currently face manning shortages of medical professionals. Dental Corps
    is manned at 89 percent (1,007 inventory vs. 1,127 billets) with 70
    percent of our junior dentists leaving the Navy at their first decision
    point. The Medical Service Corps is currently manned at 91 percent
    (2,293/2,512) and while overall Nurse Corps manning levels appear sound
    (94 percent) the Navy has experienced relatively high attrition in the
    junior officer ranks (O-2/O-3). While recruiting medical professionals
    has historically been a challenge, it is it becoming increasingly
    difficult for several reasons:

             There is an increasing shortage of health care
            professionals in the civilian sector
             The number of students attending medical schools has
            increased at a much slower pace the past three decades as
            compared to the overall population growth of the United States
            and the requirement for medical professionals to support that
            growth.
             The demographics of the medical school students have
            changed with females now making up more than 50 percent of the
            students attending medical school.
             New financial scholarships in the civilian sector have
            made military scholarships less attractive.
             Potential recruit concerns derived from the OIF/OEF

        While the recruiting of medical professionals has improved in 2007
    from previous years, Navy still attained only 82 percent of the Active
    component medical specialty mission and 57 percent of the Reserve
    component medical goals. To combat the recruiting challenges and
    continue supporting the increased demand for the OIF/OEF, we
    implemented the following:

             Increased accession bonuses for the Nurse Corps and
            Dental Corps
             Initiated plans for a Medical Corps accession bonus
             Funded a critical skills accession bonus for medical
            and dental school Health Professions Scholarship Program (HPSP)
            participants
             Increased the stipend for HPSP students, as well as
            Financial Assistance Program participants
             Expanded the critical skills wartime specialty pay for
            Reserve component medical designators
             Recently implemented a Critical Wartime Skills
            Accession bonus for Medical and Dental Corps.
             Implemented Critical Skills Retention Bonus for
            clinical psychologists.
            Enlistment Bonuses
        Our incentive programs were a key component of our enlisted
    recruiting success in 2007. The enlistment bonus continues to be our
    most popular and effective incentive for shaping our accessions. The
    authority to pay a bonus up to $40,000 made a significant contribution
    to our Navy Special Warfare and Navy Special Operations recruiting
    efforts. Likewise, our Reserve component success would not have been
    possible without the availability of enlistment bonuses.
            Education Incentives
        Tuition assistance remains a powerful enlistment incentive-offering
    the opportunity to pay for college while serving. The Navy College
    Program Afloat College Education (NCPACE) provides educational
    opportunities for sailors while deployed. The Navy College Fund,
    another enlistment incentive, provides money for college when a sailor
    decides to transition to the civilian sector. In 2007, we initiated a
    pilot program called Accelerate to Excellence, which pays recruits who
    attend community college while in the delayed entry program before boot
    camp then continue school through their initial skills training,
    culminating in a rating specific Associate's Degree. Lastly, our Loan
    Repayment Program allows us to offer debt relief of up to $65,000 to
    recruits who enlist after already earning an advanced degree.
        Achieving FIT--Meeting the All-Volunteer Force Retention Challenges
        The dynamics of retention have shifted from the behavioral patterns
    of previous generations who valued long-term commitments to a new
    generation, most of whom expect to change employers, jobs and careers
    several times in their working life. Our sailors have more choices
    available to them now than ever before. They expect innovative and
    flexible compensation policies, a commitment to continuing education,
    and professional development opportunities. Despite a weakening
    economy, there will be increased competition for our Nation's best
    talent. Retaining our sailors will continue to be challenging due to
    comparable compensation and benefits offered by industry balanced with
    the sacrifices and commitments we ask of our sailors.
        To address these challenges we are aggressively pursuing the use of
    tools that allow us to manage our people to achieve four desired
    outcomes: predictability, stability, personal and professional growth,
    and satisfying real work. To achieve these outcomes, with the goal of
    promoting a ``Stay Navy'' message, we are considering alternative
    manning solutions, providing our sailors with professional
    credentialing opportunities, exploring initiatives that support the
    life/work balance our people desire, and providing greater sailor and
    family support.
            Sea Shore Flow
        Last year, I testified the Navy was becoming increasingly sea-
    centric and that the Navy's first priority was to man sea-duty and
    front-line operational units. As we continue to assess the size and
    shape of the Navy workforce that will be required to meet future
    capabilities, it has become evident that one of the key variables to
    effective management of sailors is to determine the optimal sea-shore
    rotation periodicity. To that end, we stood up the Sea Shore Rotation
    Working Group comprised of representatives from throughout the Navy
    with significant senior enlisted representation. The working group was
    charged with conducting a comprehensive review and overhaul of the
    current plan, to ensure that we man the Fleet with the right sailor, in
    the right job, at the right time.
        Today, it is a pleasure to inform you that we made substantial
    progress in finding solutions that optimize our enlisted career paths.
    We developed an evolutionary method, known as Sea-Shore Flow, for
    determining sea tour lengths for our sailors. Sea-Shore Flow provides
    the optimal balance of sea and shore duty throughout a sailor's career;
    improves Fleet manning; and gives sailors more career choices for
    professional and personal development with improved geographic
    stability. This year we intend to revise the Navy policy that currently
    sets sea tour lengths based solely on a sailor's pay grade to a policy
    that sets sea tour lengths based on the optimal Sea-Shore Flow career
    path for each enlisted community. In some cases this may mean
    shortening sea tour lengths in order to achieve a better FIT in the
    Fleet. In other cases, a market-based rotation system that rewards
    sailors for self-selecting more time at sea, through monetary
    incentives like Sea Duty Incentive Pay, and non-monetary incentives
    like guaranteed geographic stability, may be more effective.
        Although sustaining a more sea-centric military workforce will be
    more costly, the policy is based on optimal Sea-Shore Flow career
    paths, coupled with a market-based rotation system that leverages
    incentive programs will minimize those costs, improve fleet manning,
    and enhance each sailor's life work balance.
            Navy Credentialing Opportunities On-Line
        Since June 2006, the Navy embraced licensure and certification as a
    key means of helping sailors apply their military training and work
    experience in attainment of industry-recognized credentials. We
    conducted extensive research to link the Navy's ratings, jobs, and
    occupations to civilian jobs and applicable civilian licenses and
    certifications. We found that 100 percent of the Navy's enlisted
    workforce has applicable civilian credentials. This program is
    available to over 300,000 enlisted Active and Reserve sailors.
        The Navy Credentialing Opportunities On-Line (COOL) Web site
    (https://www.cool.navy.mil) provides sailors, counselors, family
    members, veterans, prospective Navy applicants, and employers with
    comprehensive information about certification and licensure relevant to
    Navy Ratings, jobs, and occupations. It helps sailors find civilian
    credentialing programs best suited to their background, training, and
    experience; and to understand what it takes to obtain a credential and
    to identify resources that will help pay credentialing fees.
        Clear ``side benefits'' of credentialing can also be seen in the
    use of Navy COOL for recruiting (on-ramp), continuum of service
    (retention), and ultimately transition (off-ramp). The recruiting
    workforce integrated Navy COOL as part of its training and sales
    strategy. Anecdotal evidence has shown that use of Navy COOL in
    recruiting directly increased conversion of new contracts and led to
    higher Delayed Entry Program retention.
        Though retention metrics have not yet been established (funding of
    credentials began October 2007), Navy COOL and credentialing is
    expected to positively impact retention of the workforce. To be
    eligible for Navy-funded credentialing, the sailor must have a minimum
    of 1 year remaining in service. This provides the Navy with at least 1
    year use of enhanced sailor skills and knowledge, and time for the
    sailor to decide to re-enlist to obtain further credentialing
    opportunities. As a transition tool, Navy COOL provides the sailor
    valued information in translating their military training and work
    experience to the civilian workforce.
        COOL Web site usage has been high. There have been over 16 million
    hits since the web site was launched in June 2006, with visitors
    reviewing the site in excess of 9 minutes per visit. Since the
    authorization to fund for credentialing exams began in October 2007,
    over 97.4 percent of sailors completing civilian exams have passed and
    been certified, compared to a civilian pass rate of around 80 percent.
    The evidence is clear, sailor credentialing is not only successful, but
    is also meeting the goals and desires of the sailor and Navy.
            Task Force Life Work Initiatives
        We experienced some success through the use of monetary retention
    incentives such the Selective Reenlistment Bonus; however, monetary
    incentives do not always produce the desired retention effects among
    some population segments in certain specialties or skills. For example,
    female SWOs and female aviators retain at only half the rate of their
    male counterparts, despite the existence of robust retention bonus
    programs in these communities. Because female SWOs comprise more than
    25 percent of the SWO community, insufficient retention among this
    segment of the population has led Navy to explore alternative
    incentives as a means of achieving required long-term retention goals.
        On/Off Ramps. This proposal would provide temporary authority to
    the Navy to test an alternative retention incentive allowing sailors in
    a demonstration program to take an ``intermission'' in their careers
    not to exceed 3 years, to attend to personal matters (family issues,
    civic duties, advanced education, etc.) and then return to active duty
    service. During the ``intermission'' participants would not be eligible
    to receive active duty pays and allowances; however, they would be
    eligible to continue receiving certain active duty benefits (medical/
    dental care, access to commissary, exchange, MWR facilities, and child
    care, etc.).
        Expanded Education Benefits Initiative. The Navy has operated
    educational programs in the past that allowed enlisted sailors to
    attend school for up to 2 years in lieu of a shore tour to complete an
    associate or bachelors degree, but those programs were incorporated
    into the Seaman-to-Admiral program in the late 1990s. As a result, the
    only full-time college programs were commissioning programs; therefore,
    sailors who desired to remain enlisted could not benefit from this
    valuable program. In addition to Tuition Assistance and NCPACE, the
    Advanced Education Voucher program provides educational assistance for
    senior enlisted to earn a bachelor or masters degree in an off-duty
    status. In the next year, we will consider the benefits of several
    education programs specifically targeting the enlisted sailor, similar
    to the discontinued Enlisted Education Advancement Program (EEAP), and
    create a ``Mini-EEAP'', whereby sailors could take 6 months or a year
    between assignments, to complete their degree.
            Improved Sailor and Family Support
        We continue to provide our sailors and their families with a myriad
    of benefits--housing, health care, deployment support, child care,
    family employment support, education, and efforts to improve geographic
    stability. Below is an overview of the sailor and family support
    programs and initiatives we will focus on this year.
        Housing is a key element of the quality of life of our sailors and
    their families by providing suitable, affordable, and safe housing in
    the community, in privatized or government owned housing, or in the
    community.
        Navy successfully privatized 95 percent of its continental United
    States (CONUS)/Hawaii family housing units and recently awarded two
    unaccompanied housing privatization projects. The unaccompanied housing
    projects were the first for the Department of the Defense.
        The first Unaccompanied Housing Privatization project site, Pacific
    Beacon, in San Diego will feature 4, 18-story towers with 941 dual-
    master suite apartments. Two sailors will share an apartment, with
    their own master suite, walk-in closet, and private bathroom. The
    apartments will have eat-in kitchens, in-suite washers and dryers,
    living rooms, and balconies. Sailors will enjoy the comfort, style, and
    privacy of a place they can proudly call home.
        Navy also executed approximately $40 million in Major Repair
    projects in Japan, Guam, Northwest Region, and Guantanamo Bay. Our goal
    to eliminate inadequate housing by fiscal year 2007 was realized by
    having all contracts in place by October 2007.
        Our sailors and their families appreciated these improvements as
    reflected in the Annual Resident Satisfaction Survey, which showed high
    satisfaction levels with Navy housing.
        Navy is also implementing the Homeport Ashore initiative by
    ensuring shipboard sailors have the opportunity to live ashore when in
    homeport. Eleven projects at eight locations were programmed from
    fiscal year 2002-fiscal year 2008. The final projects to complete this
    initiative were approved at Naval Base Kitsap Bremerton, WA, for fiscal
    year 2008 with occupancy by fiscal year 2010.
        Sailor Care Continuum. The Navy has a long and proud history of
    providing outstanding support for all sailors who are wounded, ill, and
    injured. Sailors receive both clinical and non-clinical care through
    established programs. Medical care is coordinated by Navy Medicine
    while non-medical support is provided through sailors' parent commands
    and the Naval Personnel Command with the goal of reintegrating a
    wounded, ill or injured sailor with their Command, their family, and
    their community at the earliest possible opportunity.
        Based on our experiences in OIF/OEF, we see a different mix of
    injuries than we've seen in the past. These injuries often involve
    complex medical issues that require closer coordination of support for
    members and families. Each sailor's situation is different and their
    support must be tailored to meet their unique needs.
        In an effort to ensure we are meeting these obligations, we
    recently examined how we can best close any seams that exist between
    our current organizations and processes as well as applying new
    resources to those sailors and families in the most demanding cases--
    the severely and very severely injured.
        One group that we focused renewed attention on was those sailors
    and their families who are our severely wounded, ill, and injured. The
    Navy's commitment is to provide severely injured sailors personalized
    non-medical support and assistance; to better guide them through
    support services and structures. This is accomplished through
    addressing the non-medical needs and strongly reinforcing the message
    that they, our heroes, deserve the very best attention and care of a
    grateful nation. These individuals and their families often have the
    greatest need for tailored and individualized attention in order to
    deal with personal challenges from the time of injury through
    transition from the Navy and beyond.
        Safe Harbor staff establishes close contact, with each severely
    injured sailor, as soon as he or she is medically stabilized after
    arriving at a CONUS medical treatment facility. Safe Harbor Case
    Managers are located at major Navy medical treatment centers as well as
    the VA Poly-trauma Centers at Tampa, FL, and Palo Alto, CA, and Brooke
    Army Medical Center, San Antonio, TX. Typical assistance provided
    includes: PFM including financial assistance referral and waiving of
    debt, member/family member employment, PCS moves, assisting with non-
    medical attendant orders for assisting attendants, post-separation case
    management, expediting travel claims, and assisting with VA and Social
    Security benefits and remedying personnel/pay issues.
        The Navy's Safe Harbor program, which was established in late 2005,
    was initially stood up to provide these services for those sailors
    severely wounded, ill, and injured as a result of OEF/OIF operations
    but would not turn any severely wounded, ill, and injured sailors away.
    In January 2008 we formally acknowledged the entire population and have
    expanded Safe Harbor's mission. This will increase the potential
    population to about 250 sailors, with about 169 of these in the current
    population. Safe Harbor Case Managers' role has also been expanded to
    provide a far more active engagement to include interactions with the
    new Federal Recovery Coordinators. Overall we believe these changes
    will allow us to continue to provide the individualized non-clinical
    care that each of these individuals and their families deserve.
        Other important initiatives involve support for those individuals
    who are assigned to or volunteer for a global war on terror support
    assignment (individual augmentation). We improved our processes for
    screening, training, and family support at our Fleet and Family Service
    Centers, Navy Operational Support Centers, and Navy Mobilization
    Processing Sites. Our Warrior Transition Program (for returning sailors
    and their families) is just one of the many initiatives working at a
    local level.
        Additionally, in collaboration with other key stakeholders, we're
    enhancing the Navy's Operational Stress Control continuum. Navy's
    continuum serves to address the increasing challenges that military
    personnel currently face caused by the immediate and cumulative effects
    of the stresses of Navy life, especially the type of operational
    stresses encountered in all forms of deployments. The continuum is part
    of the Navy's overall psychological health construct and applies to all
    sailors who serve.
        The objectives of the Operational Stress Control program are to:
    improve force-wide psychological health, mission readiness, and
    retention; reduce stigma associated with stress and stress control;
    foster cultural change; eliminate redundancy and gaps across and within
    organizations; and address all aspects of psychological health, to
    include substance abuse, depression, and suicide prevention.
        The Navy is currently promoting and implementing a number of
    initiatives to enhance the current Operational Stress Control program.
    These include: (a) development of a more robust outreach, screening,
    and assessment capability; (b) establishment of doctrine and a CONOPs
    to promote a common understanding and build consensus among
    stakeholders, including leadership, trainers, health care providers,
    researchers, and other care providers; (c) a comprehensive and
    integrated continuum of training and education for sailors, leadership,
    communities support, and families.
        Extended Child Care Initiative. In a continued effort to offer
    quality child care and youth programs to Navy families, Navy launched
    extended child care, youth fitness, and School Transition Service (STS)
    initiatives.
        Navy has begun an aggressive child care expansion plan, which
    includes adding 4,000 new child care spaces within the next 18 months,
    construction of 14 new Child Development Centers (including facilities
    open 24/7), commercial contracts, and expanding military certified home
    care. In addition, Navy is converting 3,000 existing 3-5-year-old child
    care spaces into infant-2-year-old spaces to meet the greatest demand,
    children under the age of 3. Combined, these initiatives will reduce
    the current waiting time for child care of 6-18 months down to less
    than 3 months Navy-wide with first priority given to single military
    parents.
        To assist parents and children with the challenges of frequent
    deployments, an additional 100,000 hours of respite child care will be
    provided for families of deployed servicemembers.
        In efforts to combat youth obesity, the Navy implemented a new
    worldwide youth fitness initiative called ``FitFactor,'' as a means to
    increase youth interest and awareness in the importance of healthy
    choices in life.
        Navy STS is addressing the many transition/deployment issues facing
    Navy children. STS consists of a variety of programs and initiatives
    that provide strategies and resources for installations, school
    districts, and parents to address the changes associated with
    transitioning between school systems and during deployments in support
    of the Navy expeditionary mission.
        Family Employment Support Initiative. Navy launched a Family Member
    Employment Program to create opportunities for family members to manage
    their careers and achieve life goals, specifically in improving family
    finances, providing spouses with improved employment opportunities and
    improving their ability to pursue portable careers. We are implementing
    standardized short-term employment programs to provide new military
    spouses initial skills development to improve employment marketability.
    Through collaboration with the Department of Labor, we are expanding
    mobile career opportunities so our spouses may find jobs quicker when
    their sailor executes permanent change of station moves. To promote
    hiring of spouses in the private sector, we are developing a nationwide
    marketing campaign to promote the military spouses' skills as solutions
    to corporate demands.
        Montgomery GI Bill (MGIB) Benefit Initiative. Education benefits
    are a key component of the incentive package used by the military to
    attract and retain quality servicemembers. From our Task Force Life
    Work visits to the Fleet, education benefits, specifically the MGIB,
    are viewed by sailors as akin to health benefits--as a fundamental
    benefit that should be available to all sailors and transferable to
    their family members.
        We fully support legislation that would expand the ability of
    servicemembers to transfer their Montgomery GI Bill (MGIB) to their
    dependents.
        Geographic Stability. Our Geographic Stability Working Group is
    leading the effort to develop implementation strategies for increased
    geographic stability throughout the Fleet. Improving geographic
    stability during a time when the Navy is transitioning to a more sea-
    centric force has its challenges; however it is a critical issue that
    consistently remains at the top of the list for ``reasons why people
    leave the Navy.''
        While cultivating a diverse background in multiple operational
    theaters will remain important to ensuring mission readiness, we also
    recognize that geographic stability allows members to establish support
    networks which permit sailors to be successful everyday. In a time when
    dual military couples and single parenthood rates are rising at the
    same time as our operational commitments, it is critical we support
    healthy family dynamics--geographic stability is an important part of
    this.
        Part of the solution is ensuring viable shore tour opportunities in
    sea-centric locations, many of which we have ``civilianized'' in recent
    years. While we are attempting to ``buy back'' some of those billets,
    we are also looking towards more creative solutions like the EEAP
    whereby a sailor can pursue advanced education in lieu of a traditional
    shore tour while also exploring the possibility of ``virtual commands''
    as part of our large scale telecommuting effort which has recently
    gained much popularity among the Fleet.
        Sea Warrior Spiral 1. We continue to make significant progress
    towards providing our sailors with an integrated and easy to use system
    of Navy career tools that allow them greater personal involvement in
    managing their careers.
        During the past year we continued the programmatic rigor necessary
    to develop Sea Warrior as a program of record for POM-10. In 2007, we
    fielded the first version of the Career Management System (CMS) with
    Interactive Detailing. This new system has the functionality of
    allowing sailors ashore to review their personal and professional
    information, view available jobs, and submit their detailing
    preferences through their career counselors. The next step in this
    evolution is to provide the same functionality to sailors on ships.
    This portion of the system has been tested in the laboratory and is
    currently in the process of being installed and tested on a selected
    group of ships.
        The successful development and testing of these increments of
    additional functionality to the CMS system are the first steps in
    achieving our vision of enabling all sailors to review available jobs
    and submit their own applications for their next assignment by June
    2009.
        Retention of O-6s. There has been significant growth in demand for
    control grade officers, particularly for our seasoned O-6s. At the same
    time, we are experiencing a shortage of inventory of these senior
    officers. In addition to aggressively employing existing retire/retain
    authority to allow high-performing O6s to remain on active duty, we
    have taken aggressive steps to understand the considerations behind
    officers' decisions to stay on active duty past the 25 year point.
    Recent surveys indicate that retention among URL Captains is largely
    driven by 3 factors: family stability, financial concerns (a leveling
    off or reduction of pay and retirement benefits compared to civilian
    opportunities), and job satisfaction. We are exploring a variety of
    monetary and non-monetary incentives to encourage more senior officers
    to make the choice to ``stay Navy'' past the 25 year point. For
    example:

             To incentivize retention, we may offer a Captain a
            single long tour option or a ``bundled detail'' to cover two
            tours. This addresses two common concerns of those in senior
            ranks: the desire for family and geographic stability to
            accommodate a spouse's career and older children attending high
            school or college.
             For officers beyond the 25 year point, we are
            developing several initiatives to address specific financial
            concerns. We are exploring financial mitigation for those who
            may choose a geographic bachelor tour as a way of providing
            geographic stability for the family. In addition, the loss of
            most career incentive pays at the 25 years of commissioned
            service point makes retirement and transition to a civilian
            career more attractive than continued service. Accordingly, we
            will pursue specific bonuses selectively targeted to high-
            demand senior officer designators. Other initiatives include
            assignment to adequate, available quarters, or periodic funded
            travel back to the family's location, in return for a
            commitment to serve a 2-3 year geographic bachelor tour.
             To leverage the power of job satisfaction as a
            retention incentive, we are exploring detailing processes to
            provide our senior officers with opportunities for increased
            responsibility and a heightened sense of value and worth at the
            executive level. We are striving to enhance our approach to
            managing the careers of Captains that don't screen for Major
            Command (approximately 60 percent of the cohort) and those who
            are post-major command. Many highly skilled, experienced
            officers who reach these career points perceive that their
            upward mobility and career options have stalled, and are thus
            more likely to choose to transition to the civilian sector.
            Establishing a tier of billets that capitalize on a senior
            Captain's experience and leadership abilities by providing
            meaningful, challenging positions may serve as an incentive for
            retention to the 30 year point.
             Enhancing the ability of our senior Reserve component
            officers to achieve Joint designation is critical to retaining
            our control grade talent, and we are aggressively implementing
            a plan to make this process executable and easily understood,
            without compromising the spirit or integrity of Goldwater-
            Nichols.
                                   next steps
        We have made great strides in enhancing Navy's military personnel
    readiness over the past few years, and this committee has been
    unwavering in its support for our manpower, personnel, training and
    education goals.
    Meeting Navy Recruiting Challenges--Health Professions
        As we continue to tackle tough recruiting and retention challenges
    among the health care professions, we ask for your continued strong
    support for the kinds of flexible tools required to better compete with
    the private sector for highly-trained medical professionals and
    students. Specifically, we anticipate continuing challenges in
    recruiting into clinical specialties of the Medical Service Corps; to
    the Nurse Candidate program; Registered Nurses accepting a commission
    as a naval officer; and in offering a sufficiently attractive loan
    repayment program for Reserve component health care professionals. We
    expect this challenge to be further exacerbated by enactment in the
    FY08 NDAA of a moratorium on military-to-civilian conversions within
    the health professions and requirement to restore certain previously
    converted or deleted end strength. Compelled to move forward without
    this critical force shaping tool, the number of health care
    professionals we will have to recruit and retain will increase among
    skill sets for which we have achieved full readiness even under the
    reduced requirement made possible by military-to-civilian conversion
    authority. We are fully committed to ensuring that we carry out force
    shaping in the health professions in a manner which protects the
    integrity of the access and quality of care for sailors and their
    families and Navy retirees. We urge Congress reconsider its decision in
    imposing this moratorium and the requirement to restore converted
    billets that are not encumbered by civilian employees by September 30,
    2008.
    Outreach to Recruiting Influencers
        As mentioned earlier, the Millennial Generation is motivated by
    different stimuli than their predecessors. Military service is often
    not considered when evaluating their career options. Today's
    influencers, most of whom never served, are often not inclined to steer
    the Millennials toward a military option. I ask that when you meet with
    your constituents, and interest groups that play a role in influencing
    the decisions of today's youth, please highlight the importance of
    service and the many outstanding opportunities available through
    service in the United States Navy. The impact of hearing this important
    message from Members of Congress will certainly go a long way in
    persuading parents, teachers, guidance counselors, coaches, and other
    influencers to encourage the young men and women of the Millennial
    generation to at least consider serving in the United States Armed
    Forces.
                                   conclusion
        Again, on behalf of all Active and Reserve sailors and their
    families, the Department of the Navy (DON) civilians, and contractors
    who support the Navy--I want to thank you for your staunch support of
    our policies, programs and plans, and National Defense Authorization
    Act for Fiscal Year 2008.
        Because of your leadership, our sailors, DON employees and
    contractors are more organized, better trained and equipped than at any
    time I can recall in my career. In short, they're ready to win in
    battle, protect our sovereign soil and to use their skills to help
    others in crisis.
        Throughout my career, and especially in my role as Chief of Naval
    Personnel, it's been my goal to set in place policies and programs that
    reorganize our people as the principle means by which our Navy
    accomplishes its mission.
        Today, our training curriculums and methods of delivery ensure the
    continued professional development of our people and are aligned with
    fleet requirements, both in terms of the number of sailors we deliver
    to the waterfront and the development of their skill sets, so that we
    will achieve FIT in our smaller, more sea-centric force, today and in
    the future.
        We will continue to balance the requirements of our afloat commands
    and those of the combatant commanders to meet both enduring Navy
    missions and Joint warfighting augmentee responsibilities. A major step
    forward, our GSA IA detailing process, implemented in 2007, rewards
    volunteerism and instituted predictability and stability for our
    sailors and their families, as well as Navy commands. Establishing this
    was critical to the long-term goal of keeping our talent in the Fleet.
    I'm proud to say, our process and support systems are in place and
    working to meet the warfighting requirements and the personal goals of
    our people.
        Our pays and benefits, continue to keep pace with the civilian
    sector, and I thank you for that significant and impactful investment.
    With today's low unemployment rate and low-propensity to join the
    military, due to the ongoing war, we must be competitive with the
    civilian work environment, in order to attract 21st century leaders to
    serve.
        I'm confident that the policies and programs we have in place
    today, and our ongoing initiatives in diversity, life-work balance,
    family readiness and the continuum of medical care, will improve upon
    what we know already to be a highly desirable organization in which to
    work. Our goal, however, is not only to be desirable, but to be among
    the best organizations--unmistakably a ``Top 50 Employer''--one that
    every young Millennial, regardless of race, gender, socioeconomic or
    cultural background wants to affiliate with, contribute to and defend,
    because of what we recognizably value--our people.
        This goal will keep our service on pace to continue to attract the
    best our Nation has to offer. The professional challenges,
    opportunities and rewards our sailors and DON civilians experience,
    along with the quality of life and service that our sailors and their
    families deserve, will retain those high-performing patriots in our
    Nation's Navy, and keep us ready to ``defend against all enemies,
    foreign and domestic.''
        In the end, our ability to maintain this readiness and achieve our
    vision is only made possible by having your support and that of the
    American public, so again I thank you for that. The authorities you
    afforded us along with the budget necessary to realize these plans and
    initiatives, enables our people to serve confidently. On behalf of the
    more than 550,000 sailors and their families, Civilians and
    contractors, thank you for your leadership and confidence, upon which
    we rely to achieve our vision for a Cooperative Strategy for 21st
    Century Seapower.

        Senator Ben Nelson. Thank you.
        General Coleman?

         STATEMENT OF LT. GEN. RONALD S. COLEMAN, USMC, DEPUTY
      COMMANDANT FOR MANPOWER AND RESERVE AFFAIRS, UNITED STATES
                              MARINE CORPS

        General Coleman. Thank you, sir.
        Chairman Nelson, Senator Graham, and distinguished members
    of the subcommittee, it is my privilege to appear before you
    today to discuss Marine Corps recruiting, retention, and other
    personnel issues. Today, I would like to make just a few key
    points.
        First, in regard to our end-strength growth, the Marine
    Corps achieved unprecedented success in fiscal year 2007. We
    exceeded our goal of growing to 184,000 marines, ending the
    fiscal year with an Active Duty end strength of 186,492, and we
    fully expect to exceed our next milestone of 189,000 during
    fiscal year 2008 as we set our sights toward 202,000 without
    lowering our standards. We owe our success, in large part, to
    our recruiters, who met all accession goals in fiscal year
    2007, while maintaining our high-quality standards. We expect
    to meet this challenge again this fiscal year. Thank you for
    your support of our enlistment incentives which made these
    achievements possible.
        Retention should also be viewed as a success. We reenlisted
    3,700 more marines in 2007 than in the prior fiscal year--
    again, without lowering standards. Nevertheless, retention will
    continue to pose a significant challenge as our goals become
    more and more aggressive. We thank you for your support of our
    selective reenlistment bonus program. It is the foundation of
    our retention efforts. The funds provided to us have increased
    significantly in recent years and is money extremely well
    spent. These funds have enabled us to increase retention in
    targeted and specialized military occupational specialties so
    that we maintain the leadership and experience necessary for
    combat and other operational requirements, as well as for the
    new units stood up in support of our 202,000 growth.
        I also want to emphasize today our efforts toward Marine
    Corps families. Thanks to your support, we are putting our
    family readiness programs on a wartime footing, increasing
    steady-state funding, and making a host of improvements. We are
    establishing school liaison officer capability at every Marine
    Corps installation to advocate for our marine's children. We're
    also expanding our exceptional family member programs to
    improve support and provide respite care to these special
    families. These and other initiatives will help ensure that we
    fulfill our obligation to our marine's spouses, children, and
    other family members.
        Lastly, but certainly not least, I want to tout our Wounded
    Warrior Regiment. It is quickly becoming what you envisioned, a
    comprehensive and integrated approach to caring for our
    wounded, ill, and injured marines and sailors through all
    phases of their recovery. We have recently implemented a 24/7
    Wounded Warrior Call Center to reach out to our wounded
    warriors, including those who have already left the Service,
    and a job transition cell to help them find satisfying work.
    We're very proud of how the regiment has progressed in such a
    short time, and are thankful for the high priority you have
    given it.
        Overall, the commitment of Congress to supporting our
    202,000 end-strength growth and to improve the quality of life
    for marines and their families is central to the strength that
    your Marine Corps enjoys today.
        Thanks to you, your Marine Corps remains the Nation's force
    in readiness, and will continue to fulfill its mission of being
    the most ready when the Nation is least ready.
        I look forward to answering your questions.
        [The prepared statement of General Coleman follows:]
             Prepared Statement by Lt. Gen. Ronald S. Coleman, USMC
        Chairman Nelson, Senator Graham, and distinguished members of the
    subcommittee, it is my privilege to appear before you today to provide
    an overview of your Marine Corps personnel.
                                  introduction
        We remain a Corps of Marines at war with over 31,200 marines
    deployed to dozens of countries around the globe. The young men and
    women who fill our ranks today recognize the global, protracted, and
    lethal nature of the challenges facing our Nation, and their dedicated
    service and sacrifice rival that of any generation preceding them.
        Thanks to you, marines know that the people of the United States
    and their Government are behind them. The continued commitment of
    Congress to increasing the warfighting and crisis response capabilities
    of our Nation's Armed Forces and to improving the quality of life of
    our marines and their families is central to the strength that your
    Marine Corps enjoys today. The Nation is receiving a superb return on
    its investment in the world's finest expeditionary force.
        We know the future will remain challenging, but I am confident that
    with your continued support, your Corps will remain the Nation's force
    in readiness and will continue to fulfill its congressionally mandated
    mission of being the most ready when the Nation is least ready.
                          right-size our marine corps
    Active Component End Strength
        To meet the demands of the Long War and other crises that arise,
    our Corps must be sufficiently manned, trained, and equipped. To this
    end, the Marine Corps plans to grow its personnel end strength to
    202,000 Active component marines by fiscal year 2011. This increase
    will enable your Corps to train to the full spectrum of military
    operations and improve the ability of the Marine Corps to address
    future challenges. This growth will also enable us to increase the
    dwell time of our marines so that they are able to operate at a
    ``sustained rate of fire.'' Our goal is to achieve a 1:2 deployment-to-
    dwell ratio for all of our Active Forces--for every 7 months a marine
    is deployed, he or she will be back at home station for at least 14
    months.
        Our success in the first phase of this growth--184,000 marines by
    the end of fiscal year 2007--is a great first step toward our ultimate
    end strength goal. Overall, we ended fiscal year 2007 with an Active
    component end strength of 186,492 marines. We fully expect to meet our
    second goal--189,000 marines this fiscal year.
    Funding
        The Marine Corps greatly appreciates the increase in authorized end
    strength to 189,000 recently passed in the National Defense
    Authorization Act for Fiscal Year 2008. We are funding the end strength
    in excess of 180,000 through supplemental appropriations. For fiscal
    year 2009, we note that all costs of military personnel are included in
    the baseline budget.
    Compensation
        The vast majority of our personnel budget is spent on entitlements,
    including compensation. Compensation is a double-edged sword in that it
    is a principal factor for marines both when they decide to reenlist and
    when they decide not to reenlist. Private sector competition will
    always seek to capitalize on the military training and education
    provided to our marines. Marines are a highly desirable labor resource
    for private sector organizations. Competitive compensation authorities
    aid the Marine Corps in targeting specific areas and provide the
    capability to access, retain, and separate as needed. The extensions of
    special and incentive pay authorities have demonstrated your continued
    support of the Marine Corps and its endeavor to reach our ultimate end
    strength goal. We appreciate the continued support of Congress in the
    creation of flexible compensation authorities which afford the Marine
    Corps with tools that allow us to shape your Corps for the 21st
    century.
    Military-to-Civilian Conversions
        Military-to-civilian conversions replace marines in non-military-
    specific billets with qualified civilians, enabling the Corps to return
    those marines to the operating forces. Since 2004, the Marine Corps has
    returned 3,096 marines to the operating force through military-to-
    civilian conversions. We will continue to pursue sensible conversions
    as this will aid in our deployment-to-dwell ratio goals for the force.
    Reserve Component End Strength
        Our deployments in Iraq and Afghanistan have been a Total Force
    effort--our Reserve Forces continue to perform with grit and
    determination. Our goal is to obtain a 1:5 deployment-to-dwell ratio
    within our Reserve component. As our Active Force increases in size,
    our reliance on our Reserve Forces should decrease--helping us to
    achieve the desired deployment-to-dwell ratio. Our authorized Reserve
    component end strength remains at 39,600 selected Reserve marines. As
    with every organization within the Marine Corps, we continue to review
    the make-up and structure of the Marine Corps Reserve in order to
    ensure the right capabilities reside within the Marine Forces Reserve
    units and our Individual Mobilization Augmentee program across the
    force.
                                   recruiting
        Our Recruiters continue to make their recruiting goals in all areas
    in support of our total force recruiting mission. This past year, our
    recruiting mission was increased as part of a series of milestones to
    ``grow the force'' and build an active component 21st century Marine
    Corps with an end strength of 202,000. Our focus in fiscal year 2008 is
    to continue to recruit quality men and women into our Corps as we
    expand our ranks.
        To meet the challenges of the current recruiting environment, it is
    imperative that we maintain our high standards both for our recruiters
    and those who volunteer to serve in our Corps. The Corps must continue
    to be comprised of the best and brightest of America's youth. We must
    also remain mindful that the Marine Corps needs to reflect the face of
    the Nation and be representative of those we serve. Our image of a
    smart, tough, elite warrior continues to resonate with young people
    seeking to become marines.
        The Marine Corps is unique in that all recruiting efforts (officer,
    enlisted, regular, Reserve, and prior-service) fall under the direction
    of the Marine Corps Recruiting Command. Operationally, this provides us
    with flexibility and unity of command in order to annually meet our
    objectives. In fiscal year 2007, the Marine Corps achieved 100 percent
    of the enlisted (regular and Reserve) ship mission (accessions). Over
    95 percent of our accessions were Tier 1 high school diploma graduates
    and over 66 percent were in the I-IIIA upper mental group testing
    categories. In short, we accomplished our recruiting mission achieving
    the Commandant's standards and exceeding those of the Department of
    Defense (DOD). To meet the Marine Corps' proposed end strength
    increase, annual total force accessions missions will steadily grow
    from 40,863 in fiscal year 2007 to over 46,000 in fiscal year 2010.
    Fiscal year 2008 total force accessions mission is 42,202. As of 1
    February 2008, we have shipped (accessed) 12,597 applicants,
    representing 104 percent of our total force mission fiscal year to
    date. Although recruiting is fraught with uncertainties, we expect to
    meet our annual recruiting mission this fiscal year, to include our
    quality goals. Additionally, we continue to achieve our contracting
    goals for this fiscal year which ensures we have a population of
    qualified individuals ready to ship to recruit training as we enter
    fiscal year 2009. Achieving this success, as always, is dependent on
    your support for our enlistment incentives. We thank you for this
    support.
        Our Officer Selection Teams were also successful in fiscal year
    2007, accessing 1,844 second lieutenants for 101 percent of their
    assigned mission. In fiscal year 2008, we are continuing efforts to
    increase the population of officer candidates and commission second
    lieutenants commensurate with our force structure and the growth in end
    strength. To assist our Officer Selection Officers in meeting their
    officer accession missions, we have implemented new programs, such as
    the College Loan Repayment program, in order to attract prospective
    candidates and remain competitive in this difficult recruiting
    environment.
        For the Reserve component, the Marine Corps achieved its fiscal
    year 2007 Reserve enlisted recruiting goals with the accession of 5,287
    non-prior service marines and 3,591 prior service marines. As of 1
    February 2008, we have accessed 1,484 non-prior service and 1,660 prior
    service marines, which reflects 36 percent of our annual mission.
    Again, we expect to meet our Reserve recruiting goals this year.
    Officer recruiting and retention for our Selected Marine Corps Reserve
    units is traditionally our greatest challenge. The Officer Candidate
    Course-Reserve introduced in 2007 is helping to address this issue, and
    we anticipate commissioning 50 to 75 second lieutenants in the Reserve
    this year. Under this program, individuals attend Officer Candidates
    School, The Basic School, a Military Occupational Specialty school, and
    return to a Reserve unit to serve. When coupled with the selected
    Reserve officer affiliation bonus, we believe we have established a
    valid method to address the challenge.
                                   retention
        Retention is the other important part of building and sustaining
    the Marine Corps. As a strong indicator of our forces' morale, the
    Marine Corps has achieved unprecedented numbers of reenlistments in
    both the First Term and Career Force. When examining mental,
    educational and physical components as quality measures, the Center for
    Naval Analyses found that the first term force has improved steadily
    over the last 8 years and the best marines continue to demonstrate a
    higher propensity to reenlist than separate. The expanded reenlistment
    goal, in which we sought to reenlist over 3,700 additional marines,
    resulted in the reenlistment of 31 percent of our eligible first term
    force and 70 percent of our eligible career force--compared to the 22
    percent first term and 65 percent career force reenlistments in fiscal
    year 2006. This achievement was key to reaching the first milestone in
    our end strength increase--184,000 marines by the end of fiscal year
    2007--while still maintaining quality standards.
        For fiscal year 2008, our retention goals are even more aggressive
    to achieve an end strength of 189,000, but we fully expect to meet
    them. As of 15 February 2008, we have achieved 6,395 First Term
    Alignment Plan reenlistments, or 69 percent of the 9,507 goal. Equally
    impressive, we have achieved 7,331 Subsequent Term Alignment Plan
    reenlistments, or 90 percent of the 8,124 goal. Altogether, we have
    achieved 13,726 total reenlistments, or 78 percent of the combined
    goals.
        Our continuing retention success will be largely attributable to
    several important, enduring themes. First, marines are motivated to
    ``stay marine'' because they are doing what they signed up to do--
    fighting for and protecting our Nation. Second, they understand our
    culture is one that rewards proven performance and takes care of its
    own.
        There is no doubt that your marines' leadership and technical
    skills have rendered them extremely marketable to lucrative civilian
    employment opportunities. To keep the most qualified marines, we must
    maintain Selective Reenlistment Bonus (SRB) funding. In fiscal year
    2007, the Marine Corps spent over $425 million in SRB and Assignment
    Incentive Pay to help achieve our end strength increase. With a
    reenlistment mission of 17,631 in fiscal year 2008--compared to an
    historical average of 12,000--the Marine Corps expects to invest $536
    million in reenlistment incentives. This aggressive SRB plan will allow
    us to retain the right grades and skill sets for our growing force--
    particularly among key military occupational specialties.
        I am happy to report that the Marine Corps continues to achieve our
    goals for officer retention. We are retaining experienced and high
    quality officers. Our aggregate officer retention rate was 91 percent
    for fiscal year 2007, which is above our historical average. Current
    officer retention forecasts indicate healthy continuation rates for the
    officer force as a whole.
        Concerning our Reserve Force, we satisfied our manpower
    requirements by retaining 76 percent in fiscal year 2007, the 6th
    consecutive year above our pre-September 11 historic norm of 71
    percent. For the current year, Reserve officer retention has thus far
    remained above historical norms. Enlisted Reserve retention is
    currently lower than has been seen in the last 2 years, and is being
    monitored very closely. It is important to note that increased
    opportunity for prior service marines to return to the Active component
    is affecting Reserve retention rates. Additionally, higher planned
    retention in the Active component is reducing the number of personnel
    transitioning into the Selected Marine Corps Reserve. For these reasons
    we appreciate the increased reenlistment incentive provided in the
    National Defense Authorization Act for Fiscal Year 2008.
                              marine corps reserve
        This year marks the 7th year that our Reserve component has
    augmented and reinforced our Active component in support of the Long
    War. Thanks to strong congressional support, the Marine Corps has
    staffed, trained, and equipped its Reserve to respond to crises around
    the world. Our Reserve component possesses capabilities to fight across
    the full spectrum of conflicts to support our Marine Air Ground Task
    Forces. As of 1 February 2008, there have been 56,275 Reserve
    activations since September 11.
        The Marine Corps Reserve continues to recruit and retain quality
    men and women willing to serve in our military and help our Nation
    fight the Long War. These men and women do so while maintaining their
    commitments to their families, their communities, and their civilian
    careers. The development of our Long War Force Generation Model has
    greatly improved our ability to provide our Reserve Marines with
    advance notification of activation. More than 6,100 Reserve marines are
    currently on active duty with nearly 5,000 serving in Reserve ground,
    aviation and combat support units, while over 1,100 serve as individual
    augments in both Marine Corps and joint commands. Eighty-four percent
    of all mobilized reservists have deployed to the Central Command area
    of operations. To support ongoing mission requirements for Operation
    Iraqi Freedom, the Marine Corps Reserve provides approximately 18
    percent of our Total Force commitment.
        As previously mentioned, recruiting and retention remain a
    significant interest as the Marine Corps Reserve continues its support
    for the Long War. The increased flexibility and funding authorizations
    you provided in the National Defense Authorization Act for Fiscal Year
    2008 are valuable assets to assist in our recruitment and retention
    missions; they not only generate greater interest in Reserve
    reenlistment, but also provide financial assistance during the critical
    period of transition from active duty to Reserve service.
        Health care remains an essential part of mobilization readiness for
    our Reserve component. TRICARE Reserve Select has helped to ensure that
    our Selected Marine Corps Reserve members, and their families, have
    access to affordable health care. Increased access and flexibility to
    health care for these families assists in alleviating one of the most
    burdensome challenges facing families of deploying Reserve marines.
        The dedication and Reserve experience provided by our cadre of
    full-time support personnel has been a key to success in integrating
    our Total Force. Likewise, our Marine Corps Total Force Pay and
    Personnel System (MCTFS) has ensured and continues to provide a
    seamless continuum of service for our Reserve marines.
        The long-term success and sustainability of our Reserve Forces in
    both Operational Support and Strategic Reserve roles is directly
    related to our ability to prepare and employ our forces in ways that
    best manage limited assets while meeting the expectations and needs of
    individual marines and their families. In an effort to ensure a well-
    balanced total force and address any potential challenges that may
    arise, we are constantly monitoring current processes and policies, as
    well as implementing adjustments to the structure and support of our
    Reserve Forces.
                                civilian marines
        Civilian marines continue to provide an invaluable service to the
    Corps as an integral component of our Total Force. With a population of
    over 30,000 appropriated and non appropriated funded employees and
    foreign nationals, civilian marines work in true partnership with the
    active duty and play an important role in supporting the mission of the
    Marine Corps and the Long War. Our vision for the future not only
    defines what the Marine Corps will offer to, but what it expects from,
    its civilian marines.
        The Marine Corps strategy for achieving this vision is detailed in
    the Civilian Workforce Campaign Plan (CWCP) designed to create,
    develop, acculturate, reward, and maintain an innovative and
    distinctive civilian marine workforce responsible for providing
    exceptional support to the Nation's premier expeditionary ``Total Force
    in Readiness.'' Marine Corps Senior Executives have been charged with
    overseeing implementation of the CWCP by providing developmental
    opportunities and career management for assigned communities of
    interest.
        The Marine Corps is also committed to the successful implementation
    of the National Security Personnel System (NSPS). NSPS will assist us
    in achieving the goals and objectives of the CWCP by enabling us to
    better support the warfighter and provide a civilian workforce that is
    flexible, accountable, and better aligned to the Marine Corps mission.
    The first group of Marine Corps organizations converted approximately
    1,900 general schedule civilian employees to NSPS in January and
    February 2007, and we just completed this month the conversion of
    approximately 4,200 more employees across all remaining Marine Corps
    organizations, including overseas and field activities. We are actively
    participating with the Department of Defense in the development and
    implementation of NSPS. Partnering with the Services, we are working to
    ensure our civilians are provided opportunities for training and
    support for successful transition to NSPS. Our goal is high operational
    performance while supporting successful implementation of the system.
                             information technology
        Ensuring accurate, timely pay is supported by our continued efforts
    to transform our manpower processes by leveraging the benefits of the
    MCTFS, the Department of Defense's only fully integrated personnel,
    pay, and manpower system. MCTFS seamlessly serves our Active, Reserve,
    and retired members; provides total visibility of the mobilization and
    demobilization of our Reserve marines; and ensures proper and timely
    payments are made throughout the process. MCTFS provides one system,
    one record--regardless of an individual's duty status. According to the
    most recent Defense Finance and Accounting Service's ``Bare Facts''
    report, MCTFS continues to achieve a pay accuracy rate of over 99
    percent for both our Active and Reserve components. MCTFS has enabled
    the Marine Corps to move its pay and personnel administration to a
    predominately self-service, virtually paperless, secure, web-based
    environment. In fiscal year 2007, individual marines and their leaders
    leveraged MCTFS' capabilities to process more than 1.6 million
    paperless transactions.
                  taking care of our marines and our families
        Marines take care of their own--period. Never has this ethos been
    more relevant than during time of war. As marines continue to perform
    magnificently around the globe, serving in harm's way, their dedicated
    families contribute to mission success by managing the home front.
    Oftentimes, with their contribution comes great sacrifice. We realize
    that families are the most brittle part of the deployment equation and
    it is our moral imperative to ensure marines and families are provided
    the right tools to secure their family readiness.
    Putting Family Readiness on a Wartime Footing
        Last year, at the Commandant's direction, the Marine Corps set out
    to ensure our family programs have fully transitioned to wartime
    footing in order to fulfill the promises made to our families. Many of
    our family and installation support programs underwent rigorous
    assessments, and actions are underway to refresh, enhance, or improve
    family support programs in five key areas: unit family readiness
    programs and Marine Corps Family Team Building, the Exceptional Family
    Member Program (EFMP), the School Liaison Officer Program, remote and
    isolated support, and installation and infrastructure support.
    Unit and Installation Family Readiness Programs
        Through our assessments, we found that our Marine Corps Family Team
    Building Program and unit family readiness program, the centerpiece of
    our family support capability, were based on a peacetime model and 18-
    month deployment cycle and largely depended on volunteer support. As
    our deployment and tempo of operations increased, we now know that we
    overburdened our dedicated volunteers. While our compassionate
    volunteers performed magnificently, the Marine Corps must take action
    to establish an appropriate division of labor. This will be
    accomplished by increased civilian staffing within our programs and the
    establishment of primary duty family readiness officers at the
    regiment, group, battalion and squadron levels. We will additionally
    procure technology to improve outdated processes and reduce manual
    functionality.
        To implement and sustain our identified family readiness program
    improvements, the Marine Corps budget supports a $30 million sustained
    funding increase. These improvements, currently under aggressive
    implementation, include:

             Formalizing the role and relationship of family
            readiness process owners to ensure accountability for family
            readiness;
             Expanding programs to support the extended family of a
            marine (spouse, child, and parents (70 percent of marines in
            their first enlistment are unmarried));
             Establishing primary duty billets for Family Readiness
            Officers (FROs) (84 civilian FROs for Regiment/Group and higher
            and 302 primary-duty military FRO billets for Battalion/
            Squadron level;
             Increasing Marine Corps Community Services and Marine
            Corps Family Team Building installation personnel at bases and
            stations (we are hiring 138 new full-time staff);
             Enhancing methods of communication between
            installation programs to better synergize support to individual
            commands;
             Refocusing and applying technological improvements to
            our official communication network between commands and
            families; and
             Developing a standardized, high-quality volunteer
            management and recognition program.

    Warrior Family Support
        Optimally, we would like to keep our families at the bases and
    installations when their marines are deployed. We have found that
    families find better support being surrounded by others who understand
    the nature of deployments and the marine way of life. Accordingly, the
    Marine Corps has dedicated $100 million in the fiscal year 2008 Global
    War on Terror Supplemental for Warrior Family Support.
        At installations across the Marine Corps, to include remote and
    isolated locations, we are making quality of life program and services
    upgrades to include child care availability and support, playground
    equipment, youth sports equipment, fitness center equipment, bike
    paths, and facility improvements. These enhancements will further
    promote the sense of community required to form strong bonds among our
    marine families that contribute so greatly to readiness.
    Exceptional Family Member Program (Respite Care)
        Parental stress can be heightened for marine families who are also
    caring for one or more family member with special needs. To focus on
    this specific need, the Marine Corps offers our active duty families
    enrolled in the EFMP up to 40 hours of free respite care per month for
    each exceptional family member. This care is intended to provide the
    caregiver intermittent breaks while giving their family member(s) with
    special needs a nurturing and developmentally appropriate environment.
    We also seek to provide a ``continuum of care'' for our exceptional
    family members. In this capacity, we are implementing EFMP improvements
    to provide a continuum of care for EFMs that will ensure appropriate
    access and availability to medical, educational, and financial
    services. We will utilize assignment processes to stabilize the family
    or marine as necessary. Finally, we will work with Federal or State
    agencies to ensure a continuity of care for EFMs as they relocate and
    change duty stations.
    School Liaison Officers
        The education of over 41,000 school age children of Marine Corps
    parents is a quality of life priority. Our Marine children are as
    mobile as their military parents. As they relocate from duty stations,
    they encounter academic and extra curricular differences that directly
    impact learning and development achievement. To address these education
    challenges, we are establishing a School Liaison Officer capability at
    every Marine Corps Installation to help parents and commanders interact
    with local schools and help resolve education transition issues. This
    issue is especially important to our EFMs. Working with commanding
    officers, marines, and families, our School Liaison Officers will seek
    to optimize the educational experience of elementary, middle, and high
    school students.
        Our intent for all family support programs is to build trust
    between the Marine Corps and our families, enable and empower marines
    and their families to advocate and seek help as need from support
    programs available at installations and through on-line technology, and
    ensure a continuum of care through the lifecycle of a marine and his
    mission, career, and life events.
    Remote and Isolated Support
        We are additionally taking action to improve quality of life at
    remote and isolated installations that need infrastructure or expanded
    programs to appropriately sustain marines and their families. Actions
    underway include updating programs and services to appropriately
    support the needs of our Millennial Generation Marines and families who
    have experienced multiple deployments. We plan to conduct focus groups
    at installations across the Marine Corps to target these ``Generation
    Y'' marines and families to determine their specific support
    requirements, particularly in view of the tempo of operations. We will
    use the results to ensure that our program transformation meets the
    needs of the future leaders of your Marine Corps and generations of
    marines and their families to come.
        Once fully implemented, the recommendations will yield an extensive
    network of revitalized family support programs to sustain marines into
    the future. Moreover, the enhanced family readiness programs will
    better empower marines and families to effectively meet the challenges
    of and thrive in today's military lifestyle.
    Combat Operational Stress Control
        Marines train to fight. Their training includes preparedness that
    hardens them physically and instills mental readiness for the stressors
    of battle. Commanders bear primary responsibility for Combat
    Operational Stress Control (COSC) in the Marine Corps. They also bear
    responsibility for leading and training tough, resilient marines and
    sailors, and for maintaining strong, cohesive units. We teach
    commanders to detect stress problems in warfighters and family members
    as early as possible, and to effectively manage these stress problems
    anywhere they occur--in theater or at home.
        At the center of our COSC Program is a combat/operational stress
    continuum model, recommended by our Marine Expeditionary Forces
    Commanding Generals, that indicates that stress responses and outcomes
    occur on a continuum, from stress coping and readiness at one end of
    the spectrum, to stress injuries and illnesses at the other end. These
    stress responses are color-coded as green (for ``Ready''), yellow (for
    ``Reacting''), orange (for ``Injured''), and red (for ``Ill''). Marine
    leaders promote green-zone resiliency and mental readiness in their
    marines, sailors, and families, and this is done primarily through
    training, leadership, and unit and family cohesion. Training and
    education in COSC knowledge, skills, and attitudes is a priority not
    only for units preparing to deploy, but throughout deployment cycles,
    as well as in formal career schools for all marines.
        We also continue our collaboration with sister Services, the
    Department of Veterans Affairs' National Center for Post-Traumatic
    Stress Disorder, and external agencies to determine best practices to
    better support marines and their families.
    Casualty Assistance
        Your marines proudly assume the dangerous but necessary work of
    serving our Nation. They selflessly accept their mission and perform
    magnificently around the globe. Some marines have paid the ultimate
    price, and we continue to honor them as heroes who contributed so much
    to our country. Our casualty assistance program has and continues to
    evolve to ensure the families of our fallen marines are always treated
    with the utmost compassion, dignity, and honor. Our trained Casualty
    Assistance Calls Officers provide the families of our fallen marines
    assistance to facilitate their transition through the stages of grief.
        Last year, congressional hearings and inquiries into casualty next
    of kin notification processes revealed deficiencies in three key and
    interrelated casualty processes: command casualty reporting, command
    casualty inquiry and investigation, and next of kin notification. These
    process failures were unacceptable. As soon as we discovered these
    process failures, we ordered an investigation by the Inspector General
    of the Marine Corps and directed remedial action to include issuing new
    guidance to commanders--reemphasizing existing investigation and
    reporting requirements and the importance of tight links between these
    two systems to properly serve marines and their families. Additionally,
    effective December 2007, the Headquarters Marine Corps Casualty Section
    assumed responsibility for telephonic notification of the next of kin
    of injured/ill marines from the commands. The Casualty Section is
    available 24/7 to provide status updates and support to family members.
    The Marine Corps will continue to monitor our processes, making every
    effort to preclude any future errors and ensure marines and families
    receive timely and accurate information relating to their marine's
    death or injury.
                            wounded warrior regiment
        In April 2007, the Wounded Warrior Regiment was activated to
    achieve unity of command and effort in order to develop a comprehensive
    and integrated approach to Wounded Warrior care. The establishment of
    the Regiment reflects our deep commitment to the welfare of our
    wounded, ill, and injured. The mission of the Regiment is to provide
    and facilitate assistance to wounded, ill, and injured marines, sailors
    attached to or in support of marine units, and their family members,
    throughout all phases of recovery. The Regiment provides non-medical
    case management, benefit information and assistance, and transition
    support. We use ``a single process'' that supports active duty,
    Reserve, and separated personnel and is all inclusive for resources,
    referrals, and information.
        There are two Wounded Warrior Battalions headquartered at Camp
    Lejeune, NC, and Camp Pendleton, CA. The Battalions include liaison
    teams at major military medical treatment facilities, Department of
    Veterans Affairs Poly-trauma Centers and Marine Corps Base Naval
    Hospitals. The Battalions work closely with our warfighting units to
    ensure our wounded, ill, and injured are cared for and continue to
    maintain the proud tradition that ``marines take care of their own.''
        The Regiment is constantly assessing how to improve the services it
    provides to our wounded, ill, and injured. Major initiatives of the
    Regiment include a Job Transition Cell manned by marines and
    representatives of the Departments of Labor and Veterans Affairs. The
    Regiment has also established a Wounded Warrior Call Center for 24/7
    support. The Call Center both receives incoming calls from marines and
    family members who have questions and makes outreach calls to the
    almost 9,000 wounded marines who have left active service. A Charitable
    Organization Cell was created to facilitate linking additional wounded
    warrior needs with charitable organizations that can provide support.
    Additionally, the Regiment has strengthened its liaison presence at the
    Department of Veterans Affairs Headquarters. These are just some of the
    initiatives that reflect your Corps' enduring commitment to the well-
    being of our marines and sailors suffering the physical and emotional
    effects of their sacrifices for our great Nation.
        Thank you for your personal and legislative support on behalf of
    our wounded warriors. Your personal visits to them in the hospital
    wards where they recover and the bases where they live is sincerely
    appreciated by them and their families. Your new Wounded Warrior Hiring
    Initiative to employ wounded warriors in the House and Senate
    demonstrates your commitment to and support of their future well-being.
    We are grateful to this Congress for the many wounded warrior
    initiatives in the National Defense Authorization Act for Fiscal Year
    2008. This landmark legislation will significantly improve the quality
    of their lives and demonstrates the enduring gratitude of this Nation
    for their personal sacrifices. I am hopeful that future initiatives
    will continue to build upon your great efforts and further benefit the
    brave men and women, along with their families, who bear the burden of
    defending this great country.
        We are at the beginning of a sustained commitment to care and
    support our wounded, ill, and injured. As our Wounded Warrior Program
    matures, additional requirements will become evident. Your continued
    support of new legislation is essential to ensure our Wounded Warriors
    have the resources and opportunities for full and independent lives.
                                   conclusion
        As we continue to fight the Long War, our Services will be required
    to meet many commitments, both at home and abroad. We must remember
    that marines, sailors, airmen, and soldiers are the heart of our
    Services--they are our most precious assets--and we must continue to
    attract and retain the best and brightest into our ranks. Personnel
    costs are a major portion of both the Department of Defense and Service
    budgets, and our challenge is to effectively and properly balance
    personnel, readiness, and modernization costs to provide mission
    capable forces.
        Marines are proud of what they do! They are proud of the ``Eagle,
    Globe, and Anchor'' and what it represents to our country. It is our
    job to provide for them the leadership, resources, quality of life, and
    moral guidance to carry our proud Corps forward. With your support, a
    vibrant Marine Corps will continue to meet our Nation's call!
        Thank you for the opportunity to present this testimony.

        Senator Ben Nelson. Thank you.
        General Newton?

    STATEMENT OF LT. GEN. RICHARD Y. NEWTON III, USAF, DEPUTY CHIEF
       OF STAFF, MANPOWER AND PERSONNEL, UNITED STATES AIR FORCE

        General Newton. Mr. Chairman and Ranking Member Graham,
    it's noted that this is my first opportunity to testify before
    this subcommittee. I can tell you that I'm honored to be here
    today. I'm honored to be here today, certainly with Dr. Chu and
    my teammates here on this joint team, the other Services,
    military personnel teammates. I want to thank you also for this
    opportunity to discuss the airmen who serve the world's most
    respected airspace and cyberspace force.
        Our airmen have been continuously deployed and globally
    engaged in combat missions for over 17 straight years since
    that first day that an F-15 touched down over in Saudi Arabia,
    in August 1990, in the beginning of Operation Desert Shield.
    Today, airmen are fully engaged in the interdependent joint
    fight, and stand prepared for rapid response in conflict across
    the globe, to provide capabilities for our joint combatant
    commanders.
        Our priorities are clear: winning today's fight, developing
    and caring for our airmen and their families, and preparing for
    tomorrow's challenges.
        Today's airmen are doing amazing things to execute the Air
    Force mission and certainly to meet Air Force commitments and
    keep the Air Force on a vector for success against potential
    future threats in a very uncertain world. Our aim is to improve
    capability while maintaining the greatest combat-ready Air
    Force in the world.
        I look forward to accomplishing this through the lens of
    five key focus areas that I'm taking on as your Air Force
    Deputy Chief of Staff for Manpower and Personnel: managing end
    strength efficiently to maximize capability; recruit and retain
    the highest-quality airmen; maximizing the continuum of
    learning throughout the airmen life cycle; continue on focusing
    on quality-of-life programs for airmen and their families; and
    to maximize the efficiencies through evolving smart business
    solutions.
        Due to increased operations, maintenance, and personnel
    costs, we've been forced to self-finance a centerpiece of
    future dominance, the massive and critical recapitalization and
    modernization effort for our aging air and space force.
        As we prepare for an uncertain future, we are transforming
    the force to ensure we are the right size and shape to meet
    emerging global threats with joint and battle-trained airmen.
    In order to dominate in the domains of air and space and
    cyberspace throughout the 21st century, we must recruit and
    develop and organize America's diverse and brightest talent for
    complex multinational and joint interagency operations of the
    future.
        Our recruiting force has met their enlisted recruiting
    mission through persistence and dedication. Since 2000, the Air
    Force has enlisted over 258,000 airmen, against a goal of
    approximately 255,000 airmen, for nearly 101 percent mission
    accomplishment.
        For fiscal year 2008, the active-duty requirement is
    27,800, and just over 9,000 airmen have been assessed, up to
    this point, with an additional 9,500 awaiting basic military
    training, down at Laughlin Air Force Base, outside of San
    Antonio, TX. So, we're on track to meet our goals this year.
        For fiscal year 2007, Active-Duty Air Force officer
    retention finished 11 percent above the goal, while enlisted
    retention fell short, about 8 percent below the goal. The Air
    Force Reserve fell short of its enlisted retention goal by 3
    percent, but was less than one-half percent shy of the officer
    retention goal. The Air National Guard met their overall
    officer and enlisted retention goals for fiscal year 2007.
        Even with these successes, some enlisted specialties in the
    active Air Force did not achieve their overall retention goal,
    including air traffic control and Mid-East crypto-linguists,
    structural civilian engineering, pavement and construction
    equipment, vehicle operations, and contracting. As part of our
    ongoing Air Force transformation, we are reviewing and
    synchronizing our development efforts to realize efficiencies
    in how well we put into play developmental tools--education,
    training, and experiential--to produce our stellar airmen, our
    military and civilian, our officer and enlisted, our Active and
    Reserve components.
        We're dedicating resources to ensure our most important
    weapon system, our airmen, are prepared to deliver airspace and
    cyberspace power wherever and whenever it's needed.
        I'm excited that my new duties as your Air Force A-1 enable
    me to also be the quality-of-life champion for the Air Force.
    Quality of life is not necessarily a list of programs and
    services; it's the way we take care of our airmen through these
    programs, and how they know that we're supporting them and
    their families, who, every day, make the sacrifices for
    America. We know airmen focus more on their mission when they
    have a positive way to rejuvenate from stress, when they have
    the knowledge that their families are in good hands, and when
    they are comfortable, and also confident, in being part of the
    larger Air Force team.
        To achieve the Secretary of Defense's objective to shift
    resources from bureaucracy to battlefield, we are overhauling
    Air Force personnel services. Our total force personnel
    services delivery initiative modernizes the processes, the
    organizations, takes advantage of new technologies through
    which we are able to support our airmen and their commanders.
    Our goal is to deliver higher-quality personnel services with
    greater access, speed, accuracy, reliability, and efficiency.
        The Air Force plans to program the resulting manpower
    savings to other compelling needs over the next 6 years. This
    initiative enhances our ability to acquire, train, educate,
    deliver, employ, and empower airmen with the needed skills and
    knowledge and experience to accomplish the diverse set of Air
    Force missions.
        In conclusion, your Air Force is often the first to the
    fight, and the last to leave. We give unique options to all
    Joint Force Commanders. The Air Force must safeguard our
    ability to see anything on the face of the Earth, range it,
    observe it, or hold it at risk; supply, rescue, support, or
    destroy it; assess the effects and exercise global command and
    control over all of these activities.
        Rising to the 21st century challenge is not a choice, it's
    our responsibility to bequeath a dominant Air Force to
    America's joint team that will follow us in service to the
    Nation.
        Again, we appreciate your unfailing support to the United
    States Air Force. I'm honored to be here this afternoon, and I
    look forward to your questions and discussion.
        [The prepared statement of General Newton follows:]
           Prepared Statement by Lt. Gen. Richard Y. Newton III, USAF
                                  introduction
        Mr. Chairman, members of the committee, thank you for this
    opportunity to discuss the airmen who serve in the world's most
    respected air, space, and cyberspace force. Our airmen have been
    continuously deployed and globally engaged in combat missions for over
    17 straight years--since the first F-15 touched down in Saudi Arabia in
    August 1990. Today, airmen are fully engaged in the interdependent
    joint fight and stand prepared for rapid response and conflict across
    the globe as our Nation's sword and shield.
        Our priorities are clear: winning today's fight; developing and
    caring for our airmen and their families; preparing for tomorrow's
    challenges. Today's confluence of global trends already foreshadows
    significant challenges to our organization, systems, concepts, and
    doctrine. We are at an historic turning point demanding and equally
    comprehensive revolution. The future strategic environment will be
    shaped by the interaction of globalization, economic disparities and
    competition for resources; diffusion of technology and information
    networks whose very nature allows unprecedented ability to harm, and
    potentially, paralyze advanced nations; and systemic upheavals
    impacting state and non-state actors, and thereby, international
    institutions and the world order.
        Due to increased operations, maintenance, and personnel costs, we
    have been forced to self-finance the centerpiece of future dominance--a
    massive and critical recapitalization and modernization effort for our
    aging air and space force. Budgetary pressures forced difficult choices
    to ensure that the Air Force would maintain the right balance across
    our personnel, infrastructure, readiness, and investment portfolios.
        The Air Force undertook significant personnel reductions to
    generate billions of dollars to reprogram towards recapitalizing and
    modernizing essential air, space, and cyber systems, congruent with our
    three key mission priorities. The impact on our warfighting airmen has
    been significant. We have been compelled to make some very difficult
    choices with respect to our people. Fewer platforms that require fewer
    operators and maintainers are part of the equation. We are taking a
    hard look at all our processes and streamlining our organizations. At
    the same time, we want to improve the training and professional
    development of our airmen.
        However, maintaining a Required Force of 86 modern Combat Wings
    will also be significantly impacted by current programmed reductions in
    Air Force end strength. The Air Force has submitted a report to
    congressional defense committees on Total Force end strength
    requirements due to new and emerging missions. This report identifies
    our Total Force end strength requirement of 681,900 in fiscal year 2009
    growing to 688,500 by fiscal year 2015 to operate, maintain, and
    support a required force of 86 modern combat wings and how the Air
    Force will fund these requirements.
                                 force shaping
        We are working to tailor our personnel mix to the new security
    environment by using a variety of force shaping tools across the
    personnel inventory. In fiscal year 2007 we used a variety of voluntary
    and involuntary initiatives to reduce our end strength in very specific
    areas. We deliberately took greater risk in the home-station and
    support career fields to minimize risk in the combat arena. We are
    pleased with the results of our fiscal year 2007 Force Shaping efforts.
    However, we will not be looking for any significant force reductions
    beyond normal separation and retirements in fiscal year 2008. We intend
    for fiscal year 2008 to be a ``strategic pause'' as we evaluate the
    effects of our force shaping efforts on the field. This is the time for
    people and organizations to ``settle'' and we will use the feedback
    from the field to make any necessary course corrections in fiscal year
    2009. The fiscal year 2008 Force Shaping program has been structured to
    achieve approximately 650 officer separations and retirements over and
    above normal attrition. The program will offer Voluntary Separation
    Pay; Limited Active Duty Service Commitment waivers; Lieutenant Colonel
    and Colonel Time in Grade waivers for retirement; Officer 8-year Total
    Active Federal Commissioned Service retirement (vice the normal 10 year
    requirement); and continuation of the officer and enlisted Blue to
    Green Interservice Transfer program. We have cancelled the fiscal year
    2008 Force Shaping Board because we are confident we will meet our end
    strength without needing to involuntarily reduce our officer corps.
    There are currently no enlisted Force Shaping programs in fiscal year
    2008 except for the voluntary Blue-to-Green Interservice Transfer
    program.
                          personnel services delivery
        To achieve the Secretary of Defense's objective to shift resources
    ``from bureaucracy to battlefield,'' we are overhauling Air Force
    personnel services. Our Total Force (Active Duty, Air Force Reserve
    (AFRES), Air National Guard (ANG), and Civilian) Personnel Services
    Delivery initiative modernizes the processes, organizations, and
    technologies through which the Air Force supports our airmen and their
    commanders.
        Our goal is to deliver higher-quality personnel services with
    greater access, speed, accuracy, reliability and efficiency. The Air
    Force plans to program the resulting manpower savings to other
    compelling needs over the next 6 years. This initiative enhances our
    ability to acquire, train, educate, deliver, employ, and empower airmen
    with the needed skills, knowledge and experience to accomplish Air
    Force missions.
        Our front line airmen at base-level are key. They are the experts
    on the day-to-day workings of the Air Force. Just a few months ago, our
    base-level airmen at Grand Forks Air Force Base (AFB) presented us a
    technological innovation. It's a locally developed software application
    that brings mass quantities of Personnel data right to each commander
    in a consolidated, meaningful ``dashboard'' of information. All of this
    happens with minimal intervention of the Personnel ``middleman''
    thereby freeing the Personnelists up to work on other tasks. We are
    very excited by this homegrown ``Base-Level Service delivery Model''
    and are actively working to incorporate it across the Air Force in
    fiscal year 2008. We will let the bases incorporate it into their
    programs and procedures and see how we can adapt it to different
    organizations and environments. We plan to adapt it continually and
    make improvements as we get inputs from the field.
                       national security personnel system
        Our civilian workforce is undergoing a significant transformation
    with implementation of the Department of Defense (DOD) National
    Security Personnel System (NSPS). NSPS is a simplified, more flexible
    civilian personnel management system that improves the way we hire,
    assign, compensate, and reward our civilian employees. This modern
    management system enhances the Air Force's responsiveness to the
    national security environment, preserves employee protections and
    benefits, and maintains the core values of the civil service.
        NSPS design and development has been a broadbased, participative
    process that included employees, supervisors and managers, unions,
    employee advocacy groups and various public interest groups. Almost 100
    percent of eligible employees have converted to NSPS--over 39,000. NSPS
    is the most comprehensive new Federal personnel management system in
    more than 50 years, and it's a key component in the DOD's achievement
    of a performance-based, results-oriented Total Force.
                                   recruiting
        As we prepare for an uncertain future, we are transforming the
    force to ensure we are the right size and shape to meet emerging global
    threats with joint and battle trained airmen. We are becoming a smaller
    force, with a critical need for specific skills. In order to dominate
    in the domains of Air, Space, and Cyberspace throughout the 21st
    century, we must recruit, develop, and organize America's diverse and
    brightest talent for the complex, multinational, and interagency
    operations of the future.
        Our recruiting force has met their enlisted recruiting mission
    through persistence and dedication. Since 2000, the Air Force has
    enlisted 258,166 airmen against a goal of 254,753 for 101 percent
    mission accomplishment. For fiscal year 2008, the active-duty
    requirement is 27,800 and 9,258 new airman have accessed up to this
    point with 9,461 waiting to enter Basic Military Training. We're on
    track to meet our goals. To date for fiscal year 2008, we've accessed
    100 percent of our active duty goal, and accessed 100 percent and 114
    percent of our Reserve and Guard accession goals, respectively.
        The United States Air Force Recruiting Service (AFRS) continues to
    find the right person, for the right job, at the right time and this is
    clearly evident in our most critical skills. Recruiting Service has
    filled every requirement for Combat Controller, Pararescue, Tactical
    Air Control Party, Survival, Evasion, Resistance, and Escape, Fuels
    Systems, Security Forces, Armament Systems, Munitions Systems,
    Utilities and Linguists since 2001. This has been accomplished through
    hard work and the significant assistance of the U.S. Congress. Recruits
    who choose to enter these career fields are offered an Initial
    Enlistment Bonus ranging from $1.5K to $13K, depending on the job and
    length of enlistment. No other enlistment bonuses are offered.
        The AFRESs exceeded its recruiting goals for the 7th consecutive
    year in fiscal year 2007. However, the Base Realignment and Closure
    (BRAC), Total Force Initiative and PBD 720 cuts will pose significant
    challenges in 2008. Aggressive measures will be needed to stand up new
    missions at Pope, MacDill, and Elmendorf AFBs. While we've benefited
    from active duty Force Shaping initiatives we anticipate tougher days
    ahead as the prior service recruiting pool will be smaller forcing us
    to rely more heavily on non-prior service (NPS) individuals. Competing
    for the NPS pool against other Reserve and Active Duty components that
    may have more attractive bonus packages will add to recruiting
    challenges. Funding for advertising and bonuses will play a key role in
    meeting manning requirements.
        The majority of our officer programs have also met with mission
    success, with the exception of medical recruiting. Last year the Air
    Force recruited just under half of its target for fully qualified
    healthcare professionals. Broken down by specialty, we recruited 68
    doctors (17.4 percent of target), 45 dentists (25.5 percent), 222
    nurses (62.5 percent), 125 biomedical scientists (62.8 percent), and 34
    medical administrators (97 percent). Currently, the Air Force's
    Medical, Dental, and Nurse corps have significant manning challenges
    that are a directly attributable to recruiting and retaining these
    personnel. These challenges are made all the greater because the Air
    Force has deployed over 8,000 medical officers in support of the global
    war on terror since 2001. Since September 11, AFRS and Air Force
    Medical Service have been working together to implement innovative ways
    to address our shortfalls in medical recruiting, to include increasing
    the number of available health professions scholarships and developing
    a ``Career Field Champions'' network of medical professionals to assist
    with our recruiting effort.
                                   retention
        In fiscal year 2007, we continued to manage and shape the force
    across and within skills. Maintaining acceptable retention levels
    through targeted programs continues to be critical to this effort.
    Force shaping ensured active duty end strength met our longer term
    requirements.
        For fiscal year 2007, active duty Air Force officer retention
    finished 11 percent above goal (excluding force shaping losses), while
    enlisted retention fell below goal (92.7 percent of goal), still within
    acceptable margins. The AFRES fell short of its enlisted retention goal
    by 3 percent, attaining 97 percent and was .2 percent shy of the
    officer retention goal, attaining 99.8 percent. The ANG met their
    overall officer and enlisted retention goals for fiscal year 2007. Even
    with these successes, some enlisted specialties in the active Air Force
    did not achieve their overall retention goal, including Air Traffic
    Control, Mid East Crypto Linguist, Structural Civil Engineering, and
    Pavement and Construction Equipment Vehicle Operations, and
    Contracting.
        Our most critical warfighting skills require a special focus on
    retention to maintain combat capability due to critical manning and the
    demands of increased operations tempo placed on career fields including
    Pararescue, Combat Control, and Explosive Ordnance Disposal. Budget
    support for retention programs is critical to effectively manage the
    force and preserve needed warfighting capability. These programs are
    judiciously and effectively targeted to provide the most return-on-
    investment in both dollars and capability.
        Retention rate in the AFRESs is also becoming a concern although we
    missed our goal in fiscal year 2007 by only a slight margin (99.8
    percent). However, this marked the second year in a row that we didn't
    reach our AFRES retention targets. We've seen an increase in the
    turnover rate via gradual decreases in First Term and Career Airmen
    reenlistments over the last 3 years with reenlistments dropping nearly
    10 points. We believe this is partly due to fallout from BRAC and PBD
    720, but will monitor closely to identify opportunities to influence
    our airmen's behavior as they reach key career decision points.
        The Air Force's ability to retain experienced health care personnel
    past their initial commitment has declined--compounding our recruiting
    challenges. The retention at the 10-year point is 26 percent for
    physicians, 18 percent for dentists, 34 percent for nurses, 36
    percent for biomedical sciences officers, and 52 percent for
    administrators. The Air Force continues to develop both accession and
    retention incentives to ensure the right mix of health professionals.
        Our warfighting airmen are committed to serving, including those
    experiencing high deployment rates. Combatant Commander (COCOM)
    requirements and the global war on terror levy a high demand for
    pilots, navigators, intelligence, civil engineers, and security forces
    officers as well as enlisted airmen in aircrew, special operations,
    intelligence, vehicle operators, civil engineering, and security
    forces. Despite an increased operations tempo and deployment rate, the
    Air Force continues to achieve acceptable retention levels across the
    officer and enlisted force.
        Finally, we understand that support to families is a critical part
    of retention. Working together with their spouses and families, airmen
    make a decision to stay in the Air Force based on many factors, one of
    which is the quality of life they and their families deserve. With a
    strategic plan that highlights the importance of ``Taking Care of
    People'', Air Force recognizes that families are vital to retention.
                               force development
        As part of our Air Force Transformation, we are reviewing and
    synchronizing our development efforts to realize efficiencies in how we
    utilize developmental tools--educational, training or experiential--to
    produce airmen (military and civilian; officer and enlisted; Active and
    Reserve). We're dedicating resources to ensure our ``most important
    weapon system'' is prepared to deliver Air, Space, and Cyberspace power
    wherever and whenever it is needed. Synchronized, deliberate
    development relies on a common language, a common framework and
    enduring processes. We are finalizing this common language and
    framework by publishing our Institutional Competency List and Continuum
    of Learning framework. Next, we must review our developmental processes
    to ensure they describe requirements, align programs, and link
    investments with outcomes. As an example, we eliminated redundancies in
    legacy ancillary training reducing training time to 90 minutes per
    airman ultimately saving 8 hours, per year, per airman, for a total of
    over 6 million Air Force work-hours per year.
        We are synchronizing processes to meet requirements for the skills
    airmen need in an expeditionary environment. Starting in 2011 we'll
    send select airmen to the Common Battlefield Airman Training course to
    enhance the expeditionary skills they learned in Basic Military
    Training. We are teaching airmen self aid and buddy care so they can
    take care of each other when their bases take mortar fire or when teams
    come under fire while performing their duties ``outside the wire.''
    We've established a Center of Excellence for Expeditionary Ground
    Combat to ensure our pre-deployment training is responsive to the
    changing tactics and techniques used by our enemies in the AOR. We are
    extending Basic Military Training to 8.5 weeks, to teach airmen skills
    to defend an Air Base and to operate in the expeditionary environment
    of the 21st century.
        We established the Air Force Culture and Language Center at Maxwell
    AFB, AL, unique in its mission to develop expeditionary airmen by
    synchronizing education and training across our Professional Military
    Education Schools and deployment training venues. We are teaching
    language training and enhancing regional studies at our Air Command and
    Staff College and Air War College. We've also implemented regional
    studies at our Senior Noncommissioned Officer (NCO) Academy, NCO
    Academy, and Airmen Leadership Schools. We are consolidating Air Force
    Specialty codes to provide broader skill sets and enabling flexibility
    in global war on terror and support of COCOM missions.
        We have also placed a great focus on culture and language training
    at our officer accession sources, with the objective of developing
    officers with acute cultural understandings, able to forge partnerships
    and alliances. A majority of Air Force Academy and Reserve Officer
    Training Corps (ROTC) Cadets are enrolled in foreign language education
    and are now able to participate in study abroad programs, not only at
    foreign military academies but also local universities. One force
    development strategy is to target foreign language speakers, primarily
    focusing on Air Force ROTC detachments that sponsor foreign language
    programs. Currently, we have 54 cadets enrolled as Language Majors,
    with another 629 scholarship cadets majoring in technical degrees and
    taking languages as an elective. Another 100 cadets annually
    participate in foreign culture and language immersions in countries of
    strategic importance. Beginning with cadets contracted in August 2006,
    Air Force ROTC scholarship cadets majoring in nontechnical degrees must
    now complete 12 semester hours of foreign languages. Further, USAFA
    cadets who are technical majors are taking 6 semester hours in a
    foreign language and non-technical majors are taking 12 semester hours
    in a foreign language.
                               caring for airmen
        I'm excited that my role as Air Force A1 enables me to be the
    Quality of Life champion for the Air Force. Quality of life is not
    merely a list of programs and services; it's the way we take care of
    our airmen through those programs, and how they know we're supporting
    them and their families who sacrifice for America. We know airmen focus
    more on their mission when they have positive ways to rejuvenate from
    stress, when they have the knowledge that their families are in good
    hands, and when they feel good about being part of the larger Air Force
    team.
        The Air Force is shifting a portion of funding from manpower and
    base operating support to address our critical recapitalization
    requirements. However, we understand that to maintain combat capability
    we must continue to balance our modernization of our weapons systems
    with development of airmen who are ready, willing, and able to employ
    them. To that end, we are finding innovative ways to transform our
    community support services and programs while avoiding unnecessary
    impacts to services delivered. One way we are transforming is through
    the headquarters realignment of Air Force Services from Logistics to
    Manpower and Personnel. This transition opens the door to increased
    efficiencies and a more seamless approach to customer service. It also
    allows for a single point of oversight across the entire ``people
    enterprise'' and tightly linking the personnel, manpower, and services
    functions. We remain committed to ensure the needs of our airmen and
    their families are met.
        Taking care of our seriously wounded, injured, or ill airmen is a
    top priority. We continue to expand the Air Force Wounded Warrior
    Program in an effort to provide the best possible care to these brave
    airmen and their families. The heart of the Air Force Wounded Warrior
    Program is the Family Liaison Officer (FLO) who is assigned to each
    patient for the duration of their need. The FLO serves as a single
    point of contact between the airman and the numerous helping agencies.
    Our FLOs provide a critical resource to deal with the unfamiliar
    routine of the recovery process and prevents the airman from being lost
    in the bureaucracy.
        Similarly, the Air Force assigns a Community Readiness Coordinator
    (CRC) when a servicemember casualty notification is made. The CRC works
    closely with the FLO to ensure the combat related injured or ill
    servicemember and their family receives complete information and
    entitlements. Later, if the member is not returned to active duty, we
    assist with Federal employment, entitlements and benefits information,
    financial resources, family support, and more. The member is tracked
    monthly for 5 years after separation or retirement.
        Our Fit to Fight program and food service operations are
    cornerstones of combat capability. Airmen who are well-fed and
    physically fit are healthier, think more clearly, handle more stress,
    and are better able to complete the mission despite reduced sleep and
    extended hours. This translates directly to increased combat capability
    from our most important weapon system--our people.
                           child development programs
        Child care is the number 1 quality of life issue for our airmen and
    their families. We are focused on providing quality, available and
    affordable child and youth development programs to airmen and their
    families through an extensive system of programs and services both on
    and off Air Force installations. A recent national study highlighted
    the DOD child care program as leading the Nation in quality standards
    and effective oversight. We recognize that readily available, quality,
    and affordable child care and youth programs are a workforce issue with
    direct impact on mission readiness. We are proud of the Air Force's
    contribution to this program and believe our child care program is a
    critical factor in helping airmen remain focused on the mission.
        Airmen must balance the competing demands of parenting and military
    service, particularly challenging in today's environment of higher
    operations tempo, increased mobilization, and longer periods of time
    away from home. We are committed to serving these airmen and their
    families by redoubling our efforts to reach out and assist all members
    of the total force through robust child and youth programs wherever the
    member resides, when they need care. Traditional child care is provided
    in on-base Child Development Centers (CDCs), School Age Programs housed
    in Youth Centers, and Family Child Care (FCC) Homes. The Air Force
    requires that CDCs be accredited by the National Association for the
    Education of Young Children and school age programs be accredited by
    the National After-school Alliance, and the National Association of
    Family Child Care also offers accreditation to FCC providers. A diverse
    array of approaches to provide airmen and their families with
    nontraditional child care are available to support our families outside
    of typical duty schedules, or in geographically separated areas.
        The Air Force Extended Duty Child Care (EDC) Program provides
    18,000 hours of extended child care each month in FCC homes at no-cost
    to the military member. The EDC initiative enables airmen and their
    families to obtain high-quality child care from Air Force licensed or
    affiliated providers at or near their base when parental workloads
    increase due to longer duty hours and exceed their typical 50-hours per
    week child care arrangements. Child care is provided for nontraditional
    hours, such as evenings and weekends at no additional costs to parents.
    This initiative also helps parents with ``child care emergencies'' when
    their regular source of child care is not available, and care is
    provided for spouses of deployed or TDY airmen needing child care
    created in part by absence of spouse. The EDC program is available to
    Active Duty, ANG, and AFRES members.
        The Air Force Returning Home Care (RHC) Program supports airmen
    returning home from deployments lasting 30 or more days and for airmen
    who routinely deploy on a short-term basis (cumulative of 30 days in a
    6-month period) in support of contingency operations. Airmen receive 16
    hours of free child care upon their return to their home station and
    their family. The care is provided in one of the Extended Duty FCC
    homes on base that is currently under contract as part of an Air Force
    Services initiative to support airmen required to work extended hours.
    The RHC Program supports post-deployment by providing child care while
    airmen and spouses reconnect.
        Our Airman and Family Readiness professionals are helping airmen
    and their families adapt to the realities of life in an Expeditionary
    Air Force. They do this through personal and family readiness
    counseling, personal financial management, Air Force Aid assistance,
    spouse career planning, and transition and relocation assistance.
    Experts in the Equal Opportunity and Sexual Assault Prevention and
    Response arenas help every Airman exercise positive and productive
    interpersonal relationships, in both professional and personal
    interactions. The Air Force is a family, and our clubs and recreation
    programs foster and strengthen those community bonds, and promote high
    morale and an esprit de corps vital to all our endeavors.
        I'm also excited to serve as Chairman of the Board of Directors for
    the Army and Air Force Exchange Service. These exchanges exist in one
    form or another at every installation where soldiers, airmen, and their
    families need support, both at home station and in contingency or
    deployed environments. The Board acts on behalf of the Secretaries and
    Chiefs of Staff of the Army and the Air Force in directing the
    operations of this $8.7 billion per year retail operation that serves
    the needs of soldiers and airmen wherever they are stationed, providing
    goods and services and generating dividends to support morale, welfare,
    and recreation benefits. They do more than consistently provide
    affordable products for soldiers and airmen; they bring a sense of
    community and familiarity to the larger military family, and that
    carries over outside United States borders where exchanges also bring a
    sense of home to a deployed soldier or airman. Just recently, the Board
    approved 17 major construction and image update projects for a total of
    $169 million, all in an effort to ensure the highest levels of service
    and quality to our soldiers, airmen, and their families. Growing up in
    a military family, I've been a lifelong customer of both, and I'm
    dedicated to supporting both of them fully for our soldiers, airmen and
    their families.
        Additionally, we are equally committed to ensuring that all airmen
    are well trained and provided with modern, safe and efficient equipment
    and facilities to complete their mission. We provide life-sustaining
    support, such as food service and lodging, to our troops in the field
    and essential community programs to our airmen and their families back
    home. Through innovative systems and programs and the hard work of our
    dedicated personnel we continue to provide critical mission capability
    for our commanders and vital support for our members and their
    families.
                                   conclusion
        Today's airmen are doing amazing things to execute the Air Force
    mission, meet Air Force commitments, and keep the Air Force on a vector
    for success against potential future threats in an uncertain world. We
    are ready and engaged today, but we must continue to invest to ensure
    tomorrow's air, space, and cyberspace dominance. Our aim is to improve
    capability while maintaining the greatest combat-ready force in the
    world. We will accomplish this through dedication to my five focus
    areas: Manage end strength efficiently to maximize capability; Recruit
    and retain the highest quality airmen; Maximize continuum of learning
    throughout airman life cycle; Continue focus on quality of life
    programs for airmen and their families; and Maximize efficiencies of
    business processes through evolving IT solutions.
        The Air Force is often first to the fight and last to leave. We
    give unique options to all Joint Force Commanders. The Air Force must
    safeguard our ability to: see anything on the face of the Earth; range
    it; observe or hold it at risk; supply, rescue, support or destroy it;
    assess the effects; and exercise global command and control of all
    these activities. Rising to the 21st century challenge is not a choice.
    It is our responsibility to bequeath a dominant Air Force to America's
    joint team that will follow us in service to the Nation.
        We appreciate your unfailing support to the men and women of our
    Air Force, and I look forward to your questions.

        Senator Ben Nelson. Thank you.
        Secretary Chu, we've spent time showing concern and looking
    for solutions to the sexual assault issues in the armed
    services today, because preventing those assaults in the
    military remains a high priority in Congress, and I'm sure it
    is with the military as well, and Congress is going to continue
    to monitor the DOD actions on this issue.
        In that regard, in the Ronald Reagan National Defense
    Authorization Act for Fiscal Year 2005, Congress required the
    Secretary of Defense to expand the mission of the Task Force on
    Sexual Harassment and Violence at the Military Service
    Academies to examine sexual-assault matters throughout the
    entire Armed Forces, and to report findings and recommendations
    to the Secretary of Defense within 12 months of its initial
    meeting. The Secretary of Defense is then required to report to
    Congress.
        In the statement of managers accompanying this legislative
    requirement, the conferees stated, ``Given the urgency of the
    need for effective action to prevent and resolve sexual-assault
    offenses against military members, the conferees expect the
    task force will provide an independent assessment of the
    effectiveness of policies and programs developed by the
    Department, as well as the success of the military Services at
    all levels, in achieving their implementation.''
        What's the status of the task force, at this point?
        Dr. Chu. Sir, thank you for that question. It is a very
    important issue. We agree with your presumption, that the first
    priority is prevention, not simply reaction after a terrible
    event has occurred.
        The task force has been appointed. We are in the process of
    putting in place a more senior executive director to give it
    greater heft within the Department. It has held its first
    administrative meeting, which I believe, advised by lawyers,
    doesn't count as the ``clock starting'' that you mentioned.
        I do think the task force at this time is helpful, because
    we've had time for the policies to be implemented across the
    force, as a whole, time to begin to assess their effects to
    see, are we in the right place? Are we doing the right things?
    What further steps should we pursue?
        We have, of course, conducted the surveys that are required
    by statute. We have transmitted to you the academy surveys,
    specifically. I have spent some time perusing the focus-group
    report, which is part of the package we have sent you, at the
    military academies, in which the interviewers have sat down
    with the young men and women at those institutions.
        I am encouraged by what those cadets/midshipmen have told
    us. It's a very different picture from what was true 3 or 4
    years ago, when I think there was considerable fear in some
    quarters, and distrust. They may not use all the fancy
    bureaucratic terms that we employ, but they know we've put
    counselors in place, they know the procedures for reporting
    incidents. I'm particularly struck by the comments of the women
    at these academies; at least in my judgment, they feel that we
    have created a safe environment for them with our various
    policies. They're not all the same--there are some amusing
    differences across the Services, about how they've addressed
    this issue, but I do believe substantial progress has been
    made.
        Senator Ben Nelson. Do you have any idea of when we might
    expect a report from the group?
        Dr. Chu. From the task force?
        Senator Ben Nelson. Yes.
        Dr. Chu. Since it's just getting started, I do think it's
    going to be toward the end of this year before we'll see
    substantive material.
        Senator Ben Nelson. Will that report include more than the
    Service Academies?
        Dr. Chu. Yes, sir, absolutely. As directed, it is to be an
    across-the-board look at all our policies. We have put, as I
    know you appreciate, a great deal of training emphasis on this
    issue, starting with basic training for both officers and
    enlisted personnel.
        Senator Ben Nelson. Thank you.
        In terms of suicide prevention, I know the Army has
    recently experienced an increase in the number of suicides, and
    some are holding up the Air Force suicide program as a
    successful model for the Army and other Services to emulate.
    General Newton, can you briefly describe the Air Force's
    suicide prevention policy and your assessment of its success to
    date? I realize you're new into it, but you may have some
    thoughts about it at this point.
        General Newton. Yes, sir. Thank you for that question, and
    I'll be brief. But from a standpoint of where it starts in the
    Air Force, it starts down at the base level, down at the unit
    level. Other programs, much like the suicide programs that
    we've had in the past, or other similar programs, that's where
    we find a lot of success, down at the unit level; rather than
    being a top-down, it's a bottom-up, point one.
        The second point is how we communicate. How do we convey
    to, not only our airmen--and, by the way, it's Active Duty,
    Guard, and Reserve, but also to our civilians, as well--
    communication showing that, not only at the unit-commander
    level, but again, now top-down, that we as a Service put a lot
    of great value. Again, I think the fact that we are able to
    communicate to people, to have them actually understand that we
    can discuss things that perhaps have been held back in years
    gone by, particularly in a very high operations-tempo
    environment, and with the expeditionary nature of Air Force
    today.
        My last point on this is that we have discovered that, not
    only does it work in garrison or on base, in a traditional
    sense, but it also fits an expeditionary model.
        Senator Ben Nelson. General Rochelle and General Coleman
    and Admiral Harvey, can you give us some idea of what your
    experience is with the programs you have in each of your
    Services, and how effective you think that they are at the
    present time?
        General Rochelle. Happy to do that, Chairman Nelson.
        First of all, I should mention that it's clear that the
    increase in suicide, as well as other measures that we track
    very, very closely, are a reflection of the amount of stress
    that's on the force. There has been a task force--Suicide
    Prevention Task Force--in existence for quite some time. But,
    what the Secretary and the Chief have directed is greater
    Surgeon General, chaplain, Army G-1, Provost Marshal, and other
    specialist oversight and steerage of that effort, focused on
    four things:
        First is removal of the stigma that is associated with
    seeking mental health counseling and support. Our most recent
    Military Health Advisory Team trip into theater has borne out
    some very good results of the elimination of that stigma--the
    reduction of that stigma.
        The second is exactly what General Newton spoke to,
    sensitizing our junior-most leaders, not only of how to
    identify and respond to soldiers who are in danger, but, more
    importantly, reemphasizing that this is a part of our Army
    values, it's one of the tenets of our Army values, never
    leaving a fallen or falling comrade behind.
        Third is increasing the mental health professionals in
    direct support of our soldiers.
        Finally, providing commanders, at every level, actionable
    intelligence when prevention measures fail--with intelligence
    that they can use to then prevent--and ideally prevent the next
    one.
        Senator Ben Nelson. Do you have any data that would
    establish the tracking of high tempo of operations (OPTEMPO)
    with the increase? In other words, are there any statistics,
    Dr. Chu, that would establish that there is some correlation
    between the high ops tempo and the increased suicide rate?
        Dr. Chu. I do.
        We have looked at suicide rates for all four, sir. We have
    tracked them for years, actually. The chairman has testified to
    the quality of DOD suicide prevention programs, which I think
    have been recognized in the civil sector, recently with some
    awards.
        I do think it is still speculative to ascribe causality to
    ``Why has the Army rate started to rise?'' because the Marine
    Corps rate has not risen. So, it's not quite the same in each
    Service.
        Also, the majority of the suicides really are here at home.
    Of those today, the majority of people are on their first
    deployment. So, it's a more complex picture. I would be very
    hesitant to ascribe to any one cause. We do know a fair amount
    about precipitating factors. Failed relationships are a key
    factor across the board. Financial difficulty is a key factor
    across the board. But, I think I would be careful about drawing
    any immediate conclusions about, ``Why has the Army rate gone
    up?'' and, ``Why at this particular time?''
        Senator Ben Nelson. My time is up, but, maybe, Admiral and
    General Coleman, you might briefly--General Coleman, I'll give
    you a chance to go first, because your numbers apparently are
    not increasing, at some level, even with a high OPTEMPO.
        General Coleman. Yes, sir. That is correct, sir. Again,
    thanks for allowing me to answer the question.
        Since about 2001, our numbers have remained relatively low;
    meaning, they did not increase. We do not see a correlation
    between OPTEMPO and suicide rate. Obviously, one suicide is one
    too many. Our ethos is a small unit--at the small unit level,
    and emphasizing that it's not weak to seek help or to seek
    assistance. But, our main focus is on that small unit, small
    unit leader, the buddy system. We see no correlation between
    deployments. Whether a marine who committed suicide had been to
    the fight or had not been, there's no increase in the numbers
    since 2001, sir.
        Thank you, sir.
        Senator Ben Nelson. Thank you.
        Admiral?
        Admiral Harvey. Yes, sir. Our suicide rate is--for details,
    since 2004, is about 10.3 or so per 100,000, down to about 9.5
    per 100,000 now. So, fairly steady, with a robust operations
    tempo throughout that period of time. Our focus has been on
    unit training. Interestingly enough, if you look at the
    demographics of, sadly, those who are the most likely to take
    their own life, it is a relatively senior individual, not the
    young kid, the one who's been around for a while. It's that
    mid-grade petty officer, that chief petty officer, who are in
    positions of authority, which makes this a little more unique,
    because the traditional ``looking after your people''--who's
    looking after those who's looking after the people? So, it's a
    matter of unit training on awareness, unit training on the
    ability to intervene, the concept of a shipmate as someone who
    will step forward at the right time in order to prevent
    something from happening, and not just react to something
    that's happening. It's intense training on this part,
    understanding the demographics, and making sure we're ready to
    put forward with the mental health professionals available to
    us to help guide those efforts.
        Senator Ben Nelson. Thank you.
        Dr. Chu. Mr. Chairman, could I add just one comment? It is,
    I think, useful to underscore that, although each one of these
    is a tragedy, our rate in the military is, and has been, at or
    below the gender and age-adjusted rate for American society, as
    a whole. We've also seen in civil society that's been reported
    in news media, where--in some ways, this parallels with Admiral
    Harvey--older suicide rates have been rising in civil society.
    So, again, I do not think we fully understand the causality of
    all these troubles. We are concerned by the fact that the
    Army's rate has been rising. Let me underscore that point.
        Senator Ben Nelson. Thank you.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman.
        Dr. Chu, I think you're pretty well aware of the fact that,
    last year, this committee and Congress as a whole passed a
    provision that would promote the Judge Advocates General to
    three-star rank, Lieutenant General or Vice Admiral, and I
    think that was effective January 28. Do you know the status of
    attempts to comply with that legislation? Are there any
    problems that I need to be made aware of?
        Dr. Chu. No, sir, I don't believe there are any problems.
    We are very much aware of the provision. It has the Secretary's
    personal interest, and he is asking the Department to act in a
    unified way, since it affects all three Services.
        Senator Graham. Thank you very much. If you have any
    problems, please let me know.
        Now, pharmacy costs. We've been trying to deal with ways to
    lower our pharmacy costs without hurting quality, and actually
    improving access. Can you tell me where we stand now with
    trying to come up with a new pharmaceutical system?
        Dr. Chu. We will, of course, implement the statutory
    provisions that you have enacted. We are looking at, again, the
    question, and we very much hope for partnership with Congress
    of, how do we address the overall TRICARE structure, as you
    signaled in your opening comments.
        We do believe that the report of the task force that
    Congress required that we constitute does provide a roadmap for
    the way ahead. We can change the specifics, obviously, and that
    needs to be a constant process, and we're very glad that you
    have agreed to receive that briefing, because I do think it
    provides us with a set of guidelines as to how to think about
    other issues.
        Senator Graham. Thank you very much.
        Admiral Harvey, one of the issues facing, I think, all
    Services is health care professionals. You're competing in a
    very tough market out there. Maybe just very briefly, each of
    you, starting with the Navy, could you tell me what your
    biggest challenge is, in terms of your health care costs and
    obligations in your health care professionals, of recruiting
    and retaining those professionals? Is there anything we can do?
        Admiral Harvey. Sir, I'm very pleased to tell you that this
    committee and this Congress have done an awful lot in the 2007
    and 2008 authorization bills that have enabled us to, I
    believe, turn the corner, for the first time in 5 years, and
    put ourselves on a path to success in recruiting in every area
    for our medical professionals. Let me just give you a quick hit
    on what's come out of those bills that gave us the tools that
    we needed to have in what is a very, very tough market.
        Our 4-year active nurse corps accession bonus has gone from
    $15,000 in 2005 to $25,000 in 2007. I'm going to make nurse
    corps accession goals this year.
        Critical wartime specialty accession bonuses for medical
    corps, dental corps officers, up to $400,000; general surgeons,
    $300,000; psychiatrists, $175,000; emergency medicine,
    $175,000. I am 40 percent ahead of where I was last year on
    medical corps accessions. We have 80 accepted and 92 in
    process, against a goal of 358.
        The dental officer accession bonus has increased to
    $75,000. I expect to make our goal of 141 for dental corps
    accessions this year.
        The Health Professions Scholarship Program increased to a
    maximum amount of $30,000 per year, and the Health Professions
    Loan Repayment Program, critical action that you all put into
    the bills, increased to $60,000 a year.
        So, I see that these tools are being received very well. We
    have made medical recruiting the number-one priority in our
    recruiting command, and it's my number-one priority in my job,
    as Chief of Naval Personnel. We have the Surgeon General and
    his team onboard. Doctors are helping us recruit doctors.
    Nurses are helping us recruit nurses. Our medical service corps
    are helping us recruit those health care professionals.
        So, I'm not declaring victory, sir, but I am saying after 4
    to 5 years of missing every goal in every year, I believe we
    have turned the corner on this one, and I'm really looking
    forward to when we get the results of medical school decisions
    here, in the next 2 months, that we'll be able to come back and
    tell you, yes, we are definitely on the path to success.
        Senator Graham. That's great. One of the unsung heroes of
    this war, that our men and women in uniform and, I guess, some
    contractors, but primarily men and women in uniform, who are
    handling combat casualties, it's just an amazing story.
        General Rochelle?
        General Rochelle. Senator Graham, I thank you for that
    question. I would like to echo Admiral Harvey's comments about
    the increases in incentives. But, I would take a slightly
    different tack with respect to where Congress has been most
    helpful, in terms of our medical recruiting, and that is,
    echoing Dr. Chu's comments about authorities, giving us the
    flexibility--the Army, in particular, in 2005--to pilot
    inventive and innovative programs that would allow us to be
    able to stretch out and do things in quite a different way.
        Two examples--we are about to launch, in the Army, a
    program to grow our own nurses--registered nurses, bachelor of
    science in nursing graduates--in partnership with universities.
    The second is, we will soon launch, as part of our pilot
    authorities granted by this committee, by Congress, a waiver of
    the military service obligation that accrues to every
    commissioned officer in the Army--as a pilot. We think this
    will give us a huge increase, in terms of the challenges in the
    marketplace.
        So, I would echo everything that Admiral Harvey has said;
    most especially, the Health Professions Scholarship Program and
    the increase in those incentives; but, the authorities, by far,
    have been the most effective.
        Senator Graham. I'll be very brief, here. I know Senator
    Webb has questions.
        General Coleman, we're growing the Marine Corps; it seems
    to be we're on track to grow the numbers we need.
        General Coleman. Yes, sir.
        Senator Graham. The quality is being maintained. Is there
    any major deviation in quality, here, as we try to grow our
    numbers?
        General Coleman. Thank you, sir. Sir, we have not lowered
    our standards one bit. Our goal, last year, was 184,000 end
    strength. I believe we came in at 186,000-plus, and we have not
    lowered our standards in any way, shape, form, or fashion.
        Senator Graham. Is the Marine Corps generally in good
    shape, here?
        General Coleman. The Marine Corps is in great shape, sir.
        Senator Graham. Personnel wise?
        General Coleman. Yes, sir, great shape.
        Senator Graham. All right. Anything we can do for you, let
    us know.
        General Newton, the Air Force has a sort of dilemma here.
    We're, I think, 5 percent short of where we need to be, in
    terms of personnel. Tell me your dilemma and what we can do to
    help you, here.
        General Newton. Yes, sir. We made a conscious decision, as
    we look at striving to recapitalize our force and modernize our
    force, the average aircraft age--I'm sure you heard reported--
    is over 24\1/2\ years old. So, we've made the conscious
    decision, as we look at our program force, of decreasing end
    strength by 40,000. So, we're on a glide slope, by the end of
    fiscal year 2009, to get down to about 316,600--the number for
    Active Duty end strength.
        Senator Graham. Is that wise, given the OPTEMPO?
        General Newton. Sir, it's a balance between cost and risk.
    I'll tell you that we submitted a report to Congress, just
    several weeks ago, with regard to what--as I just indicated,
    the program force is, versus the required force. The required
    force, in order to meet our global commitments, with new
    emerging missions, with the growth of end strength, the United
    States Army and the United States Marine Corps, appears to be
    about 330,000 if you look at the Program Objective Memorandum
    starting around fiscal year 2010 and through 2015. If you're
    asking me the question, ``Are we incurring more risk by staying
    on glide path to a reduced end strength for program force down
    to 316,000?'' I would say, yes, sir, we are. But, again, it
    comes down to the challenge between the costs of--so forth
    and--as well as the overarching need at this juncture to
    recapitalize and modernize.
        Senator Graham. So, you're having to cut your personnel
    cost to pay for your capital needs, is that the deal, here?
        General Newton. Sir, if you think of it in terms of the
    number of banks we went to, in this case we made the decision
    in Program Budget Decision 720 back in November 2005 to make
    that very tough recapitalization call and went into the
    personnel account.
        Again, the backdrop of that is, with new emerging
    missions--I didn't mention, but we have a new combatant command
    standing up in U.S. Africa Command--not only are we striving to
    dominate in air and space, by cyberspace, as well, with our
    plans to stand up a new cyberspace command. But, if you look at
    the QDR report that came out around that same time period,
    which reports that the Air Force is to maintain 86 modern
    combat wings, it's the difference between, obviously the cost
    and the risk, but also the difference between where we are,
    programmatically, but also in terms of requirements.
        Senator Graham. Thank you.
        Thank you, Mr. Chairman.
        Senator Ben Nelson. Senator Webb.
        Senator Webb. Thank you, Mr. Chairman.
        Gentlemen, first, I would like to just start by saying--
    listening to the reactions on the question about suicide
    prevention and your programs and the information that you have,
    I've been watching this for 6 years now, through three
    different family relationships, from the enlisted infantry
    company level, looking up, and I don't have the service-wide
    data that you have, but I do have a serious concern about this.
    The things that I have seen are admittedly anecdotal, but they
    kind of contravene all of the things you're just saying, in
    terms of age and OPTEMPO and these sorts of things. Because
    they are personal in nature, and because they're anecdotal, I
    don't think it's appropriate for me to go into it in a hearing,
    but I would like the opportunity to have you come and sit in my
    office for about 10 minutes and explain some of the concerns
    that I have. I don't believe I'd be doing my job if I didn't
    say this. We really have a responsibility to make sure we
    examine the potential as it exists. Sometimes, as data filters
    up to the top--having spent 5 years in the Pentagon, 4 of them
    with Dr. Chu, I know how that can go. So, at some point, I
    would enjoy being able to sit down and talk to you all about
    that.
        Dr. Chu. Delighted, Senator.
        Senator Webb. One statistic that jumps out at me, David,
    from all the years that I've been involved in this, is this
    notion that fewer than 3 out of 10 of America's youth are
    deemed fully qualified to serve in the military. That just
    astounds me because when you look back, for instance, at the
    Vietnam era, one out of every three males in the age group
    actually served and there were many more who would have been
    physically qualified. To what do you attribute this number?
        Dr. Chu. I think there are two principal factors, in my
    judgment. One is, in the military, we have set far higher
    standards, particularly for educational achievement than was
    true before and far higher standards than we set in the force
    in the early days of the volunteer force, when Congress rebuked
    us, as you recall, in the 1970s, for the low fraction of high
    school diploma graduates and the weak performance on the Armed
    Forces Qualification Test. So, we really have set ourselves to
    be Lake Woebegone. We have set a standard that 90 percent
    should be high school diploma graduates. The estimates--and
    they are only estimates--of the high school diploma graduation
    in the country hover between 70 and 80 percent. Everybody in
    the military, as I know you appreciate, is a high school
    graduate, either through diploma or General Equivalency
    Diploma. That didn't used to be true. Similarly, in the AFQT,
    we aim to have 60 percent or more--and three of the four
    Services are really in the 70 percent range--of scores above
    average. We limit mental category IV to 4 percent of
    accessions, for example, whereas Project 100,000 in the 1960s
    deliberately took mental category IV individuals, in the hopes
    that--often high school dropouts--we could rehabilitate them
    and put them on a more productive track.
        Senator Webb. Right, but just to recall the history of that
    30 years ago, during the Carter administration, we redefined
    what category IV was. We created category IIIA and then
    category IIIB, and a whole lot of the IIIBs were category IVs
    previously.
        Dr. Chu. Let me double check, but I think the category
    limits were kept more or less the same.
        [The information referred to follows:]

        The Armed Forces Qualifications Test (AFQT) Category definitions
    have remained the same since the inception of the Joint-Service
    enlistment test battery in the mid-1970s. However, in the late 1970s,
    we experienced a miscalibration (scaling error) of test scores when new
    forms of the enlistment test were implemented. The result, often called
    the ``misnorming,'' was that AFQT scores ranging from 21 through 49
    were particularly inflated. For example, a recruit with a reported
    score of 50 should have received a score of 41. When the error was
    discovered, the scores were adjusted and by 1980, new norms were
    implemented. But with all that going on, the AFQT Category definitions
    remained unchanged: an AFQT percentile score of 50 or better was, and
    remains, defined as AFQT Category I-IIIA: AFQT Category III is for
    scores from 31 through 64. with AFQT Category IIIA defined as scores of
    50 to 64 and AFQT Category IIIB for scores from 31 through 49; AFQT
    Category IV is for scores of 10 through 30; and AFQT Category V
    includes scores 9 or lower.

        Dr. Chu. The other big factor, I think--and this is
    something that is a national challenge--is the issue of
    physical fitness, and particularly obesity. A large fraction of
    the loss of the cohort that is described in this study that has
    been done is because they're not medically qualified. This is
    not the draft-era failing the physical issue; these are recent
    standards for physical fitness and obesity that are
    sufficiently tight that large numbers of young Americans can't
    comply.
        It doesn't necessarily mean--and this is one of the
    internal issues that we are examining (the Army is examining in
    pilot)--that we're necessarily in the right place on some of
    those standards. The Army does have a so-called ARMS
    experiment, where we're--instead of looking at the indicators,
    we ask the person to actually perform for us--do a step test, I
    think as one of the key ingredients. If they can do that well,
    even if they might be a larger girth than the rules would
    otherwise argue should be the case----
        Senator Webb. It would seem to me--I have a very limited
    amount of time here, and I know where you're going on this--
    that if you take, for instance, truly disqualifying conditions,
    such as disease or systemic disorders and those sorts of
    things, you still have a pretty large group of people that
    you're potentially missing out on, here. The Marine Corps used
    to have what we called ``Fat Boy Platoons,'' where they would
    take people who were overweight, and run them through a pre-
    boot-camp conditioning program, and then in-process them. In
    terms of high school graduates, I've always been of a mind that
    if you take someone with a higher mental category on their
    testing, who happens to be a non-high-school grad, you can make
    very fine military people out of them, and help them redirect
    their life.
        Walter Anderson, who's the CEO of Parade Magazine
    Enterprises, was a high school dropout who enlisted in the
    Marine Corps and became valedictorian of his college class
    after he got out.
        I want to ask another question, here, so I don't lose all
    my time on this, but I would hope that you could find ways to
    expand the potential recruitment base and take advantage of
    that.
        Dr. Chu. We agree, sir. And, just very quickly to say, the
    Army is running another pilot--so-called Tier Two Attrition
    Screen--where we are looking at other indicators--and,
    specifically, some combination of test scores and other
    attributes, to say, could they substitute for the diploma as a
    predictor of success in the military? So, we agree; we want to
    enlarge that pool.
        Senator Webb. General Rochelle, I'm interested in this
    notion that--and, actually, for Dr. Chu, as well, potentially--
    of transferability with the educational benefits. First of all,
    has that been costed? Has anybody put a cost on this?
        Dr. Chu. If I may answer that part, sir--the specifics of
    the program are still being debated within the administration,
    issues of, ``Should you have served a certain number of years
    before you can do this?'' So the cost estimates depend on that
    set of answers.
        Senator Webb. So, we have a program that the President
    mentioned in his State of the Union Address, and Secretary
    Gates mentioned when he testified, that we really don't have a
    cost for. Is that correct?
        Dr. Chu. No, we do have a cost for it, sir.
        Senator Webb. You do have? What's the projected cost?
        Dr. Chu. It depends on the parameters of the program.
        Senator Webb. What's the low and the high?
        Dr. Chu. The low ranges from $0.5 billion a year to above
    $1 billion a year, depending again on the parameter choices
    that you're making.
        Senator Webb. Just for the transferability.
        Dr. Chu. Transferability, yes, sir.
        Senator Webb. Okay. Let me make two suggestions to you,
    here. Number one, having served on the House Veterans Committee
    for 4 years, there was a lot of wisdom over there when this
    idea came up, 30 years ago, that you have to be very careful
    because you're taking a benefit away from a veteran. There's
    one point in your life you may want to transfer this off to a
    family member and 9 years later you're divorced and you're out
    on the economy, and you want to get an education and your
    benefit's gone, then what do you do? That's point number one.
        Point number two is, I've been working really hard to try
    to get the right kind of a GI Bill, instead of this Montgomery
    GI Bill, that would actually allow you to expand your potential
    recruitment base in an area where you're not really able to
    recruit that individual who has a propensity to come into the
    military, for family tradition, because they love their
    country, but not necessarily because they want to become a part
    of a career force, when they know they're going to get a full
    boat out of it, the same way that people in World War II got,
    if they get on the other end of it. That total cost is about--
    we're trying to get a firm estimate, but it's about $2 billion,
    to dramatically change the GI Bill and really help recruitment,
    here.
        Dr. Chu. Sir, you raise two very important issues. Let me
    respond very briefly.
        First, on your concern with the irrevocable nature of it
    and perhaps having deep regret at some later point, yes, that
    is one of the issues that we are, likewise, concerned with. We
    want to structure this so that we protect the servicemember
    from what might not always be a decision that he or she would
    sustain over time.
        Senator Webb. How do you do that?
        Dr. Chu. I'd rather not comment yet, sir, if I may.
    [Laughter.]
        But, we do have some ideas on that point.
        Second, on the cost estimates, VA did testify last year
    when your bill was first introduced that, at least as then
    structured, it was more like $7.5 billion a year--$75 billion
    over a 10-year period, 2008 to----
        Senator Webb. What, my bill? S. 22?----
        Dr. Chu. They also testified that it would be technically
    complex to carry out, when people did it in 1944 on the back of
    a memo pad----
        Senator Webb. The best estimate we have now from the
    Congressional Budget Office (CBO) is $2 billion.
        Dr. Chu. Then, I believe you've revised the parameters, but
    I defer to CBO.
        Senator Webb. Okay. Well, we haven't an official estimate
    out anywhere. I don't know where the DVA got $7.5 billion,
    other than the fact that the administration opposes the program
    because they're saying that DOD believes it will affect
    retention.
        Dr. Chu. I have looked at the VA's estimates for the bill,
    as then drafted. I understand you've made some proposed changes
    to it. I do think the $75 billion number over 10 years is in
    the ballpark, so to speak. Now, one could structure a less
    expensive proposal, that's absolutely true.
        Senator Graham. Senator Webb, I don't mean to interrupt,
    but could you tell me what your bill does? I apologize, but I
    don't know.
        Senator Webb. The bill basically gives a mirror benefit to
    the people who have been serving since September 11 as those
    people who came back from World War II received. It pays
    tuition, buys their books, and gives them a monthly stipend.
    The bill, as originally introduced--and, Dr. Chu, you're
    correct on this--had a room-and-board provision in it, and also
    had a provision where all private schools would give a full
    tuition. We've modified it on that but I don't think that would
    in any way bring the bill to the cost that people say that it
    has.
        I would just strongly urge you to take a look at what that
    might do, in terms of your potential recruitment pool.
        My time's way up; thank you, Mr. Chairman.
        Senator Ben Nelson. Thank you, Senator Webb.
        I have a question from Senator McCaskill who had planned to
    attend, but she is presiding over the Senate from 3:00 to 5:00
    today, and so she's asked that I ask the question on her
    behalf, which I'm happy to do.
        This is her question: ``I want to address the issue of
    administrative personality disorder discharges in DOD.'' My
    colleagues, Senators McCaskill and Lieberman, have taken
    particular leadership on these issues. They have raised
    concerns with the propriety of use of these discharges, which
    lead to a discharge of a servicemember for what is deemed a
    `pre-existing' personality disorder. ``The discharge, unlike a
    medical discharge, is not accompanied by a medical or a
    monetary compensation, and in some ways, may be viewed as a
    black mark on the servicemember's permanent military discharge
    file. In the case of combat veterans, it seems that a post-
    combat finding that a servicemember's mental health problems
    are not combat-related, but rather pre-existed service, may be
    suspect.
        ``In July 2007, Dr. Sally Satel, a resident scholar at the
    American Enterprise Institute, noted in her testimony before
    the House Veterans Affairs Committee that `The controversy
    surrounding Chapter 5-13 discharges would suggest the need for
    a reevaluation of screening protocols currently used by DOD.
    Misapplication of the Chapter 5-13 discharge sets up the kind
    of Catch 22 for the DOD. First, the military deems a recruit
    sufficiently mentally fit to be sent into training and then
    into a war zone, but then when psychiatric problems arise, it
    turns around and claims that those problems were there all
    along, problems that should have shown up earlier in their tour
    of duty.
        ``Further, the summer 2007 report of the Mental Health Task
    Force found that servicemembers may be being pressured to
    accept personality disorder discharges instead of awaiting more
    thorough medical diagnoses and gaining compensation through the
    MEB and PEB process.''
        ``Finally, it's my understanding that the DOD instruction
    on personality disorder charges has not been updated since
    1982.
        ``Secretary Chu, are you concerned that the administrative
    personality disorder discharges are being misused in the DOD?''
        Dr. Chu. The short answer, sir, is no. But, let me first
    underscore two points that I know you're familiar with. One,
    these are only reached upon the advice of fairly senior
    clinicians; this is not something cavalierly adopted. Second,
    it's basically a no-fault discharge for the individual. In a
    number of these cases, discharge could be on another basis, but
    it might not--but, it's an honorable discharge.
        Senator Ben Nelson. It is, but doesn't it carry a stigma?
        Dr. Chu. I'm not so sure. It depends whether people can
    read the codes and so on, so forth. I don't think that's the
    big issue.
        That all said, we are looking at whether it would be wise
    to require yet more significant review before such a discharge
    is employed, and whether some of that review should be
    triggered if the person has served in a combat theater.
        So, we agree it's an area we ought to relook at. We are
    engaged in that with our colleagues in the military
    departments. I would urge we be careful not to rule out the use
    of this discharge because in some cases for the individual it
    is actually a better basis for discharge than some of the
    alternatives.
        Senator Ben Nelson. I don't think that there would be any
    expectation to rule it out altogether, just perhaps updating
    the 1982 approach.
        Dr. Chu. We are in the process of doing that, yes, sir.
    That's appropriate to ask.
        Senator Ben Nelson. Thank you.
        There was a recent series in the Denver Post relating to
    deploying medically unfit soldiers. This would be to you,
    General Rochelle. Those articles reported that 79 soldiers, who
    were determined to be medical no-goes, were knowingly deployed
    to Iraq. The most recent article described the soldier being
    pulled out of a hospital, where he was being treated for
    bipolar disorder and alcohol abuse, so that he could be
    deployed to Kuwait. Thirty-one days later, he was returned to
    Fort Carson because health care professionals in Kuwait
    determined that he shouldn't have been sent there in the first
    place. These articles quote an e-mail from Fort Carson's 3rd
    Brigade Combat Team as saying, ``We've been having issues
    reaching deployable strength, and thus, have been taking along
    some borderline soldiers who we would otherwise have left
    behind for continued treatment.''
        I suspect that catches all of us a little bit flatfooted,
    that that kind of a situation could be occurring. Have you been
    able to look into that? Because I'm sure it's been brought to
    your attention, since it was reported so widely in the papers.
        General Rochelle. It has, Mr. Chairman. I am familiar with
    the incident. Let me say that that particular incident is under
    review--the Fort Carson case. Therefore, it would be
    inappropriate for me to comment on it.
        But from a policy perspective, I will say two things that
    are significant.
        First, every soldier who has a questionable deployability
    status, medical or otherwise, is reviewed not only by--
    certainly, medical is reviewed by a clinician and then that
    review, subject to the review also of the chain of command. We
    would not knowingly deploy a soldier into combat who should not
    be deployed.
        Senator Ben Nelson. Excuse me. What about borderline? I
    mean, that was the from the combat team who had some borderline
    soldiers.
        General Rochelle. ``Borderline'' may very well, in this
    case, mean an area of judgment within a range. But, I say
    again, sir, with absolute affirmation, that I have confidence
    that commanders would not knowingly deploy a soldier who would
    be dangerous to himself, to the unit, or the mission.
        Senator Ben Nelson. As you complete the investigation and
    review of this current situation, could you get in touch with
    us to let us know what you found out?
        General Rochelle. Yes, sir.
        Senator Ben Nelson. I would imagine that the question would
    apply to all the other Services, as well. This might have been
    an example, citing the Army, but we'd want to make sure that
    there wouldn't be any situation like this for any of the
    Services. So, if we can be sure of that, that would be helpful.
        General Coleman, during Secretary Gates' recent trip
    abroad, he made comments regarding NATO forces not being able
    to combat a guerrilla insurgency. The Marine Corps is now
    preparing to send an additional 3,200 marines to Afghanistan.
    Is the Marine Corps' end strength sufficient to send an
    additional 3,200 marines to Afghanistan--asking you the
    question without expecting to get crosswise with the Secretary
    of Defense, but you are here to give us your opinion.
    [Laughter.]
        General Coleman. Thank you, sir.
        Yes, sir, we are well prepared. Certainly, the plan has
    been done. Last week, I was in both Iraq and Afghanistan. We
    looked at some of the areas where our forces may go. There was
    a number of areas that we could not visit because of weather,
    but our 3,200, plus or minus, marines are ready--prepared and
    ready to go. They will be combat ready and 100 percent up round
    when it is time to deploy.
        Senator Ben Nelson. That ``combat ready'' would mean that
    they would have the equipment, including body armor or whatever
    is required, to qualify them as combat ready. Is that correct?
        General Coleman. That's correct, sir. We would say they
    were a full-up round, which means they were 100 percent
    prepared, sir.
        Senator Ben Nelson. Do you have any thought on what the
    impact could be, of this deployment, on recruiting and
    retaining--the recruitment in the Marine Corps?
        General Coleman. Sir, we're doing better than expected in
    our recruiting. We're not having--our goal is 189,000 at the
    end of September 30 for this year. We have every reason to
    believe that we will exceed 189,000 end strength, and that will
    be without lowering our standards. So, yes, sir, there are no
    concerns about how this will affect recruitment and retention.
        Now, I would venture to say that there was a planned end
    date to this deployment. If that end date were extended, and
    other things weren't adjusted, then that may cause some
    concerns. But, as it stands right now with this mission, we're
    fully capable and fully ready to take it on, sir.
        Senator Ben Nelson. Yesterday General Casey, in testifying
    before the Senate Armed Services full committee, stated that
    one of the top five areas that Army families expressed concern
    about was access to quality health care. He said that soldiers
    and their families are dealing with an inundated health care
    system, and those stationed in more remote areas may not have
    access to as many providers as they would consider adequate.
        Maybe Dr. Chu and General Rochelle, can you tell us a bit
    more about the problems that the Army families are having with
    health care coverage? Senator Graham made some reference to,
    maybe, splitting off the programs into different programs for
    retirees versus Active members and their families, but perhaps
    you could just tell us a little bit more, because this is
    obviously something very important, and General Casey has now
    raised it to attention, where maybe there's something we can do
    about it.
        Dr. Chu. Yes, sir. Thank you for raising that issue.
        We do poll our people repeatedly about their satisfaction
    with the health care that they receive. Generally, the system
    gets quite good grades.
        It is the case, interestingly, that the Active Duty
    members, the younger members in the patient population, tend to
    be more critical. The retired population tends to be much more
    satisfied, even though it doesn't have quite the same access
    rights as the Active Duty population. There's an interesting
    relationship here as to how you perceive the world.
        There is an issue, in some areas, with the ease of access
    to specialty care. I think, in general, access to primary care
    is quite good. The Services set high standards, in terms of
    primary care availability, and generally meet those standards.
    We will be looking at those posts where General Casey, and the
    Army, have identified issues as to whether we have enough
    uniformed providers in that area. Do we have a strong enough
    network for the TRICARE program, where we go to the civil
    sector--and that's particularly true for the specialty care--to
    support that?
        Certainly, there have been issues in the past about
    reimbursement rates from the government under TRICARE. We're
    prepared to address those.
        I have heard, more recently from Secretary Geren, that some
    providers in some areas of the country are distrustful of the
    government. So whatever the rates may be, that's not the issue;
    it's alleged that some providers simply don't want too many
    government patients in their practice for fear that a future
    set of decisionmakers will be less generous, I presume. I don't
    know what it might be. If that's true, we need, together, to
    advocate to the Nation's clinicians that this is a national
    responsibility. You shouldn't be here. Several of your
    colleagues have been very gracious in doing that in their home
    States. We're prepared to work with the Governors through the
    National Governors Association, if that proves to be an
    important issue.
        Senator Ben Nelson. General?
        General Rochelle. Yes, sir. Please allow me to add just
    three fine points to that.
        First of all, I'm pleased to report that the Secretary of
    the Army and General Casey have added, in fiscal year 2007,
    $1.4 billion, double what we submitted in the past to our Army
    Family Action Plan, recognizing that the resiliency of our
    families is not without limits. In the 2009 budget which is
    currently before Congress--$1.2 billion to address family well-
    being needs.
        Social work services is the number-one area in which
    General Casey and Mrs. Casey, as they traveled about, and
    Secretary Geren, as he travels now, as well, hear about, with
    respect to the pressures of deployment on children. We are
    aggressively, with the resources Congress has given us,
    increasing social work services coverage in and around our
    military installations, most especially with the schools that
    are attended by military youth.
        The third and final point, the network, especially in
    specialty-care services, is sorely in need of some beefing up,
    and that's what our families tell us, sir.
        Senator Ben Nelson. Admiral, do you have any particular
    points you'd like to make on family health care?
        Admiral Harvey. Yes, sir. The particular issue for us, in
    terms of this point, is the medical support to the Marine Corps
    bases that we routinely provide. So part of what I talked about
    in the medical recruiting, we've really gone after the
    psychiatrists, psychologists, social workers, et cetera. I'm
    pleased to see we're getting the same results there.
        The issue for us has been keeping them once we get them. We
    saw over the last 3 years a higher loss rate than we'd like,
    and particularly in the areas that impact Camps Pendleton and
    Lejeune, with the tempo and the fight that they're sustaining
    in CENTCOM. So, I think we see the movement. We're getting in
    the right direction and getting them in there. We know where we
    have to get them to. We have some end strength issues that
    we're working through right now, in terms of the shape of the
    medical corps, the talent that we have in there, and the talent
    we need to keep. I think we have some road ahead on that. So
    I'm confident that we're going to improve in this area, but
    clearly we have improvements to make.
        Senator Ben Nelson. General Coleman, here's your chance.
    The Navy doing well for you, or not?
        General Coleman. The Navy truly is doing an outstanding
    job. But, a lot of that is because of the budgetary help that
    they're receiving. So, yes, sir, they're doing a fantastic job.
        Senator Ben Nelson. Thank you.
        General Newton?
        General Newton. Mr. Chairman, in terms of medical
    recruiting and so forth, as well as retention, we have some
    challenges. I know the Navy mentioned that they're going to be
    pretty much on track, in terms of recruitment. Recruitment,
    overall in the United States Air Force, is in good shape. So is
    retention. But, if you look into our health professionals, we
    have some challenges with regard to both recruiting, as well as
    retention, the same issues that were just raised in the Navy.
    So, that's a prime focus for us.
        I would also add the fact that we are, again, a very high
    operations tempo Air Force; we're also an expeditionary force.
    To go back to the mental health discussion we had, perhaps what
    would have been thought of in the past, in terms of the health
    environment or the health professionals, now needs to be added,
    certainly with our psychiatrists and psychologists, as well as
    our social workers.
        What affects our airmen--Active Duty, Guard, and Reserve--
    to a degree, our civilians, but principally those in uniform
    affects our family members, as well. So the stresses that our
    airmen have can obviously have a dramatic impact, perhaps that
    we've not seen before.
        I'll close on this point--we still have to continue to
    strive for and create an environment, either at our bases, at
    home or deployed, whereby mental health becomes something that
    is no longer the stigma, but it's something that we can all
    understand and relate to.
        Senator Ben Nelson. I guess I'd ask this of all of you. If
    we are able to even out the time at home and the deployment, in
    terms of the number of months, so that there's less time
    deployed, more time at home, will that help some of the mental
    stress that we're seeing on the families, as well as on the
    servicemembers? Obviously, it's going to help some, but will we
    see anything appreciable coming from that?
        Dr. Chu?
        Dr. Chu. First, I should emphasize that again, we survey
    the military person about his or her perception of a family's
    support for that military career choice. We also do survey the
    spouses about their outlook. Those indicators have held up
    remarkably well across this period of time. Now, that's not to
    say there isn't stress there. I don't want to suggest that.
    But, when you take into account the kind of energy that, for
    example, General Rochelle described the Army is putting in some
    of these support programs, the military family is reasonably
    satisfied with where it stands.
        Certainly, they would like to see the military person spend
    more time at home. That is a constant complaint.
        I would not, however, overemphasize that attitude to the
    exclusion of what I think is an equally important factor, and
    that's predictability. I think the whole issue of expectations
    is a central element here. What do we promise--or what do we
    lead people to believe will be the compact between us and them?
    What do we deliver? I would hope that we'd pay equal attention
    to that issue. We ask our military persons, properly, to do a
    lot of tough, demanding things, spend a lot of time away from
    home. The military is there to be deployed, in the end. I don't
    think we want to shrink from that reality. We want to be honest
    with our families about it. But, we want to be constant, so
    much as world events permit us, in honoring whatever
    expectation we set. I think that's really the issue out there.
    Can we set a reasonable set of expectations? Can we honor those
    expectations? Can we avoid breaking our word to our people?
    That, I think, above all, is the most important thing.
        Senator Ben Nelson. I'm trying to remember whether it was
    April, where the extension was put in place, and that many of
    the servicemembers in the war zone found out about it, because
    it came through the news back here at home, and they found out
    about it from their families.
        Dr. Chu. Yes, and if you're going to have bad news, you're
    obviously right, sir, you want to communicate it to the
    affected parties first. We have tightened up those procedures.
    It is tough, given the time-zone differences, given
    notification requirements here on the Hill, to tell everybody
    first. That is a challenging assignment, I would acknowledge.
        General Rochelle. If I may, Mr. Chairman, we were
    particularly displeased with the way that announcement went,
    the way it occurred. We're striving very, very aggressively to
    make sure that never happens again, in terms of notifying
    families. That's leader responsibility, and that's exactly how
    we view it.
        To your question, predictability is key. Predictability for
    the soldier, predictability for the family. I would not want us
    to perceive the lack of predictability as anything other than a
    stressor, in and of itself. So, the answer to your question is
    yes.
        Senator Ben Nelson. Thank you.
        In terms of the wounded warrior issues, Secretary Chu, the
    committee recently received a letter signed by your principal
    deputy, Secretary Dominguez, and Secretary Cooper, from the VA,
    saying that they couldn't meet the February 1 statutory
    requirement for an interim report on the policy, as required by
    the Wounded Warrior Act, and stating that the interim report
    would be submitted by February 15. I'm not going to quarrel
    over a few days, but can you tell us--since the 15th has
    passed, whether there's another extension that you're going to
    talk about, or you could tell us that there might be a date
    that we might expect it?
        Dr. Chu. Let me go back and check why we're late against
    the late date. That's not excusable.
        [The information referred to follows:]

        The Interim Report to Congress on the Policy on Improvements to
    Care, Management, and Transition of Recovering Servicemembers was
    delivered to the Senate and House Armed Services Committees on February
    27, 2008.

        Senator Ben Nelson. Okay.
        The President, in his State of the Union speech, referred
    to the importance of implementing the recommendations of the
    Dole-Shalala Commission to improve the care and treatment of
    our wounded warriors. I believe that the Wounded Warrior Act,
    included in the National Defense Authorization Act that the
    President signed into law on January 28, addresses all but one
    of the recommendations of that Commission. The recommendation
    that the Wounded Warrior Act does not address is the
    recommendation to restructure the VA disability payments into
    three payments: transition payments, earnings lost payments,
    and quality of life payments. The VA Committees of the House
    and the Senate are holding hearings to address this
    recommendation.
        First let me ask you, do you agree that the Wounded Warrior
    Act addresses all but one of the recommendations of the
    Commission? We have to establish some groundwork, first of all.
    Is there only remaining that hasn't been addressed?
        Dr. Chu. I think the way I would see it, sir, is that the
    central proposition of Dole-Shalala was not addressed. That is
    this big issue, what should the annuity and disability system
    look like? As you have summarized, there would be several
    changes for VA. VA has launched the studies, even though
    Congress did not adopt the recommendation. Likewise, the other
    provision is that we would vastly simplify the medical
    retirement decision in Defense. If you're not fit for duty and
    you're medically retired, you get a much smaller annuity, but
    it would not be subject to concurrent receipt; you would
    actually receive it, and we would end a lot of the quarreling
    that goes on about what your status is. I do think the
    Department's view of this is, this is the central provision,
    this is the heart of the other Dole-Shalala proposition. We
    hope Congress would enact it. We also recognize that one of its
    benefits is that it sets up a sharper division of labor between
    DOD and VA. Our job then becomes focused on, is this medical
    condition unfitting for military service? If the answer is yes,
    ``Thank you for your service,'' you move over to the VA, and
    they deal with the remaining issues.
        So, I do hope that Congress will act on this important
    issue.
        Senator Ben Nelson. Of course, we're all going to call that
    ``seamless,'' because it's going to happen automatically.
        Dr. Chu. I do think part of the advantage of what Dole-
    Shalala has recommended is that it's a much simpler sort of
    decision, as far as DOD is concerned. There is some controversy
    about this, I would acknowledge--but, basically it removes DOD
    from the rehabilitation business. I think that's part of where
    some of the current issues arise.
        Senator Ben Nelson. Your determination by DOD, versus VA,
    was, in many instances, for different reasons. We understand.
        Dr. Chu. Yes, sir.
        That's statutory in its foundation. Therefore, we need your
    action to clarify the roles.
        Senator Ben Nelson. Now, as that legislation gets
    introduced, should I assume that the funding for it is already
    included in the DOD budget?
        Dr. Chu. The way it would affect the DOD budget is through
    the normal cost percentage for the retirement account, which
    would change. That requires, under the laws that affect that
    account, the actuaries to pronounce--and I believe the
    situation is, until it's enacted, they won't actually make that
    change.
        Senator Ben Nelson. Would they have some idea of what the
    net cost would be?
        Dr. Chu. Yes, sir, we do have estimates of what the net
    cost would be.
        Senator Ben Nelson. Okay.
        Dr. Chu. Not necessarily sanctioned by the actuaries, I
    emphasize. This is what we have done.
        Senator Ben Nelson. Question about the fiscal year 2009
    budget of the Departments that includes 2,036 military-to-
    civilian conversions for medical military billets. It appears
    inconsistent with section 721 of the conference report for the
    National Defense Authorization Act for Fiscal Year 2008, which
    expressly prohibits the Department from converting any
    additional military medical and dental positions to civilian
    positions until September 30, 2012. Are we misreading this, or
    is this actually happening?
        Dr. Chu. Sir, we, of course, will obey the law, as it's
    written. The budget was prepared before the enactment of the
    authorization bill, which didn't come until January, as you are
    well aware. We will also be submitting a legislative proposal
    to change back to the prior regime. Obviously, that would be
    ultimately your decision. So, we recognize that, unless the law
    changes, we can't actually make the conversions, but we would
    like to be able to pursue some of those conversions in the
    future.
        Senator Ben Nelson. So, we won't have the conversions in
    the future unless we have the actual authorization, and have it
    handled by legislation.
        Dr. Chu. We will be sending you a legislative proposal to
    reverse the action just taken. If it should receive favorable
    action by Congress, then we would be able to make some of these
    conversions.
        Admiral Harvey. Dr. Chu, may I add something on that?
        Senator Ben Nelson. Oh, sure.
        Admiral Harvey. Yes, sir. We certainly got the message.
    It's been received and acknowledged, and we will carry out the
    law.
        One thing I would just put on the table for you, sir, is
    that the appropriations to support the end strength that we're
    going to have to carry are not there. So in the short-term,
    we're going to do what we have to do to provide medical care
    across-the-board to where we have to do it, but in the long-
    term, we do have an issue here, in that the appropriations that
    we have do not match what is now going to be the end strength
    we need to carry with the current force structure. So,
    something either changes in our operational force structure, in
    terms of end strength to support the increased military end
    strength we'll carry, or we have to find some other means here.
    But, it is a significant issue for us, as we carry out the law.
        General Rochelle. If I may, Mr. Chairman.
        Senator Ben Nelson. Sure.
        General Rochelle. Another nuance, not at all insignificant,
    to piggyback on my colleagues' comments, we may also require,
    in addition to the appropriations to accompany the reversal
    back military spaces, standard-of-grade relief, just to
    highlight something, because as we bring the military structure
    back in, we're going to bump--inside the same end-strength
    structure--against standard-of-grade ceilings. So, I mention
    that, if you please, for the record.
        Senator Ben Nelson. Sure. Okay, thank you.
        I was hoping that we didn't have the situation develop,
    where we now had a fourth branch of government. When I was
    Governor, I always knew we had three branches of government--
    executive, legislative, and judiciary--and then the fourth
    branch, the Department of Roads. [Laughter.]
        They did whatever they felt they wanted to do. So, I didn't
    think we had that developing here. We'll find a way to smooth
    that out, to the best extent possible.
        In terms of respite care, General Coleman, in your written
    statement, you said that the Marine Corps offers Active Duty
    families enrolled in the Exceptional Family Member Program up
    to 40 hours of free respite care per month to enable caregivers
    to get breaks while still nurturing the needs of family members
    with special needs. This sounds like a very important program
    for these families with special needs. Can you give us a little
    bit more about it and who it covers and how you are able to
    fund it?
        General Coleman. Yes, sir. This is a great success and news
    story. The Commandant was able to procure some funds for this,
    and some given from the Office of the Secretary of Defense,
    some from within the Marine Corps, that allows these special
    needs to give the caregivers--to give the homemaker some time
    away. One of my dearest friends, his son has autism, and his
    wife is there all the time. A thing like this allows her some
    downtime, some alone time, some ``Let me get myself together''
    time. I believe it's in the 36- to 40-hours-a-month time, where
    she can get away and get some well-needed rest. It's a great
    program.
        We stole it from the Army, because we weren't as involved
    in it as the Army was. Mrs. Conway, the Commandant's wife, read
    an article, where the Army was all over this, and she said,
    ``Hey, Marine Corps, we need some of this, too.'' So, it's a
    great news story, sir.
        Senator Ben Nelson. It certainly is family-friendly and in
    recognition of reality for people with families with those
    special needs. So maybe the other two Services--well, you stole
    it from the Army, so maybe you can give it to the Navy and give
    it to the Air Force. [Laughter.]
        General Rochelle. I'd like to thank my colleague for the
    acknowledgment. [Laughter.]
        Senator Ben Nelson. There is nothing better than to find
    good programs on what you would call the exceptional programs
    that are there. I am one of those; I commented about yesterday
    with Secretary Geren, and that is maternity leave, after
    delivering the baby, for the mother not to be deployed sooner
    than 12 months, I think is the Navy's standard; 6 months, the
    Marines; and, I think, 4 months for the Army and the Air Force,
    at the moment, and suggested that that be reviewed because of a
    variety of different reasons, all of which makes some sense. If
    we want to be a family-friendly force, the last thing we need
    to do is let a situation develop, or continue to be there, that
    might cause a choice between having a family and not having a
    family. That's the objective. We don't want to train people and
    then have those kinds of roadblocks or those kinds of
    hindrances that would cause people to say, ``At some point, I
    guess I'll just have to hang it up, because I want to have a
    family, and 4 months is not enough in between deployments,''
    not knowing what future deployments may be.
        Dr. Chu, would you have some thoughts on that?
        Dr. Chu. Let me comment on that, sir. I'd like to make
    several points. First of all, 4 months is a minimum. Services
    are free to adopt more. You've noted some have. Second, the
    Services--and I've spoken to both the Army and Air Force
    Assistant Secretaries for Manpower on this matter--will use
    waivers to deal with individual situations. I do think we need
    to be a little careful that we don't damage the standing of
    women as a key element of the force, in saying that they should
    not share their part of the overall force burdens, in terms of
    how we utilize them. That's the reason the Department has
    looked at it in the past, and I think in the end judges we
    should look at again, the notion of a sabbatic period, which I
    think may be a superior alternative for those who would like
    room within which to develop a family. The Navy has expressed
    interest in this before. The Department has never really come
    to a good conclusion about this. It would require statutory
    assistance, in my judgment, in order to have a successful
    program, so people could step out of their military role,
    maintain some degree of benefit support during that period of
    time--perhaps most important, health care--but not be part of
    the Active component for a period of 1 or 2 years. That may
    really be the solution, for those who need more time off,
    whether it's to care for a relative or to start a family or for
    other purposes.
        Senator Ben Nelson. That was going to be my next question.
    If you're going to have maternity leave, is it possible,
    without absolutely adversely affecting the possibility of a
    deployment of a person, other conditions where you might grant
    a waiver to keep them in the military; otherwise, they have a
    choice.
        Dr. Chu. Right, and we don't want to lose the trained
    personnel.
        Senator Ben Nelson. Right
        Dr. Chu. On the other hand, I do think we have to remember,
    the military is there as a deployable force. That is its
    primary mission.
        I should add, also into the record, that mothers all
    receive 6 weeks maternity leave.
        Senator Ben Nelson. Yes.
        Dr. Chu. It's a separate matter.
        Senator Ben Nelson. We worked on that, so now I believe we
    have something for adoptive parents, as well, recognizing that
    it's not just the biological situation that we're recognizing,
    but also the family relationship that's developing and bonding
    that's required. Otherwise, we run into other issues. I was
    glad to find that particular situation that we could cite as a
    reason to change the policy.
        General?
        General Rochelle. Mr. Chairman, may I simply state, for the
    record, that at the direction of Secretary Geren and General
    Casey, our policy is actively under review.
        Admiral Harvey. Sir, this is a not a small issue. Seventeen
    percent of the Navy right now is made up of women, and our
    incoming classes in Reserve Officers' Training Corps and the
    Naval Academy is about 22-23 percent. I expect that the
    percentage of women in the Navy will grow steadily over the
    next few years. So, they'll be picking up a larger and larger
    contribution of our overall effort.
        We have to be able to come up with the means and the manner
    in which we will also get the retention of this group that is
    equivalent to the male sailors that we now enjoy. The sad fact
    is that female retention in our surface warfare and aviation
    communities is about one-third of their male counterparts. So,
    we run up against this issue every day, and we have to keep
    pushing forward on this aspect of our service, and the nature
    of our service, to ensure that we reach all the talent we have
    to deliver the capabilities we must, and find a way to keep
    that talent with us, regardless of gender.
        So, this is a very big issue, and I think it's going to get
    bigger for us over time.
        Senator Ben Nelson. If we don't get it right, we lose our
    investment in personnel, the cost of training, and then we're
    faced with replacing those trained personnel. We don't have to
    perform miracles, we just have to figure out what works and
    what will keep us in the mix as they make decisions about
    family. If we have those things that are roadblocks or
    inhibitors, we're obviously going to pay the price of the loss
    in retention.
        Admiral Harvey. I think we can do this in a way to express
    the concern, that Dr. Chu so rightly expressed, that we can
    never forget, we are an expeditionary force. We are routinely
    forward deployed. We are expected to go forward and do hard
    things in hard places. That's never going to change. That's the
    core element of who we are and what we do. But, I do believe
    that we can find a way to bring these two issues together that
    will result in the kind of outcomes we need to sustain this
    force in the future with the demographics that simply are
    before us.
        Senator Ben Nelson. General Newton, I think you might have
    been at Strategic Command at the time that we found out about
    the Air Force couple that served as the example for why we were
    able to get this policy changed.
        General Newton. Yes, sir. We constantly survey throughout
    our force, both Active Duty, Guard, and Reserve, to make sure
    that we are certainly in touch with the realities that our
    airmen and their families face. We also stand tall and not take
    for granted the fact that it's an All-Volunteer Force, and that
    it's just unique circumstances we have. So constantly, it's
    under review and assessment to make sure that we're on the
    mark.
        Senator Ben Nelson. Thank you.
        Those are generally the questions that I have. Would there
    be any comments that anybody would like to make before we
    adjourn the hearing?
        Now, I would say thank you for what you do, day in and day
    out. Thank you for the members of your Service, for what they
    do.
        Thank you, Dr. Chu, for what you, at the Pentagon, do to
    keep our country safe, to keep our military functioning as an
    expeditionary force and ready to go and deploy as the need
    requires.
        I appreciate the fact that we don't ignore reality just to
    try to stay ready to go. There are other considerations about
    how we can go about doing it that will not get in the way.
    Moving toward programs of transferability of education, of
    other opportunities, just simply to enhance the ability of the
    military to stay an All-Volunteer Force. Competition is such
    that you're up against the corporate world, against the
    government, and others for the same young people, and to retain
    the ones you have. So, it just behooves us all to continue to
    work together to try to find ways to make it that much more
    friendly.
        It's easy to say that in a hostile world, but that's what
    we have to do. We have to have this military-friendly demeanor
    for the people so we can protect ourselves from a hostile
    world.
        Dr. Chu. Mr. Chairman, thank you for the actions you and
    your subcommittee members have taken in support of the military
    forces, the partnership that has allowed us, I think, to
    sustain this fine force over the course of the last 7 years.
        Senator Ben Nelson. Thank you.
        General?
        General Coleman. Sir, I would like to jump onto your kind
    nature there, and also Senator Graham when you asked if there's
    anything you can do. My mother used to say, ``If you want
    something fixed, you go to the people that can fix it.'' So, if
    I may, back in December, the Commandant, General Conway,
    discussed with me, in a one-way discussion where I was
    listening, that the Army--and I've already vetted this with my
    good friend and colleague, Lieutenant General Rochelle, so
    there's no hard feelings here--is having a little bit of
    concern with their company-grade officers staying on Active
    Duty. There's a couple of programs where they give upwards of
    $30,000, depending on the specialty, so that they stay. We, in
    the Marine Corps, aren't having that problem--knock on wood--
    but, the Commandant, in December, said, ``Ron, I'd like to
    reward our company-grade officers. Is there some way that I can
    say to those officers, to all the company-grade officers that
    are staying, `Hey, here's $2,000; here's $3,000, go do
    something. Thank you for staying. No commitment.' ''
        Senator Ben Nelson. A reward, as opposed to, perhaps, an
    incentive?
        General Coleman. Yes, sir. Or, sir, what it reminds me of,
    when I returned from Vietnam in 1970, the great State of
    Pennsylvania gave me a whopping $300 and said, ``Thanks for
    your service.'' So, we vetted that, and we've come up against
    quite a few roadblocks. We were told that we could do that if
    we made them sign on for another 1, 2, or 3 years. That's not
    what we want to do. We don't--they're already staying for the 1
    or 2 or 3 years that we want. All the Commandant would like to
    do is say, ``Thank you for your service.'' So, if you could
    give us a hand there, sir, in either pointing me in the right
    direction or at least acknowledging to the Commandant that I
    said that, so I don't have any more one-way conversations, I
    certainly would appreciate it, sir. [Laughter.]
        Senator Ben Nelson. I suspect he's going to know, by the
    end of the day. [Laughter.]
        That is a worthy consideration, because we talk about
    incentives, but we ought to also think about it in terms of
    ``thank you'' recognition, as well. A pat on the back is
    helpful, but very often there are other things that you could
    do to make it even better. So, we will take that under
    consideration, under advisement, clearly.
        Once again, thank you, everybody, for being here. I
    appreciate, so much, your input. As my colleague and I clearly
    indicated this is a bipartisan effort here. There's nothing
    partisan about making sure that our men and women in uniform
    are receiving the best and having the best opportunity to do
    their job, and to be able to do it well, and also for us to be
    able to say ``thank you'' in a number of different ways, all of
    which, I hope, are helpful and express our appreciation for
    what they do and what you do.
        So, with that, unless there's anything else, this hearing
    is adjourned.
        [Questions for the record with answers supplied follow:]
                    Questions Submitted by Senator Evan Bayh
                      national security education program
        1. Senator Bayh. Secretary Chu, please describe the activities of
    the National Security Education Program's (NSEP) Flagship Program in
    2007 and your projected activities in 2008 and 2009.
        Secretary Chu. The Language Flagship is a cornerstone of the
    Department's Language Transformation Plan and the President's National
    Security Language Initiative (NSLI). The Flagship effort, since its
    inception, has had a major impact on the way many higher education
    institutions, as well as K-12 programs, organize and develop their
    approaches to language education. The central goal of Flagship is to
    reach a minimum of 2,000 students by the end of the decade. This effort
    provides the Department of Defense (DOD), as well as the entire
    national security community, with an opportunity to recruit from a more
    globally proficient pool of candidates. We are pleased to report that
    we are well on our way to meeting or exceeding this goal.
        In 2007, Language Flagship provided funding primarily in the form
    of core institutional grants to domestic and overseas Flagship Centers
    and partners. During 2007, Flagship continued its major effort to
    transition its focus from post-graduate to primarily United States
    undergraduate education. In moving toward this goal, Flagship has
    endeavored to include more institutions in the movement through the
    launch of a Promoting the Diffusion of Innovation grant program. This
    grant program was held as an open national competition designed to
    increase collaboration within the Flagship framework while increasing
    the number of institutions, language programs, degree programs, and
    students involved in Flagship efforts. Through the grant program, the
    Language Flagship encourages individuals and organizations to work with
    currently funded Flagship Centers to propose ways of increasing the
    effectiveness and scope of the Language Flagship. Partners may include
    academic institutions, public sector and nonprofit sector agencies,
    school districts, businesses, or private sector organizations.
        In October 2007, three new projects were funded under the Promoting
    the Diffusion of Innovation grant program: the Arizona State University
    Chinese Flagship Partner Program, which increased the scale and scope
    of Chinese offerings by teaming up with the Chinese Flagship Center at
    the University of Oregon; the Flagship ``My China'' project (also at
    the University of Oregon), which creates a virtual Flagship presence in
    the online world of ``Second Life''; and, the American Councils for
    International Education's Flagship Online Russian Proficiency Test and
    Assessment, which provides online assessment tools for evaluating
    individual student performance. In addition to the institutional
    grants, the Language Flagship, through the Institute of International
    Education (IIE), provided significant funding to support students in
    the form of student scholarships, fellowships, and stipends.
        The Diffusion of Innovation effort continues with a 2008
    competition initiated in December 2007 with proposals due by March 14,
    2008. The Diffusion of Innovation solicitation, managed by our
    nonprofit partner, IIE, was announced through all major communication
    channels. As in 2007, the grant program intends to provide funds to
    additional institutions of higher education who demonstrate a strong
    commitment to support innovative approaches to language education,
    including the diffusion of proven and effective practices. We expect to
    expand the reach of Flagship to as many as 10 to 15 more institutions
    through this innovative diffusion model.
        In 2007, Language Flagship also introduced special initiatives as
    part of its overall approach to changing the way Americans learn
    languages. Flagship special initiatives provide a larger venue for
    discourse and action in areas that are important to language learning
    and that complement the core activities of Language Flagship. In June
    2007, regional Language Summits were hosted by three Flagship Centers:
    Ohio State University, University of Oregon, and University of Texas at
    Austin. The summits resulted in highly innovative and ``first of their
    kind'' State Language Roadmaps for Ohio, Oregon, and Texas. With
    funding provided by Congress, the projects were overseen by NSEP with
    co-sponsorship from the Departments of Defense, Commerce, and Labor.
        The Language Roadmaps were instrumental in identifying State and
    local needs for language learning and enhancing the capabilities of
    Flagship Centers to address the goals of the Language Flagship. They
    also introduced language education as an important element of the
    public policy debate, asking State policymakers and business leaders to
    examine their priorities and seek ways to identify the needs for a
    workforce with language and culture skills. The engagement of State and
    local government decision makers and the business community served as
    an important and necessary step in moving the national language agenda
    forward. Flagship Centers will continue to explore efforts to address
    key components of these Roadmaps and to facilitate opportunities for
    additional States to develop their own Roadmaps. Recently, Language
    Flagship announced a competition for an African Languages Flagship
    Center with a due date of May 2, 2008. This effort responds to the
    urgent need for a pipeline of students with increased knowledge and
    expertise in African language and culture. NSEP expects to make this
    award by early summer.
        During 2009, Language Flagship will consolidate its efforts with
    its core Flagship Centers and its diffusion partners. Our focus will
    remain on transforming language learning in United States higher
    education so that, in the coming years, DOD, our colleagues in the
    entire Federal sector as well as business, will be able to identify and
    hire a new generation of global professionals.

        2. Senator Bayh. Secretary Chu, please list the current Language
    Flagship Programs and the universities which have been identified as
    the lead institutions for those Flagship Programs.
        Secretary Chu. The current Language Flagship Programs and
    universities identified as lead institutions are:

              Arabic Flagship Centers
              Michigan State University*
              Dearborn Public Schools K-12 Flagship Program
              University of Texas, Austin*
              University of Maryland, College Park*
              Alexandria University, Egypt
              Damascus University, Syria
              Central Asian Turkic Language Consortium
              American Councils for International Education*
              Indiana University
              University of Chicago
              Chinese
              Arizona State University Flagship Partner Program
              Brigham Young University*
              Ohio State University*
              Ohio Public Schools K-12 Flagship Program
              University of Mississippi*
              University of Oregon
              Portland Public School K-12 Flagship Program
              Nanjing University, China
              Qingdao University, China
              Eurasian Languages
              American Councils for International Education*
              Bryn Mawr College
              Middlebury College
              University of California, Los Angeles
              University of Maryland, College Park
              St. Petersburg University, Russia
              Hindi/Urdu
              University of Texas, Austin*
              American Institute for Indian Studies, Jaipur, India (Hindi)
              American Institute for Indian Studies, Lucknow, India (Urdu)
              Korean
              University of Hawaii, Manoa*
              Korea University, South Korea
              Persian/Farsi
              University of Maryland, College Park *
              Tajik State National University, Tajikistan
        * Lead Institution

        3. Senator Bayh. Secretary Chu, how were the institutions which
    have been identified as the lead for each Language Flagship Program
    selected?
        Secretary Chu. Institutions designated as lead Flagship Language
    Centers have been chosen through open competition. For Flagship
    programs that focus on a more diverse set of language groups and which,
    typically, rely more on overseas immersion than domestic study (e.g.,
    Eurasian and Central Asian Turkic Languages), a nonuniversity umbrella
    organization with extensive experience in the region, American Councils
    for International Education, has taken primary responsibility for the
    overseas effort while promoting and facilitating partnerships among
    academic institutions. Partner institutions have been actively
    encouraged to expand their programming and offerings through an annual
    competition, Promoting the Diffusion of Innovation grant program, which
    provides funding at the institutional level. A Diffusion of Innovation
    solicitation for 2008 was announced in December 2007 with proposals due
    by March 14, 2008.

        4. Senator Bayh. Secretary Chu, did NSEP hold a competition for
    these designations? Please explain.
        Secretary Chu. Competitions have been held for all Flagship grant
    awards since the inception of the program in 2000-2003 when the program
    was operated as a pilot under the NSEP institutional grants umbrella.
    Since 2003, when Flagship was formally established, all awards have
    been made through open national competitions administered by the NSEP
    nonprofit contractor, the Institute of International Education. The
    most recent solicitation is for an African Flagship Program. During
    2003-2007, open competitions were held for the establishment of
    programs in Arabic, Chinese, Hindi/Urdu, and Persian/Farsi. In
    addition, through its Diffusion of Innovation process, NSEP has also
    held open competitions for new partner programs in all of these
    languages as well as Eurasian and Central Asian.

        5. Senator Bayh. Secretary Chu, NSEP has been working with U.S.
    universities to provide critical language training to Reserve Officers'
    Training Corps (ROTC) cadets. What are your plans to continue this
    program in 2009 and beyond?
        Secretary Chu. The DOD plans to continue the ROTC Language and
    Culture Project in 2009. This program was funded from fiscal year 2007
    through 2013.
        This project was developed based on guidance contained in the 2006
    Quadrennial Defense Review (QDR), which charged the Department to
    increase investments focused on developing and maintaining appropriate
    language, cultural and skills relevant to the challenges of the 21st
    century. The QDR directs that the Department will, ``Require language
    training for Service Academy and Reserve Officer Training Corps
    scholarship students, and expand immersion programs, semester abroad
    study opportunities.''
        The goal of the project is to provide cadets and midshipmen with
    opportunities to study languages and cultures of world regions critical
    to United States national security. We are beginning the review for the
    2009 ROTC Language and Culture Project now.

        6. Senator Bayh. Secretary Chu, not all of the Service Academies
    work in conjunction with their respective ROTC scholarship programs to
    ensure that applicants who are rejected from the academy have the
    opportunity to apply for an ROTC scholarship. Has DOD investigated
    whether to institute such a program? If not, why not? If so, how is the
    DOD looking to implement those programs?
        Secretary Chu. While not all service applicant information exchange
    processes are formalized, all Service Academies exercise recruiting
    partnerships with their respective ROTC programs. Candidates are
    encouraged to apply to both the Service Academy and the corresponding
    Service ROTC. Oftentimes, applicants will apply to all Service
    Academies and ROTC scholarship programs with many highly qualified
    candidates receiving multiple acceptances and offers.
        In recent years, the United States Military Academy (USMA) has
    created a more robust partnership with the United States Army Cadet
    Command (USACC) to formalize their procedures for exchanging applicant
    data. From September through January, they share candidate information
    on a monthly basis. In 2007, USACC conducted a centralized board to
    review USMA applicants who did not receive a USMA nomination. Forty-two
    percent of the 892 candidates considered will receive 4-year Army ROTC
    scholarship offers. USACC will conduct a similar board this month.
        Since there is considerable crosstalk between the Service Academies
    and their respective ROTC programs, there is currently no DOD plan to
    institute a formal program for their partnerships.
                                     ______

                Questions Submitted by Senator Claire McCaskill
                             paternity leave policy
        7. Senator McCaskill. Secretary Chu, I understand that most of the
    Services have indicated that they support instituting a paternity leave
    policy that would permit unit commanders to provide military members
    administrative paternity leave at the commander's discretion. It
    strikes me that such a policy would be supportive of military families,
    would be consistent with policies in the civilian sector, and would
    send a strong message to servicemembers about the respect their
    Services have for their personal lives. It also seems to me that such a
    policy can only prove helpful in retention efforts.
        However, I have since been informed that the Department may have
    ordered that work on paternity leave policies be terminated and that
    the issue not be considered for a DOD-wide personnel policy initiative.
        Can you discuss what consideration was given by the Office of the
    Secretary of Defense (OSD) of paternity leave issues and what decisions
    have been reached by OSD on instituting a Department-wide policy?
        Secretary Chu. This legislative proposal is being worked within the
    Department. It would allow spouses up to 21 days of discretionary
    administrative absence after the birth of a child. The Department is
    weighing the proposal against operational readiness, cost, and equity
    factors. We anticipate a decision on proceeding with the present
    proposal by end of March 2008.

        8. Senator McCaskill. Secretary Chu, has OSD directed the Services
    to cease work on instituting or considering paternity leave policies,
    and if so, why?
        Secretary Chu. No. This legislative proposal is being worked within
    the Department. It would allow spouses up to 21 days of discretionary
    administration absence after the birth of a child. The Department is
    weighing the proposal against operational readiness, cost, and equity
    factors. We anticipate a decision on proceeding with the present
    proposal by end of March 2008.

        9. Senator McCaskill. Lieutenant General Rochelle, Vice Admiral
    Harvey, Lieutenant General Coleman, and Lieutenant General Newton, what
    is your Service's current policy on paternity leave?
        General Rochelle. The Army does not have paternity leave policy.
    However, soldiers may take up to 30 days of annual leave on the birth
    of a child.
        Admiral Harvey. Under current DOD guidance, Navy authorizes regular
    leave for paternity purposes, approved by each servicemember's
    commanding officer. DOD Instruction 1327.6, governing leave and liberty
    procedures, prohibits the use of administrative leave following the
    birth of a child.
        General Coleman. Commanders may authorize up to 10-days
    administrative absence (Permissive TAD) for a married male marine when
    his spouse gives birth, dependent on the unit's mission, specific
    operational circumstances, and the marine's billet.
        General Newton. The Air Force does not have a specific category of
    administrative absence (i.e., leave) that is designated for paternity.
    Military members accrue 30 days of leave annually (2.5 days/month).
    Military fathers may use this leave to assist mothers and newborns.

        10. Senator McCaskill. Lieutenant General Rochelle, Vice Admiral
    Harvey, Lieutenant General Coleman, and Lieutenant General Newton, have
    you considered, at any time, instituting a formal paternity leave
    policy, and if so, when and what was considered and what was done?
        General Rochelle. The Army has explored implementation of
    nonchargeable paternity leave for soldiers, through the Army Family
    Action Plan program. However, since paternity leave is another form of
    nonchargeable absence from duty like other forms of permissive
    temporary duty, implementation would require the support of the other
    Services and OSD.
        Admiral Harvey. In August 2007, Navy submitted a proposal to amend
    title 10, U.S.C., to authorize Military Department Secretaries to grant
    up to 21 days permissive temporary duty in connection with the birth of
    a new dependent. This initiative was intended to align the Department's
    policy for natural fathers with policy applicable to adoptive parents,
    as provided for in the National Defense Authorization Act for Fiscal
    Year 2006.
        Based on a subsequent dialogue, it is my understanding that a
    paternity leave authority may be accomplished through policy without
    the need for new legislative authority. The issue is currently pending
    before the Under Secretary of Defense for Personnel and Readiness but a
    final decision has not been reached.
        General Coleman. The Marine Corps implemented an official
    Permissive TAD policy for Paternity on 4 October 1995. We implemented
    it based on the guidance in the Presidential Memorandum on Supporting
    the Role of Fathers in Families, 16 June 1995, to promote family values
    and encourage fathers to be active and committed to their families.
        General Newton. Yes, the Air Force considered a paternity leave
    policy after the Navy raised the issue of 21 days of paternity leave in
    fall of 2007. I have not implemented specific guidelines since the
    current leave authority (30 days/year) provides adequate leave for
    military fathers. However, we are still analyzing the various options
    available to us.

        11. Senator McCaskill. Lieutenant General Rochelle, Vice Admiral
    Harvey, Lieutenant General Coleman, and Lieutenant General Newton, does
    your Service currently support instituting a paternity leave policy? If
    so, what are you considering? If not, please explain why not?
        General Rochelle. The Army supports the DOD proposal to amend title
    10, U.S.C., section 702, authorizing up to 21 days of permissive
    temporary duty (TDY) for servicemembers paternity leave in conjunction
    with the birth of a new child. The legislative proposal is consistent
    with recent congressional change to section 701 authorizing up to 21
    days of administrative leave for a servicemember adopting a child.
    Paternity leave, as with all other leave categories, would be granted
    on an individual basis dependent on the unit's mission and operational
    circumstances.
        Admiral Harvey. Navy supports establishing a paternity leave policy
    that provides Service Secretaries discretionary authority to grant up
    to 21 days permissive TDY to be used in connection with the birth of a
    servicemember's natural child. Requests for paternity leave would be
    considered on a case-by-case basis, and approved when possible;
    consistent with unit mission, operational circumstances, and each
    servicemember's billet.
        General Coleman. The Marine Corps supports and implemented a
    paternity leave policy, under the authority of administrative absence,
    on 4 October 1995.
        General Newton. Military members accrue 30 days of leave annually
    and the use of ordinary leave for military fathers to take time-off to
    be with the mothers and newborns is effective and meets the needs of
    families and the mission. Moreover, the average leave balance at the
    end of fiscal year 2007 was 34.75 days (enlisted) and 42.4 days
    (officer). The Air Force continues to study a policy proposed by the
    Navy for 21 days of paternity leave. We understand the rationale, but
    with over 15,000 new dependents born to Air Force families yearly we
    are considering the impacts of having those fathers out for 21 days
    each. We will continue to analyze all options.

                             maternity leave policy
        12. Senator McCaskill. Lieutenant General Rochelle, Vice Admiral
    Harvey, Lieutenant General Coleman, and Lieutenant General Newton, I
    want to address the current post-maternity deferment from deployment
    policy for Active Duty military mothers and the disparity between the
    Services on the length of this deferment. I recently wrote to Secretary
    Gates about this matter and ask that my letter be entered into the
    record of this hearing. Further, I ask Secretary Chu to ensure that
    Secretary Gates' response to my letter also be submitted to this
    committee and entered into the record of this hearing.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        I would like each of you to briefly comment on your Service's
    deferment policy and to explain why the Service has followed such a
    policy. Please be specific about any medical considerations that have
    been taken into consideration in establishing and following the policy.
        General Rochelle. Current Army policy requires a 4-month Postpartum
    Operational Deferment period for a female soldier after the birth of a
    child. The Army Postpartum Operational Deferment policy is based on and
    matches the designated guidelines established by OSD.
        The Army recognizes the merit in lengthening the Postpartum
    Operational Deferment period, and intends to lengthen that period to 6
    months once Active Army units return to a 12-month deployment rotation
    policy from the 15-month deployment rotation policy that is currently
    in place.
        Admiral Harvey. Following a 2-year medical readiness review, Navy
    modified its postpartum operational deferment policy from 4 to 12
    months in OPNAVINST 6001.1C, and has received overwhelming positive
    feedback from the fleet. Our decision was based on extensive review of
    medical research on postpartum depression, Shaken Baby Syndrome (SBS),
    and the long-term benefits of breastfeeding. Our review informed that:

             20 percent of postpartum women experience depression at some
            point in the year following delivery. Longer deferment resulted
            in fewer cases requiring personnel replacement as a result of
            late-onset depression in theater.
             30 percent of SBS cases identified within DOD between 2004-
            2005 occurred in Navy or Marine Corps families. SBS cases were
            often the result of parental stress and lack of sleep in the
            early stages of infant development. By extending operational
            deferment, the risk of SBS is lowered because frequent training
            schedules necessitating time away from home and inconsistent
            sleep patterns are no longer factors.
             The American Academy of Pediatrics, American Academy of
            Family Physicians, Department of Health and Human Services, and
            the Surgeon General of the United States recommend
            breastfeeding infants exclusively for 6 months and continuing
            to breastfeed for 12 months while incorporating complimentary
            foods for the health and wellness of mother and child. In
            addition, a 2005 Navy Pregnancy and Parenthood Survey
            identified the 4-month deferment period as a key deterrent to
            continue breastfeeding. We believe that a 12-month deferment
            period will increase breastfeeding continuation rates and
            workplace productivity, thereby decreasing health care costs
            over time.
        With respect to changing Navy demographics, the following is
    offered for consideration:

             In the last 15 years, the percentage of women serving in the
            Navy has risen from 10 to 15 percent of the total force. Women
            now account for 22 percent of the U.S. Naval Academy's freshman
            class and 25 percent of freshmen participating in the Naval
            Reserve Officers Training Corps Program. The proportion of
            women in each program is expected to reach 30 percent by 2018.
             As Navy becomes an increasingly technical force, retaining
            women in critical skill sets, such as surface warfare, aviation
            warfare, and health professions, is essential.
             According to Navy's 2008 Pregnancy & Parenthood Survey, a 12-
            month deployment deferment policy positively influences the
            retention decisions of women by 47 percent and those of men by
            10 percent.

        In summary, the 12-month deferment policy is based on a
    preponderance of medical evidence and the impact of changing Navy
    demographics on operational readiness. In order to assess the impact of
    this policy change, the Navy will continue to monitor retention rates
    as well as the physical and mental health and well-being of female
    sailors over the next several years.
        General Coleman. Pregnant marines will not normally be transferred
    to deploying units from the time of pregnancy confirmation up to 6
    months after the date of delivery. Pregnant marines are afforded a 6-
    month deferment from deployment after the date of delivery. The
    deferment option is provided to the marine, not the commander. The
    marine may waive the deployment deferment period. Commanders have the
    option of extending this deferment if, in consultation with the Health
    Care Provider (HCP), it is deemed necessary for the health of the
    mother or child. On 12 June 2007, we reduced the deferment period, from
    12 months to 6 months, after extensively reviewing the former policy.
    Marine Corps policies are constantly reviewed to ensure their
    applicability to the force, and this review was no different. During
    the review and staffing process it was determined a 6-month deferment
    provided the best balance between ensuring the health of the mother and
    child and the requirements of a naval career. This change complies with
    DOD Instruction 1342.19 (Family Care Plans), which states ``Military
    mothers of newborns shall receive a 4-month deferment from duty away
    from the home station for the period immediately following the birth of
    a child.''
        General Newton. Our Air Force Instruction guidance allowing a 4-
    month post pregnancy deferment for deployments is consistent with
    deferments for assignment. In fact, the guidance in our deployment
    instruction (10-403, Attachment 2, table A2.1, Note 6) references our
    assignments instruction stating that ``members are deferred from
    deployments for 4 months after birth of baby'' (extensions approved at
    unit/CC discretion) per AFI 36-2110, para 2.39.4 and Table 2.2 Rule 1.
    Both AFIs are based on DOD Directive 1315.7, in Aug 91 that established
    a ``4-month deferment after childbirth to duty away from the home
    station.'' We are unaware of what medical considerations may have been
    taken into consideration when DOD Directive 1315.7 was published.
                                     ______

                Question Submitted by Senator Lindsey O. Graham
                                  nominations
        13. Senator Graham. Secretary Chu, I was pleased to hear you do not
    anticipate any problems with implementation of the provision requiring
    The Judge Advocates General (TJAG) of the Army, Navy, and Air Force to
    serve in the rank of lieutenant general or vice admiral. In order to
    ensure the maximum effectiveness of the TJAGs, I believe this needs to
    be implemented quickly. Do you have an indication of when the
    nominations will be forwarded to the Senate for confirmation?
        Secretary Chu. At this time, we do not have a clear indication of
    when the nominations will be forwarded to the Senate. The Department
    will immediately attend to these nominations upon receipt from the
    Secretaries of the Military Departments.
                                     ______

                 Questions Submitted by Senator Saxby Chambliss
                          base realignment and closure
        14. Senator Chambliss. Secretary Chu and Lieutenant General
    Rochelle, as you are well aware, both Fort Stewart and Fort Benning in
    the State of Georgia are in the process of growing as a result of the
    Grow the Army plan and the Base Realignment and Closure (BRAC) process,
    and we welcome that growth and look forward to having more Army
    soldiers and their families residing in the State of Georgia.
        This growth does bring challenges, and one specific challenge that
    I've been aware of and working to address for several years now is the
    growth in the number of students at local school districts resulting
    from an influx of military-connected children. No school district is
    going to turn away additional students, and I know that the folks in
    Muscogee County, Chattahoochee County, and Liberty County are eager to
    accommodate new Army families and their children into their school
    districts--and they will do so.
        I have had a very difficult time getting accurate estimates from
    the Army regarding how many soldiers and, consequently, how many
    school-aged children will be relocating to Georgia bases. The estimates
    have varied widely and have made it very difficult for local school
    districts to predict and plan how to accommodate this growth. However,
    everyone agrees that, at least at Fort Benning, they will experience a
    growth of several thousand students. But this is not just a Georgia
    issue. Bases and communities in Virginia, North Carolina, Kentucky, and
    Kansas will be affected as well.
        As you can well-understand, any additional facilities and teachers
    required to accommodate additional students will need to be funded in
    advance of the students arriving. Local communities are challenged to
    pay for these expenses, especially when the tax base for doing so does
    not exist, or will likely be made up of nonresidents who may not be
    paying income and property tax.
        I would appreciate your comments on what policies the Army and DOD
    have established to address this issue and how you are partnering with
    communities around bases experiencing this growth. I would also
    appreciate your assurances that making sure this transition is seamless
    and doing everything you can to help local communities prepare for this
    growth will remain a priority for DOD and the Army.
        Secretary Chu. DOD clearly recognizes the importance of quality
    educational opportunities for all military families. We are working in
    close collaboration with all key stakeholders to engage affected
    communities and assist them in finding viable solutions to the
    projected school growth. Understanding that in order to prepare
    adequately, a community must first have reliable growth projections,
    the military Services have carefully identified the school-age growth
    projections for each community. Dialogue is continuous between the
    installation commanders and local educational agencies about timing,
    projected growth, and the dynamic nature of the challenge.
        These projections will be provided to Congress in the very near
    future as directed in section 574 (c) of the John Warner National
    Defense Authorization Act (NDAA) for Fiscal Year 2007. In addition, the
    Office of the Under Secretary of Defense for Personnel and Readiness
    (Military Community and Family Policy), in coordination with the Army,
    the Department of Education's Offices of Elementary and Secondary
    Education and Management, and the Department of Defense Office of
    Economic Adjustment, has conducted site visits to a representative
    sample (Fort Benning, Fort Bliss, Fort Drum, and Fort Riley) of growth
    locations to provide program stakeholders (Federal, State, and local)
    with on-the-ground knowledge of issues surrounding mission growth,
    improve communications among all partners, identify gaps/lags in
    capacities, and to more extensively document the specific requests for
    Federal action to assist communities and States responding to student
    migration.
        Of note, the visit to El Paso and Fort Bliss, TX, highlights the
    strong set of partnerships in place to support Fort Bliss's mission,
    soldiers, and families. There is close cooperation between Fort Bliss
    and the surrounding community and the nine independent school
    districts. Representatives from the installation, community, and school
    districts meet regularly to discuss the impact of growth. An example of
    the consolidated planning process is the El Paso Independent School
    District. The voters of the most heavily affected of the region's
    school districts voted in favor of a $230 million bond, of which $101
    million will go to support growth at Fort Bliss. Additionally, Texas
    has two State programs for funding construction: (1) an instructional
    facilities allotment that all Local Education Authorities (LEAs) are
    eligible to receive, and (2) an interest allotment for the lowest
    income LEAs that have the lowest (tax) bases.
        Besides reporting school-age growth projections, the report to
    Congress will include recommendations from the Office of Economic
    Adjustment for means of assisting affected local educational agencies
    in accommodating increases in enrollment of military students as well
    as the DOD plan for outreach regarding information on the assistance to
    be provided to local educational agencies (LEAs) that experience growth
    in the enrollment of military students.
        In order to effectively focus the DOD outreach effort, we have
    leveraged the expanded authority that DOD received in the NDAA for
    Fiscal Year 2007. The Secretary of Defense can now use funds of the DOD
    Education Activity (DODEA) to share its expertise and experience with
    LEAs as military dependent students transition from DOD schools to
    LEAs, including transitions resulting from the closure or realignment
    of military installations under a base closure law, global rebasing,
    and force restructuring. Under this expanded authority, DODEA is in the
    process of creating educational partnerships with LEAs who educate
    military students. Launched October 1, 2007, the DODEA Educational
    Partnership Directorate (EPD) promotes quality education and seamless
    transitions for military students. More specifically, EPD:

             1. Develops partnerships with military-connected schools and
            districts that focus on research-based educational programs and
            best practices, seamless transitions, and deployment support
            services,
             2. Facilitate agreements at the local and State levels to
            positively impact military children's education and wellbeing,
            and
             3. Extend opportunities for student learning via online and
            other research-based models.

        Finally, to support the transition of children impacted by
    permanent change of station moves, as well as moves promulgated by BRAC
    and force realignment, the Department has partnered with the Council of
    State Governments to develop an Interstate Compact designed to mitigate
    the difficulties children in military families experience when
    transitioning between school systems. Legislatures in 14 States are
    currently considering the Compact. Once adopted by 10 States, the
    Compact will be enforced.
        General Rochelle. The Army and DOD are partnering with local
    communities to deal with community needs, such as schools, housing, and
    community activities, associated with Army stationing and growth.
    Garrison commanders and staff regularly engage with community leaders
    and have school liaison officers who facilitate communication with
    local education agencies to help communities deal with stationing and
    growth. The DOD, Office of Economic Adjustment regularly provides
    funding and planning support to communities experiencing growth from
    Defense actions. The planning connection between the installation,
    local education agency and the U.S. Department of Education for
    financial Impact Aid Assistance continues to be our most effective
    means to support seamless growth in communities around our
    installations.

        15. Senator Chambliss. Secretary Chu, in last year's National
    Defense Authorization Act we established the Yellow Ribbon
    Reintegration Program which I worked on with several other Senators.
    This is an extremely important program for the National Guard and
    Reserve and provides continuous support to our deploying servicemembers
    by creating a national combat veteran reintegration program to provide
    servicemembers and their families support services during their entire
    deployment cycle. I was pleased to see in your written statement that
    DOD is fully committed to implementing this program and that you are
    moving quickly to stand up an interim Office for Reintegration
    Programs.
        Please provide additional detail on how this program is proceeding,
    the resources that you believe will be necessary to fully implement the
    program, and whether DOD has those resources and if you are requesting
    specific resources to carry out this program in the fiscal year 2009
    budget.
        Secretary Chu. We will have the Office for Reintegration Programs
    established by the end of March, with the Deputy Assistant Secretary of
    Defense for Reserve Affairs (Manpower and Personnel) designated as the
    director of that office. For interim staffing until we can establish
    the permanent manpower requirements, we have asked the Reserve
    components to assist by providing one person each. The NDAA for Fiscal
    Year 2008 also provides for an Advisory Board and a Center of
    Excellence. These organizations will be operational soon.
        To support National Guard and Reserve members, and their families
    throughout the deployment cycle, we already have pilot programs in 15
    States that provide services and support to Reserve component members
    and their families. We plan to expand the program to all 54 States and
    territories.
        The Department is developing the funding requirements for the 2010
    budget and future budget submissions. Since funding for this program
    was not included in the Defense appropriations for 2008 or in the
    President's budget submission for 2009, we must seek supplemental
    funding as a bridge to support this program. We do not have funds
    available in 2008 or the President's budget to fully implement the
    program without obtaining supplemental funding.

        [Whereupon, at 4:57 p.m., the subcommittee adjourned.]

    DEPARTMENT OF DEFENSE AUTHORIZATION FOR APPROPRIATIONS FOR FISCAL YEAR
                                      2009

                                  ----------

                           WEDNESDAY, APRIL 16, 2008

                                   U.S. Senate,
                             Subcommittee on Personnel,
                                   Committee on Armed Services,
                                                        Washington, DC.

     TESTIMONY OF MILITARY BENEFICIARY ORGANIZATIONS REGARDING THE QUALITY
     OF LIFE OF ACTIVE, RESERVE, AND RETIRED MILITARY PERSONNEL AND THEIR
                                 FAMILY MEMBERS

        The subcommittee met, pursuant to notice, at 2:37 p.m. in
    room SR-232A, Russell Senate Office Building, Senator E.
    Benjamin Nelson (chairman of the subcommittee) presiding.
        Committee members present: Senators Ben Nelson and Graham.
        Committee staff member present: Leah C. Brewer, nominations
    and hearings clerk.
        Majority staff members present: Jonathan D. Clark, counsel;
    Gabriella Eisen, counsel; and Gerald J. Leeling, counsel.
        Minority staff members present: Diana G. Tabler,
    professional staff member; and Richard F. Walsh, minority
    counsel.
        Staff assistants present: Ali Z. Pasha and Brian F. Sebold.
        Committee members' assistants present: Andrew R.
    Vanlandingham, assistant to Senator Ben Nelson; Jennifer Cave,
    assistant to Senator Warner; Lenwood Landrum, assistant to
    Senator Sessions; Mark J. Winter, assistant to Senator Collins;
    and Andrew King, assistant to Senator Graham.

       OPENING STATEMENT OF SENATOR E. BENJAMIN NELSON, CHAIRMAN

        Senator Ben Nelson. Good afternoon. This Personnel
    Subcommittee hearing will come to order.
        The subcommittee meets today to receive testimony from
    military beneficiary organizations regarding the quality of
    life of Active, Reserve, and retired military personnel and
    their family members in review of the National Defense
    Authorization Requet for Fiscal Year 2009 and the Future Years
    Defense Program.
        This subcommittee is responsible for the most important
    aspect of the United States military system: our men and women
    and their families. These great Americans have volunteered to
    serve our Nation, so we have a special responsibility to
    provide for their quality of life.
        The repeated and extended deployments and the intensity of
    the conflicts in Iraq and in Afghanistan are taking a toll on
    the health of our troops and their families. This hearing will
    help us to learn about the concerns and needs of our military
    members and their families from the beneficiary organizations
    that stay in constant contact with them and represent their
    interests.
        It's been an honor to be able to work with my ranking
    member, Senator Graham, in this effort. We have exchanged
    positions a time or two, but, we, along with the rest of the
    subcommittee, aim to do everything we can to ensure that our
    servicemembers and their families have a quality of life
    commensurate with the sacrifices they make on a daily basis.
        I'd like to express my personal appreciation to the many
    organizations that assist and represent the interests of our
    military personnel and their families. You do a great service
    to our Nation, and you deserve to be recognized for what you
    do.
        Although it would be ideal to hear the testimony of each of
    the organizations, that's not possible. That's why we reach out
    to The Military Coalition (TMC), a consortium of 33 service and
    veterans organizations, to present the collective views of the
    organizations.
        We're pleased to welcome our witnesses here this afternoon:
    Colonel Steve Strobridge, U.S. Air Force (Ret.), and Master
    Chief Petty Officer Joseph L. Barnes, U.S. Navy (Ret.). They
    are the co-chairman of TMC. Colonel Strobridge is the Director
    of Government Relations for the Military Officers Association
    of America, and Master Chief Barnes is the National Executive
    Director of the Fleet Reserve Association.
        We also welcome Kathleen Moakler, Director of Government
    Relations for the National Military Family Association. She
    also serves as the co-chair of the Survivor Committee of TMC.
    Michael Cline is the Executive Director of the Enlisted
    Association of the National Guard of the United States
    (EANGUS). He serves as the co-chair of the Guard and Reserve
    Committee of TMC. Ms. Meredith Beck is the National Policy
    Director of the Wounded Warrior Project, an organization
    devoted to the care and treatment of our wounded warriors.
        We look forward to learning from our witnesses about the
    needs and concerns of our military personnel, their families,
    and their employers. I, again, want to thank all of the
    organizations that serve our military personnel and their
    families for your continuing support, especially the support to
    our wounded warriors and their families.
        Senator Graham, it's been a pleasure to work with you over
    these years, and I look forward to being able to continue to do
    that. We serve as bipartisan as any group can serve, and, with
    that, maybe you have an opening statement you'd like to make.

                 STATEMENT OF SENATOR LINDSEY O. GRAHAM

        Senator Graham. Very briefly. What you said is absolutely
    true, it's been a pleasure working with you and your staff. I
    think the subcommittee has the right spirit about the way we
    should approach our job when it comes to the military
    community, and you've really been a pleasure and joy to work
    with.
        I want to recognize Meredith. She did my defense work
    before she went on to bigger and better things, and has done a
    good job with the Wounded Warrior Project.
        Thank you all for coming. Thank you all, all of you, for
    what you do every day.
        I'm ready to listen and learn.
        Senator Ben Nelson. Before we proceed to opening
    statements, we've received prepared statements from TMC, the
    Fleet Reserve Association, the National Military Family
    Association, EANGUS, the Wounded Warrior Project, and the
    Reserve Officers Association. Without objection, all of these
    statements will be included in the record.
        Ms. Beck, would you like to begin the process today?

       STATEMENT OF MEREDITH M. BECK, NATIONAL POLICY DIRECTOR,
                        WOUNDED WARRIOR PROJECT

        Ms. Beck. Yes, sir. Thank you.
        Sir, before I begin, I'd like to recognize two people who
    are in the audience: Sarah and Ted Wade. Ted was injured in
    Iraq on February 14, 2004, and the two of them together have
    overcome just about every obstacle, and have created a success
    out of the program. So they have brought a tremendous amount of
    knowledge, expertise, experience, emotion, and devotion to
    this, and information to the Wounded Warrior Project, and I'd
    like to acknowledge them.
        Senator Ben Nelson. Thank you.
        Ms. Beck. Mr. Chairman, thank you for the opportunity to
    testify before you today regarding the needs of our Nation's
    most recent generation of wounded servicemembers. My name is
    Meredith Beck. I'm the policy director for the Wounded Warrior
    Project. As a result of our direct and daily contact with this
    most recent generation of wounded warriors, we have a unique
    perspective on their needs and the obstacles they face as they
    attempt to reintegrate into their communities.
        With respect to case management, many of our families state
    that they need a case manager to manage their case managers.
    Therefore, Wounded Warrior Project (WWP) was pleased that the
    Senior Oversight Committee (SOC) charged with resolving these
    issues created the Federal Recovery Coordinator (FRC) Program.
    However, with the limited number of individuals serving as
    FRCs, we must use our resources wisely and effectively.
    Currently, the FRCs seem to be focused on those in the
    hospitals, yet it is important to remember that this program
    was created as a result of the study of the Walter Reed
    scandal, and we must not only serve those who are injured
    tomorrow, but also those who were injured during the previous
    years of the conflict.
        There's a common and dangerous misperception that if you
    are injured earlier on, then all of your problems have been
    solved. I can only tell you from personal experience, those
    families are often the ones in need of the most help. They are
    the bow wave, often finding the problems and facing them alone.
    WWP understands that the SOC is reviewing a range of options to
    address this look-back issue, and we encourage the swift
    implementation of such a plan.
        In addition, the FRC can only be successful if he or she
    has the authority to break through the current barriers of both
    agencies. Part of that authority would have to include the
    overlap of benefits and services, which, to a certain extent,
    was included in last year's defense authorization bill. A
    successful overlap would allow the recovery coordinator or case
    manager concurrent access to the Department of Defense (DOD)
    and Department of Veterans Affairs (VA) benefits necessary for
    the care and rehabilitation of severely injured servicemembers.
    In other words, the provision rightfully recognizes that an
    individual's care should be based on his medical condition and
    not on his status as Active Duty or retired. However, WWP is
    concerned that the regulations prescribed in accordance with
    the law will miss the spirit with which the provision was
    drafted. For example, the provision authorizes the Secretary to
    offer severely injured veterans the same medical care and
    benefits as those on Active Duty if they are, ``not reasonably
    available to such a member in the VA.'' The VA offers excellent
    services for many, but, due to insufficient funding,
    inconsistency in service, and differences in generational
    needs, what is offered on paper may not, in some cases, be
    sufficient to meet the needs of our severely injured
    population. Therefore, we encourage strong oversight of the
    implementation of this provision to ensure its success, not
    only in policy, but also in practice.
        Finally, with respect to case management, it is imperative
    that we take steps to promote the visibility of all of these
    case managers. Currently, there is a myriad of case managers
    both within DOD and VA that many times they're either
    overburdened or unused because the injured don't know where to
    begin. Without visibility, the servicemembers are lost and
    organizations like WWP, the Military Officers Association of
    America, the National Military Family Association (NMFA), and
    others are unable to plug those we find back into the system
    quickly and effectively.
        With respect to deferment, unlike burn patients and
    amputees, those with severe brain injuries appear to be boarded
    out of the military very quickly, some within days or even
    weeks of their devastating injury. While this process has
    implications for all, for traumatic brain injury (TBI) patients
    the availability of options in their medical care is at stake.
    While they do have access to the VA in many cases, private
    therapies for which they were eligible while on Active Duty
    become unavailable once retired. Unfortunately, even though
    TBIs are considered the signature injury of the recent
    conflicts, once medically retired, TRICARE no longer covers
    cognitive rehabilitation, as it is considered unproven. While
    WWP is familiar with a number of families who disagree with
    such a characterization, following the successful
    rehabilitation of their loved ones--the Wades are a prime
    example--and strongly encourage the coverage of cognitive
    therapy, we must take steps in the short-term to facilitate the
    transition of our most severely injured. Therefore, WWP is
    seeking legislation to establish a 1-year deferment for the
    Marine Expeditionary Brigade (MEB)/Physical Evaluation Board
    (PEB) process, unless initiated by the family, for severe TBI
    patients.
        Severe TBI is a devastating and life-altering wound that
    causes uncertainty and anguish to the affected servicemembers
    and their families. Delaying the MEB/PEB will allow the
    patient's condition to stabilize, provide a standard period of
    time for coverage under TRICARE, and allow the family to fully
    understand their options before being removed from the familiar
    military environment. It is the moral thing to do.
        With respect to TRICARE eligibility for parents and next of
    kin, most agree that, due to the advances in medicine, we are
    able to save those we otherwise would not have been able to
    save in previous generations. However, we must now provide them
    with the most appropriate and best quality of care. In some
    cases, the most appropriate care at home includes parents and
    spouses who leave their jobs to become full-time caregivers.
    Family caregivers offer the severely injured love, continuity,
    flexibility, and dignity that cannot be found through a
    contract agency. Unfortunately, however, when family members
    leave their jobs, they often lose their health insurance.
    Fortunately, spouses are eligible for TRICARE through their
    injured servicemembers, but parents and next of kin are not
    included in this coverage; therefore, we are requesting
    legislation allowing the parents and next of kin to be fully
    eligible for TRICARE if they are providing those services.
        It's our responsibility to ensure that the family members
    providing the care have the tools to maintain their health,
    giving the servicemember the best chance of recovery.
        Lastly, with respect to DOD-VA collaboration, while there
    are still many issues to address, we've been very impressed
    with the level of involvement of the leadership of both
    agencies. However, with all of the legislative proposals and
    policy revisions, it is imperative that a joint permanent
    structure be in place within both agencies to evaluate the
    changes, monitor the systems, and make further recommendations
    for process improvement. It must be structured in a way not to
    be bogged down in bureaucracy, and must have a clearly defined
    mission with the appropriate authority to make changes and
    recommendations, as warranted.
        These issues have received much attention over the past
    several months, but will likely fade from the national stage
    over time. Without such a joint structure in place, other
    issues will arise, and we may, though well-intentioned, find
    ourselves in the same situation, 3 to 5 years from now.
        Finally, while the agencies share joint responsibility for
    resolving this problem, WWP strongly believes that Congress
    must also re-evaluate its current means of addressing these
    issues. Due to the committee's jurisdictional boundaries, it is
    often difficult to address issues facing these injured and
    transitioning servicemembers. For example, under the Traumatic
    Servicemembers Group Life Insurance, a small portion of the
    servicemember's paycheck goes into the DOD and, if required, is
    paid out through the VA. Without overlapping jurisdiction,
    these injured brave men and women will continue to be stuck in
    limbo, because there's no mechanism to resolve problems.
    Therefore, WWP is proposing the creation of a Joint Select
    Subcommittee on Transition between both the Armed Services and
    Veterans Affairs Committees in both the House and the Senate.
    This subcommittee would not require additional members, simply
    the shared jurisdiction and participation of those already in
    place. Such an action would signify to injured servicemembers
    and their families that Congress understands their needs and is
    willing to take the difficult steps to resolve their problems.
        Thank you, and I'll look forward to your questions.
        [The prepared statement of Ms. Beck follows:]
                     Prepared Statement by Meredith M. Beck
        Mr. Chairman, Senator Graham, and members of the committee, thank
    you for the opportunity to testify before you today regarding the needs
    of our Nation's most recent generation of wounded servicemembers. My
    name is Meredith Beck, and I am the National Policy Director for the
    Wounded Warrior Project (WWP). As a result of our direct, daily contact
    with this most recent generation of wounded warriors, we have a unique
    perspective on their needs and the obstacles they face as they attempt
    to reintegrate into their communities.
                                case management
        As many of our families state that they need a case manager to
    manage their case managers, WWP was pleased that the Senior Oversight
    Committee (SOC) charged with resolving these issues followed the
    recommendation of the Dole-Shalala Commission to improve the case
    management process through the creation of a Federal recovery
    coordinator (FRC). The FRC's serve as long-term oversight for the
    development and implementation of the individual's recovery plan, and
    we are pleased to report that most of the families who have come into
    contact with an FRC are very excited about the program.
        However, with a limited number of individuals serving as FRC's, we
    must use our resources wisely and effectively. Currently, the FRC's
    seem to be focused on those in the hospitals. Yet, it is important to
    remember that this program was created as a result of the study of the
    Walter Reed scandal, and we must not only serve those who are injured
    tomorrow, but also those who were injured during the earlier days of
    the current conflicts.
        There is a common and dangerous misperception that if you were
    injured earlier on, then all of your problems have been solved. I can
    only tell you from personal experience, those families are often the
    ones in need of the most help--they are the bow wave, often finding the
    problems and facing them alone. WWP understands that the SOC is
    reviewing a range of options to address this ``lookback'' issue, and we
    encourage the swift implementation of such a plan.
        In addition, the FRC can only be successful if he/she has the
    authority to break through the current barriers within both agencies.
    Part of that authority would have to include the overlap of benefits
    and services which, to a certain extent, was included in section 1631
    of the National Defense Authorization Act for Fiscal Year 2008. A
    successful overlap would allow the recovery coordinator or case manager
    concurrent access to the Department of Defense (DOD) and Department of
    Veterans Affairs (VA) benefits necessary for the care and
    rehabilitation of severely injured servicemembers. In other words, the
    provision rightfully recognizes that a severely injured servicemember's
    care should be based on his medical condition and not on his status as
    active duty or retired.
        However, WWP is concerned that the regulations proscribed in
    accordance with the law will miss the spirit with which the provision
    was drafted. For example, the provision authorizes the Secretary to
    offer severely injured veterans the same medical care and benefits as
    those on active duty if they are, ``not reasonably available to such
    former member in the VA.'' The VA offers excellent services for many,
    but, due to insufficient funding, inconsistency in service, and
    differences in generational needs, what is offered on paper may not, in
    some cases, be sufficient to meet the needs of our severely injured
    population. Therefore, we encourage strong oversight of the
    implementation of this provision to ensure its success not only in
    policy, but also in practice.
        Finally, with respect to case management, it is imperative that we
    take steps to promote visibility of all the case managers who provide
    services to injured servicemembers. Currently, there is such a myriad
    of case managers both within DOD and VA that, many times, they are
    either overburdened or unused because the injured don't know where to
    begin. For example, the FRCs are VA employees who are based in Military
    Treatment Facilities. In addition, active duty servicemembers are being
    treated in VA facilities. Without visibility, the servicemembers are
    lost and organizations like WWP, MOAA, NMFA and others are unable to
    plug those we find back into the system quickly and effectively.
                                   deferment
        Unlike burn patients and amputees, those with severe brain injuries
    appear to be ``boarded out'' of the military very quickly, some within
    days or weeks of their devastating injury. While this process has many
    implications for all, for traumatic brain injury (TBI) patients, the
    availability of options in their medical care is at stake.
        While they do have access to the VA, in many cases, private
    therapies for which they were eligible while on active duty become
    unavailable once retired. Unfortunately, even though traumatic brain
    injuries are considered by many to be the ``signature injury'' of the
    recent conflicts, once medically retired, TRICARE does not cover
    cognitive rehabilitation, as it is considered unproven. While WWP is
    familiar with a number of families who disagree with such a
    characterization following the successful rehabilitation of their loved
    ones and strongly encourage the coverage of cognitive therapy, we must
    take steps in the short term to facilitate the transition of our most
    severely injured. Therefore, the WWP is seeking legislation to
    establish a 1 year deferment for the Marine Expeditionary Brigade
    (MEB)/Physical Evaluation Board (PEB) process unless initiated by the
    family for severe TBI patients.
        A severe traumatic brain injury is a devastating and life-altering
    wound that causes uncertainty and anguish for the affected
    servicemember and his/her family. Delaying the individual MEB/PEB will
    allow the patient's condition to stabilize, provide a standard period
    of time for coverage under TRICARE, and allow the family to fully
    understand their options before being removed from the familiar
    military environment. In addition, this step will allow the VA to
    follow a path already initiated by the DOD to confer with private
    facilities, learn from successful models, and further enhance their
    services. Furthermore, allowing the family and the injured individual a
    period of time to adjust to their new, often tragically different
    situation, shows compassion, reflects the sacrifice of the most
    severely injured, and will result in a more positive environment for
    the entire family.
                  tricare eligibility for parents/next of kin
        Most agree that, due to advances in medicine, we are able to save
    those we otherwise may not have been able to save in previous
    generations. However, we must now provide them with the most
    appropriate and best quality of care. In some cases, the most
    appropriate care at home includes parents and spouses who leave their
    jobs to become full-time caregivers. Family caregivers offer the
    severely injured love, continuity, flexibility, and dignity that cannot
    be found through a contract agency.
        Unfortunately, however, when family members leave their jobs, they
    often lose their health insurance. Fortunately, spouses are eligible
    for TRICARE through their injured servicemembers, but, parents/next of
    kin are not included in this coverage. Therefore, WWP is requesting
    legislation allowing parents/next of kin to be fully eligible for
    TRICARE if they are providing full-time caregiving services. It is our
    responsibility to ensure that family members providing this care have
    the tools to maintain their own health, giving the servicemember the
    best chance at recovery.
                              dod/va collaboration
        With respect to DOD/VA collaboration, while there are still many
    issues to address, WWP has been very impressed with the level of
    involvement of the leadership of both DOD and the VA in the previously
    mentioned SOC. However, with all of the legislative proposals and
    policy revisions, it is imperative, consistent with the recommendation
    of the Veterans Disability Benefits Commission that a joint, permanent
    structure be in place within the agencies to evaluate the changes,
    monitor the systems, and make further recommendations for process
    improvement. This office must be structured in a way so as to not get
    bogged down in bureaucracy and must have a clearly defined mission with
    the appropriate authority to make necessary changes or recommendations
    as warranted. In addition, to facilitate coordination, the office
    should absorb the functions of the other smaller offices that have
    arisen within both agencies over time. While the SOC has recently been
    working diligently on these issues there is no guarantee that this will
    continue to be the case as administrations and leadership changes.
    These issues have received much attention over the past several months,
    but will likely fade from the national stage over time. Without such a
    joint structure in place, other issues will arise, and we may, though
    well-intentioned, find ourselves in the same situation 3 or 5 years
    from now.
        It is not only DOD and VA who need to collaborate more fully.
    Others such as the Social Security Administration, Medicare, the
    Department of Labor, and private entities need to be included in these
    discussions. For example, an injured servicemember recently contacted
    WWP because he was understandably confused. He had been rated as
    unemployable by the VA but was told he did not qualify for Social
    Security Disability benefits because he was able to work. In addition,
    the Social Security Administration has had a difficult time getting
    medical records necessary for evaluation from DOD. These agencies must
    work together to resolve, where possible, inconsistencies in their
    policies or the goal of ``seamless transition'' will never be achieved.
        While the agencies share joint responsibility for resolving these
    problems, WWP believes that Congress must also re-evaluate its current
    means of addressing these issues. Due to the committee's jurisdictional
    boundaries, it is often difficult to address the issues facing these
    injured and transitioning servicemembers. For example, under the
    Traumatic Servicemembers Group Life Insurance, a small portion of a
    servicemembers paycheck is designated each month for the fund. If an
    individual is injured, that insurance money is then paid through the
    VA, often while the servicemember is still on active duty. If a problem
    arises with the program, of which several have, which Congressional
    committee is charged with resolving it? Without overlapping
    jurisdiction, these injured brave men and women will continue to be
    stuck in limbo. Therefore, WWP is proposing the creation of a Joint
    Select Subcommittee on Transition Issues between both the Armed
    Services and Veterans Affairs Committees in both the House and Senate.
    This subcommittee would not require additional members, simply the
    shared jurisdiction and participation of those already in place. Such
    an action would signify to injured servicemembers and their families
    that Congress understands their needs and is willing to take the
    difficult steps to resolve their problems.
        Mr. Chairman, thank you again for the opportunity to testify before
    you today, and I look forward to answering your questions.

        Senator Ben Nelson. Thank you.
        Master Chief Barnes?

     STATEMENT OF MASTER CHIEF PETTY OFFICER JOSEPH L. BARNES, USN
     (RET.), NATIONAL EXECUTIVE DIRECTOR, FLEET RESERVE ASSOCIATION

        Master Chief Barnes. Mr. Chairman, Senator Graham, thank
    you for this opportunity to present the concerns of TMC.
        The extensive Coalition statement reflects the consensus of
    TMC organizations and extensive work by eight legislative
    committees, each comprised of representatives from the
    Coalition's nearly three dozen military and veterans
    organizations. I will briefly address key Active Duty and
    retiree recommendations, and my colleagues will then address
    other issues.
        But first, I wish to thank you and the entire subcommittee
    for the steadfast and strong support of our military personnel,
    retirees, veterans, and their families and survivors, and
    particularly for recently enacted Wounded Warrior enhancements.
        Sustaining adequate Active, Guard, and Reserve end
    strengths to effectively prosecute the war effort and other
    demanding operational commitments is vital to our national
    security, and TMC urges strong support for Army and Marine
    Corps end-strength increases in fiscal year 2009. Wearing down
    the force contributes to serious morale, readiness, and
    retention challenges.
        Restoring military pay comparability remains a top
    priority, and TMC urges this distinguished subcommittee to
    authorize at least a 3.9 percent pay hike. We appreciate your
    leadership, authorizing past higher than the increase in the
    Economic Cost Index (ECI) Active Duty pay hikes. Despite
    significant progress on compensation levels, there's a
    significant lag between ECI data collection and the
    implementation date, and a 3.4 percent pay gap remains.
        Housing standards determine local housing allowance rates,
    which need to be revised to more appropriately reflect where
    servicemembers are living. For example, only E-9s, which
    comprise 1 and one-quarter percent of the enlisted force, are
    eligible for Basic Allowance for Housing (BAH) for single-
    family detached homes. TMC supports integrating the Guard and
    Reserve Montgomery GI Bill (MGIB) and the Active Duty MGIB laws
    under title 38, along with other MGIB reform initiatives.
        In considering the transfer of education benefits to
    spouses, it's important to not forget the approximately 20,000
    currently serving Veterans Education Assistance Program (VEAP)-
    era personnel who are not authorized to enroll in the MGIB.
        The Coalition appreciates the extension of the combat-
    related special compensation to disabled retirees who were
    forced to retire before attaining 20 years of service, and for
    those rated unemployable by the VA. However, major inequities
    remain, and TMC urges this distinguished subcommittee to act on
    recommendations of the Veterans Disability Benefits Commission
    and implement a plan to eliminate the reduction of VA
    disability compensation for military retired pay for all
    disabled retirees.
        Finally, the Coalition remains committed to adequate
    funding to ensure access to the commissary benefit for all
    beneficiaries, and moral, welfare, and recreation programs must
    be adequately funded, accordingly.
        Providing adequate programs, facilities, and support
    services for personnel impacted by Base Realignment and Closure
    (BRAC) actions, rebasing initiatives, and global repositioning
    is very important, particularly during wartime, which alone
    results in significant stress on servicemembers and their
    families due to demanding operational commitments, repeated
    deployments, and other service requirements.
        Thank you, again, for the opportunity to present our
    recommendations. Kathy Moakler will now discuss family
    readiness, military spouse, and survivor issues.
        [The prepared statement of Master Chief Petty Officer
    Barnes follows:]
    Prepared Statement by Master Chief Petty Officer Joseph L. Barnes, USN
                                     (Ret.)
                                  introduction
        Mr. Chairman, the Fleet Reserve Association (FRA) salutes you,
    members of the subcommittee, and your staff for the strong and
    unwavering support of programs essential to active duty, Reserve
    component, and retired members of the uniformed Services, their
    families, and survivors. The subcommittee's work has greatly enhanced
    care and support for our wounded warriors, improved military pay,
    eliminated out-of-pocket housing expenses, improved health care, and
    enhanced other personnel, retirement and survivor programs. This
    support is critical to maintaining readiness and is invaluable to our
    uniformed services engaged throughout the world fighting the global war
    on terror, sustaining other operational commitments and fulfilling
    commitments to those who've served in the past.
        FRA's 2008 priorities include full funding for Department of
    Defense (DOD) and Veterans Administration (VA) health care, annual
    active duty pay increases that are at least a half percent above the
    Employment Cost Index, to help close the pay gap between active duty
    and private sector pay, full concurrent receipt of military retired pay
    and VA disability compensation, and enhanced family readiness via
    improved communications and awareness initiatives related to benefits
    and quality of life programs.
        Additional issues include the introduction and enactment of
    legislation to eliminate inequities in the Uniformed Service Former
    Spouses Protection Act (USFSPA), streamlining the voting process for
    overseas military personnel, additional reform of the Montgomery GI
    Bill (MGIB) to provide adequate funding to keep pace with rising
    college costs to improve benefits for reservists and push for an open
    enrollment for those who did not enroll in the Veterans Education
    Assistance Program (VEAP) or the MGIB. In addition to the Navy and
    Marine Corps, FRA also proudly represents the U.S. Coast Guard and
    closely monitors benefits and quality of life programs to ensure parity
    for Coast Guard personnel.
        Excluding supplemental appropriations, the United States spent less
    than 4 percent of its GDP on national defense in 2008. From 1961-1963,
    the military consumed 9.1 percent of GDP annually. The active duty
    military has been stretched to the limit since September 11, and has
    expanded by only 30,000 personnel. FRA strongly supports funding to
    support the anticipated increased end strengths in fiscal year 2009 and
    beyond since the current end strength is not adequate to meet the
    demands of fighting the War on Terror and sustaining other operational
    commitment throughout the world. ``Measuring governmental costs against
    the economy as a whole is a good proxy for how much of the Nation's
    wealth is being diverted to a particular enterprise.'' \1\
    ---------------------------------------------------------------------------
        \1\ John Cranford, CQ Weekly, February 10, 2007; ``Political
    Economy: High, and Low, Cost of War''
    ---------------------------------------------------------------------------
        Over the past several years, the Pentagon has been constrained in
    its budget even as it has been confronted with rising personnel costs,
    aging weapon systems, worn out equipment, and dilapidated facilities.
        For these reasons, FRA strongly supports H.J. Res. 26 sponsored by
    Representative Trent Franks, and S.J. Res. 67 sponsored by Senator
    Elizabeth Dole which would ensure that annual defense spending is
    maintained at a minimum of 4 percent of GDP.
        This statement lists the concerns of our members, keeping in mind
    that the Association's primary goal is to endorse any positive safety
    programs, rewards, quality of life improvements that support members of
    the uniformed services, particularly those serving in hostile areas,
    and their families and survivors.
                         wounded warriors improvements
        FRA is especially grateful for the inclusion of the Wounded Warrior
    assistance provisions as part of the National Defense Authorization Act
    (NDAA) for Fiscal Year 2008. Key elements of the House and Senate-
    passed versions of the act, plus elements of the Dole-Shalala
    Commission recommendations establish new requirements to provide the
    people, training and oversight mechanisms needed to restore confidence
    in the quality of care and service received by our wounded warriors and
    their families. Maintaining an effective delivery system between DOD
    and VA to ensure seamless transition and quality services for wounded
    personnel, particularly those suffering from Post-Traumatic Stress
    Disorder and Traumatic Brain Injuries is very important to our
    membership.
        FRA recommends that this distinguished subcommittee monitor the
    implementation of these wounded warrior programs to include periodic
    oversight hearings to ensure the creation and full implementation of a
    joint electronic health record that will help ensure a seamless
    transition from DOD to VA for wounded warriors, and establishment and
    operation of the Wounded Warriors Resource Center as a single point of
    contact for servicemembers, their family members, and primary care
    givers.
        Unfortunately, legislation has been enacted addressing many of
    these issues during the past 20 plus years, and it took a major news
    organization's coverage last year to help advance these important
    support programs for our Nation's heroes. Authorization is one thing--
    full implementation is another. Regarding this--our members continue to
    ask what are the government's priorities?
                                  health care
        The Task Force on the Future of Military Health Care recently
    issued its final report with recommendations that urged Congress to
    shift higher health care costs to retirees, including TRICARE-for-Life
    beneficiaries, through higher fees, deductibles, and pharmacy co-pays
    that would be adjusted regularly to cover the cost of health care
    inflation. The initial TFL annual enrollment fee proposed is $120. The
    reference to ``fairness to the American taxpayer'' elicited bitter
    reaction by some of our older members who served before the recent and
    significant pay and benefit enhancements were enacted and receive
    significantly less retired pay than those serving and retiring in the
    same pay grade with the same years of service today. They clearly
    recall promises made to them about the benefit of health care for life
    in return for a career in the military with low pay and demanding duty
    assignments. Many believe they are entitled to free health care for
    life based on the government's past commitments and are angered by
    reference to taxpayer fairness given their sacrifices in service to our
    Nation. (The same ``fairness'' sentiment can be easily understood in
    conjunction with how our wounded warriors have been treated.)
        FRA reiterates TMC's appreciation to this distinguished
    subcommittee for refusing to allow the implementation of the Department
    of Defense's drastic health care fee increases during the past 2 years.
    As stated in FRA's testimony to the Task Force on March 7, 2007:
        DOD, Congress and FRA all have reason to be concerned about the
    rising cost of military health care. But it is important to recognize
    that the problem is a national one, not military-specific. It's also
    important, in these times of focusing on benefit costs, to keep in
    perspective that military service is much different than work in the
    corporate world and the government's unique responsibility to provide
    health care and other benefits for a military force that serves and has
    served under extraordinarily arduous conditions to protect and preserve
    our freedoms and security.
        Adequately funding health care benefits for all beneficiaries is
    part of the cost of defending our Nation.
                          health care survey responses
        FRA launched a web survey in March 2006, and obtained more than 800
    responses. From these the Association learned that there is a strong
    opposition to the proposed fee increases within the senior enlisted and
    retiree communities.

             Over 90 percent of respondents opposed the
            administration's TRICARE fee increases.
             More than 84 percent would participate in a mail-order
            prescription program if it meant they did not have to pay a co-
            payment.
             More than 75 percent said that health care benefits
            influenced their decision to remain in the military.
             More than 57 percent said that health care benefits
            influenced their decision to join the military.
             One active duty survey respondent reflects these
            sentiments: ``I am third generation Navy, and after 30 years of
            service, I am extremely concerned about the erosion of medical,
            as well as other benefits. I have a very unique historical view
            of how much benefits that were believed to be everlasting for
            both active and retired servicemembers have been decreased or
            terminated. The medical coverage was fundamental for my
            continued service after my initial enlistment. This once again
            is simply a break in the faith. This philosophy needs to be
            suspended and the faith reaffirmed for past present and future
            military generations.''
             A retiree stated: ``My spouse and I have relied on the
            Navy and the Military Health Care System to provide us with all
            our medical needs. We expect health care to continue without
            monetary increase, throughout our remaining years. We both
            provided our country with a valuable service in the defense
            posture of this country. We stood ready at the call without
            complaint. We now expect the high quality of care that we were
            led to believe would be available at no cost throughout our
            remaining years if we used the Military Health Care System and
            facilities. I do not expect to absorb increasing cost for
            health care, when my retired pay does not increase with the
            cost of health care increases.''
                                  troop morale
        The proposed health care fee increases are a morale issue within
    the senior enlisted active duty communities who view this as reducing
    the value of their future retiree benefits. They are aware of the
    government's failures to honor past commitments and sensitive to
    threats to their retiree benefits. Eroding benefits for career service
    can only undermine long-term retention/readiness.
        Today's sailors, marines, and coast guardsmen are very much aware
    of Congress' actions toward those who preceded them in service. Strong
    support for the enactment of TRICARE for Life was based in part on the
    fact that inadequate retiree health care was affecting attitudes and
    career decisions among active duty troops. Today, despite the
    significant progress in restoring retiree benefits, arguing that
    funding for retiree health care and other promised benefits negatively
    impacts military readiness is fueling resentment and anger in retiree
    communities and raising concerns within the senior career enlisted
    force about their future benefits.
        The 8 percent increase in TRICARE Reserve Select premiums imposed
    within a short period after implementation of the program prompted
    similar reaction within Reserve communities and FRA appreciates
    attention to addressing the cost projection formula for adjusting
    annual fees to ensure that future adjustments are based on more
    realistic actual cost data for this benefit.
                             legislative proposals
        FRA strongly supports ``The Military Health Care Protection Act''
    (S. 604) sponsored by Senators Frank Lautenberg (D-NJ) and Chuck Hagel
    (R-NB) that would limit annual TRICARE fee increases to the amount of
    the Consumer Price Index and ``The Military Retiree Health Care
    Protection Act'' (H.R. 579) sponsored by Representatives Chet Edwards
    (D-TX) and Walter Jones (R-NC).
                               concurrent receipt
        FRA continues its unwavering support for the full concurrent
    receipt of military retired pay and veterans' disability compensation
    for all disabled retirees. Provisions of the NDAA for Fiscal Year 2008
    reflect progress toward this goal. FRA's membership appreciates the
    support of this distinguished subcommittee in addressing the
    elimination of the Concurrent Retirement and Disability Pay phase-in
    for retirees rated less than 100 percent IU (retroactive to 1 January
    2005) which will be effective on 1 October 2008, and expanding the
    Combat Related Special Compensation for Chapter 61 retirees that took
    effect when the bill became law and will be retroactive to 1 January
    2008. As stated in the TMC statement, major inequities remain that
    require the subcommittee's attention.
                    basic allowance for housing improvements
        FRA's January 2007 online survey of enlisted active duty personnel
    indicates that 68.8 percent believe Basic Allowance for Housing (BAH)
    rates are inadequate, and housing allowances were rated second only to
    pay in order of importance of quality of life programs. The need to
    update the standards used to establish BAH rates is clear since only
    married E-9s now qualify for BAH based on single family housing costs
    and the Association continues to advocate for legislation authorizing
    more realistic housing standards, particularly for career senior
    enlisted personnel.
                               mgib improvements
        A priority concern for senior enlisted leaders is ensuring that
    many senior enlisted personnel who entered service during the VEAP era
    (1977-1985), have an opportunity to sign up for the MGIB. Understanding
    the challenges of split jurisdiction over active and Reserve benefits,
    FRA urges authorization of an open enrollment period affording enlisted
    leaders the opportunity to sign up for MGIB benefits. FRA supports Rep.
    Tim Walberg's legislation, ``The Montgomery GI Bill Enhancement Act'',
    (H.R. 4130), which would allow retirees and active duty personnel who
    were on active duty before 1985 and did not participate in VEAP to
    sign-up for the more generous MGIB.
        In 1976, Congress created the VEAP as a recruitment and retention
    tool for the post-Vietnam era. Congress greatly expanded education
    benefits in 1984 and allowed individuals with VEAP accounts to transfer
    their benefits to the new MGIB in 1996 (P.L. 104-275). Individuals who
    were on active duty before 1985 and did not participate in VEAP were
    not eligible to sign-up for MGIB, leaving a gap in available coverage
    for certain career military personnel. Congress has voted several times
    in the last decade to allow VEAP participants opportunities to transfer
    to MGIB. Yet, there has never been an opportunity for those who did not
    have VEAP accounts to sign up for the new program, excluding them from
    taking advantage of these improved educational benefits.
        According to 2007 data, over 5,000 marines that were then on active
    duty were affected by this inequity.
        FRA is also supporting ``The Post-September 11 Veterans Educational
    Assistance Act'' (S. 22), and salutes Senator James Webb for his
    leadership on this issue. The legislation would provide servicemembers
    who have served since 11 September 2001 with improved educational
    benefits similar to those provided to World War II-era veterans. Among
    other improvements, Senator Webb's bill would provide 4 years of full-
    time college benefits after personnel serve 36 months or more on active
    duty and eliminate the $1,200 enrollment fee. FRA believes this bill is
    a step in the right direction but is concerned about creating an
    entirely new MGIB program rather than making reforms in the current
    programs.
        Other much needed education reform include in-State tuition
    eligibility for servicemembers and their families; integrating MGIB
    laws under title 38; and restoring Reserve MGIB rates to the intended
    levels.
                                     voting
        Only 47.6 percent of overseas military voters who requested an
    absentee ballot actually had their votes counted in 2006 according to a
    recent report of the U.S. Election Assistance Commission (September
    2007). Despite efforts to remedy past problems, voting from overseas is
    a long and cumbersome process and paper ballots from military personnel
    are frequently contested because they arrive late and often without
    postage or a postmark date.
        FRA is concerned about these statistics, since according to the New
    York Times, the Department of Defense has spent more than $30 million
    over the last 6 years to find an efficient way for servicemembers
    living abroad to cast their votes.
        The Uniformed and Overseas Citizens Voting Act of 1986 and the Help
    America Vote Act of 2002 address voting rights of active duty military
    personnel and all citizens that are outside the country during an
    election. Despite these efforts serious challenges still exist that
    include interfacing and lack of uniformity with state and local
    election officials.
        If electronic communications are secure enough for our Nation's
    most sensitive secrets and for transferring huge sums of money, then
    FRA asks why is it not possible to develop and implement a system for
    the military and Federal employees who are stationed overseas to vote
    by secure electronic means?
        FRA appreciates the introduction of ``The Military Voting
    Protection Act'' (H.R. 5673) by Congressman Kevin McCarthy (CA) that
    directs the Secretary of Defense to collect the absentee ballots of
    overseas military voters, and deliver the ballots to state election
    officials via air transport. Although, the Association believes
    legislation could more effectively streamline the current process by
    allowing servicemembers to request and receive an absentee ballot
    electronically but continue to return the signed completed ballot by
    regular mail as is done now. The bill should also require states to
    identify one state official to administer absentee ballots from
    overseas military rather than county clerks and other local officials;
    limit participation only to military personnel and Federal employees
    overseas; and shift Federal responsibility away from DOD to another
    agency such as the U.S. Election Assistance Commission.
        In recent years, Congress has recognized the need for electronic
    voting for servicemembers who are deployed overseas, and has mandated
    DOD's Federal Voting Assistance Program to administer a pilot program
    for internet voting since 2000. Unfortunately many states and local
    election jurisdictions refused to participate.
        The Association seeks support for improved active duty voter
    participation in Federal elections and to expedite the military mail
    processing of overseas ballots.
                         predatory lending protections
        FRA has been in the forefront of ensuring active duty personnel and
    their dependents have adequate protections against predatory lenders
    who target military personnel and their families, and appreciates
    support from this distinguished subcommittee and the full committee to
    establish a 36 percent cap on pay day loans per provisions in the NDAA
    for Fiscal Year 2007. This is an important readiness issue and FRA is
    monitoring implementation of these requirements and recently expressed
    concern to DOD about press reports indicating that predatory lenders
    are making an end run around recently implemented DOD regulations (DOD-
    2006-0S-0216).
        The regulation implementing the law excludes credit cards,
    overdraft loans, and all forms of open-ended credit from the 36 percent
    rate cap. The Navy Times (31 Dec. 2007), however, indicates that some
    predatory lenders are charging as much as 584 percent annual percentage
    rate (APR) on these type of loans to servicemembers.
        The Association believes that the current regulation is too narrow
    and should include all loans to servicemembers and their dependents
    except for mortgages and loans secured by collateral.
                 uniform services former spouses protection act
        FRA continues to advocate for hearings and the introduction of
    legislation addressing the inequities of the USFSPA. The Association
    believes that USFSPA should be more balanced in its protection for both
    the servicemember and the former spouse and that Congress needs to
    review and amend so that the Federal Government is required to protect
    its servicemembers against State courts that ignore its provisions.
        FRA has long supported several recommendations in the Department of
    Defense's September 2001 report, which assessed USFSPA inequities and
    offered recommendations for improvement. Last year, the Department sent
    a more extensive list of recommendations to staff of the House and
    Senate Armed Services Committees regarding amending the USFSPA that
    include the following FRA supported provision:

             Base former spouse award amount on member's grade/
            years of service at the time of divorce (and not retirement)
             Prohibit award of imputed income while still on active
            duty
             Permit designation of multiple Survivor Benefit Plan
            (SBP) beneficiaries
             Permit SBP premiums to be withheld from former
            spouse's share of retired pay if directed by the court

        Few provisions of the USFSPA protect the rights of the
    servicemember and none are enforceable by the Department of Justice or
    DOD. If a State court violates the right of the servicemember under the
    provisions of USFSPA, the Solicitor General will make no move to
    reverse the error. Why? Because the act does not have the enforceable
    language required for Justice or the Defense Department to react. The
    only recourse is for the servicemember to appeal to the court, which in
    many cases gives that court jurisdiction over the member. Some State
    courts also award a percentage of veterans' compensation to ex-spouses,
    a clear violation of U.S. law; yet, nothing has been done to stop this
    transgression.
        FRA believes Congress needs to take a hard look at the USFSPA with
    the intent to amend it so that the Federal Government is required to
    protect its servicemembers against State courts that ignore provisions
    of the act.
                            reserve early retirement
        FRA is disappointed that the effective date of a key provision in
    the NDAA for Fiscal Year 2008, the Reserve retirement age provision
    that is reduced by 3 months for each cumulative 90-days ordered to
    active duty is effective upon the enactment of the legislation and NOT
    retroactive to 7 October 2001 as addressed in the floor amendment to
    the Senate version of the bill. Consistent with TMC, FRA strongly
    endorses ``The National Guardsmen and Reservists Parity for Patriots
    Act'' (H.R. 4930), sponsored Rep. Joe Wilson (SC) and ``The National
    Guard and Reserve Retired Pay Equity Act'' (S. 2836) sponsored by Sen.
    Saxby Chamblis (GA).
                       mandate travel cost re-imbursement
        FRA appreciates the NDAA for Fiscal Year 2008 provision (Section
    631) that permits travel reimbursement for weekend drills, not to
    exceed $300, if the commute is outside the normal commuting distance.
    The Association urges the subcommittee to make this a mandatory
    provision. This is a priority issue with many enlisted reservists who
    are forced to travel lengthy distances to participate in weekend drill
    without any reimbursement for travel costs. Providing travel
    reimbursement for drill weekends would assist with retention and
    recruitment for the Reserves--something particularly important is to
    increased reliance on these personnel in order to sustain our war and
    other operational commitments.
                                   conclusion
        FRA is grateful for the opportunity to present these
    recommendations to this distinguished subcommittee. The Association
    reiterates its profound gratitude for the extraordinary progress this
    subcommittee has made in advancing a wide range of military personnel
    benefits and quality-of-life programs for all uniformed services
    personnel and their families and survivors. Thank you again for the
    opportunity to present the FRA' views on these critically important
    topics.

        Senator Ben Nelson. Thank you.
        Ms. Moakler?

       STATEMENT OF KATHLEEN B. MOAKLER, DIRECTOR OF GOVERNMENT
            RELATIONS, NATIONAL MILITARY FAMILY ASSOCIATION

        Ms. Moakler. Chairman Nelson, Senator Graham, thank you for
    the many military-family-friendly provisions included in the
    National Defense Authorization Act (NDAA) for Fiscal Year 2008.
        We are happy that you have recognized the important role
    that families play in supporting our servicemembers in all
    stages of deployment. Excellent support programs exist. It is
    important to find out which programs families are finding most
    effective, and focus resources toward supporting those
    programs. The evaluation process and the reports required in
    the NDAA for Fiscal Year 2008 should help accomplish that.
        Enhancements to the Family Medical Leave Act (FMLA) on
    behalf of the families of the wounded are most timely and have
    already been implemented. We also appreciate the FMLA changes
    proposed for families in the midst of deployment, and hope
    they, too, can be implemented soon.
        You also recognized the excellence of the Yellow Ribbon
    Reintegration Program from Minnesota by calling for it to be
    implemented by the Reserve component in all States and
    territories. We recognize its excellence, as well, but feel the
    implementation would be carried out more thoroughly across the
    board if the program were adequately funded. The reintegration
    process, taking the initiative to educate families along with
    the returning servicemember, acknowledging the challenges of
    reconnecting as a family, and providing information and tools
    to accomplish this is too important to ask already thin
    financial resources to be stretched further.
        As deployments continue, military families can be stressed
    to the breaking point. We emphatically ask that you recognize
    that greater access to mental health care and counseling for
    returning servicemembers and families is vital. Military
    children, the treasure of many military families, have
    shouldered the burden of sacrifice with great pride. Many
    programs have been created with the goal of providing support
    and coping skills to our military children during this great
    time of need. We appreciate this subcommittee's requirement to
    report from DOD on programs that touch military children and
    their caregivers, and hope the report results can be quickly
    transformed into more effective programs.
        Family members with special needs require extra
    consideration. We recommend extending the Extended Care Health
    Option (ECHO) program for 1 year for eligible families who are
    retiring or being medically retired to aid in transition to
    civilian support programs.
        A fully funded, robust family readiness program is crucial
    to military readiness. As deployments continue, families must
    know there is a secure, yet flexible, set of support services
    available to them to reinforce readiness and build resiliency.
        While military childcare centers have consistently been
    ranked highest in national ratings, families still experience
    access problems. Despite new centers and funding provided last
    year, there is still a shortfall of over 30,000 spaces.
    Increased needs for respite care for both the families of the
    deployed and families with special needs also add new strains
    to the system. While some of the Services have broadened access
    to childcare for geographically dispersed families, especially
    for Guard and Reserve families, some have not. We ask the
    subcommittee remain committed to helping all military families
    access quality childcare.
        Education is important in military families. The education
    of military children is a prime concern for their parents. The
    need for DOD-provided supplemental funding for Impact Aid is
    increasing, and we ask for that increased funding. We also ask
    this subcommittee to allow all school districts experiencing a
    significant growth in their military student population due to
    BRAC, global rebasing, or installation housing changes to be
    eligible for the additional funding currently available only to
    districts with an enrollment of at least 20 percent military
    children.
        Military spouses face unique employment challenges as they
    deal with deployments and relocations. We appreciate the
    partnerships being developed between DOD and the Services with
    the Department of Labor and employers. Extending military-
    spouse preference to all Federal agencies would expand
    employment opportunities for this most mobile of workforces.
    Spouses value education as a way to enhance their
    employability. We hope that ways can be found to implement a
    broader transferability of the GI Bill or tuition assistance
    for military spouses.
        Despite the implementation of long-awaited full-
    replacement-value reimbursement, servicemembers still have
    concerns as they anticipate moving from one installation to
    another. Permanent change-of-station (PCS) allowances have not
    kept up with today's expenses. PCS mileage rates have not been
    adjusted since 1985. Temporary lodging expenses have not been
    increased in 7 years. If they are moving to an installation
    that is receiving a huge influx of troops and families, they
    may be confronted with insufficient housing capacity, both on
    and off the installations, overcrowded schools, and a shortage
    of other community support structures.
        We hear from military spouses how they would like to have a
    professional equipment weight allowance, whether it is for the
    items they collect as they run much-needed in-home daycare or
    the paperwork and resources they accumulate as volunteer family
    readiness group leaders.
        TMC urges the subcommittee to upgrade PCS allowances to
    better reflect the expenses members are forced to incur in
    complying with government-directed moves.
        We also urge the subcommittee to closely monitor rebasing
    and BRAC plans and schedules to ensure sustainment and timely
    development of adequate family support, quality-of-life
    programs.
        We appreciate your continuing attention to the needs of the
    families of those who have made the greatest sacrifice: the
    survivors of those who have died as a result of Active Duty
    service. TMC views the special survivor allowance as a first
    step toward the repeal of the Survivor Benefit Plan (SBP)-
    Dependency and Indemnity Compensation (DIC) offset. We would
    urge the subcommittee to expand eligibility for this allowance
    to all SBP-DIC survivors.
        We hear from the survivors of retirees that the practice of
    recouping the final month's retired pay adds an unnecessary
    financial stressor at a time the survivor is dealing with reams
    of paperwork.
        We thank you for your consideration of all these issues.
        [The prepared statement of Ms. Moakler follows:]
                   Prepared Statement by Kathleen B. Moakler
        Mr. Chairman and distinguished members of this subcommittee, the
    National Military Family Association (NMFA) would like to thank you for
    the opportunity to present testimony today on the quality of life of
    military families. Once again, we thank you for your focus on the many
    elements of the quality of life package for servicemembers and their
    families: access to quality health care, robust military pay and
    benefits, support for families dealing with deployment, special care
    for the families of the wounded, and of those who have made the
    greatest sacrifice.
        NMFA endorses the recommendations contained in the statement
    submitted by The Military Coalition. In this statement, NMFA will
    expand on several issues of importance to military families:

              I. Family Readiness
              II. Family Health
              III. Families and Deployment
              IV. Wounded Families
              V. Families in Transition
              VI. Pay and Compensation
              VII. Families and Community
                                family readiness
        Today's military families are required to be in a constant state of
    readiness. They are preparing for deployment, experiencing a
    deployment, or recovering from a deployment until it is time to prepare
    for another one. Family readiness calls for coordinated programs and
    the information delivery system necessary to create a strong foundation
    of family preparedness for the ongoing and unique challenges of
    military family life.
        NMFA is most grateful for the provisions included in the National
    Defense Authorization Act (NDAA) for Fiscal Year 2008. This
    subcommittee listened to the family concerns presented in our testimony
    last year and provided legislative changes that will greatly benefit
    military families. NMFA maintains the Department of Defense (DOD) and
    the Services provide many great programs to support military families
    during all stages of deployment. It is imperative, as the conference
    language emphasizes, ``support is continuously available to military
    families in peacetime and war, as well as during periods of force
    structure change and relocation of military units.'' NMFA appreciates
    the emphasis on a consistent support structure for both active duty and
    Reserve component, and the recommended inclusion of family support
    programs in the planning and budgeting process.
        We are especially interested in the congressional mandate for DOD
    to measure the effectiveness and performance of these support programs.
    Developing standardized metrics and ensuring all programs are properly
    evaluated against those metrics will ensure only the most effective and
    necessary programs continue to receive funding while indicating any
    shortfalls in coverage where new or expanded programs may be required.
    We look forward to participating in the surveys and reading the outcome
    of the required reports.
        The establishment of a DOD Military Family Readiness Council will
    elevate the importance of family readiness and the programs that
    support family readiness. We hope to work closely with the Council and
    to participate wherever possible in the formulation of its
    recommendations.
        Since the beginning of the global war on terror, family programs
    have made great progress. Outreach to families is constantly evolving.
    We continue to hear from more and more families who access Military
    OneSource for information and counseling sessions. NMFA regards
    Military OneSource (www.militaryonesource.com), DOD's version of an
    employee assistance program, as a solid resource for servicemembers,
    military families and their extended family members, regardless of
    Service affiliation or geographical location.
        The DOD web portal www.militaryhomefront.dod.mil and the Service
    Web sites continue to adapt to the changing needs of families. The
    Army, including the Army Reserve, has been promoting virtual family
    readiness groups as one way for the geographically dispersed units to
    come together for support and information. The DOD Office of Family
    Policy is reaching out to service providers with their traveling Joint
    Family Assistance Workshop highlighting DOD resources. They also train
    service providers--relocation managers, financial counselors, state
    family assistance coordinators and others--on the most effective use of
    resources, cross training them to be information and referral
    specialists.
        While we often think of family readiness in terms of military
    readiness, recent natural disasters have placed military families in
    the position of literally running for their lives. We are all familiar
    with the devastation families impacted by Hurricane Katrina. The
    wildfires in California this year found many military installations in
    its path. It was encouraging to observe how the Navy and Marines used
    the lessons learned in Katrina to alert families to the fire danger and
    to establish safe locations for military families, with one-stop aid
    centers to help them. Quick coordination of services was apparent and
    lessened the blow to the military families who found themselves
    displaced because of the fires. Military families, like all American
    families, should be ready for emergencies. Installation and command
    programs that foster emergency preparedness are another way to foster
    family readiness.
    Child Care
        The Services--and families--continue to tell NMFA more child care
    spaces are needed to fill the ever growing demand. We hear good news
    stories like this from Fort Irwin, CA.

              In recent months the Child Development Center (CDC) has
            extended hourly care on a trial basis to see if longer hours
            would be sufficiently used to warrant the changes. This
            resulted from requests from families for longer hourly care
            hours which typically were only available from 0900-1400.
            Longer free respite hours are now available for all deployed
            families and limited respite hours are available for Rear
            Detachment families.

        But, we also hear other stories from families:

              We continue to struggle with the child care programs that
            were created to assist Guard and Reserve specifically. It is
            unfortunate that I will not even recommend the Operation Child
            Care benefit to my families any longer because they have
            actually been told that Air Force/ANG/AFR families do not
            qualify to use the program. Families who have been denied
            services or hit a brick wall when pursuing the program feel
            angry, let down and disappointed. This really hampers morale so
            why bother to add stress to an already stressful situation for
            them.

        NMFA is very grateful for the additional Child Care Centers (CDC)
    Congress included in the Military Construction Appropriations Act for
    Fiscal Year 2008. However, the new Centers and funding will only
    provide 10 percent of the full time slots currently needed. There is
    still a shortfall of 31,500 spaces. These figures do not include drop-
    in and respite care shortages, which exist throughout the force.
    Multiple deployments have diminished the number of child care
    providers, both Center and home-based because Child and Youth Service
    (CYS) programs have historically counted heavily on the ranks of
    military spouses to fill these positions. Service CYS programs report a
    growing shortage of spouses willing to provide child care as the stress
    of single parenting and the worry over the deployed servicemember takes
    its toll.
        The partnerships between the Services and the National Association
    of Child Care Resource and Referral Agencies (NACCRRA) are helping and
    have grown over the past 2 years; however, not all families qualify for
    the subsidies and not all programs are the same. NMFA was disappointed
    to learn the Air Force is no longer providing funding for Air Force
    families not currently enrolled in either Military Child Care in Your
    Neighborhood or Operation Military Child Care. Currently approximately
    800 Air Force families receive assistance through these programs.
    However, over 375 families remain on indefinite wait lists due to lack
    of Air Force funding. In addition, Title 32 families are now eligible
    for NACCRRA programs, but Air Force families will continue to be denied
    these programs. Additional challenges to expanding the Military Child
    Care in Your Neighborhood program are related to accreditation. DOD
    CDCs are nationally accredited; as a result, civilian centers desiring
    to participate in the Military Child Care in Your Neighborhood program
    must be accredited. Earning accreditation is an expensive and complex
    procedure. Perhaps, an incentive could be provided to participating
    civilian child care centers to receive their accreditation. Not only
    would military children benefit, but all children using the Center
    would benefit as well.
        As always, getting the word out to families that such programs
    exist is challenging. Military OneSource must do a better job of
    putting the NACCRRA programs at the top of their list when referring
    families to CDCs within their neighborhood. Too often, a family will
    call OneSource and receive the closest child care option to their home
    address, NOT the program that is currently working with the military
    and providing subsidies.
        Innovative strategies are also needed when addressing the
    unavailability of after-hour child care (before 6 a.m. and after 6
    p.m.) and respite care. The Army, as part of the funding attached to
    its Army Family Covenant is rolling out more spaces for respite care
    for families of deployed soldiers. Respite care is needed across the
    board for the families of the deployed and for special needs families.
    Families often find it difficult to obtain affordable, quality care
    especially during hard-to-fill hours and on weekends. Both the Navy and
    the Air Force have piloted excellent programs that provide 24/7 care.
    The Navy has Centers in Norfolk and Hawaii, which provide a home-like
    atmosphere for children of sailors working late nights or varying
    shifts. The Air Force provides Extended Duty Child Care and Missile
    Care (24-hour access to child care for servicemembers working in the
    missile field). These innovative programs must be expanded to provide
    care to more families at the same high standard as the Services'
    traditional child development programs.
        NMFA urges Congress to ensure resources are available to meet
    thechild care needs of military families to include hourly, drop-in and
    increased respite care for families of deployed servicemembers and
    families with special needs members.
    Working with Youth
        Older children and teens must not be overlooked. School personnel
    need to be educated on issues affecting military students and be
    sensitive to their needs. To achieve this goal, schools need tools.
    Parents need tools too. Military parents constantly seek more resources
    to assist their children in coping with military life, especially the
    challenges and stress of frequent deployments. Parents tell NMFA
    repeatedly they want resources to ``help them help their children.''
    Support for parents in their efforts to help children of all ages is
    increasing but continues to be fragmented. New Federal, public-private
    initiatives, increased awareness, and support by DOD and civilian
    schools educating military children have been developed; however, many
    military parents are either not aware such programs exist or find the
    programs do not always meet their needs.
        NMFA is working to meet this pressing need through its Operation
    Purplesummer camps. Unique in its ability to reach out and gather
    military children of different age groups (7-18), Services, and
    components, Operation Purple provides a safe and fun environment in
    which military children feel immediately supported and understood. Last
    year, 4,000 campers, primarily the children of deployed servicemembers,
    were able to attend camp. Our ultimate goal for 2008, with the support
    of private donors, is to send 10,000 military children to camp.
    Additionally, NMFA hopes to expand the camp experience to more children
    of the wounded and bereaved, and a program addressing the family as a
    unit.
        NMFA appreciates the provisions in the NDAA for Fiscal Year 2008
    instructing DOD to report on the effects of deployment of children of
    all ages. Through its Operation Purple camps (OPC), NMFA has begun to
    identify the cumulative effects multiple deployments are having on the
    emotional growth and well being of military children and the challenges
    posed to the relationship between deployed parent and child in this
    very stressful environment. Understanding a need for qualitative
    analysis of this information, NMFA contracted with the RAND corporation
    to conduct a pilot study aimed at the current functioning and wellness
    of military children attending Operation Purple camps and assessing the
    potential benefits of the OPC program in this environment of multiple
    and extended deployments. The results of this pilot study will be
    available later this spring. NMFA also plans an additional longitudinal
    study over the next several years.
    Education of Military Children
        As increased numbers of military families move into new communities
    due to Global Rebasing and Base Realignment and Closure (BRAC), their
    housing needs are being met further and further away from the
    installation. Thus, military children may be attending school in
    districts whose familiarity with the military lifestyle may be limited.
    Educating large numbers of military children will put an added burden
    on schools already hard-pressed to meet the needs of their current
    populations. Impact Aid has traditionally helped to ease this burden;
    however, the program remains underfunded. NMFA remains appreciative of
    the additional funding you provide to civilian school districts
    educating large numbers of military children. However, NMFA was
    disappointed to learn the DOD supplement to Impact Aid was once again
    funded at only $30 million for fiscal year 2008 for school districts
    with more than 20 percent military enrollment and only $10 million was
    provided to school districts experiencing significant shifts in
    military dependent attendance due to force structure changes, with
    another $5 million for districts educating severely-disabled military
    children.
        While the total funding available to support civilian schools
    educating military children is greater than in recent years, we urge
    Congress to further increase funding for schools educating large
    numbers of military children. This supplement to Impact Aid is vital to
    school districts that have shouldered the burden of ensuring military
    children receive a quality education despite the stresses of military
    life. NMFA also encourages this subcommittee to make the additional
    funding for school districts experiencing growth available to all
    school districts experiencing significant enrollment increases and not
    just to those districts meeting the current 20 percent enrollment
    threshold. We also urge you to authorize an increase in the level of
    this funding until BRAC and Global Rebasing moves are completed. The
    arrival of several hundred military students can be financially
    devastating to any school district, regardless of how many of those
    students the district already serves. Because military families cannot
    time their moves, they must find available housing wherever they can.
    Why restrict DOD funding to local school districts trying to meet the
    needs of military children simply because they did not have a large
    military child enrollment to begin with?
        NMFA congratulates the DOD Office of Personnel and Readiness and
    the Council of State Governments (CSG) for drafting the new Interstate
    Compact on Educational Opportunity for Military Children. This compact
    is intended to bring States together to allow for the uniform
    treatment, at the State and local district level, of military children
    transferring between school districts and States. Since July 2006, CSG
    has worked with a variety of Federal, State, and local officials as
    well as national stakeholder organizations representing education
    groups and military families to create the new interstate compact. NMFA
    was pleased to participate on both the Advisory Group and Drafting Team
    for the compact. Currently, many States are considering joining the
    compact, and legislatures in several have already filed bills to allow
    their States to participate. NMFA is very excited to see this important
    State legislation going forward.
        NMFA asks Congress to increase the DOD supplement to Impact Aid to
    $50 million to help districts better meet the additional demands caused
    by large numbers of military children, deployment-related issues, and
    the effects of military programs and policies. We also ask Congress to
    allow all school districts experiencing a significant growth in their
    military student population due to BRAC, Global Rebasing, or
    installation housing changes to be eligible for the additional funding
    currently available only to districts with an enrollment of at least 20
    percent military children.
    Spouse Education
        Since 2004, NMFA has been fortunate to sponsor our Joanne Holbrook
    Patton Military Spouse Scholarship Program, with the generosity of
    donors who wish to help military families. In 2007, NMFA published
    Education and the Military Spouse: The Long Road to Success, based on
    spouse scholarship applicant survey responses, identifying education
    issues and barriers specific to military spouses. The entire report may
    be found at www.nmfa.org/education.
        The survey found military spouses, like their servicemembers and
    the military as a whole, value education and set education goals for
    themselves. Yet, military spouses often feel their options are limited.
    Deployments, the shortage of affordable and quality child care,
    frequent moves, the lack of educational benefits and tuition assistance
    for tuition are discouraging.
        For military spouses, the total cost of obtaining a degree can be
    significantly higher than the cost for civilian students. The unique
    circumstances that accompany the military lifestyle have significant
    negative impacts upon a spouse's ability to remain continuously
    enrolled in an educational program. Military spouses often take longer
    than the expected time to complete their degrees. More than one-third
    of those surveyed have been working toward their goal for 5 years or
    more.
        The report offers recommendations for solutions that Congress could
    provide. Some, like the recently announced partnership between the
    Department of Labor (DoL) and DOD to designate military spouses as an
    eligible group for DoL training and education funds have been
    implemented. Others include:

             Ensuring installation education centers have the
            funding necessary to support spouse education programs and
            initiatives,
             Providing additional child care funding to support
            child care needs of military spouse-scholars,
             Providing additional funding for education benefits
            under the ``Spouses to Teachers'' program,
             Helping to defray additional costs incurred by
            military spouses who ultimately spend more than civilian
            counterparts to obtain a degree. Some possibilities include:

                     Removing housing allowances from FAFSA
                    calculations to allow more spouses to qualify for need-
                    based financial aid programs,
                     Providing tuition assistance to spouses,
                     Providing an additional education tax credit
                    to military spouses.

        Also in the spouse suggestions was expanded eligibility for the
    transfer of Montgomery G.I. Bill education benefits. NMFA wishes to
    thank President George W. Bush for his recognition of the importance of
    educational opportunities to military spouses in his recent State of
    the Union address. NMFA hears often from military spouses who wish they
    had access to the unused Montgomery G.I. Bill education benefits of
    their servicemember. They feel this would greatly assist them in the
    pursuit of educational and career objectives. Expanding the existing
    G.I. Bill transferability pilot has been a top issue for the Army-wide
    Army Family Action Plan delegates for several years. NMFA believes that
    expanding the Montgomery G.I. Bill benefit to eligible dependents would
    go a long way in making education more affordable for them.
        We have concerns, however, on how to ensure an equitable
    disbursement of this benefit and how the expansion of this program will
    be funded. We feel the sooner in a servicemember's career that spouses
    could avail themselves of this benefit, the greater the positive impact
    would be on the spouse's education. Although these benefits are
    currently available through some Services, we believe that all military
    spouses of eligible servicemembers should be eligible. In addition, we
    would hope transference of G.I. benefits would not preclude the
    servicemember from receiving re-enlistment or other incentive bonuses.
    It is difficult for families to make the choice between the short-term
    benefit of bonuses and the long-term effect of additional education of
    the spouse on the family. NMFA realizes that extending educational
    benefits to military children may have unintended effects on future
    recruitment of those same military children. It is a complex issue and
    we welcome a full discussion of any legislation that may be proposed
    with Congress and the Services.
    Spouse Employment, Unemployment
        NMFA applauds the DOD, and DoL, and the Department of Veteran
    Affairs (VA) for the new Military Spouse Career Advancement Initiative,
    which creates a more accessible education system for military spouses
    along with targeting careers in high-growth sectors. The Military
    Spouse Career Advancement Initiative will provide more than $35 million
    to military spouses in 8 States on 18 military installations, and set
    up accounts for eligible spouses in those States to cover expenses
    directly related to post-secondary education and training. NMFA
    believes this is an important first step to helping spouses advance
    their careers, but we would like to see this pilot program expanded.
    NMFA supports H.R. 2682 which expands the Workforce Opportunity Tax
    Credit for employers who hire spouses of active duty and Reserve
    component servicemembers, and to provide tax credits to military
    spouses to offset the expense in obtaining career licenses and
    certifications when servicemembers are relocated to a new duty station
    within a different State.
        Expanding spouse hiring preference beyond the DOD to the entire
    Federal Government is another avenue to enhancing employment
    opportunities and career development for military spouses.
    Financial Readiness
        Financial readiness is a critical component of family readiness.
    NMFA completely supports the Military Lending Act (MLA) and is
    following its implementation and enforcement closely. This legislation
    was desperately needed to protect servicemembers and their families
    from unscrupulous business practices. Last year we expressed our
    concern that many lenders would attempt to exploit loopholes in the
    narrow definitions contained in the regulation to circumvent the intent
    of this important legislation. Unfortunately, our fears have been
    realized. Covered products are so narrowly defined, lenders have
    changed their product to fit the regulations. Payday loans have become
    revolving credit loans addressed in the MLA. The Refund Anticipation
    Loans (RALs) regulated in the MLA that were addressed were re-packaged
    as well by tax preparation companies. Although they meet the letter of
    the law, the new products use a debit card as a vehicle for the loan.
    One debit card has an expiration date of August. If the taxpayer fails
    to spend the entire refund by the expiration date a fee is charged to
    get the remainder of the tax refund back. Installment loans, rent to
    own, and credit cards are still not addressed.
        While we fully recognize expanding this regulation could impede the
    ability of some servicemembers and their families to obtain short-term
    loans, we believe this risk is justified given the negative impact of
    the use of predatory loans. Military banks and credit unions have
    worked diligently to develop excellent alternatives to payday loans.
    Small dollar, short-term loan products are available to servicemembers
    through reputable lenders and should be marketed to pull families away
    from predatory lenders. We look forward to the congressionally-mandated
    DOD report on the MLA due in April 2008. We also believe better
    education about other available resources and improved financial
    education for both the servicemember and spouse will also reduce the
    risk. NMFA contends that legitimate lenders have no need to fear an
    interest rate cap of 36 percent. We encourage DOD to continue to make
    military families aware of the need to improve their money management
    skills and avoid high cost credit cards and other lenders. DOD must
    continue to monitor high cost, low value financial products targeted at
    military families.
        NMFA asserts that the protections provided under the Military
    Lending Act must be strengthened to eliminate loopholes that will
    diminish the protection for servicemembers and their families. We urge
    Congress to monitor DOD's implementation of the legislative provision
    to ensure full protections are made available to military families.
        Family readiness is directly linked to servicemember readiness.
    NMFA asks Congress to direct DOD to maintain robust family readiness
    programs addressing child care, youth services, education of military
    children, spouse employment and education, and financial literacy and
    to see that resources are in place to accomplish this goal.
                                 family health
        Family readiness calls for access to quality health care and mental
    health services. Families need to know the various elements of their
    military health care system (MHS) are coordinated and working as a
    synergistic system. NMFA is concerned the DOD military health care
    system may not have all the resources it needs to meet both the
    military medical readiness mission and provide access to health care
    for all beneficiaries. It must be funded sufficiently, so the direct
    care system of military treatment facilities (MTF) and the purchased
    care segment of civilian providers can work in tandem to meet the
    responsibilities given under the TRICARE contracts, meet readiness
    needs, and ensure access for all military beneficiaries.
    The Military Health Care System
        Officials of the DOD often speak of ``the MHS.'' There are annual
    MHS conferences, a MHS Web site (www.tricare.mil), and a MHS Strategic
    Plan. The current round of TRICARE contracts require coordination of
    many health care activities in markets with multiple MTFs and Memoranda
    of Understanding to govern the relationships between TRICARE
    contractors and individual MTFs. Battlefield medicine has never been
    more joint and is supported by the coordination of many elements. While
    NMFA believes DOD has made some progress in living up to the rhetoric
    regarding a military health ``system'', we still see too many
    separations between and within Services. We agree with the statement of
    the Task Force on the Future of Military Health Care that there is a
    ``lack of integration (within the MHS, which) diffuses accountability
    for fiscal management, result (ing) in misalignment of incentives, and
    limits the potential for continuous improvement in the quality of care
    delivered to beneficiaries.'' NMFA feels there have been many missed
    opportunities resulting in inefficiencies, higher costs, and decreased
    beneficiary satisfaction. For example:

             In a market served by several military hospitals and
            clinics, one MTF decides to limit the items carried in its
            pharmacy. While this decision saves money for this particular
            MTF, it shifts pharmacy costs to other local MTFs or to DOD as
            a whole when beneficiaries opt to obtain their medications in
            the more expensive retail pharmacies.
             In another market with several MTFs, local commanders
            work together to share providers in order to keep care within
            the MTF direct care side of the system and avoid the costs of
            moving more patients to the more expensive purchased care side.
            This arrangement, while sucessful, depends on the individuals
            involved and could change when commanders are replaced.
             In Alaska, several factors are in play: different
            Services, geographical boundaries, and a lack of a robust
            civilian network specialty care. Currently, the solution is to
            fly the servicemember, family member(s), or retiree to the
            nearest MTF--Madigan Army Medical Center in Washington State
            rather than finding care close to home.

        NMFA thanks this subcommittee for supporting continued funding to
    provide for a robust military health care system. This system must
    continue to meet the needs of servicemembers and the DOD in times of
    armed conflict. It must also acknowledge that military members and
    their families are indeed a unique population with unique duties, who
    earn an entitlement to a unique health care program.
        The proposals by DOD and the Task Force on the Future of Military
    Health Care to raise TRICARE fees by exorbitant amounts have resonated
    throughout the beneficiary population. Beneficiaries see these
    proposals as a concentrated effort by DOD to change their earned
    entitlement to health care into an insurance plan. NMFA appreciates the
    concern shown by Members of Congress since the release of DOD's
    proposals regarding the need for more information about the budget
    assumptions used to create the proposals, the effects of possible
    increases on beneficiary behavior, the need for DOD to implement
    greater efficiencies in the Defense Health Care Program (DHP), and the
    adequacy of the DHP budget as proposed by DOD. We appreciate the many
    questions Members of Congress are asking about these proposals and urge
    Congress to continue its oversight responsibilities on these issues.
    TRICARE
        In the ongoing debate about whether or not to raise TRICARE
    beneficiary fees, NMFA believes it is important for everyone
    participating in that debate to understand the difference between
    TRICARE Prime and TRICARE Standard and to distinguish between creating
    a TRICARE Standard enrollment fee and raising the Standard deductible
    amount. TRICARE Prime has an enrollment fee for military retirees;
    however, it offers enhancements to the health care benefit. These
    enhancements include: lower out-of-pocket costs, access to care within
    prescribed standards, additional preventive care, assistance in finding
    providers, and the management of one's health care. In other words,
    enrollment fees for Prime are not to access the earned entitlement, but
    for additional services. These fees, which have not changed since the
    start of TRICARE, are $230 per year for an individual and $460 per year
    for a family.

    ------------------------------------------------------------------------
                                             Prime             Standard
    ------------------------------------------------------------------------
    Enrollment fees.................  $230/year for an    None
                                       individual; $460/
                                       year for a family.
    Annual Deductibles..............  None..............  $150/individual;
                                                           $300 for a family
    Outpatient co-payment (Prime)/    $12...............  25 percent of
     cost share (Standard) for                             allowed charges
     individual providers.                                 1,2
    Inpatient co-payment/cost share   None..............  25 percent of
     for individual providers.                             allowed charges
                                                           1,2
    Daily inpatient hospitalization   Greater of $11 per  Lesser of $535/day
     charge.                           day or $25 per      or 25 percent of
                                       admission.          billed charges if
                                                           treated in non-
                                                           network hospital
                                                           3
    Emergency Services co-payment/    $30...............  25 percent of
     cost share.                                           allowed charges
    Ambulance Services co-payment/    $20...............  25 percent of
     cost share.                                           allowed charges
    Preventive Examinations (such     None..............  25 percent cost
     as: blood pressure tests,                             share 1,2
     breast exams, mammograms,
     pelvic exams, PAP smears,
     school physicals) co-payments/
     cost shares.
    ------------------------------------------------------------------------
    \1\ Providers may charge 15 percent above the TRICARE allowable and the
      beneficiary is responsible for this additional cost, making the
      potential cost share 40 percent.
    \2\ If care is accessed from a TRICARE Prime/Extra network provider the
      cost share is 20 percent.
    \3\ If care is received in a TRICARE Prime/Extra network hospital, the
      daily hospitalization rate is the lesser of $250/day or 25 percent of
      negotiated charges.
    (For a more detailed comparison of TRICARE costs, go to: http://
      www.tricare.mil/tricarecost.cfm)

    TRICARE Prime
        DOD's proposal to increase TRICARE Prime enrollment fees, while
    completely out-of-line dollar wise, was not unexpected. While Congress
    temporarily forestalled increases over the past 2 years, NMFA believes
    DOD officials continue to support large increased retiree enrollment
    fees for TRICARE Prime, combined with a tiered system of enrollment
    fees and TRICARE Standard deductibles. The Task Force on the Future of
    the Military Health Care report, recently recommended the same. NMFA
    believes DOD's tiered system based on rank was arbitrarily devised and
    failed to acknowledge the needs of the most vulnerable beneficiaries:
    survivors, wounded servicemembers, and their families. NMFA does
    consider the Task Force's tiered system to be more palatable since it
    is based on retiree pay rather than rank.
        NMFA acknowledges the annual Prime enrollment fee has not increased
    in more than 10 years and that it may be reasonable to have a mechanism
    to increase fees. With this in mind, NMFA has presented an alternative
    to DOD's proposal should Congress deem some cost increase necessary.
    The most important feature of our proposal is that any fee increase be
    no greater than the percentage increase in the retiree cost-of-living
    adjustment (COLA). If DOD thought $230/$460 was a fair fee for all in
    1995, then it would appear that raising the fees simply by the
    percentage increase in retiree pay is also fair. NMFA also suggests it
    would be reasonable to adjust the TRICARE Standard deductibles by tying
    increases to the percent of the retiree annual COLA.
    TRICARE Standard
        NMFA remains especially concerned about what seems to be the intent
    of DOD and the Task Force on the Future of Military Health Care to
    create a TRICARE Standard enrollment fee. TRICARE Standard, as the
    successor to CHAMPUS, is an extension of the earned entitlement to
    health care. Charging a premium (enrollment fee) for TRICARE Standard
    moves the benefit from an earned entitlement to an opportunity to buy
    into an insurance plan. We are pleased the Task Force did not recommend
    an enrollment fee for active duty family members. We note, however,
    Standard is the only option for many retirees, their families, and
    survivors because TRICARE Prime is not offered everywhere. Also, using
    the Standard option does not guarantee beneficiaries access to health
    care, which beneficiaries opting to use Standard rather than Prime
    understand. DOD or the Task Force has not linked any guarantee of
    access to a Standard enrollment fee.
        We also ask what additional services beneficiaries who enroll in
    Standard will receive after paying the enrollment fee. Or, will they
    only be paying for the ``privilege'' of having to seek their own
    providers, often filing their own claims, meeting a deductible, paying
    a 20 to 25 percent cost share for their care (plus an additional 15
    percent if the provider does not participate in the claim), and being
    liable for a daily hospitalization charge of up to $535? Because they
    recognize the cost liabilities of being in Standard, we know most will
    continue to bear the cost of a TRICARE supplemental insurance policy.
        NMFA opposes DOD's proposal to institute a TRICARE Standard
    enrollment fee and believes Congress should reject this proposal
    because it changes beneficiaries' entitlement to health care under
    TRICARE Standard to just another insurance plan. However, we would be
    remiss if we did not ask the many questions beneficiaries have about
    how a Standard enrollment fee would be implemented and its implications
    regarding access to care:

              1. How much will it cost to implement the enrollment fee,
            including the education efforts, additional tasks imposed on
            the TRICARE contractors, and the inevitable cost of handling
            appeals from beneficiaries whose claims were denied because
            they did not know they had lost their benefit?
              2. What type of open enrollment season will be needed to
            provide retirees with the opportunity to coordinate coverage
            between TRICARE and their employer-sponsored insurance?
              3. Will retirees who do not enroll in Prime and do not pay a
            premium (enrollment fee) for Standard be refused space
            available care in MTFs, including their emergency rooms?
              4. Will these same retirees be refused pharmaceutical
            services at MTFs or be unable to use TRICARE retail network
            pharmacies and the TRICARE mail order pharmacy (TMOP)?
              5. Will retirees who only use Standard as a wrap-around to
            their employer-provided health care insurance pay the same
            premium (enrollment fee) as those who will use Standard as
            their primary coverage?

        NMFA is most appreciative of efforts by Congress to force DOD to
    improve TRICARE Standard. Congressionally-mandated surveys of providers
    have pointed out some issues related to providers' reluctance to treat
    TRICARE patients, including the perennial complaints of complicated
    paperwork and low reimbursement rates. We appreciate Congress'
    requirement of DOD to report on patient satisfaction.
    Pharmacy
        It has been theorized there is a relationship between medication
    co-payments and the use of generics by beneficiaries: as the difference
    in co-payment widens between two groups (generics and preferred-band
    named medication to non-preferred brand named drugs), beneficiaries
    will chose the lower costing medications. In fact, the Task Force used
    this assumption when designing their pharmacy tier and co-payment
    structure. However, some studies have shown a high co-payment does not
    necessarily drive beneficiaries to choose lower costing medications.
    One study found participants did not switch to the lower cost generics,
    finding there was a decrease in overall medication purchases by
    consumers. This decrease in drug utilization meant consumers were no
    longer adhering to or complying with their medication regime, which
    could lead to increased Emergency Room visits and in-patient hospital
    stays. It is believed the unexpected outcome resulted from the lack of
    education by the insurer to the beneficiaries. Results may have been
    different if they had been told the reason behind the large increases
    and provided information on ways to lower their drug costs through the
    purchase of generics and preferred-brand named drugs. As we all know,
    DOD infrequently contacts its beneficiaries, even though military
    associations have asked for years for this to be done. NMFA cautions
    DOD about generalizing findings of certain beneficiary behaviors and
    automatically applying them to our Nation's unique military population.
    NMFA encourages Congress to require DOD to utilize peer-reviewed
    research involving beneficiaries and prescription drug benefit options,
    along with performing additional research involving military
    beneficiaries, before making any recommendations on prescription drug
    benefit changes such as co-payment and tier structure changes for
    military servicemembers, retirees, their families, and survivors.
        NMFA appreciates the inclusion of Federal pricing for the TRICARE
    retail pharmacies in the NDAA for Fiscal Year 2008. However, we will
    need to examine its effect on the cost of medications for both
    beneficiaries and DOD. Also, we will need to see how this may
    potentially impact the overall negotiation of future drug prices by
    Medicare and civilian private insurance programs.
        NMFA appreciates the establishment of the Beneficiary Advisory
    Panel (BAP), which gave beneficiaries a voice in DOD process to move
    medications to the Uniform Formulary's third tier. The BAP has played
    an important role, but, at times it has been limited in its ability to
    be effective. NMFA requests Congress require the BAP play a more
    substantial role in the formulary-setting process, have access to drug
    cost data on medications being considered, have BAP comments directly
    incorporated in the decisionmaking process, and require formal feedback
    by DOD addressing why recommendations by the BAP were not taken into
    consideration.
    TRICARE for Life Enrollment Fees
        NMFA applauds the congressional creation of TRICARE for Life (TFL).
    The reasons behind the creation of this benefit was to right an
    injustice. We should not let this get lost when the Task Force's
    recommendation, to include an enrollment fee for retired servicemembers
    over 65, is discussed by DOD. NMFA strongly believes an enrollment fee
    for TFL is not appropriate for many reasons. The fee will create
    additional financial burdens on a population who has limited income and
    is currently paying for Medicare Part B at $94 a month. The current
    system does not really encourage wellness and prevention. It is
    important to maintain continuity of care and access to prevention
    programs for Medicare eligible retirees because it will stabilize this
    group known for its co-morbidities and lead to more cost-effective care
    for both Medicare and TRICARE. Also, being part of TRICARE allows
    beneficiaries to access medications through MTFs and TMOP, which
    creates a lower individual out-of-pocket burden and provides
    significant costs savings for DOD and ultimately Medicare, making the
    beneficiary a good steward of our tax dollars. Certainly, a victory for
    everyone involved.
    TRICARE Reimbursement
        NMFA has been encouraged by the TRICARE contractors' efforts to
    speed payments, especially to providers who choose to file claims
    electronically. TRICARE is no longer the slowest payer, but it remains
    the lowest payer. TRICARE rates are tied to Medicare rates, which often
    mean providers are reluctant to accept too many TRICARE beneficiaries.
    The passage of the Medicare, Medicaid, and SCHIP Extension Act of 2007
    in December was important to TRICARE beneficiaries because it prevented
    a scheduled 10.1 percent cut to Medicare physician reimbursement rate
    for 6 months and provided a half-percent update in payments. NMFA is
    concerned that continuing pressure to lower Medicare reimbursement
    rates will create a hollow benefit for TRICARE beneficiaries. As
    Congress takes up Medicare legislation this summer, NMFA requests
    consideration of how this legislation will also impact military
    families' health care, especially access to mental health services.
        NMFA believes tying increases in TRICARE enrollment fees to the
    percentage increase in the retiree COLA is a fair way to increase
    beneficiary cost shares should Congress deem an increase necessary.
        NMFA encourages Congress to direct DOD to continue efforts to gain
    real efficiencies, improve the quality of care, and access before
    passing additional costs on to beneficiaries.
        NMFA believes Congress and DOD must address the reasons why
    providers do not accept TRICARE Standard. There should be NO enrollment
    fee for TRICARE Standard and TFL. Further research should be done on
    the pharmacy benefit's impact on beneficiaries.
    Improving Access to Care
        MHS funding shortfalls are experienced first-hand by military
    families enrolled in TRICARE Prime when they find their MTF cannot meet
    prescribed access standards. No one is more cognizant of the need for
    superior health care to be provided to servicemembers in harm's way
    than their families. However, a contract was made with those who
    enrolled in Prime. Beneficiaries must seek care in the manner
    prescribed in the Prime agreement, but in return they are given what
    are supposed to be guaranteed access standards. When an MTF cannot meet
    those standards, appointments within the civilian TRICARE network must
    be offered. In many cases, this is not happening and families are told
    to call back next week or next month. In other cases, MTFs must send
    enrolled beneficiaries to providers in the civilian network, thus
    increasing costs to the system as a whole.
        Because operational requirements have reduced the number of
    uniformed health care personnel available to serve in the MTF system, a
    more coordinated approach is needed to optimize care and enable MTFs to
    meet access standards. We continue to hear difficulties in the Service
    contracting process are preventing MTFs from filling open contract
    provider slots and thus optimizing care within their facilities or
    increasing the overall numbers of health care providers to help
    backfill forward deployed health care personnel. NMFA suggests DOD
    reassess the resource sharing program used prior to the implementation
    of the T-Nex contracts and take the steps necessary to ensure MTFs meet
    access standards with high quality health care providers.
        MTFs must have the resources and the encouragement to ensure their
    facilities are optimized to provide high quality, coordinated care for
    the most beneficiaries possible. They must be held accountable for
    meeting stated access standards. If funding or personnel resource
    issues are the reason access standards are not being met, then
    assistance must be provided to ensure MTFs are able to meet access
    standards, support the military mission, and continue to provide
    quality health care.
    DOD Must Look for Savings
        The Task Force on the Future of Military Health Care, along with
    the Government Accountability Office, highlighted DOD had no single
    point of accountability for costs. In fact, the Task Force went as far
    as to say ``DOD cannot provide financial statements that are reliable
    or that account with a high level of confidence the true and accurate
    costs of health care in the MHS.'' Given this information, how can we
    know what DOD's cost for beneficiary health care really is? We ask
    Congress to establish better oversight for DOD's accountability in
    becoming more cost-efficient.
        We have two possible recommendations:

             Require the Comptroller General to audit MTFs on a
            random basis until all have been examined for their ability to
            provide quality health care in a cost-effective manner;
             Create an oversight committee, similar in nature to
            the Medicare Payment Advisory Commission, which provides
            oversight to the Medicare program and makes annual
            recommendations to Congress. The Task Force often stated it was
            unable to address certain issues not within their charter or
            the timeframe in which they were commissioned to examine the
            issues. This Commission would have the time to examine every
            aspect in a nonbiased manner.

        According to the Task Force on the Future of Military Health Care,
    DOD's organizational structure is a large, inflexible, disintegrated
    system that leads to negative outcomes at the operational level. The
    Task Force noted fragmentation still exists within the MHS, which is
    unable to effectively leverage resources to meet common or shared
    requirements. The Task Force recommended DOD needed greater flexibility
    and alignment at all levels in order to provide better decisionmaking
    based on cost-effectiveness and to plan properly to manage prudently
    its direct versus purchased health care services. DOD and the Task
    Force have made recommendations for beneficiaries to pay enrollment
    fees, higher co-pays and deductibles. NMFA believes DOD must first make
    the health care side of its house run more efficiently. Large private
    sector Health Care Organizations have incorporated best business
    practices and centralized their resources. However, DOD continues to
    split health care resources between three Services, and within the
    Services and between the TRICARE contractors. Why should military
    families have to pay for DOD's inability to gain control of their
    health care costs through streamlining their organization? One solution
    would be to move toward a Unified ``Joint'' Medical Command structure,
    which was recommended by the Defense Health Board in 2006.
        In recent years at the annual TRICARE conferences and other venues,
    DOD officials have discussed the benefits of disease management,
    especially for certain chronic illnesses. These benefits flow to the
    beneficiaries through better management of their conditions and to DOD
    through patients' decreased need for costly emergency room visits or
    hospitalizations. However, more needs to be done. NMFA does not support
    the recommendation of the Task Force on the Future of Military Health
    Care to carve out one regional TRICARE contractor to provide both the
    pharmacy and health care benefit. We agree a link between pharmacy and
    disease management is necessary, but feel this pilot would only further
    erode DOD's ability to maximize potential savings through TMOP. NMFA
    was also disappointed to find no mention of disease management or a
    requirement for coordination between the pharmacy contractor and
    Managed Care Support Contractors in the Request for Proposals for the
    new TRICARE pharmacy contract. The ability certainly exists for them to
    share information bi-directional.
        Despite the successes of the TRICARE Next Generation (T-Nex)
    managed care support contracts, NMFA remains concerned that efforts to
    optimize the MTFs have not met expectations in terms of increasing or
    even maintaining access for TRICARE beneficiaries. NMFA believes
    optimizing the capabilities of the facilities of the direct care system
    through timely replacement construction, funding allocations, and
    innovative staffing would allow more beneficiaries to be cared for in
    the MTFs, which DOD asserts is the least costly venue. The Task Force
    made recommendations to make DOD MHS more cost-efficient. NMFA
    supports: the MHS must be appropriately sized, resourced, and
    stabilized; and make changes in its business and health care practices.
        NMFA is dismayed that DOD has taken only small steps to encourage
    migration to the TMOP. Its marketing effort to promote the use of the
    TMOP came only after NMFA and other associations raised the issue in
    congressional testimony in their push for the implementation of
    significant cost-saving measures prior to any increase in TRICARE fees.
    Promoting use of the TMOP makes sense, as it provides significant
    savings to beneficiaries, as well as huge savings to the Department.
    The creation of the Members Choice Center by DOD and Express Scripts in
    August 2007, to provide personal assistance in transferring
    beneficiaries' prescriptions from TRICARE Retail Pharmacies (TRRx) to
    TMOP, has provided more than $800,000 in savings to beneficiaries and
    $9.3 million to DOD. Significant savings have also been seen in the
    over-the-counter (OTC) demonstration project for select Proton Pump
    Inhibitors. In just 6 months, roughly 14,000 beneficiaries have
    participated with huge savings to beneficiaries and DOD. We are
    confident similar results will be seen with the second OTC
    demonstration project for select Antihistamine products. NMFA believes
    it is imperative all of the medications available through TRRx should
    also be made available through TMOP. Medications treating chronic
    conditions, such as asthma, diabetes, and hypertension should be made
    available at the lowest level of co-payment regardless of brand or
    generic status. We agree with the recommendations of the Task Force on
    the Future of Military Health Care that OTC drugs be a covered pharmacy
    benefit and there be a zero co-pay for TMOP Tier 1 medications.
        NMFA strongly suggests that DOD look within itself for cost savings
    before first suggesting that beneficiaries bear the burden! We
    encourage DOD to investigate further cost saving measures such as: a
    systemic approach to disease management, a concentrated marketing
    campaign to increase use of the TMOP, eliminating contract
    redundancies, holding DOD more accountable, moving towards a Unified
    Medical Command, and optimizing MTFs.
    Support for Families With Special Needs
        NMFA is grateful to Congress for expanding health care and other
    support services to military dependent children with autism in the NDAA
    for Fiscal Year 2008. This complicated condition places a burden on
    many military families. Frequent military moves make it difficult for
    these children to receive a consistent level of services. Approximately
    12 percent of military children have disabilities, of which autism is
    only one condition affecting military special needs children. While
    grateful for the increased support targeted at military children with
    autism, NMFA urges Congress and DOD to ensure a comparable level of
    support for all military special needs families. Deployment of a
    servicemember removes a caregiver from the home, making managing
    therapy and doctors' appointments, negotiating with school officials
    for suitable services, and caring for other children in the family
    difficult for the parent remaining behind.
        In the NDAA for Fiscal Year 2002, Congress authorized the Extended
    Care Health Option (ECHO) to provide additional benefits to active duty
    with a qualifying mental or physical disability in recognition of
    extraordinary challenges faced by active duty families because of the
    servicemember's deployment or frequent relocations that often make
    accessing services in the civilian community difficult. We applaud
    Congress and DOD desire to create a robust health care and educational
    service for special needs children. But, these robust services do not
    follow them when they retire. NMFA has encouraged the Services to allow
    these military families the opportunity to have their final duty
    station be in an area of their choice. This will allow them to move up
    on waiting lists for local services before retirement. Because not all
    servicemembers can have such an assignment, NMFA suggests ECHO be
    extended for 1 year after retirement for those who were already
    enrolled in ECHO prior to retirement.
        We remain concerned that military servicemembers with special needs
    family members continue to battle a lack of information or support and
    are often frustrated by the failure of the military health care and
    family support systems to work together and with civilian agencies to
    support their families' needs.
    Guard and Reserve Family Health Care
        Despite increased training opportunities for families, the problem
    still persists of educating Guard and Reserve family members about
    their benefits. New and improved benefits do not always enhance the
    quality of life of Guard and Reserve families as intended because these
    families lack the information about how to access these benefits. NMFA
    is grateful to Congress for its initial efforts to enhance the
    continuity of care for National Guard and Reserve members and their
    families by creating TRICARE Reserve Select. We continue to monitor
    this new program closely, watching both premium increases and
    beneficiaries access to providers. Because TRICARE Reserve Select is
    basically the TRICARE Standard benefit, access to providers within
    certain standards is not guaranteed. Because Guard and Reserve members
    are paying premiums for this program, however, we believe they will
    expect DOD to ensure providers are available and willing to treat
    beneficiaries in this program.
        TRICARE Reserve Select is not the complete answer to Guard and
    Reserve families' health care needs. Information and support are
    improving for Guard and Reserve families who must transition into
    TRICARE; however, NMFA believes that going into TRICARE may not be the
    best option for all of these families. Guard and Reserve servicemembers
    who have been mobilized should have the same option as their peers who
    work for the Department of Defense: DOD should pay their civilian
    health care premiums. The ability to stay with their civilian health
    care plan is especially important when a Guard or Reserve family member
    has a special need. We appreciate the provision in the NDAA for Fiscal
    Year 2008 that provided for a stipend for that purpose but the need is
    just as great for a family member with a chronic condition, or in the
    midst of treatment. NMFA also believes that paying a subsidy to a
    mobilized Guard or Reserve member for their family's coverage under
    their employer-sponsored insurance plan may also prove to be more cost-
    effective for the government than subsidizing 72 percent of the costs
    of TRICARE Reserve Select for Guard or Reserve members not on active
    duty.
        Emphasis must continue on promoting continuity of care for families
    of Guard and Reserve servicemembers. NMFA's recommendation to enhance
    continuity of care for this population is to allow members of the
    Selected Reserve to choose between buying into TRICARE when not on
    active duty or receive a DOD subsidy allowing their families to remain
    with their employer-sponsored care when mobilized.
                            families and deployment
        Families are impacted differently in all phases of deployment. They
    may be preparing for a first deployment. They may be in the first few
    months, adjusting to life without that all important partner, parent,
    son or daughter. They may be feeling the strain as months 6, 7 or 8 go
    by, as the tension of loved one in danger or the strain of keeping
    things ``normal'' begin to show. They may be experiencing the
    anticipation of reunion. But even with reunion there are worries, as we
    heard from one young man: ``Will my dad still like me?'' With return
    and reunion, families struggle to re-acquaint themselves with the
    member who has returned. Will she be the same as before? Did he suffer
    a traumatic brain injury (TBI)? How do we cope with his isolation or
    changes in personality?
        Each deployment is different. The needs of each family are
    different as well. We hear from families that they are weary. A recent
    article in USA Today highlighted the burn-out of family readiness group
    leaders and commander's spouses, family members who support other
    families in the unit, dealing with the problems at the other end of the
    phone, expressed in the commissary line or shared at the child care
    center. We appreciate the emphasis by the Services on the importance of
    training these important volunteers. Having attended several regional
    training sessions, we have seen first hand the tools and training that
    these volunteers are equipped with. It does take a measure of
    individual insight to know when a family member needs a good listener
    and when they need more help than the volunteer is able to provide.
    Care for these caregivers is essential. It is difficult to mandate or
    legislate relief for volunteers. NMFA hopes that professional staff
    members and commanders at the unit and installation levels are aware of
    the stress that these volunteers live with and look for ways to relieve
    them of some of these responsibilities. We applaud the Army's infusion
    of family readiness support assistants to units down to the battalion
    level to help relieve some of the overworked volunteers. But we want to
    make sure that there is a distinction between administrative help and
    the counseling that many of our deployed families need. We want to make
    sure that this additional staff support is available across all
    Services and components.
        NMFA is pleased that DOD is reaching out to servicemembers and
    families to gauge their needs. Defense Secretary Robert M. Gates'
    recent visit with soldiers and families at Ft. Campbell revealed many
    of the same concerns that NMFA hears from families. The impact of
    extended deployments was a significant concern of families there.
    Secretary Gates stated ``There is no question that 15-month deployments
    are a real strain, not only on the soldiers, but (also) on the families
    they leave behind.'' NMFA has said before, missing one birthday, one
    Christmas, one anniversary can be viewed as just part of the
    deployment. When two Christmases go by, or dad or mom has not been
    there for two birthdays in a row, the sacrifice can seem too great.
        The Services are also reaching out to the families of individual
    augmentees, those ``onesies and twosies'' who often are far from the
    unit headquarters of the deploying unit or may get lost in the shuffle.
    The Navy has developed a number of new initiatives in support of
    individual augmentee (IA) sailors and their families. One such
    initiative is the new Fleet and Family Support Centers (FFSC) and
    Expeditionary Combat Readiness Center (ECRC) individual augmentee
    newsletter. This newsletter will be published monthly to inform
    augmentees and their families of programs and services available to
    them. The ECRC Care Line can be reached via phone at 877-364-4302,
    email at ecrc.fs.fct@navy.mil, or online at http://www.ecrc.navy.mil/.
        Fleet and Family Support Centers (FFSC) have also created programs
    and services to keep IAs and their families informed. Among them are
    Virtual Individual Augmentee Discussion Groups hosted by Fleet and
    Family Support Centers worldwide. Discussion Groups will be available
    to help IA family members stay connected to other Navy families who are
    experiencing an IA deployment. Participation is via Internet and
    telephone.
    Guard and Reserve
        NMFA would like to thank Congress for authorizing many provisions
    within the NDAA for Fiscal Year 2008 that affect our Guard and Reserve
    families. We now ask Congress to fund these important provisions to
    help improve the quality of life for our Guard and Reserve families,
    who have sacrificed greatly in support of our Nation. In the recently
    released final report from the Commission on the National Guard and
    Reserves the commissioners stated ``Reserve Component family members
    face special challenges because they are often at a considerable
    distance from military facilities and lack the on-base infrastructure
    and assistance available to active duty families.'' The report also
    stated ``Military family members today believe that all families in the
    community should enjoy a comparable level of ``purple'' support
    services, regardless of Service or component--with adequate funding and
    staffing resources.'' The report recognized the importance of Military
    OneSource to Reserve component families. While citing a robust
    volunteer network as crucial, the report also stated that family
    readiness suffers when there are too few paid staff professionals
    supporting the volunteers. These findings resonate with support
    recommendations made by NMFA through the years. NMFA thanks the
    Commission for recognizing the importance of family support to the
    National Guard and Reserve.
        The Yellow Ribbon Reintegration program was extremely successful in
    the State of Minnesota. Best practices always deserve to be shared.
    NMFA thanks this subcommittee for including provisions to implement the
    Yellow Ribbon program in all States and territories. This program
    should provide National Guard and Reserve members and their families
    with sufficient information, services, referral, and proactive outreach
    opportunities throughout the entire deployment cycle. We are well aware
    that members of the Reserve components face a host of unique challenges
    upon returning to their families, hometowns, and civilian jobs. NMFA is
    concerned, however, that a lack of funding may diminish the impact of
    this critical program. We urge Congress to fully fund this initiative
    supporting the men and women of our Reserve components and their
    families who have answered the call to protect our Nation. We must not
    forget that reintegration programs must address the needs of the entire
    family, including children.
        NMFA supports the institution of the Yellow Ribbon Reintegration
    program in all States and territories but asks that the program be
    fully funded to be most effective.
    Military Family Life Consultants
        As this DOD program has matured, NMFA hears good things about the
    Military Family Life Consultant (MFLC) program. More servicemembers and
    families are familiar with the program and expect to see the counselors
    in their communities. We heard from one Marine family who said:

              As a Marine Corps wife and a medical provider at Quantico, I
            can tell you the family life consultants have been a God send.
            Quick access for marines to get counseling for combat
            operational stress, stress management and spouse education post
            deployment. They are so accommodating to the marines schedule
            and they work closely with deployment health issues and mental
            health clinic.

        Installations and commanders are also recognizing them as resource
    multipliers. Said one family support professional:

              The MFLC program works hard to make services available to
            families. New MFLCs are announced in the post paper as she or
            he is assigned. MFLCs attend post activities to meet families,
            pass out phone numbers and make themselves available to
            families. I have personally met them on playgrounds, at
            workshops offered through MCEC, and through MOPs meeting
            groups.

        MFLCs are also an integral part of NMFA's Operation Purple (OP)
    Camps. Through the support of DOD every OP camp, with the exception of
    the western region, has assigned an MFLC mental health consultant (NMFA
    wishes to thank the TriWest Health Care Alliance which supports OP
    camps in the west through a similar program).
        MFLCs fill an important need in the overall support of military
    families. The program's success warrants its continued authorization
    and funding.
                                wounded families
    Wounded Servicemembers Have Wounded Families
        Post-deployment transitions can be especially problematic for
    injured servicemembers and their families. NMFA asserts that behind
    every wounded servicemember is a wounded family. Spouses, children,
    parents, and siblings of servicemembers injured defending our country
    experience many uncertainties. Fear of the unknown and what lies ahead
    in future weeks, months, and even years, weighs heavily on their minds.
    Other concerns include the injured servicemember's return and reunion
    with their family, financial stresses, and navigating the transition
    process to the VA.
        The system should alleviate, not heighten these concerns, and
    provide for coordination of care that starts when the family is
    notified the servicemember has been injured and ends with the DOD and
    VA working together to create a seamless transition as the injured
    servicemember transfers from active duty status to veteran status. NMFA
    congratulates Congress on the NDAA for Fiscal Year 2008 Wounded Warrior
    Act, in which many issues affecting this population were addressed. We
    also appreciate the work DOD and the VA have done in establishing the
    Senior Oversight Committee (SOC) to address the many issues highlighted
    by the three Presidential Commissions. However, more still needs to
    done. NMFA recently heard the SOC is now meeting monthly rather than
    weekly. There is certainly more work to be done. We urge Congress to
    establish an oversight committee to monitor DOD and VA's partnership
    initiatives, especially with the upcoming administration turnover and
    the disbandment of the SOC early this year.
        It is NMFA's belief the government, especially the VA, must take a
    more inclusive view of military families. Those who have the
    responsibility to care for the wounded servicemember must also consider
    the needs of the spouse, children, and the parents of single
    servicemembers and their siblings. According to the TBI Task Force,
    family members are very involved with taking care of their loved one.
    As their expectations for a positive outcome ebbs and flows throughout
    the rehabilitation and recovery phases, many experience stress and
    frustration and become emotional drained. NMFA recommends care for the
    families of the wounded/ill/injured should include support, assistance,
    and counseling programs. NMFA recently held a focus group composed of
    wounded servicemembers and their families to learn more about issues
    affecting them. They said following the injury, families find
    themselves having to redefine their roles. They must learn how to
    parent with an injury and become a spouse/lover with an injury. Each
    member needs to understand the unique aspects the injury brings to the
    family unit. Reintegration programs become a key ingredient in the
    family's success. NMFA believes we need to focus on treating the whole
    family with programs offering skill based training for coping,
    intervention, resiliency, and overcoming adversities. Parents need
    opportunities to get together with other parents who are in similar
    situations and share their experiences and successful coping methods.
    DOD and VA need to provide family and individual counseling to address
    these unique issues. A retreat for the entire family and for the couple
    provides an opportunity to reconnect and bond as a family again.
        Caregivers of the severely wounded, ill, and injured services
    members, such as those with severe TBI, must be trained through a
    standardized program, certified, and compensated. Caregivers need to be
    recognized for the important role they play in the care of their loved
    one. Without them, their quality of life would be significantly
    compromised. Additional financial burdens would be placed on the DOD
    and the VA health care systems. NMFA has heard from caregivers the
    difficult decisions they have to make over their loved one's bedside
    following the injury. Many don't know how to proceed because they don't
    know what their loved one's wishes were. We support the recently
    released TBI Task Force recommendation for DOD to require each
    deploying servicemember to have a medical power of attorney and a
    living will. The NDAA for Fiscal Year 2008 authorized an active-duty
    TRICARE benefit for severely wounded/ill/injured servicemembers, but
    not for their family members. This needs to be rectified to include the
    servicemember's spouse and children. NMFA recommends an active duty
    benefit like the surviving spouse benefit for 3 years for the family
    members of those who are medically retired.
        The impact of the wounded/ill/injured on children is often
    overlooked and underestimated. Military children experience a
    metaphorical death of the parent they once knew and must make many
    adjustments as their parent recovers. Many families relocate to be near
    the MTF or the VA Polytrauma Center in order to make rehabilitation
    process more successful. As the spouse focuses on the rehabilitation
    and recovery, older children take on new roles. They may become the
    caregivers for other siblings, as well as for the wounded parent. Many
    spouses send their children to stay with neighbors or extended family
    members, as they tend to their wounded/ill/injured spouse. Children get
    shuffled from place to place until they can be reunited with their
    parents. Once reunited, they must adapt to the parent's new injury and
    living with the ``new normal.'' Brooke Army Medical Center has
    recognized a need to support these families and has allowed for the
    system to expand in terms of guesthouses co-located within the hospital
    grounds. The on-base school system is also sensitive to issues
    surrounding these children. Unfortunately, not all families enjoy this
    type of support. NMFA is concerned the impact of the injury is having
    on our most vulnerable population, military children. NMFA believes we
    need research to better understand this phenomenon and identify
    effective support programs for these children.
        NMFA strongly suggests research on families, especially children of
    wounded/ill/injured servicemembers; standardized training,
    certification, and compensation for caregivers; individual and family
    counseling and support programs; and a reintegration program that
    provides an environment rich for families to reconnect. An oversight
    committee to monitor DOD's and VA's continued progress toward seamless
    transition.
    Mental Health
        As the war continues, families' need for a full spectrum of mental
    health services--from preventative care to stress reduction techniques,
    to individual or family counseling, to medical mental health services--
    continues to grow. The military offers a variety of mental health
    services, both preventative and treatment, across many helping agencies
    and programs. However, as servicemembers and families experience
    numerous lengthy and dangerous deployments, NMFA believes the need for
    confidential, preventative mental health services will continue to
    rise. It will also remain high for some time even after military
    operations scale down. Successful return and reunion programs will
    require attention over the long term, as well as a strong partnership
    at all levels between the various mental health arms of the DOD and VA.
        The Army's Mental Health Advisory Team (MHAT) IV report links the
    need to address family issues as a means for reducing stress on
    deployed servicemembers. The team found the top non-combat stressors
    were deployment length and family separation. They noted that soldiers
    serving a repeat deployment reported higher acute stress than those on
    their first deployment and the level of combat was the key ingredient
    for their mental health status upon return. They found there was no
    difference in Services. Multiple deployers reported higher acute stress
    than first-time deployers, which is a difference from the MHAT III that
    found those who redeploy were better prepared due to improved pre-
    deployment training. They also acknowledged deployment length was
    causing higher rates of martial problems. Given all the focus on mental
    health prevention, the study found current suicide prevention training
    was not designed for a combat/deployed environment. Recent reports on
    the increased number of suicides in the Army also focused on tour
    lengths and relationship problems.
        DOD's Task Force on Mental Health stated timely access to the
    proper mental health provider remains one of the greatest barriers to
    quality mental health services for servicemembers and their families.
    NMFA and the families it serves have noted with relief more providers
    are deployed to theaters of combat operations to support
    servicemembers. The work of these mental health professionals with
    units and individuals close to the combat action they experience have
    proved very helpful and will reduce the stress that impedes
    servicemembers' performance of their mission and their successful
    reintegration with their families.
        While families are pleased more mental health providers are
    available in theater to assist their servicemembers, they are less
    happy with the resulting limited access to providers at home. DOD's
    Task Force on Mental Health found families are reporting an increase
    difficulty in obtaining appointments with social workers,
    psychologists, and psychiatrists at their military hospitals and
    clinics. The military fuels the shortage by deploying some of its child
    and adolescent psychology providers to the combat zones. Providers
    remaining at home stations report they are frequently overwhelmed
    treating active duty members who either have returned from deployment
    or are preparing to deploy to fit family members into their schedules,
    which could lead to compassion fatigue. Creating burnout and
    exacerbating the problem.
        In the seventh year of the global war on terror, care for the
    caregivers must become a priority. NMFA hears from the senior officer
    and enlisted spouses who are so often called upon to be the strength
    for others. We hear from the health care providers, educators, rear
    detachment staff, chaplains, and counselors who are working long hours
    to assist servicemembers and their families. Unless these caregivers
    are also afforded respite care, given emotional support through their
    command, and effective family programs, they will be of little use to
    those who need their services most.
        Thousands of servicemember parents have been away from their
    families and placed into harm's way for long periods of time. Military
    children, the treasure of many military families, have shouldered the
    burden of sacrifice with great pride and resiliency. Many programs,
    both governmental and private, have been created with the goal of
    providing support and coping skills to our military children during
    this great time of need. Unfortunately, many support programs are based
    on vague and out of date information.
        Given this concern, NMFA has partnered with RAND Corporation to
    research the impact of war on military children with a report due in
    April 2008. In addition, NMFA held its first ever Youth Initiatives
    Summit for Military Children, ``Military Children in a Time of War''
    last October. All panelists agreed the current military environment is
    having an effect on military children. Multiple deployments are
    creating layers of stressors, which families are experience at
    different stages. Teens especially carry a burden of care they are
    reluctant to share with the nondeployed parent in order to not ``rock
    the boat.'' They are often encumbered by the feeling of trying to keep
    the family going, alongside anger over changes in their schedules,
    increase responsibility, and fear for their deployed parent. Children
    of the National Guard and Reserve face unique challenges as there are
    no military installations for them to utilize. They find themselves
    ``suddenly military'' without resources to support them. School systems
    are generally unaware of this change in focus within these family units
    and are ill prepared to lookout for potential problems caused by these
    deployments. Also vulnerable are children who have disabilities that
    are further complicated by deployment. Their families find stress can
    be overwhelming, but are afraid of reaching out for assistance for fear
    of retribution on the servicemember.
        NMFA recommends research to:

             Gain a better understanding of the impact of war,
            especially multiple and extended deployments;
             Identify and fund effective programs to address this
            issue;
             Educate those who are at the touch point of our
            military children on how to provide support, such as clergy,
            child care providers, and teachers; and
             Encourage DOD to reach out and partner with those
            private and nongovernmental organizations who are experts in
            their field on children and adolescents to identify and
            incorporate best practices in the prevention and treatment of
            mental health issues affecting our military children.

        National provider shortages in this field, especially in child and
    adolescent psychology, are exacerbated in many cases by low TRICARE
    reimbursement rates, TRICARE rules, or military-unique geographical
    challenges: large populations in rural or traditionally underserved
    areas. Many mental health providers are willing to see military
    beneficiaries in a voluntary status. However, these providers often
    tell us they will not participate in TRICARE because of what they
    believe are timeconsuming requirements and low reimbursement rates.
    More must be done to persuade these providers to participate in TRICARE
    and become a resource for the entire system, even if that means DOD
    must raise reimbursement rates.
        Many mental health experts state that some post-deployment problems
    may not surface for several months or years after the servicemember's
    return. We encourage Congress to request DOD to include families in its
    Psychological Health Support survey; perform a pre and post-deployment
    mental health screening on family members (similar to the PDHA and
    PDHRA currently being done for servicemembers as they deploy into
    theater); and sponsor a longitudinal study, similar to DOD's Millennium
    Cohort Study, in order to get a better understanding of the long-term
    effects of war on our military families.
        NMFA is especially concerned not as many services are available to
    the families of returning National Guard and Reserve members and
    servicemembers who leave the military following the end of their
    enlistment. They are eligible for TRICARE Reserve Select, but as we
    know Guard and Reserve are often located in rural areas where there may
    be no mental health providers available. We ask you to address the
    distance issues families face in linking with military mental health
    resources and obtaining appropriate care. Isolated Guard and Reserve
    families do not have the benefit of the safety net of services provided
    by MTFs and installation family support programs. Families want to be
    able to access care with a provider who understands or is sympathetic
    to the issues they face. NMFA recommends the use of alternative
    treatment methods, such as telemental health; increasing mental health
    reimbursement rates for rural areas; modifying licensing requirements
    in order to remove geographical practice barriers that prevent mental
    health providers from participating in telemental health services; and
    educating civilian network mental health providers about our military
    culture.
        Mental health professionals must have a greater understanding of
    the effects of mild TBI in order to help accurately diagnose and treat
    the servicemember's condition. They must be able to deal with
    polytrauma--Post-Traumatic Stress Disorder (PTSD) in combination with
    multiple physical injuries. NMFA appreciates Congress establishing a
    Center of Excellence for TBI and PTSD. For a long time, the Defense and
    Veterans Brain Injury Center (DVBIC) has been the lead agent on TBI.
    Now with the new Center, it is very important DVBIC become more
    integrated and partner with other Services in researching TBI. Also, we
    need more education to civilian health care providers on how to
    identify signs and symptoms of mild TBI and PTSD.
        DOD must balance the demand for mental health personnel in theater
    and at home to help servicemembers and families deal with unique
    emotional challenges and stresses related to the nature and duration of
    continued deployments. We ask you to continue to put pressure on DOD to
    step up the recruitment and training of uniformed mental health
    providers and the hiring of civilian mental providers to assist
    servicemembers in combat theaters AND at home stations to care for the
    families of the deployed and servicemembers who have either returned
    from deployment or are preparing to deploy.
        DOD should increase reimbursement rates to attract more providers
    in areas were there is the greatest need. TRICARE contractors should be
    tasked with stepping up their efforts to attract mental health
    providers into the TRICARE networks and to identify and ease the
    barriers providers cite when asked to participate in TRICARE.
                             families in transition
    Survivors
        NMFA applauds the enhancement of medical benefits included in the
    NDAA for Fiscal Year 2006 making surviving children eligible for full
    medical benefits to age 21 (or 23 if they are enrolled in college)
    bringing them in line with the active duty benefit for dependent
    children. To complete the benefit package, we ask Congress to allow
    surviving children to remain in the TRICARE Dental Program until they
    age out of TRICARE and, in cases where the surviving family had
    employer-sponsored dental insurance, treat them as if they had been
    enrolled in the TRICARE Dental Program at the time of the
    servicemember's death.
        Because the VA has as part of its charge the ``care for the widow
    and the orphan,'' NMFA was concerned about recent reports that many Vet
    Centers did not have the qualified counseling services they needed to
    provide promised counseling to survivors, especially to children. DOD
    and the VA must work together to ensure surviving spouses and their
    children can receive the mental health services they need. New
    legislative language governing the TRICARE behavioral health benefit
    may also be needed to allow TRICARE coverage of bereavement or grief
    counseling. While some widows and surviving children suffer from
    depression or some other medical condition for a time after their loss,
    many others simply need counseling to help in managing their grief and
    helping them to focus on the future. Many have been frustrated when
    they have asked their TRICARE contractor or provider for ``grief
    counseling'' only to be told TRICARE does not cover ``grief
    counseling.'' Available counselors at military hospitals can sometimes
    provide this service and certain providers have found a way within the
    reimbursement rules to provide needed care, but many families who
    cannot access military hospitals are often left without care because
    they do not know what to ask for or their provider does not know how to
    help them obtain covered services. Targeted grief counseling when the
    survivor first identifies the need for help could prevent more serious
    issues from developing later.
        NMFA recommends that surviving children be allowed to remain in the
    TRICARE Dental Program until they age out of TRICARE eligibility. We
    also recommend that grief counseling be more readily available to
    survivors.
        NMFA appreciates the work being done by DOD and the Services to
    provide training to casualty assistance officers and to make sure
    survivors are receiving accurate information in a timely manner. The
    survivor notebook provided by DOD and the Services, The Days Ahead:
    Essential Papers for Families of Fallen Servicemembers, has received
    praise from survivors and families and has enhanced the information
    being provided by the Services. The Army Long Term Family Case
    Management Office--the one-stop resolution and assistance for benefits,
    outreach, advocacy, and support--for their improvements to the case
    management system and continued communication with families to further
    refine their services and response time.
        NMFA still believes the benefit change that will provide the most
    significant long-term advantage to the financial security of all
    surviving families would be to end the Dependency and Indemnity
    Compensation (DIC) offset to the Survivor Benefit Plan (SBP). Ending
    this offset would correct an inequity that has existed for many years.
    Each payment serves a different purpose. The DIC is a special indemnity
    (compensation or insurance) payment paid by the VA to the survivor when
    the servicemember's service causes his or her death. It is a flat rate
    payment of $1,091 for the surviving spouse and $271 for each surviving
    child. The SPB annuity, paid by DOD, reflects the longevity of the
    service of the military member. It is ordinarily calculated at 55
    percent of retired pay. Military retirees who elect SBP pay a portion
    of their retired pay to ensure that their family has a guaranteed
    income should the retiree die. If that retiree dies due to a service
    connected disability, their survivor becomes eligible for DIC.
        Surviving active duty spouses can make several choices, dependent
    upon their circumstances and the ages of their children. Because SBP is
    offset by the DIC payment, the spouse may choose to waive this benefit
    and select the ``child only'' option. In this scenario, the spouse
    would receive the DIC payment and the children would receive the full
    SBP amount until each child turns 18 (23 if in college), as well as the
    individual child DIC until each child turns 18 (23 if in college). Once
    the children have left the house, this choice currently leaves the
    spouse with an annual income of $13,092, a significant drop in income
    from what the family had been earning while the servicemember was alive
    and on active duty. The percentage of loss is even greater for
    survivors whose servicemembers served longer. Those who give their
    lives for their country deserve more fair compensation for their
    surviving spouses.
        NMFA appreciates the establishment of a special survivor indemnity
    allowance as a first step in the process to eliminate the DIC offset to
    SBP. As written, the NDAA for Fiscal Year 2008 only provides this
    allowance to survivors of military retirees who paid premiums for the
    Survivor Benefit Plan and survivors of gray area reservists who have
    signed up for SBP but had not yet begun paying premiums. The House
    version of the NDAA for Fiscal Year 2008 extended this allowance to all
    surviving spouses, including those survivors of active duty deaths.
    NMFA believes that eligibility for this special allowance should be
    extended to all survivors.
        NMFA believes several other adjustments could be made to the
    Survivor Benefit Plan. These include allowing payment of the SBP
    benefits into a Special Needs Trust in cases of disabled children and
    allowing SBP eligibility to switch to children if a surviving spouse is
    convicted of complicity in the member's death.
        NMFA has always emphasized that servicemembers and families
    understand there is a package of survivor benefits. While NMFA
    understands the impetus for allowing a servicemember to designate
    payment of the death gratuity in 10 percent increments to persons other
    than their primary next of kin, it begs the question ``what is the
    purpose of the death gratuity?'' The death gratuity was originally
    intended to act as a financial bridge, to help with living expenses
    until other benefits such as the Dependency and Indemnity Compensation
    (DIC) payment, the Survivor Benefit annuity, and Social Security
    benefits begin to be paid. The death gratuity is not an insurance
    payment, even though its $100,000 payment is bigger than many civilian
    life insurance plans. NMFA is concerned that families may be left
    without that financial bridge if the servicemember designates someone
    other than their primary next of kin to receive the entire death
    gratuity. We do appreciate the provision language that requires
    notification of the spouse if the servicemember does change designees.
    We will monitor with interest the effects of this change on surviving
    families.
        NMFA recommends that eligibility for the special survivor indemnity
    allowance be expanded to include all SBP-DIC survivors. We also ask the
    DIC offset to SPB be eliminated to recognize the length of commitment
    and service of the career servicemember and spouse
    Families on the Move
        NMFA is gratified that DOD has begun to implement the ``Families
    First'' program for Permanent Change of Station (PCS) moves with the
    launching of the full replacement value (FRV) component late last year.
    This program is long overdue. It will provide much needed protections
    to military families entrusting their most precious possessions to
    movers. We ask Congress to monitor additional issues related to
    Families First to ensure all components are brought online in a timely
    manner. NMFA will monitor the implementation of the provision included
    in the NDAA for Fiscal Year 2008 that requires the servicemember to
    comply with reasonable restrictions or conditions prescribed in order
    to receive payment for damaged or lost items. NMFA is concerned that
    this language, coupled with the small business language in the
    Conference Report, could be used to diminish or destroy this important
    benefit families have waited so long to receive. NMFA asks Congress to
    ensure full replacement value coverage is not diminished or lost now
    that families finally have the benefit.
        We also ask Congress to recognize that military spouses accumulate
    professional goods over the course of a military career. Frequent moves
    make it difficult to establish and maintain professional materials used
    for a job or volunteer activities that will ultimately count against
    the family's weight allowance when the time to move arrives. Military
    members are permitted a professional goods weight allowance to
    compensate for the computers, books and equipment that must accompany
    them from duty station to duty station. We request that spouses be
    provided this professional courtesy as well.
        NMFA was disappointed this subcommittee's recommendation for
    shipment of a second vehicle to non-foreign overseas duty stations was
    dropped in conference. A PCS move to an overseas location can be
    especially stressful. Military families are faced with the prospect of
    being thousands of miles from extended family and living in a foreign
    culture. At many overseas locations, there are insufficient numbers of
    government quarters resulting in the requirement to live on the local
    economy away from the installation. Family members in these situations
    can begin to feel extremely isolated; for some the only connection to
    anything familiar is the local military installation. Unfortunately,
    current law permits the shipment of only one vehicle to an overseas
    location, including Alaska and Hawaii. Since most families today have
    two vehicles, they sell one of the vehicles.
        Upon arriving at the new duty station, the servicemember requires
    transportation to and from the place of duty leaving the military
    spouse and family members at home without transportation. This lack of
    transportation limits the ability of spouses to secure employment and
    the ability of children to participate in extra curricular activities.
    While the purchase of a second vehicle alleviates these issues, it also
    results in significant expense while the family is already absorbing
    other costs associated with a move. Simply permitting the shipment of a
    second vehicle at government expense could alleviate this expense and
    acknowledge the needs of today's military family.
        NMFA requests that Congress ease the burden of military PCS moves
    on military families by authorizing a professional goods weight
    allowance for military spouses and by authorizing the shipment of a
    second vehicle for families assigned to an overseas location on
    accompanied tours.
    Pay and Compensation
        NMFA thanks members of this subcommittee for their recognition that
    servicemembers and their families deserve a comprehensive benefit
    package consistent with the extraordinary demands of military service.
    We ask you to continue to evaluate changing circumstances that may
    diminish the value of that package and threaten the retention of a
    quality force. We also ask you to recognize the interaction between the
    various elements of the compensation package and how they affect
    families' eligibility for certain State and Federal programs. Despite
    regular annual pay increases, in addition to targeted raises, over the
    past several years, military pay for some servicemembers still lags
    behind civilian pay. NMFA was disappointed to see the additional one
    half percent above ECI provision was stripped from the NDAA for Fiscal
    Year 2008 during conference. We encourage Congress to consider
    extending the pay raise for 2009 by an additional one-half percent over
    the ECI.
    Military Allowances and Safety Net Programs
        In congressional testimony since 2003, NMFA has raised a
    longstanding frustration for military families: the confusion involved
    in how and when military allowances are counted to determine
    eligibility for military and civilian programs. NMFA again reinforces
    the need for Members of Congress, as well as State officials, to assist
    in bringing a sense of order in how military allowances are counted for
    Federal and State programs. We ask you to help ensure equitable access
    to these safety net services and protect families against disruptions
    in benefit eligibility caused by the receipt of deployment pays. No
    family should have to face the prospect of losing valuable benefits for
    a disabled child because a servicemember has received deployment
    orders. Families living off the installation are often there only
    because of insufficient on-base housing, yet endure higher expenses
    than families living on an installation. Ideally, therefore, NMFA
    believes tax-free allowances such as BAH should not be counted under
    any safety net program, which is how they are now treated in
    determining eligibility for the Earned Income Tax Credit. NMFA
    understands this could increase the number of military families
    eligible for some of these programs, but believe this increase is
    justified given the need for equitable treatment of all servicemembers,
    as well as the loss of spouse income due to military relocations and
    high operations tempo.
        Inconsistent treatment of military allowances in determining
    eligibility for safety net programs creates confusion and can exact a
    financial penalty on military families. A start in correcting this
    inequity would be to adopt a common standard in how BAH should be
    counted in eligibility formulas and to ensure that the receipt of
    deployment-related allowances do not cause military family members to
    become ineligible for support services for which they would otherwise
    be eligible.
    Flexible Spending Accounts
        Flexible Spending Accounts have done a great deal to help Federal
    employees and corporate civilian employees defray out-of-pocket costs
    for both their health care and dependent care needs. NMFA believes this
    important program should be extended to military servicemembers, and
    urges Congress to work with the Department of Defense to accomplish
    this much needed change. It is imperative that we include active duty
    and Selected Reserve members in this cost saving benefit.
        NMFA asks that a flexible spending account benefit be extended to
    military families.
    Commissaries and Exchanges
        The commissary is a key element of the total compensation package
    for servicemembers and retirees and is valued by them, their families,
    and survivors. NMFA surveys indicate that military families consider
    the commissary one of their most important benefits. In addition to
    providing average savings of more than 30 percent over local
    supermarkets, commissaries provide an important tie to the military
    community. Commissary shoppers get more than groceries at the
    commissary. They gain an opportunity to connect with other military
    family members and to get information on installation programs and
    activities through bulletin boards and installation publications.
    Finally, commissary shoppers receive nutrition information and
    education through commissary promotions and educational campaigns
    contributing to the overall health of the entire beneficiary
    population.
        NMFA is concerned that there will not be enough commissaries to
    deal with the areas experiencing substantial growth. The surcharge was
    never intended to pay for DOD and Service transformation. Additional
    funding is needed to ensure commissaries are built in areas that are
    gaining personnel as a result of these programs.
        The military exchange system serves as a community hub, in addition
    to providing valuable cost savings to members of the military
    community. Equally important is the fact that exchange system profits
    are reinvested in important Morale Welfare and Recreation (MWR)
    programs, resulting in quality of life improvements for the entire
    community. We believe that every effort must be made to ensure that
    this important benefit and the MWR revenue is preserved, especially as
    facilities are down-sized or closed overseas. Exchanges must also
    continue to be responsive to the needs of deployed servicemembers in
    combat zones.
    Military Housing
        In the past few years, privatized housing has changed the lifestyle
    for the military families who live there. New or renovated housing with
    spacious floor plans, new appliances and amenities you would find the
    new suburban subdivisions have gone a long way to improving the quality
    of life for military families. However, there are still a few things
    that need to be addressed.
        With rebasing, as more installations become joint, there is a need
    for a single unified definition of adequate housing. Currently some
    servicemembers are receiving refunds of part of their BAH while members
    of other Services living in identical units are not. The only
    difference is the individual Service definition of ``adequate
    housing''. This situation creates a disparity in benefit between
    servicemembers of equal rank. In addition, there are concerns that DOD
    is not adequately monitoring construction contracts. Air Force
    privatization contracts have fallen hopelessly behind schedule in some
    areas leaving sizeable wait lists for housing that should already be
    complete and occupied. Better oversight is absolutely necessary. NMFA
    appreciates the provision in the NDAA for Fiscal Year 2008 calling for
    a report on this issue.
        Commanders must be held accountable for privatized communities.
    These housing areas remain the responsibility of the installation
    Commander even when managed by a private company. Military members
    should not be on wait lists while civilians occupy housing. While
    privatization contracts permit other occupants for vacant units,
    Commanders must ensure that privatized housing is first and foremost
    meeting the needs of the active duty population of the installation. In
    some cases this will require modification or renegotiation of
    contracts. On an aesthetic and health care note, NMFA asks that a
    minimum number of non-smoking quarters be designated at each
    installation. Non-smokers, especially in multi-family dwellings, are
    being forced to live with second hand smoke in far too many cases. NMFA
    has received complaints from families who are suffering health
    consequences of living with a neighbor's smoking habit. This is
    unacceptable.
        NMFA feels there needs to be a review of BAH standards. While
    families who live on the installation are better off, families living
    off the installation are forced to absorb more out-of-pocket expenses
    in order to live in a home that will meet their needs. In the
    calculation for BAH there is no regard for family size. In addition,
    the standards are based on an outdated concept of what would constitute
    a reasonable dwelling. For example, in order to receive BAH for a
    single family dwelling a servicemember must be an E9. However, if that
    same servicemember lived in military housing, he or she would likely
    have a single family home at the rank of E6 or E7. BAH standards should
    mirror the type of dwelling a servicemember would occupy if government
    quarters were available.
                             families and community
        Higher stress levels caused by open-ended and multiple deployments
    require a higher level of community support. Military families,
    especially those geographically dispersed, often look to support
    programs in their communities because of their proximity and
    familiarity.
        A question is often asked about whether there is a sense of
    detachment between the civilian community and military servicemembers
    and their families. A small part of the Nation is being asked to assume
    duties and sacrifices while the rest of the Nation goes about their
    business, oblivious to the contributions of the few. To recognize the
    sacrifices and the day-to-day needs of America's military family
    members, NMFA worked with the U.S. Family Health Plan, a TRICARE
    provider, to implement a public service campaign urging citizens to
    ``support, befriend, remember and appreciate'' military family members.
    The campaign consists of national print, radio, TV, online and in-
    cinema public service announcements (PSAs). The messages are moving and
    emotional, designed to get people thinking about the families who
    contribute to the Nation's well-being every day, during war as well as
    peace. For example, the PSAs suggest having coffee with a soldier's
    parents, hiring a military spouse and mentoring a military child.
    Thirty- and 15-second video PSAs were shown to approximately 3.4
    million moviegoers in 205 theatres this past summer. The videos along
    with four radio PSAs, may be downloaded from http://
    www.yearofthemilitaryfamily.org/.
        NMFA often learns of other community programs that are reaching out
    to military families. Some of these are initiatives funded by other
    Federal agencies. Many of these programs are highlighted on the America
    Supports You Web site. In North Carolina, Essential Life Skills for
    Military Families is a 12-hour workshop series designed for National
    Guard and Reserve component couples. The sessions offer to help
    military families deal with the unique challenges they experience as a
    citizen soldier family. Held in their own communities, the classes are
    taught by local Cooperative Extension Family and Consumer Sciences
    Agents. Funding for this project was provided by the United States
    Department of Health and Human Services, Administration for Children
    and Families. The program addresses marriage and family relationships,
    parenting, balancing military and family needs, financial literacy,
    legal issues and building a support network in your own community.
        NMFA is also partnering with the United Way's 2-1-1 program. This
    hotline program provides health and human service information to
    callers around the United States. The program is robust in some areas,
    like Texas and still in the development stage in others. NMFA is
    offering military family friendly information and resources through
    webinars and conferences to the 2-1-1 information and referral
    operators so that they can send military families who call the hotline
    to already existent military resources like Military OneSource or State
    Joint Family Assistance Centers.
        Military families share a bond that is unequaled in the civilian
    world. They support each other through hardship, deployments, PCS
    moves, and sometimes, the loss of a loved one. The military community
    is close knit and must be so. It is imperative that our Nation ensure
    the necessary infrastructure and support components are in place to
    support families regardless of where they happen to be located
    geographically. More importantly, we ask you and other Members of
    Congress to ensure that the measures undertaken today in the interest
    of cutting costs and improving efficiency do not also destroy the sense
    of military community so critical to the successful navigation of a
    military lifestyle. Educating families on what support is being
    provided helps reduce the uncertainty for families.
        Preparation and training are essential in reaching families and
    making sure they are aware of additional resources available to them.
    While NMFA appreciates the extraordinary support that was made
    available to address the special needs of the families during
    deployment extensions and last year's ``Surge'', our Nation must ensure
    this level of support is available to all families day-in and day-out.
    Military family support and quality of life facilities and programs
    require dedicated funding, not emergency funding. Military families are
    being asked to sustain their readiness. The least their country can do
    is make sure their support structure is consistently sustained as well.
    Strong families equal a strong force. Family readiness is integral to
    servicemember readiness. The cost of that readiness is an integral part
    of the cost of the war and a national responsibility. We ask Congress
    to shoulder that responsibility as servicemembers and their families
    shoulder theirs.

        Senator Ben Nelson. Thank you.
        Sergeant Cline?

      STATEMENT OF MASTER SERGEANT MICHAEL P. CLINE, USA (RET.),
    EXECUTIVE DIRECTOR, ENLISTED ASSOCIATION OF THE NATIONAL GUARD
                          OF THE UNITED STATES

        Sergeant Cline. Thank you.
        Mr. Chairman, Senator Graham, we thank you for holding
    these hearings on behalf of the men and women who make up our
    Nation's National Guard and Reserve component.
        Thanks to the diligent work of Congress and this
    subcommittee, the National Guard and Reserves have proven they
    are a ready, reliable, and relevant force. Today, almost
    700,000 National Guard and Reserve members have been called to
    Active Duty for Operation Enduring Freedom (OEF) and Operation
    Iraqi Freedom (OIF), and 173,000 have been deployed multiple
    times. More than 527 National Guard members have made the
    ultimate sacrifice for freedom.
        Mr. Chairman, one of the most asked-about issues that faces
    the Associations of TMC is the early retirement provision
    passed last year. It was signed into law by the President in
    January of this year. However, this vital piece of legislation
    didn't provide retroactively back to October 2001, when our
    Guard and Reserve members began deploying. EANGUS and the
    member organizations of TMC are opposed to the lack of
    retroactivity. We believe it sends a message, loud and clear,
    that the budget of the United States has a higher priority than
    the lives sacrificed in its defense.
        Although the estimates by the Congressional Research
    Service (CRS) is in excess of $2 billion over 10 years, we
    believe the demographics used by the CRS are overinflated.
    Based on the Defense Advisory Committee on Military
    Compensation Report in 2005, only 47 percent of officers and 15
    percent of enlisted will remain in uniform long enough to
    qualify for retirement. Of the Guard's end strength of
    approximately 460,000, only 5,227 of those will be eligible for
    early retirement. Even if you include the Federal Reserves, the
    costs will not amount to $2 billion over 10 years. We ask the
    committee to endorse Senator Chambliss' bill, S. 2836, to
    include retroactivity, those who have so proudly answered the
    call of our country. In this year of political chaos and debate
    over the war in Iraq, we don't ask that you endorse the war,
    but we do ask that you support those who have answered the call
    to duty. Please support our troops.
        We are most grateful to Congress for adopting the 10-year
    post-service readjustment benefit for National Guard and
    Reserve veterans of Iraq and Afghanistan, and others who have
    served on Active Duty on contingency operations, but additional
    upgrades are needed to fully match the MGIB with the needs of
    all warriors who serve in the 21st century. We ask that you
    authorize a month-for-month MGIB entitlement for reservists who
    serve multiple Active Duty tours for up to 36 months; integrate
    our Reserve and Active Duty MGIB laws under title 38, restore
    basic Reserve MGIB benefits for drill service for 47 to 50
    percent of the Active Duty rates, change the ``14 years from
    date of eligibility'' rule to ``as long as you're a member in
    good standing'' in the Guard and Reserve, and, last, authorize
    upfront reimbursement of tuition or training coursework.
        The Commission on the National Guard and Reserves rendered
    their report on January 31 of this year. It made 95
    recommendations. The majority of the document discounts the
    importance of the Reserves and a militia. The report recommends
    diminishing the full-time support workforce in the Guard and
    replacing them with Active component soldiers. Today, with
    heavier commitments and more deployments, full-time support is
    critical to the mission for success. This necessary full-time
    force pays dividends in preparing lives for war, and cannot be
    sacrificed on the economic altar. We oppose degrading the full-
    time support program for the Guard and Reserve.
        EANGUS agrees with the Commission that the Chief of the
    National Guard Bureau should be promoted to general and have a
    seat on the Joint Chiefs of Staff. There is no representation
    that relates the homeland security mission so critical to
    America. The Chief of the National Guard Bureau brings that
    focus to the panel. Likewise, the top officers at Northern
    Command (NORTHCOM) need to be National Guard, due to the
    complexity of coordinating with individual States and their
    governments.
        Duty status reform--either on Active Duty or not, the
    Commission considers in-Active Duty training as Active Duty,
    and therefore, recommends adjusting the pay from receiving 1
    day's pay per drill period to 1 day's pay for 1 day's work.
    This will reduce the DOD's liability for pay, benefits, and
    retirement, but it also reduces the financial benefit to Guard
    and Reserve members to include a reduction of retirement points
    and potential recruiting and retention problems. We stand
    opposed to this recommendation.
        Mr. Chairman, Senator Graham, thank you for the opportunity
    to express the views of TMC. We look forward to working with
    your subcommittee.
        [The prepared statement of Sergeant Cline follows:]
           Prepared Statement by MSG Michael P. Cline, USA (Retired)
        Mr. Chairman, Senator Graham, and distinguished members of the
    subcommittee, the Enlisted Association of the National Guard of the
    United States appreciates the opportunity to submit our views regarding
    the Defense Department's budget submission for fiscal year 2009 and its
    possible effect on the National Guard.
        The Enlisted Association of the National Guard of the United States
    is the only military service association that solely represents the
    interests of every enlisted soldier and airmen in the Army and Air
    National Guard. Our constituency base is comprised of over 414,000
    soldiers and airmen, their families, and a large retiree membership.
    The Enlisted Association of the National Guard of the United States
    receives no Federal funds or Federal grants.
        The Army and the Air National Guard are part of the ``Reserve
    component,'' a term which is commonly used to refer collectively to the
    seven individual Reserve components of the Armed Forces. The role of
    the Reserve component as codified in law is to ``provide trained units
    and qualified persons available for active duty in the Armed Forces, in
    time of war or national emergency, and at such other times as the
    national security may require, to fill the needs of the Armed Forces
    whenever more units and persons are needed than are in the regular
    components.''
        The war on terror has taxed the resources of the U.S military and,
    in particular, the Army. The Army has responded by relying very heavily
    on the citizen soldiers of the National Guard and Reserves. Currently,
    the Reserve component has over 95,000 service men and women on active
    duty. Since the beginning of the war on terror, 527 National Guardsmen
    have been killed in action or suffered disease or non-battle related
    mortality. Thousands more have been wounded and their lives have been
    changed forever. On the other hand, involvement of the Reserves in the
    war on terror has filled the ranks with the most combat experienced
    force since World War II.
        We would like to highlight a few issues we hope will be taken into
    consideration during the committee's review of the fiscal year 2009
    budget and the Future Years Defense Program.
                                early retirement
        We greatly appreciate the subcommittee's support for earlier
    retirement eligibility. In Public Law 110-181, signed by President Bush
    on January 28, 2008, the provisions for earlier retirement were a
    significant advance on this issue. This issue is the number one
    priority issue for our association, and the number one issue that the
    three senior enlisted leaders of the National Guard Bureau face as they
    travel and talk with Guard members. But as pleased as we are with the
    provisions in that law, we are deeply concerned that the provisions are
    not retroactive to the beginning of the war on terror. Over 600,000
    reservists have served in the war, around the world, since September
    11, 2001. Without the retroactivity, it screams to those veterans that
    their service doesn't count as much as it should.
        We see the provisions as a tangible incentive for those members
    with 20 years of service or more, our most experienced force. They have
    no bonus or other incentives to stay, and they cannot retire and
    receive an immediate annuity. By allowing the possibility of earlier
    retirement, it incentivizes their service and they will stay with the
    Guard. When they stay, we all win, retaining their vast and important
    experience. The same senior enlisted leaders at the National Guard
    Bureau will tell you that they are losing that experience just after 20
    years of service, and the earlier retirement eligibility is just the
    incentive needed to retain them in boots.
        So we thank you for what you've done so far, and encourage you to
    continue to work on this issue to include the 600,000 who have
    valiantly served their country by making this law retroactive to
    September 11.
                                  compensation
        We thank the subcommittee for its work on raising the pay of
    military members above the ECI. We believe there is still a pay gap
    between what military members are paid and what their comparable
    civilian counterparts earn, despite what the Defense Department says.
    The Department includes in its calculations the intangible benefits a
    military member receives, which are difficult to quantify. For example,
    they include commissary privileges--quantifying that benefit will
    differ from person to person, depending on whether or not they use the
    commissary and if they do, how much. We do not believe the intangible
    benefits can be used in the metrics to compute the pay gap.
        Our members are civilians when not in Federal service, and they
    experience that gap once they are ordered to active duty. For some, it
    has caused their families to rely on government programs and to even
    consider bankruptcy as avenues to solve their dire financial problems.
    We encourage the subcommittee to continue to strive to close the pay
    gap, which will have a profound effect in the lives of our members and
    their families.
        Bonuses and other forms of cash compensation that the subcommittee
    has authorized not only attracted but motivated our citizen soldiers
    and airmen to serve their country and then remain in that service.
    Recruiting and retention of National Guard members is at an all time
    high, and all of them are volunteers. We don't view returning to
    conscription a viable alternative to the benefits the National Guard
    enjoys today.
        We do ask the subcommittee to consider raising the amount of Family
    Serviceman's Group Life Insurance payable for children from $10,000 to
    $25,000, remaining at no cost to the military member. The cost of care
    and even funerals has risen, and $10,000 would be only a partial
    reimbursement against any costs for a child.
                              inactive duty travel
        Our association and its members greatly appreciate the
    subcommittee's authority for inactive duty travel that was in Public
    Law 110-181, amending title 37, U.S.C., to allow for payment of travel
    and expenses related to inactive duty training outside of normal
    commuting distances. The law allows for payment of up to $300 per round
    trip with conditions. It was a good first step. However, with the
    increasing cost of fuel, as well as the impact on airline tickets, this
    very issue alone could determine whether a Guard member decides to stay
    or leave the Service.
        We would encourage the subcommittee to remove the restrictions and,
    for the most part, limit the determining factor to the normal commuting
    distance. In the case of the Virgin Islands and Hawaii, where the Guard
    is spread out over several islands, we would ask the subcommittee to
    place exceptions in title 37, section 408a, for those two geographic
    locations so that they don't have to meet the normal commuting distance
    restriction.
                             tricare fee increases
        For yet another year, the Defense Department has provided Congress
    a budget with false assumptions regarding the savings that will be
    accrued to fund TRICARE, and have asked for increases in fees, co-
    payments and deductibles. As the Government Accountability Office (GAO)
    report on TRICARE Reserve Select shows, the Defense Department is
    really not a reliable source for estimating its costs for health care
    programs. The GAO report doesn't mention the initial $300 million that
    Congress gave the Department for TRICARE Reserve Select in fiscal year
    2004 for a pilot project that never was. The GAO report says in fiscal
    year 2005, the Department estimated its costs for the program to be $70
    million, and actual costs were $5 million. In fiscal year 2006, after
    raising rates for users 8.5 percent, the Department estimated the
    program costs to be $442 million, and their actual costs were $40
    million. It is evident to the average person that the Department can't
    estimate costs for health care. The GAO report also said that the
    Department doesn't have a reliable or accurate accounting system.
        We believe all military members, and especially our National Guard
    members, have paid the cost of health care with their service and their
    lives. The Future of Military Health Care Task Force reported that the
    military health care system needs to be very generous, and we agree.
    The Task Force reported that the military health care system should not
    be free, and we agree--and the price is being paid every minute of
    every day in the lives of our soldiers and airmen and their families.
    The Task Force reported that the military health care system should be
    fair to the American taxpayer, and we agree, once the American taxpayer
    makes the same sacrifices that members of the military make, and the
    numbers say that less than 1 percent of the American taxpayers are
    willing to serve their Nation in its military forces.
        We thank the subcommittee for not raising the fees, co-payments and
    deductibles on TRICARE, and urge the subcommittee to require a greater
    accountability of the Defense Department before any other sacrifices,
    monetary or otherwise, are required of our members or veterans.
        A related issue is the provider fee schedule, and its tie to
    Medicare rates. More than a legislative band-aid needs to be applied to
    revamp the provider fees, to prevent the decrease of fees and increase
    the pool of eligible providers, especially in rural areas. This affects
    TRICARE Standard and TRICARE Reserve Select. As an example, the TRICARE
    fee schedule is so little, most providers in the State of Alaska will
    not accept TRICARE (acknowledging there is a provider access problem in
    Alaska as well) rendering TRICARE Reserve Select a useless benefit to
    many of those Guard and Reserve members who live in the State.
        We also suggest the subcommittee consider allowing gray area
    retirees the option to buy into TRICARE Reserve Select at the same rate
    as currently serving members. When our Guard members retire prior to
    reaching age 60 or in conjunction with the early retirement provisions
    in Public Law 110-181, they will have a lapse in health care. We
    propose the subcommittee consider allowing this small group of retirees
    the ability to buy into TRICARE at the same rate as those on TRICARE
    Reserve Select.
                                 dental funding
        One of the largest readiness needs, other than equipment, for the
    National Guard is dental treatment prior to mobilization and
    deployment. Currently authorized just prior to mobilization, during the
    alert period, there is still a problem with dental readiness and 90
    days just isn't enough time to diagnose and treat our National Guard.
    In addition, dental insurance rates through the TRICARE Reserve Dental
    Program are steep. Family coverage for National Guard members is almost
    $84 per month, and our Individual Ready Reserve cousins pay over $101
    monthly, and rates are set to increase in February next year another 5
    percent. When added to TRICARE Reserve Select rates, our citizen
    soldiers and airmen and their families are paying $337 monthly for
    basic services. That's a lot of money for over a third of our members,
    and they will make an economic decision to self insure rather than to
    pay those premiums. When they decide to self insure, military readiness
    for deployment is severely degraded.
        We seek your help in providing authority for the dental readiness
    of our members. Whether through additional government subsidizing of
    the dental contractor, space available treatment in military or
    veterans treatment facilities, or another idea that the subcommittee
    may have, something must be done to relieve this situation, and we
    request your assistance.
                               montgomery gi bill
        Education benefits were once the prime reason Guard members
    enlisted but at this particular time it is no longer is as much of a
    motivator. We are distressed by that fact, and have long been promoters
    of the educational benefits of military service. We recommend the
    subcommittee amend title 10, U.S.C., and move the entire Montgomery GI
    Bill program into Title 38. The Defense Department recently testified
    that they have no opposition to this action. Further, we recommend the
    subcommittee fix the inequities between active and Reserve benefits and
    reset the benefit to 47 percent of the active duty benefit--those
    benefits have shrunk to less than 29 percent of the active duty benefit
    in the last 8 years. Additionally, we recommend that the subcommittee
    authorize transferability of benefits from the servicemember to his/her
    spouse or family member should the servicemember be unable to use his/
    her educational benefit. We also recommend to the subcommittee that
    consideration be given to expansion of benefits based on cumulative
    periods of active duty due to multiple deployments of Guard and Reserve
    members. Finally, we recommend that the 14-year time limit on Chapter
    1606 benefits be lifted, and eligibility for entitlements be extended
    to a set period of time (i.e. 15 years) after separation from service,
    without tying expiration of benefits to the date of initial
    eligibility.
              report, commission on the national guard and reserve
        The Commission on the National Guard and Reserve rendered their
    report on January 31, 2008, and made 95 recommendations. In a macro
    sense, we disagree with the Commission's recommendations. The report
    takes a precarious step towards assimilating the National Guard into
    the Active Forces, losing its Constitutional mandate and charter, and
    relegating the Guard to limited roles and missions. As a trade-off, the
    report recommends more joint assignments, commensurate rank with
    responsibility, and accountability of Active component commanders for
    Reserve strength and readiness. Although a few of the recommendations
    seem worthy of consideration, the majority of the document discounts
    the militia as nothing more than bill payers for active duty billets
    and structure.
        One recommendation is for the Department of Homeland Security to
    determine civil support requirements, not the Defense Department. We do
    not believe that the Department of Homeland Security has the capability
    or expertise resident in the agency to determine the homeland security
    requirements for the Guard. We oppose the Department of Homeland
    Security determining or dictating requirements for the National Guard.
        The report recommends diminishing the full-time support workforce
    in the Guard and replacing them with Active component soldiers. The
    Guard had such an arrangement in the early-1980s, when the Guard first
    started their Active Guard Reserve program. Today, with heavier
    commitments and more deployments with which to deal, full time support
    is critical to mission success. The Army Guard is funded for less than
    60 percent of their full-time support requirements. The Air Guard is
    somewhat better. This necessary full-time force pays dividends in
    preparing lives for war, and cannot be sacrificed on the economic
    altar. We oppose any degradation of the full-time support program.
        We agree with the Commission that the Chief, National Guard Bureau,
    should be promoted to General and have a seat on the Joint Chiefs of
    Staff. Traditionally, the Joint Chiefs have all been Active component
    officers, all fine men. However, they are combat-oriented, wartime
    focused officers. There is no representation that relates the homeland
    security mission so critical to America. The Chief, National Guard
    Bureau, brings that focus to the panel. Likewise, the top officers at
    Northern Command need to be National Guard, either Army or Air, due to
    the complexity of coordinating with individual States and their
    governments. An Active component officer knows little to nothing of
    communicating with State governments, especially for emergency planning
    and response.
        The commission recommended revamping the retirement system, taking
    the views of the Defense Advisory Committee on Military Compensation
    from 2006. Although the recommendation is close to what the Guard
    currently has, it will be a tremendous culture change for the Active
    component. Without more specificity on the recommendation, it only
    causes confusion and distrust in the process and the system, two
    undesirable qualities in a time of war. We believe the parent Services,
    as well as the U.S. Coast Guard, Public Health Service, and National
    Oceanic and Atmospheric Administration, will all have concerns about
    this recommendation, even though the report was not inclusive of those
    organizations.
        It recommends shifting capabilities currently resident in the Guard
    that are not required for its State missions but are required for its
    Federal missions either to the Federal Reserve components or to the
    active duty military, as appropriate. This means the Guard will do
    homeland security and civil support missions only and no longer have
    combat roles or missions. It would be impossible for the Army or Air
    Force to prosecute the war on terror without the Guard, and impossible
    for the Active components to recruit, train, and retain the thousands
    of people it would need to replace the Guard capability. We oppose this
    recommendation.
        Another recommendation is for duty status reform--taking 29
    statuses down to 2, either on active duty or not. The Commission
    considers inactive duty training as active duty, and therefore
    recommends adjusting the pay from receiving one day's pay per drill
    period to one day's pay for one day. The Commission recommends
    implementing this within 2 years and completing it within 5 years. This
    may reduce duty statuses and the Defense Department's liability for
    pay, benefits and retirement, but it also reduces the financial benefit
    for the Guard member, to include a reduction of retirement points and
    eventual retirement compensation (and possibly survivors benefit
    annuity payments to surviving spouses). We stand opposed to this
    recommendation.
        We do agree that Basic Allowance for Housing, which pays a reduced
    housing allowance for periods of active duty of less than 30 days, can
    be eliminated altogether and any period of active duty would receive
    prorated housing allowance.
            space available travel privileges for surviving spouses
        When a military member passes away, the surviving spouse is no
    longer eligible to use the space available travel benefit since that
    spouse no longer has a sponsor with whom to travel. There is no cost to
    the government associated with this benefit--if there is a seat
    available on the military aircraft, the spouse fills the seat. If there
    is no seat, the spouse does not fly. If there is a small cost to fly,
    the spouse pays the cost. The spouse would have to comply with all
    space available standards, such as carrying their own luggage, climbing
    stairs unassisted, and being financially responsible during their
    travel.
        We believe this benefit is earned by the spouse with the years of
    sacrifice the spouse endured while their military member served our
    great nation. Such a small change in the law is the right thing to do
    for them, as they are one of the few classes of beneficiaries unable to
    travel on a military aircraft. We encourage the subcommittee to
    consider legislation to allow surviving spouses to fly on military
    aircraft space available.
                              equipment shortages
        Our soldiers and airmen will not remain in the National Guard if
    they have no equipment on which to train, either for sustainment after
    returning from deployment or in preparation for deployment. As much as
    TRICARE is a readiness issue, so is equipment and both have personnel
    implications in recruiting and retention of Guard members.
        Within the last couple of weeks, you have heard the testimony of
    the Reserve chiefs, to include the Chief of the National Guard Bureau,
    with regard to equipment shortfalls in the Guard. Much of the Guard's
    equipment has been moved to Iraq, and we believe some of that
    equipment, which was supposed to come back from theater, has been given
    to the Iraqi Army. A major news source reported in mid-March that
    refurbished U.S. humvees, which have been used by U.S. forces and were
    scheduled to be sent home, had been transferred to the Iraqi Army. A
    total of 8,500 vehicles are part of this action.
        Testimony has likened the Guard equipment problem to a local fire
    or police department being called for help, and not showing up with its
    required equipment to address the situation. Billions and billions of
    dollars have been authorized and appropriated by Congress, and the
    Department cannot accurately track those appropriations down to the end
    item being purchased. Indeed, there is doubt that the monies earmarked
    for Guard equipment were ever used for that purpose.
        We want to go on record with our appreciation for the National
    Guard and Reserve Equipment Account, for without it our Guard would be
    seriously without any necessary supplies and equipment. We implore the
    subcommittee to work with the appropriators to ensure the
    accountability for equipment procurement has proper oversight.
        We thank you for the opportunity to express the views of the
    Enlisted Association of the National Guard of the United States and
    look forward to working with the subcommittee. We know the subcommittee
    is well aware of the National Guard, the capabilities it brings to the
    table, and the undeniable devotion to this Nation the National Guard
    has in its citizen soldiers and airmen.

        Senator Ben Nelson. Thank you, Sergeant.
        Colonel Strobridge?

     STATEMENT OF COL. STEVEN P. STROBRIDGE, USAF (RET.), DIRECTOR
       OF GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF
                                AMERICA

        Colonel Strobridge. Thank you, Mr. Chairman and Senator
    Graham. My portion of the Coalition testimony will address
    health care issues.
        We certainly fully support the comments Meredith made on
    care for wounded warriors and their families, and we applaud
    what the committee did in first-step actions in this year's
    NDAA, but we do think that is only a first step, and we have a
    long way to go.
        In that regard, continued collaboration between this
    committee and the Veterans Affairs Committee is going to be
    absolutely essential. We still have a lot of problems to deal
    with on that front.
        Meredith mentioned some of the eligibility continuity
    problems encountered by families after disability retirement.
    We believe that members and families who are forced from Active
    Duty because of service-caused disabilities should retain
    Active-Duty-level TRICARE coverage for 3 years. The new law
    does that only for the servicemember, and only when VA care is
    not available. That's too limited and too vague for troops and
    families facing extended rehab requirements after leaving
    Active Duty. Families shouldn't be caught between differing
    definitions of what VA care is available, as they are now. We
    allow 3 years Active-Duty-level coverage for survivors when a
    servicemember dies on Active Duty. To us, the severely wounded
    and their families deserve no less. Examples of those kinds of
    things--Meredith mentioned the cognitive therapy issue. We have
    people who are in the ECHO program who lose their benefits when
    they're retired, per diem for family caregivers, those kinds of
    issues.
        We're also concerned that there's no central oversight to
    ensure that all departments and Services implement best
    practices from all the various ongoing military, VA, and
    civilian test projects on TBI and post-traumatic stress
    disorder. We urge including this responsibility under the newly
    legislated DOD-VA Interagency Program Office or establishing a
    related office for that purpose.
        Finally, we support the disability retirement model in
    which DOD accepts VA-assigned disability ratings, but we still
    need to address interservice differences on what conditions are
    deemed unfitting or pre-existing. We oppose doing away with the
    DOD disability retirement system, as some have envisioned,
    which would substantially reduce retirement benefits for many
    wounded warriors, and we don't think that was the intent of
    this exercise.
        On TRICARE fees, we oppose the large increases proposed by
    DOD in the recent task force report, and we urge restoring the
    $1.2 billion budget cut. We think it's wrong that the task
    force focused only on cost to the government, with barely a
    sentence on what military people earn for their career of
    sacrifice. In 2001, the new administration's officials praised
    TRICARE for Life, but now act as if no one expected that health
    care expenses for retirees over 65 would be very high. We can't
    see what changed during the past 6 years of war that makes the
    military community any less deserving of their benefit.
        The plan to raise drug co-pays 100 to 400 percent would put
    them higher than most civilian plans. The Blue Cross/Blue
    Shield plan that the Military Officers Association offers every
    one of our employees has lower co-pays, across the board, than
    DOD proposes. DOD would quintuple the retail generic co-pay
    from $3 to $15. That's more than 87 percent of civilian plans
    charge. Wal-Mart offers generics to anybody who walks in the
    door, for $4 for 400 generic drugs.
        The Coalition believes military benefits should be driven
    by standards and principles, not the budget. Just as we have
    statutory standards for most other major compensation elements,
    we urge the subcommittee to put some standards in this year's
    defense bill using S. 604 as the model. Fundamental among these
    are that military retirement and health benefits are the
    primary offset for the extraordinary sacrifices inherent in two
    or three decades of military service, that military people pay
    steep premiums for care, over and above the cash fees they pay
    in retirement, and pay them up front in service and sacrifice
    over multiple decades; and, finally, that the percentage
    increase in fees in any year shouldn't exceed the percentage
    increase in military compensation.
        Two years ago, you met with us and DOD leaders to urge us
    to work together to find ways to reduce costs in ways that
    don't hurt military people. We took that very seriously, and we
    identified 16 ways, and have offered, repeatedly, to partner
    with the DOD on those. The DOD has refused, until just
    recently. Thanks to Dr. Casscells and General Granger, they're
    now looking at several of our proposals. We will be willing
    partners in that effort, if we're allowed.
        One final item, a recent GAO report confirmed that Guard
    and Reserve members are overcharged for TRICARE Reserve Select
    by about $50 for single people and $175 a month for families.
    We urge the subcommittee to cut TRS fees and direct refunds. We
    continue to believe--and the Guard and Reserve Commission
    agreed--that the government will save money and Reserve
    families will be better served by authorizing an optional
    subsidy to continue their civilian family coverage when
    mobilized, just as we already do for DOD civilians who are
    mobilized as Guard or Reserve members.
        That concludes my remarks. Thank you very much for your
    consideration.
        [The prepared statement of The Military Coalition follows:]
                  Prepared Statement by The Military Coalition
        Mr. Chairman and distinguished members of the committee. On behalf
    of The Military Coalition, a consortium of nationally prominent
    uniformed services and veterans' organizations, we are grateful to the
    committee for this opportunity to express our views concerning issues
    affecting the uniformed services community. This statement provides the
    collective views of the following military and veterans' organizations,
    which represent approximately 5.5 million current and former members of
    the 7 uniformed services, plus their families and survivors.

             Air Force Association
             Air Force Sergeants Association
             Air Force Women Officers Associated
             American Logistics Association
             American Veterans
             Army Aviation Association of America
             Association of Military Surgeons of the United States
             Association of the United States Army
             Chief Warrant Officer and Warrant Officer Association,
            U.S. Coast Guard
             Commissioned Officers Association of the U.S. Public
            Health Service, Inc.
             Enlisted Association of the National Guard of the
            United States
             Fleet Reserve Association
             Gold Star Wives of America, Inc.
             Jewish War Veterans of the United States of America
             Marine Corps League
             Marine Corps Reserve Association
             Military Chaplains Association of the United States of
            America
             Military Officers Association of America
             Military Order of the Purple Heart
             National Association for Uniformed Services
             National Military Family Association
             National Order of Battlefield Commissions
             Naval Enlisted Reserve Association
             Naval Reserve Association
             Noncommissioned Officers Association
             Reserve Enlisted Association
             Reserve Officers Association \1\
    ---------------------------------------------------------------------------
        \1\ The Reserve Officers Association supports the non-health care
    portion of the testimony.
    ---------------------------------------------------------------------------
             Society of Medical Consultants to the Armed Forces
             The Retired Enlisted Association
             United States Army Warrant Officers Association
             United States Coast Guard Chief Petty Officers
            Association
             Veterans of Foreign Wars of the United States
             Veterans' Widows International Network

        The Military Coalition, Inc., does not receive any grants or
    contracts from the Federal Government.
                               executive summary
    Wounded Warrior Issues
        Joint Transition Office
        The Coalition is encouraged with the creation of a joint DOD-VA
    office to oversee development of a bidirectional electronic medical
    record. However, we strongly recommend that the subcommittee upgrade
    the scope of responsibilities and span of authority for the new DOD-VA
    Interagency Program Office to include top-down planning and execution
    of all ``seamless transition'' functions, including the joint
    electronic health record; joint DOD/VA physical; implementation of best
    practices for traumatic brain injury (TBI), post-traumatic stress
    disorder (PTSD), and special needs care; care access/coordination
    issues; and joint research.
        The Coalition believes authorizing 3 years of their active-duty-
    level health care benefit for service-disabled members and their
    families after separation or retirement is essential to align stated
    ``seamless transition'' intentions with the realities faced by disabled
    members and families.
        Disability Retirement Reform
        The Coalition urges the subcommittee to ensure any legislative
    changes to the military disability evaluation and retirement systems do
    not reduce compensation and benefit levels for disabled servicemembers.
        The Coalition does not support proposals to do away with the
    military disability retirement system and shift disability compensation
    responsibility to the VA.
        The Coalition urges an expanded review of all administrative and
    disciplinary separations since October 7, 2001, for members with recent
    combat experience to assess whether the behavior that led to separation
    may have been due to service-caused exposure.
    Active Force Issues
        End Strength and Associated Funding
        The Coalition strongly urges the subcommittee to sustain projected
    increases in ground forces and provide additional recruiting,
    retention, and support resources as necessary to attain/sustain them.
        The Coalition urges the subcommittee to reconsider the consistency
    of projected reductions of Navy and Air Force forces with long-term
    readiness needs.
        Compensation and Special Incentive Pay
        The Coalition urges the subcommittee to propose a military pay
    raise of at least 3.9 percent for fiscal year 2009 (one-half percentage
    point above private sector pay growth) and to continue such half-
    percent annual increases over the employment cost index (ECI) until the
    current 3.4 percent pay comparability gap is eliminated.
        The Coalition also urges the subcommittee to continue periodic
    targeted pay raises as appropriate to recognize the growing education
    and technical qualifications of enlisted members and warrant officers
    and sustain each individual grade/longevity pay cell at the minimum
    70th percentile standard.
        Access to Quality Housing
        The Military Coalition urges reform of military housing standards
    that inequitably depress BAH rates for mid- to senior-enlisted members
    by relegating their occupancy to inappropriately small quarters.
        Family Readiness and Support
        The Coalition urges the subcommittee to support increased family
    support funding and expanded education and other programs to meet
    growing needs associated with increased ops tempo, extended deployments
    and the more complex insurance, retirement, and savings choices faced
    by over-extended military families.
        Spouse Employment
        The Coalition urges the subcommittee to support legislation which
    would expand the Workforce Opportunity Tax Credit for employers who
    hire spouses of Regular and Reserve component servicemembers.
        Additionally, the Coalition supports providing tax credits to
    offset military spouses' expenses in obtaining career-related licenses
    or certifications when servicemembers are relocated to a different
    State.
        Flexible Spending Accounts
        TMC urges the subcommittee to continue pressing the DOD until
    servicemembers are provided the same eligibility to participate in
    Flexible Spending Accounts (FSAs) that all other Federal employees and
    corporate employees enjoy. Additionally, we support S.773.
        Permanent Change of Station Allowances
        The Military Coalition urges the subcommittee to upgrade permanent
    change-of-station allowances to better reflect the expenses members are
    forced to incur in complying with government-directed relocations, with
    priority on adjusting flat-rate amounts that have been eroded by
    years--or decades--of inflation, and shipment of a second vehicle at
    government expense to overseas accompanied assignments.
        Base Realignment and Closure/Rebasing/Military Construction/
            Commissaries
        The Coalition urges the subcommittee to closely monitor rebasing/
    base realignment and closure (BRAC) plans and schedules to ensure
    sustainment and timely development of adequate family support/quality
    of life programs. At closing and gaining installations, respectively--
    to include housing, education, child care, exchanges and commissaries,
    health care, family centers, unit family readiness, and other support
    services.
        Morale, Welfare, and Recreation Programs
        TMC urges the subcommittee to ensure that DOD funds MWR programs at
    least to the 85 percent level for Category A programs and 65 percent
    for Category B requirements.
        Education Enhancements
        TMC urges the subcommittee to work with the Veterans Affairs
    Committee to establish the benchmark level of Montgomery GI Bill (MGIB)
    education benefits at the average cost of attending a 4-year public
    college, and support continuous in-State tuition eligibility for
    servicemembers and their families in the State in which the member is
    assigned and the member's home State of record once enrolled as a
    student.
    National Guard and Reserve Issues
        Reserve Retirement and `Operational Reserve' Policy
        TMC strongly urges further progress in revamping the Reserve
    retirement system in recognition of increased service and sacrifice of
    National Guard and Reserve component members, including at a minimum,
    extending the new authority for a 90-day=3-month reduction to all
    National Guard and Reserve members who have served since September 11.
        A Total Force Approach to the Montgomery GI Bill
        TMC urges Congress to integrate Guard and Reserve and active duty
    MGIB laws into Title 38. In addition, TMC recommends restoring basic
    Reserve MGIB rates to approximately 50 percent of active duty rates and
    authorizing upfront reimbursement of tuition or training coursework for
    Guard and Reserve members.
        Family Support Programs and Benefits
        TMC urges Congress to continue and expand its emphasis on providing
    consistent funding and increased outreach to connect Guard and Reserve
    families with relevant support programs.
        Tangible Support for Employers
        The Coalition urges Congress to support needed tax relief for
    employers of Selected Reserve personnel and reinforce the Employer
    Support for Guard and Reserve Program.
        Seamless Transition for Guard and Reserve Members
        The Coalition urges the subcommittee to continue and expand its
    efforts to ensure Guard and Reserve members and their families receive
    needed transition services to make a successful readjustment to
    civilian status.
    Retirement Issues
        Concurrent Receipt
        The Coalition urges the subcommittee to act expeditiously on the
    recommendations of the Veterans' Disability Benefits Commission and
    implement a plan to eliminate the deduction of VA disability
    compensation from military retired pay for all disabled military
    retirees.
        Uniformed Services Retiree Entitlements and Benefits
        TMC urges the subcommittee to resist initiatives to ``civilianize''
    the military retirement system in ways that reduce the compensation
    value of the current retirement system and undermine long-term
    retention.
        Permanent ID Card Reform
        The Coalition urges the subcommittee to direct the Secretary of
    Defense to authorize issuance of permanent military identification
    cards to uniformed services family members and survivors who are age 65
    and older.
    Survivor Issues
        Survivor Benefit Plan-Dependency and Indemnity Compensation Offset
        The Coalition strongly urges the subcommittee to take further
    action to expand eligibility for the special survivor indemnity
    allowance to include all Survivor Benefit Plan (SBP)-Dependency and
    Indemnity Compensation (DIC) survivors and continue progress toward
    completely repealing the SBP-DIC offset for this most-aggrieved group
    of military widows.
        Final Retired Paycheck
        TMC urges the subcommittee to end the insensitive practice of
    recouping the final month's retired pay from the survivor of a deceased
    retired member.
    Health Care Issues
        Full Funding for the Defense Health Program
        The Military Coalition strongly urges the subcommittee to take all
    possible steps to restore the reduction in TRICARE-related budget
    authority and ensure continued full funding for Defense Health Program
    needs.
        Protecting Beneficiaries Against Cost-Shifting
        The Coalition urges the subcommittee to require DOD to pursue
    greater efforts to improve TRICARE and find more effective and
    appropriate ways to make TRICARE more cost-efficient without seeking to
    ``tax'' beneficiaries and make unrealistic budget assumptions.
        TMC Health Care Cost Principles
        The Coalition most strongly recommends Rep. Chet Edwards' and Rep.
    Walter Jones' H.R. 579 and Sen. Frank Lautenberg's and Sen. Chuck
    Hagel's S. 604 as models to establish statutory findings, a sense of
    Congress on the purpose and principles of military health care
    benefits, and explicit guidelines for and limitations on adjustments.

             Active duty members and families should be charged no
            fees except retail pharmacy co-payments, except to the extent
            they make the choice to participate in TRICARE Standard or use
            out-of-network providers under TRICARE Prime.
             For retired and survivor beneficiaries, the percentage
            increase in fees, deductibles, and co-payments that may be
            considered in any year should not exceed the percentage
            increase beneficiaries experience in their compensation.
             The TRICARE Standard inpatient copay should not be
            increased further for the foreseeable future. At $535 per day,
            it already far exceeds inpatient copays for virtually any
            private sector health plan.
             There should be no enrollment fee for TRICARE Standard
            or TRICARE For Life (TFL), since neither offers assured access
            to TRICARE-participating providers. An enrollment fee implies
            enrollees will receive additional services, as Prime enrollees
            are guaranteed access to participating providers in return for
            their fee. Congress already has required TFL beneficiaries to
            pay substantial Medicare Part B fees to gain TFL coverage.
             There should be one TRICARE fee schedule for all
            retired beneficiaries, just as all legislators, Defense leaders
            and other Federal civilian grades have the same health fee
            schedule. The TRICARE schedule should be significantly lower
            than the lowest tier recommended by the DOD, recognizing that
            all retired members paid large upfront premiums for their
            coverage through decades of arduous service and sacrifice.
        TRICARE Standard Enrollment
        The Coalition strongly recommends against establishment of any
    TRICARE Standard enrollment system; to the extent enrollment may be
    required, any beneficiary filing a claim should be enrolled
    automatically, without denying the claim. No enrollment fee should be
    charged for TRICARE Standard until and unless the program offers
    guaranteed access to a participating provider.
        Private Employer Incentive Restrictions
        The Coalition recommends Congress modify the law restricting
    private employer TRICARE incentives to explicitly exempt employers who
    offer only cafeteria plans (i.e., cash payments to all employees to
    purchase care as they wish) and employers who extend specific cash
    payments to any employee who uses health coverage other than the
    employer plan (e.g., FEHBP, TRICARE, or commercial insurance available
    through a spouse or previous employer).
        Provider Participation Adequacy
        The Coalition urges the subcommittee to continue monitoring DOD and
    Government Accountability Office (GAO) reporting on provider
    participation to ensure proper follow-on action.
        Administrative Deterrents to Provider Participation
        The Coalition urges the subcommittee to continue its efforts to
    reduce administrative impediments that deter providers from accepting
    TRICARE patients.
        TRICARE Reimbursement Rates
        The Coalition urges the subcommittee to exert what influence it can
    to persuade the Finance Committee to reform Medicare/TRICARE statutory
    payment formula. To the extent the Medicare rate freeze continues, we
    urge the subcommittee to encourage the DOD to use its reimbursement
    rate adjustment authority as needed to sustain provider acceptance.
        Additionally, The Coalition urges the subcommittee to require a
    Comptroller General report on the relative propensity of physicians to
    participate in Medicare vs. TRICARE, and the likely effect on such
    relative participation of a further freeze in Medicare/TRICARE
    physician payments along with the affect of an absence of bonus
    payments.
        Minimize Medicare/TRICARE Coverage Differences
        The Coalition urges the subcommittee to align TRICARE coverage to
    at least match that offered by Medicare in every area and provide
    preventive services at no cost.
        TRICARE Reserve Select (TRS) Premium
        The Coalition recommends reducing TRS premiums to $48/month
    (single) and $175/month (family), as envisioned by the GAO, with
    retroactive refunds as appropriate. For the future, the percentage
    increase in premiums in any year should not exceed the percentage
    increase in basic pay.
        The Coalition further recommends that the subcommittee request a
    report from the Department of Defense (DOD) on options to assure TRS
    enrollees' access to TRICARE-participating providers.
        Private Insurance Premium Option
        The Coalition recommends developing a cost-effective option to have
    DOD subsidize premiums for continuation of a Reserve employer's private
    family health insurance during periods of deployment as an alternative
    to permanent TRICARE Reserve Select coverage.
        Involuntary Separatees
        The Coalition recommends authorizing 1 year of post-Transitional
    Assistance Management Program (TAMP) TRS coverage for every 90 days
    deployed in the case of returning members of the Individual Ready
    Reserve (IRR) or members who are involuntarily separated from the
    Selected Reserve. The Coalition further recommends that voluntarily
    separating reservists subject to disenrollment from TRS should be
    eligible for participation in the Continued Health Care Benefits
    Program (CHCBP).
        Gray Area Reservists
        The Coalition urges the subcommittee to authorize an additional
    premium-based option under which members entering ``gray area'' retiree
    status would be able to avoid losing health coverage.
        Reserve Dental Coverage
        The Coalition supports providing dental coverage to reservists for
    90 days pre- and 180 days post-mobilization (during TAMP), unless the
    individual's dental readiness is restored to T-2 condition before
    demobilization.
        Restoration of Survivors' TRICARE Coverage
        The Coalition recommends restoration of TRICARE benefits to
    previously eligible survivors whose second or subsequent marriage ends
    in death or divorce.
        TRICARE Prime Remote Exceptions
        The Coalition recommends removal of the requirement for the family
    members to reside with the active duty member to qualify for the
    TRICARE Prime Remote Program, when the family separation is due to a
    military-directed move or deployment.
        Base Realignment and Closure, Rebasing, and Relocation
        The Coalition recommends codifying the requirement to provide a
    TRICARE Prime network at all areas impacted by BRAC or rebasing.
    Additionally, we recommend that DOD be required to provide an annual
    report to Congress on the adequacy of health resources, services,
    quality and access of care for those beneficiary populations affected
    by transformation plans.
        Pharmacy Co-payment Changes
        The Coalition recommends deferral of any pharmacy copay increases
    pending assessment of the effects of the new Federal pricing law on
    usage and cost patterns for the different venues, and that the
    subcommittee instead urge DOD to pursue copay reductions and ease prior
    authorization requirements for medications for chronic diseases, based
    on private sector experience that such initiatives reduce long-term
    costs associated with such diseases.
        Rapid Expansion of ``Third Tier'' Formulary
        The Coalition urges the subcommittee to reassert its intent that
    the Beneficiary Advisory Panel (BAP) should have a substantive role in
    the formulary-setting process, including access to meaningful data on
    relative drug costs in each affected class, consideration of all BAP
    comments in the decisionmaking process, and formal feedback concerning
    rationale for rejection of BAP recommendations.
        Referral and Authorization System
        The Coalition recommends that Congress require a cost analysis
    report, including input from each Managed Care Support Contractor,
    concerning the referral process within DOD and reliance on Civilian
    Network Providers within an MTF's Prime Service Area.
        Deductibility of Health and Dental Premiums
        The Coalition urges all Armed Services Committee members to seek
    the support of the Finance Committees to approve legislation to allow
    all military beneficiaries to pay TRICARE-related insurance premiums in
    pre-tax dollars, to include TRICARE dental premiums, TRICARE Reserve
    Select premiums, TRICARE Prime enrollment fees, premiums for TRICARE
    Standard supplements, and long-term care insurance premiums.
                                    overview
        Mr. Chairman, The Military Coalition (TMC) thanks you and the
    entire subcommittee for your continued, steadfast support of our active
    duty, Guard, Reserve, retired members, and veterans of the uniformed
    services and their families and survivors. the subcommittee's work last
    year generated ground-breaking, innovative improvements in military end
    strength, currently serving pay, survivor benefits, disabled retiree
    programs, and of most significance, improvements in wounded warrior
    benefits, care, and treatment. These enhancements will definitely make
    a positive difference in the lives of active, Guard and Reserve
    personnel, retirees, survivors, and families.
        As our men and women in uniform continue to prosecute the global
    war on terror, the Coalition believes it is critical that the Nation
    support our troops with the appropriate resources. The services have
    reported that they are wearing out equipment at a record pace; however,
    the Coalition is concerned that we are wearing out our people in
    uniform at even a faster pace. The current rate of deployments and the
    accompanied stress to our troops and their families put at risk the
    readiness of our servicemembers.
        The men and women in uniform, active duty, Guard, and Reserve, are
    answering the call--but not without ever-greater sacrifice. Currently,
    over 615,000 National Guard and Reserve members have been called to
    active Federal service for the war on terrorism. Over 150,000 have had
    two or more deployments, putting particular stress on these members'
    civilian careers and employers. The ``total force'', with the support
    of their families, continues to endure mounting stress brought about by
    repeated deployments and ever-increasing workloads. Therefore, now is
    not the time to scrimp on the needs for our troops and their families.
        Over the past several years, the Pentagon has repeatedly sought to
    curb spending on military personnel and facilities to fund operational
    requirements. In the process, the DOD has imposed dramatic force
    reductions in the Air Force and the Navy, tried to deter military
    retirees from using their earned health coverage by proposing large
    TRICARE fee increases, and cut back on installation quality of life
    programs.
        The Coalition believes these efforts to rob personnel to fund
    operations will only make the uniformed services more vulnerable to
    future readiness problems. We agree with the Chairman of the Joint
    Chiefs of Staff, who has stated that 4 percent of gross domestic
    product (GDP) should be the ``absolute floor'' for the overall military
    budget. If we want a strong national defense, we have to pay for a
    strong military force as well as replace and upgrade aging, war-worn
    weapons and equipment.
        The Coalition is encouraged by Congress' strong support for
    continued increases to Army and Marine Corps end strength, in
    recognition that our troops and families are dangerously overburdened.
    We believe the country must follow through on future planned increases,
    regardless of troop withdrawals from Iraq, and that these should be
    funded through permanent increases in the defense budget, not
    supplemental appropriations that undermine essential, long-term
    commitments. It's been proven that our military didn't have sufficient
    forces to meet the requirements of the current war. It would be
    inexcusable not to be better prepared for future contingencies.
        In our statement today, The Military Coalition offers its
    collective recommendations on what needs to be done to address
    important personnel-related issues in order to sustain long-term
    personnel readiness.
                             wounded warrior issues
        Last February, a series of articles in the Washington Post titled
    ``The Other Walter Reed'' profiled shocking cases of wounded
    servicemembers who became lost in military health care and
    administrative systems upon being transferred to outpatient
    rehabilitative care.
        Subsequently, the national media ran many stories of seriously
    wounded troops warehoused in substandard quarters, waiting weeks and
    months for medical appointments and evaluation board results, left
    pretty much on their own to try and navigate the confusing maze of
    medical system and benefit and disability rules, and low-balled into
    disability separations rather than being awarded the higher benefits of
    military disability retirement.
        Interviews with family members--spouses, children, and parents--
    revealed heartbreaking real life dramas of those who quit their jobs
    and virtually lived at military hospitals to become caregivers to
    seriously wounded troops. Left with diminishing resources and
    unfamiliar with military benefit and disability rules, they were
    severely disadvantaged in trying to represent the interests of their
    wounded spouses and children who couldn't stand up for themselves.
        These issues drew the attention of the President and Congress,
    leading to the immediate appointment of multiple special commissions
    and task forces charged with investigating the problems and identifying
    needed solutions. The Coalition is very grateful for the work of the
    Dole-Shalala Commission, the Marsh-West Independent Review Group, the
    VA Interagency Task Force on Returning Veterans, the Mental Health Task
    Force, and the previously authorized Veterans' Disability Benefits
    Commission. The Coalition endorses the vast majority of these groups'
    recommendations, and we're pleased that the subcommittee made a
    conscientious effort to address many of them in the Wounded Warrior Act
    provisions of the National Defense Authorization Act (NDAA) for Fiscal
    Year 2008.
        Congress and TMC agree that our Nation's service men and women have
    earned first class care and assistance, both during recuperation and
    following separation or retirement from the military.
        We are gratified at the sincere and unprecedented leadership
    efforts in the Departments of Defense and Veterans' Affairs and the
    Armed Services and Veterans' Affairs Committees to transform the system
    to make this long overdue goal a reality.
        But years of bureaucratic and parochial barriers can't be swept
    away as easily as we all would wish. The good work done in 2007 was
    only a modest first step on the path to transforming military and
    veterans programs to meet the pressing needs of wounded and disabled
    members and their families. We're still a long, long way from achieving
    the ``seamless transition'' goal.
    Joint Transition Office
        The Coalition believes one critical problem is bureaucratic
    stovepiping in each department. While both DOD and VA are making great
    efforts to cooperate, there is no permanent joint activity or office
    whose primary mission is to jointly plan and execute the seamless
    transition strategy and then exercise productive oversight over the
    longer-term process. There's no doubt about the good intentions of
    leadership, but to sustain the effort for the long term requires a
    change in organizational structure. Periodic meetings, after which the
    DOD and VA participants return to their separate offices on opposite
    sides of the Potomac, won't sustain the effort after the horror stories
    fade from the headlines.
        This simply can't be someone's part-time job. It requires a full-
    time joint Federal transition office, staffed by full-time DOD, service
    and VA personnel working in the same office with a common joint
    mission: developing, implementing and overseeing the Joint Executive
    Council's strategic plan. This office's responsibilities should
    include:

             Joint In-Patient Electronic Health Record--The NDAA
            for Fiscal Year 2008 took the first step in authorizing a DOD/
            VA Interagency Program Office to oversee this specific
            initiative, which TMC has been seeking for years. But we
            believe the 2012 objective for implementing this system is too
            long to wait. Congress must press DOD and VA to speed delivery
            as soon as humanly possible, with concrete timelines and
            milestones for action. TMC also believes that the same logic
            that necessitates a joint office's oversight of this specific
            initiative is equally applicable in other areas, and that the
            interagency office's area of responsibility should be expanded
            accordingly.
             Special Needs Health Care--Polytrauma Rehabilitation
            Centers were established to meet the specialized clinical care
            needs of patients with multiple trauma conditions. They provide
            comprehensive inpatient rehabilitation services for individuals
            with complex cognitive, physical and mental health sequelae of
            severe disabling trauma. These centers require special
            oversight in order to ensure the required resources are
            available to include specialized staff, technical equipment and
            adequate bed space. This oversight must be a joint effort since
            it provides a significant piece of the health care continuum
            for severely injured personnel.
             PTSD, Traumatic Brain Injuries (TBI), and Mental
            Health/Counseling--The Coalition strongly supports the
            provisions in the NDAA for Fiscal Year 2008 establishing
            Centers of Excellence for these programs. We simply must have
            some central monitoring, evaluation, and crossfeed to take best
            advantage of the wide variety of current and planned DOD,
            Service, and VA programs and pilot projects aimed at
            destigmatizing, identifying, and treating TBI and PTSD. The
            Coalition believes it also is important to ensure that TBI and
            PTSD are identified and treated as combat injuries rather than
            mental health problems. The Coalition is doubtful whether these
            centers, by themselves, will be in a position to ensure
            coordination and implementation of best practices across all
            departments and Services.
             Caregiver Initiatives--Several wounded warrior
            provisions in the recently enacted NDAA provide additional
            support for the caregiver of the wounded warrior, typically a
            family member. However, we believe more needs to be done to
            strengthen support for families, to include the authorization
            of compensation for family member caregivers of severely
            injured who must leave their employment to care for the
            servicemember.
             Access to Care--A significant impediment to the
            ``seamless transition'' goal is that there are significant
            differences between health coverage and some other entitlements
            when a member transitions from active military Service to
            separated or retired status. TRICARE benefits for disability
            retirees and families are not the same as they were on active
            duty, and there are significant differences between coverage
            and availability of programs between TRICARE and the VA. When a
            member dies on active duty, Congress has deemed that the
            member's family should be eligible for 3 years of active-duty-
            level TRICARE coverage to assist in the family's transition.
            TMC believes strongly that members who are disabled
            significantly by military service deserve equal treatment. The
            NDAA for Fiscal Year 2008 authorized continued active-duty
            level coverage, but only for the servicemember, and then only
            in cases where VA coverage is not available. TMC believes this
            limitation significantly undermines the seamless transition
            goal for wounded/disabled members whose rehabilitation and
            recovery may continue long after the time they leave active
            duty. Their needs--and those of their families--should not be
            inhibited by higher copays, deductibles, and coverage decreases
            the moment they are separated or retired from active duty.
            Allowing disabled members and their families to retain their
            active duty military health care benefit for 3 years after
            separation or retirement is essential to align our stated
            intentions with the realities faced by disabled members and
            families.
             Joint Research-Combined Research Initiatives would
            further enhance the partnership between VA and DOD. Since many
            of the concerns and issues of care are shared, joint
            collaboration of effort in the area of research should enable
            dollars to go much further and provide a more standardized
            system of health care in the military and veteran communities.
            Furthermore, research must also be performed jointly and across
            all military departments and with other practicing health care
            agencies to ensure timely integration of these findings in the
            diagnosis and treatment of wounded and disabled patients.

        The Coalition is encouraged with the creation of a joint DOD-VA
    office to oversee development of a bi-directional electronic medical
    record. However, we strongly recommend that the subcommittee upgrade
    the scope of responsibilities and span of authority for the new DOD-VA
    Interagency Program Office to include top-down planning and execution
    of all ``seamless transition'' functions, including the joint
    electronic health record; joint DOD/VA physical; implementation of best
    practices for TBI, PTSD, and special needs care; care access/
    coordination issues; and joint research.
        The Coalition believes authorizing 3 years of their active-duty-
    level health care benefit for service-disabled members and their
    families after separation or retirement is essential to align stated
    ``seamless transition'' intentions with the realities faced by disabled
    members and families.
        Disability Retirement Reform--Several of the Walter Reed task
    forces and commissions recommended significant changes to the DOD
    Disability Evaluation System (DES), and the NDAA for Fiscal Year 2008
    includes several initiatives requiring joint DOD/VA DES pilot programs;
    use of the VA Schedule for Rating Disabilities; review of medical
    separations with disability ratings of 20 percent or less; and enhanced
    disability severance pay. These changes will hopefully improve the
    overall DES and correct the reported ``low-ball'' ratings awarded some
    wounded warriors.
        The Coalition is very supportive of the current DOD/VA disability
    rating pilot, which has the potential to help streamline transition
    from active duty into veteran/retired status. However, we believe
    further legislative efforts are required to curb service differences in
    determining whether a condition existed prior to service. To this end,
    language in the NDAA for Fiscal Year 2008 aimed at addressing this
    problem may actually have exacerbated it by amending only a part of the
    relevant provisions of law.
        The Coalition does not support proposals to simply do away with the
    military disability retirement system and shift disability compensation
    responsibility to the VA. While this proposal seems administratively
    simple, and supports our long-standing ``concurrent receipt'' goal of
    ensuring proper vesting of service-based retirement for members who
    suffer from service-caused disabilities, it poses two significant risks
    that TMC deems unacceptable. First, it would cause significant
    compensation reductions for some severely disabled personnel--up to
    $1,000 a month or more in some cases, and even more for some Guard and
    Reserve members who suffer severe disabilities. Second, it would
    eliminate the 30 percent-disability retirement threshold that now
    establishes eligibility for retiree TRICARE coverage for disabled
    members and their families. TMC believes there must continue to be a
    statutory military disability threshold above which the member is
    considered a military retiree (not simply a separatee and veteran) and
    eligible for all the privileges of military retirement, including
    TRICARE coverage. The Coalition objects strongly to establishing
    disability ratings, compensation, or health care eligibility based
    whether the disability was incurred in combat vice non-combat.
        The Coalition strongly supports the recent NDAA requirement for a
    case review of members separated with 20 percent or lower ratings since
    Oct. 7, 2001. There is evidence that many received ``low-ball'' ratings
    that did not adequately reflect the degree of their disabilities and
    unfairly denied them eligibility for military disability retired pay
    and health coverage.
        But we believe the subcommittee did not go far enough to correct
    past inequities. The Coalition is aware of many cases of ``model
    troops'' who fell into depression, drug use, and disciplinary
    situations after one or more combat tours, and who subsequently
    received administrative or disciplinary discharges.
        The Coalition urges the subcommittee to ensure any legislative
    changes to the military disability evaluation and retirement systems do
    not reduce compensation and benefit levels for disabled servicemembers.
    The Coalition does not support proposals to do away with the military
    disability retirement system and shift disability compensation
    responsibility to the VA.
        The Coalition urges an expanded review of all administrative and
    disciplinary separations since Oct. 7, 2001 for members with recent
    combat experience to assess whether the behavior that led to separation
    may have been due to service-caused exposure.
                              active force issues
        The subcommittee's key challenges will be to fend off those who
    wish to cut needed personnel and quality of life programs while working
    with DOD and the Administration to reduce the stress on the force and
    their families already subjected to repeated, long-term deployments.
    Rising day-to-day workloads for non-deployed members and repeated
    extensions of combat tours creates a breeding ground for retention
    problems. Meeting these challenges will require a commitment of
    personnel and resources on several fronts.
    End Strength and Associated Funding
        The Coalition was encouraged when the subcommittee ensured that the
    Army and Marine Corps authorized end strengths continued to grow in
    fiscal year 2008, and we are further encouraged that the DOD has asked
    for additional manpower increases for the Army and Marine Corps over
    the next 4 years.
        Congress must ensure these increases are sufficient to ease force
    rotation burdens and the services are fully funded in order to achieve
    the new end strength. Increasing end strength is not a quick fix that
    will ease the stressors on currently serving servicemembers and their
    families.
        Some already speculate that the planned increases may not be needed
    if we can reduce the number of troops deployed to Iraq. The Coalition
    believes strongly that the increases are essential to future readiness,
    regardless of force levels in Iraq. We know we didn't have enough
    troops to fight the current war without imposing terrible penalties on
    military members and families, and we must build our force management
    plans to avoid having to do so when the Nation is faced with another
    major unexpected contingency requirement.
        For too long, we have planned only for the best-case scenario,
    which ignores our responsibility to the Nation to be prepared for
    unexpected and less-favorable scenarios, which could well arise
    anywhere around the globe, including the Far East.
        A full range of funding is required to support this necessary end
    strength, including housing, health care, family programs, and child
    care. Having the services absorb these costs out of pocket is self-
    defeating.
        Furthermore, as the Army and Marine Corps increase over the next 4
    years, the Coalition remains concerned that ongoing Navy and Air Force
    active and Reserve personnel cuts are driven by budget considerations
    rather than operational requirements. We believe it is increasingly
    likely that future experience will prove these cutbacks ill-advised,
    and urge the subcommittee to reconsider their consistency with long-
    term readiness needs.
        The Coalition strongly urges the subcommittee to sustain projected
    increases in ground forces and provide additional recruiting,
    retention, and support resources as necessary to attain/sustain them.
        The Coalition urges the subcommittee to reconsider the consistency
    of projected reductions of Navy and Air Force forces with long-term
    readiness needs.
    Compensation and Special Incentive Pays
        The Coalition is committed to ensuring that pay and allowance
    programs are equitably applied to the seven uniformed services. In that
    regard, the Coalition urges the subcommittee to be mindful that
    personnel and compensation program adjustments for DOD forces should
    also apply to uniformed members of the Coast Guard, NOAA Corps, and
    Public Health Service.
        Since the turn of the century, Congress and DOD have made
    significant progress to improve the lives of men and women in uniform
    and their families. Since 1999, when military pay raises had lagged a
    cumulative 13.5 percent behind the private sector pay comparability
    standard, the subcommittee has narrowed that gap to 3.4 percent. Each
    year during that span, the subcommittee has ensured at least some
    progress in shrinking that disparity further. TMC is grateful for that
    progress, and believes strongly that it should continue until full pay
    comparability is restored.
        DOD uses the 70th percentile of earnings of private workers of
    comparable age, experience and education as a standard to help
    rebalance the military pay table through special targeted pay increases
    depending on grade and longevity status. The Coalition believes this
    measure is useful as one tool in the process of establishing the proper
    progression of the pay table, and needs to be monitored and applied as
    necessary in the future. But it does not, by itself, supplant overall
    growth in the ECI as the measure of pay comparability, nor does it
    erase the remaining 3.4 percent gap between military pay raises and
    private sector pay growth.
        The Coalition believes Congress will never find a better
    opportunity to phase out the remaining gap than today's conditions when
    private sector pay growth is relatively low. In assessing the proper
    amount to reduce the pay gap, Congress also should consider that
    today's troops are working much harder--and their families sacrificing
    much more--for their modest raises.
        This year, we expect the Defense budget will propose a 3.4 percent
    raise for military personnel in 2009--a percentage equal to the growth
    in private sector pay 2 years earlier in 2007. The Coalition believes
    strongly that this is not the time to end Congress' steady path of
    progress in reducing the military pay comparability gap.
        The Coalition urges the subcommittee to propose a military pay
    raise of at least 3.9 percent for fiscal year 2009 (one-half percentage
    point above private sector pay growth) and to continue such half-
    percent annual increases over the ECI until the current 3.4 percent pay
    comparability gap is eliminated.
        The Coalition also urges the subcommittee to continue periodic
    targeted pay raises as appropriate to recognize the growing education
    and technical qualifications of enlisted members and warrant officers
    and sustain each individual grade/longevity pay cell at the minimum
    70th percentile standard.
    Access to Quality Housing
        Today's housing allowances come much closer to meeting military
    members' and families' housing needs than in the past, thanks to the
    conscientious efforts of the subcommittee in recent years.
        But the Coalition believes it's important to understand that some
    fundamental flaws in the standards used to set those allowances remain
    to be corrected, especially for enlisted members.
        The Coalition supports revised housing standards that are more
    realistic and appropriate for each pay grade. Many enlisted personnel
    are unaware of the standards for their respective pay grade and assume
    that their BAH level is determined by a higher standard or by the type
    of housing for which they would qualify if they live on a military
    installation. For example, only 1.25 percent of the enlisted force (E-
    9) is eligible for BAH sufficient to pay for a three-bedroom single-
    family detached house, even though thousands of more junior enlisted
    members do, in fact, reside in detached homes. The Coalition believes
    that as a minimum, this BAH standard (single-family detached house)
    should be extended gradually to qualifying servicemembers beginning in
    grade E-8 and subsequently to grade E-7 and below over several years as
    resources allow.
        The Military Coalition urges reform of military housing standards
    that inequitably depress BAH rates for mid to senior enlisted members
    by relegating their occupancy to inappropriately small quarters.
    Family Readiness and Support
        A fully funded, robust family readiness program continues to be
    crucial to overall readiness of our military, especially with the
    demands of frequent and extended deployments.
        Resource issues continue to plague basic installation support
    programs. At a time when families are dealing with increased
    deployments, they are being asked to do without. Often family centers
    are not staffed for outreach. Library and sports facilities hours are
    being abbreviated or cut altogether. Manpower for installation security
    is being reduced. These are additional sacrifices that we are imposing
    on our families left behind while their servicemembers are deployed.
        In a similar vein, the Coalition believes additional authority and
    funding is needed to offer respite and extended child care for military
    families. These initiatives should be accompanied by a more aggressive
    outreach and education effort to improve members' and families'
    financial literacy. We should ensure members are aware of and
    encouraged to use child care, mental health support, spousal
    employment, and other quality-of-life programs that have seen recent
    growth. However, this education effort should also include expanded
    financial education initiatives to inform and counsel members and
    families on life insurance options, Thrift Savings Plan, IRAs, flexible
    spending accounts, savings options for children's education, and other
    quality of life needs.
        In particular servicemembers must be educated on the long-term
    financial consequences of electing to accept the much lower-value
    $30,000 REDUX retention bonus after 15 years of service vice sustaining
    their full High-3 retirement benefit.
        The Coalition urges the subcommittee to support increased family
    support funding and expanded education and other programs to meet
    growing needs associated with increased ops tempo, extended deployments
    and the more complex insurance, retirement, and savings choices faced
    by over-extended military families.
    Spouse Employment
        The Coalition is pleased that movement is being made to enhance the
    total force spouse employment opportunities through a test program and
    strong partnerships between DOD, Department of Labor, service
    organizations, employers, and others; however, more needs to be done.
        More and more military spouses are in the workforce than in the
    past, but challenges in finding jobs after relocation adversely impact
    the military families' financial stability and satisfaction with
    military life. Spouse employment helps contribute to a strong military
    and helps in retention of our high quality, All-Volunteer Force.
    Defense leaders repeatedly acknowledge, ``We recruit servicemembers,
    but we retain families.''
        One of the greatest frustrations for working spouses is the career
    and financial disruption associated with military-directed relocations.
    If we're serious about retaining more military families, we must get
    serious about easing this significant career and military life
    dissatisfier.
        The Coalition urges the subcommittee to support legislation which
    would expand the Workforce Opportunity Tax Credit for employers who
    hire spouses of Regular and Reserve component servicemembers.
        Additionally, the Coalition supports providing tax credits to
    offset military spouses' expenses in obtaining career-related licenses
    or certifications when servicemembers are relocated to a different
    State.
    Flexible Spending Accounts
        The Coalition cannot comprehend the DOD's continuing failure to
    implement existing statutory authority for active duty and Selected
    Reserve members to participate in FSAs, despite both Armed Services
    Committees' prodding on this subject.
        All other Federal employees and corporate civilian employees are
    able to use this authority to save thousands of dollars a year by
    paying out-of-pocket health care and dependent care expenses with pre-
    tax dollars. It is unconscionable that the Department has failed to
    implement this money-saving program for the military members who are
    bearing the entire burden of national sacrifice in the global war on
    terrorism.
        TMC urges the subcommittee to continue pressing the DOD until
    servicemembers are provided the same eligibility to participate in FSAs
    that all other Federal employees and corporate employees enjoy.
    Additionally, we support S. 773.
    Permanent Change of Station Allowances
        Permanent Change of Station (PCS) allowances have continually
    failed to keep pace with the significant out-of-pocket expenses
    servicemembers and their families incur in complying with government-
    directed moves.
        For example, PCS mileage rates still have not been adjusted since
    1985. The current rates range from 15 to 20 cents per mile--an ever-
    shrinking fraction of the 50.5 cents per mile rate authorized for
    temporary duty travel. Also, military members must make any advance
    house-hunting trips at personal expense, without any government
    reimbursements such as Federal civilians receive.
        Additionally, the overwhelming majority of service families consist
    of two working spouses, making two privately owned vehicles a
    necessity. Yet the military pays for shipment of only one vehicle on
    overseas moves, including moves to Hawaii and Alaska. This forces
    relocating families into large out-of-pocket expenses, either by
    shipping a second vehicle at their own expense or selling one car
    before leaving the States and buying another upon arrival. The
    Coalition is greatly disappointed that, for 2 consecutive years, a
    subcommittee proposal to authorize shipping two vehicles to non-foreign
    duty locations outside of CONUS has been dropped in conference.
        The Coalition is grateful that the senior enlisted PCS weight
    allowance tables were increased slightly in the NDAA for Fiscal Year
    2006; however, we believe that these modification need to go further
    for personnel in pay grades E-7, E-8, and E-9 to coincide with
    allowances for officers in grades O-4, O-5, and O-6 respectively. The
    personnel property weight for a senior E-9 leader without dependents
    remains the same as for a single O-3 despite the normal accumulation of
    household goods over the course of a career.
        Four years ago, the subcommittee authorized the Families First
    initiative. Among its provisions was full replacement value (FRV)
    reimbursement for household goods damaged during PCS moves. We are
    grateful that this first FRV phase has begun but will continue to
    monitor its implementation. The next phase, focusing on survey results
    and real time access to the progress of household goods in the moving
    process has yet to be fully implemented. We will continue to monitor
    the progress and hope that Congress will be doing the same.
        Aside from that long-delayed initiative the last real adjustment in
    PCS expenses was 7 years ago in 2001, when this subcommittee upgraded
    PCS per diem (but not mileage) rates and raised the maximum daily
    Temporary Lodging Expense (TLE) allowance from $110 to $180 a day for a
    PCSing family, among certain other adjustments, including the increase
    in the junior enlisted weight allowances. That TLE amount is supposed
    to cover a family's food and lodging expenses while in temporary
    quarters at the gaining or losing installation. Today, after 7 years of
    inflation, it's hardly adequate to cover the daily expenses of a family
    of four or five anywhere in America, let alone a family ordered to
    relocate to San Diego or Washington, DC.
        The Coalition also supports authorization of a dislocation
    allowance for servicemembers making their final ``change of station''
    upon retirement from the uniformed services and a 500-pound
    professional goods weight allowance for military spouses.
        We cannot avoid requiring members to make regular relocations, with
    all the attendant disruptions in their children's education and their
    spouses' careers. The Coalition believes strongly that the Nation that
    requires military families to incur these disruptions should not be
    making them bear the attendant high expenses out of their own pockets.
        The Military Coalition urges the subcommittee to upgrade permanent
    change-of-station allowances to better reflect the expenses members are
    forced to incur in complying with government-directed relocations, with
    priority on adjusting flat-rate amounts that have been eroded by
    years--or decades--of inflation, and shipment of a second vehicle at
    government expense to overseas accompanied assignments.
    Base Realignment and Closure/Rebasing/Military Construction/
            Commissaries
        TMC remains concerned about inadequacy of service implementation
    plans for DOD transformation, global repositioning, Army modularity,
    and BRAC initiatives. Given the current wartime fiscal environment, TMC
    is greatly worried about sustaining support services and quality of
    life programs for members and families. These programs are clearly at
    risk--not a week goes by that the Coalition doesn't hear reports of
    cutbacks in base operation accounts and base services because of
    funding shortfalls.
        Feedback from the installation level is that local military and
    community officials often are not brought ``into the loop'' or provided
    sufficient details on changing program timetables to plan, seek, and
    fund support programs (housing, schools, child care, roads, and other
    infrastructure) for the numbers of personnel and families expected to
    relocate to the installation area by a specific date.
        We believe it is important to note that the commissary is a key
    element of the total compensation package for servicemembers and
    retirees. In addition to providing average savings of 30 percent over
    local supermarkets, commissaries provide an important tie to the
    military community. Shoppers get more than groceries at the commissary.
    It is also an opportunity to connect with other military family members
    and to get information on installation programs and activities through
    bulletin boards and installation publications. Finally, shoppers
    receive nutrition information and education through commissary
    promotions and educational campaigns contributing to the overall health
    of the entire beneficiary population.
        The Coalition urges the subcommittee to closely monitor rebasing/
    BRAC plans and schedules to ensure sustainment and timely development
    of adequate family support/quality of life programs. At closing and
    gaining installations, respectively--to include housing, education,
    child care, exchanges and commissaries, health care, family centers,
    unit family readiness, and other support services.
    Morale, Welfare, and Recreation Programs
        The availability of appropriated funds to support MWR activities is
    an area of continuing concern. TMC strongly opposes any DOD initiative
    that withholds or reduces MWR appropriated support for Category A and
    Category B programs or that reduces the MWR dividend derived from
    military base exchange programs.
        Servicemembers and their families are reaching the breaking point
    as a result of the war and the constant changes going on in the force.
    It is unacceptable to have troops and families continue to take on more
    responsibilities and sacrifices and not give them the support and
    resources to do the job and to take care of the needs of their
    families.
        TMC urges the subcommittee to ensure that DOD funds MWR programs at
    least to the 85 percent level for Category A programs and 65 percent
    for Category B requirements.
    Education Enhancements
        Providing quality education for all military children is a key
    recruiting and retention standard that has been historically supported
    by the subcommittee.
        The Coalition is concerned that there was no increase in the amount
    of the DOD Supplement to Impact Aid. The need for supplemental funding
    as school districts receive more military children as rebasing is
    implemented is increasing. We believe that the funding should reflect
    this greater impact.
        Servicemembers have seen the value of their MGIB dramatically
    diminish due to double digit education inflation. The Coalition
    recommends tying the MGIB education benefit level to the average cost
    of a 4-year public college.
        Furthermore, service families facing several duty location changes
    during a career often encounter problems establishing State residency
    for the purpose of obtaining in-State tuition rates for military
    children and spouses. The Coalition supports authorizing in-State
    college tuition rates for servicemembers and their families in the
    State in which the member is assigned and the member's home State of
    record. The in-State tuition should remain continuous once the military
    member or family member is established as a student.
        TMC urges the subcommittee to work with the Veterans' Affairs
    Committee to establish the benchmark level of MGIB education benefits
    at the average cost of attending a 4-year public college, and support
    continuous in-State tuition eligibility for servicemembers and their
    families in the State in which the member is assigned and the member's
    home State of record once enrolled as a student.
                    national guard and reserve force issues
        Every day somewhere in the world, our National Guard and Reserves
    are answering the call to service. Although there is no end in sight to
    their participation in homeland security, overseas deployment and
    future contingency operations, Guard and Reserve members have
    volunteered for these duties and accept them as a way of life in the
    21st century.
        Since September 11, 2001, more than 615,000 National Guard and
    Reserve service men and women have been called to active Federal
    service for the war on terrorism and more than 150,000 have served
    multiple deployments. They are experiencing similar sacrifices as the
    active-Duty Forces. However, readjusting to home life, returning to
    work and the communities and families they left behind puts added
    stress on Guard and Reserve members. Unlike active duty members, whose
    combat experience enhances their careers, many Guard Reserve members
    return to employers who are unhappy about their active duty service and
    find that their civilian careers have been inhibited by their prolonged
    absences. Further, despite the continuing efforts of the subcommittee,
    most Guard and Reserve families do not have the same level of
    counseling and support services that the active duty members have.
        All Guard and Reserve components are facing increasing challenges
    involving major equipment shortages, end-strength requirements,
    wounded-warrior health care, assistance and counseling for Guard and
    Reserve members for pre-deployment and post-deployment contingency
    operations.
        Congress and the DOD must provide adequate benefits and personnel
    policy changes to support our troops who go in harm's way.
    Reserve Retirement and `Operational Reserve' Policy
        The assumption behind the 1948-vintage G-R retirement system--
    retired pay eligibility at age 60--was that these servicemembers would
    be called up only infrequently for short tours of duty, allowing the
    member to pursue a full-time civilian career with a full civilian
    retirement. Under the ``Operational Reserve'' policy, reservists will
    be required to serve 1-year active duty tours every 5 or 6 years.
        Repeated, extended activations devalue full civilian careers and
    impede reservists' ability to build a full civilian retirement, 401(k),
    etc. Regardless of statutory reemployment protections, periodic long-
    term absences from the civilian workplace can only limit Guard and
    Reserve members' upward mobility, employability and financial security.
    Further, strengthening the Reserve retirement system is needed as an
    incentive to retain critical mid-career officers and NCOs for a full
    Reserve career to meet long-term readiness needs.
        The Coalition is grateful for the NDAA for Fiscal Year 2008
    provision that would lower the Reserve retirement age by 3 months for
    each cumulative 90 days of active duty on contingency operation orders.
    TMC appreciates the importance of this small first step, but is very
    concerned that the new authority authorizes such credit only for
    service in 2008 and beyond--ignoring the extreme sacrifices of those
    who have borne the greatest burden of sacrifice in the war on terror
    for one, two, three or more combat tours in the past 6 years.
        TMC strongly urges further progress in revamping the Reserve
    retirement system in recognition of increased service and sacrifice of
    National Guard and Reserve component members, including at a minimum,
    extending the new authority for a 90 day=3 month reduction to all
    National Guard and Reserve members who have served since September 11.
    A Total Force Approach to the MGIB
        The Nation's active duty, National Guard, and Reserve Forces are
    operationally integrated under the Total Force policy. But educational
    benefits under the MGIB do not reflect the policy nor match benefits to
    service commitment.
        TMC is grateful that the NDAA for Fiscal Year 2008 addressed a
    major inequity for operational reservists by authorizing 10 years of
    post-service use for benefits earned under Chapter 1607, 10 U.S.C.
        But this change will require the DOD, not the VA to pay the costs
    of readjustments for reservists. At a hearing on January 17, 2008, a
    senior DOD official acknowledged that the DOD no longer should control
    Chapter 1607.
        In addition, basic Reserve MGIB benefits for initial service entry
    have lost proportional parity with active duty rates since September
    11. These relative benefits have spiraled down from a historic ratio of
    47-50 percent of active duty MGIB levels to less than 29 percent--at a
    time when Guard and Reserve recruitment continues to be very
    challenging.
        TMC urges Congress to integrate Guard and Reserve and active duty
    MGIB laws into Title 38. In addition, TMC recommends restoring basic
    Reserve MGIB rates to approximately 50 percent of active duty rates and
    authorizing upfront reimbursement of tuition or training coursework for
    Guard and Reserve members.
    Family Support Programs and Benefits
        The Coalition supports providing adequate funding for a core set of
    family support programs and benefits that meet the unique needs of
    Guard and Reserve families with uniform access for all servicemembers
    and families. These programs would promote better communication with
    servicemembers, specialized support for geographically separated Guard
    and Reserve families and training and back up for family readiness
    volunteers. This access would include:

             Web-based programs and employee assistance programs
            such as Military OneSource and Guard Family.org.
             Enforcement of command responsibility for ensuring
            that programs are in place to meet the special needs of
            families of individual augmentees or the geographically
            dispersed.
             Expanded programs between military and community
            religious leaders to support servicemembers and families during
            all phases of deployments.
             Availability of robust preventive counseling services
            for servicemembers and families and training so they know when
            to seek professional help related to their circumstances.
             Enhanced education for Guard and Reserve family
            members about their rights and benefits.
             Innovative and effective ways to meet the Guard and
            Reserve community's needs for occasional child care,
            particularly for preventive respite care, volunteering, and
            family readiness group meetings and drill time.
             A joint family readiness program to facilitate
            understanding and sharing of information between all family
            members, no matter what the service.

        The Coalition recognizes the subcommittee's longstanding interest
    and efforts on this topic, including several provisions in the NDAA for
    Fiscal Year 2008. The Coalition will monitor the results of the surveys
    and increased oversight called for in the provisions and looks forward
    to working closely with the Family Readiness Council.
        TMC urges Congress to continue and expand its emphasis on providing
    consistent funding and increased outreach to connect Guard and Reserve
    families with relevant support programs.
    Tangible Support for Employers
        Employers of Guard and Reserve servicemembers shoulder an extra
    burden in support of the national defense. The new ``Operational
    Reserve'' policy places even greater strain on employers. For their
    sacrifice, they get plaques to hang on the wall.
        For Guard and Reserve members, employer `pushback' is listed as one
    of the top reasons for reservists to discontinue Guard and Reserve
    service. If we are to sustain a viable Guard and Reserve Force for the
    long term, the Nation must do more to tangibly support employers of the
    Guard and Reserve and address their substantive concerns, including
    initiatives such as:

             Tax credits for employers who make up any pay
            differential for activated employees.
             Tax credits to help small business owners hire
            temporary workers to fill in for activated employees.
             Tax credits for small manufacturers to hire temporary
            workers.

        The Coalition urges Congress to support needed tax relief for
    employers of Selected Reserve personnel and reinforce the Employer
    Support for Guard and Reserve Program.
        Seamless Transition for Guard and Reserve Members--Over 615,000
    members of the Guard and Reserve have been activated since September
    11. Congressional hearings and media reports have documented the fact
    that at separation, many of these servicemembers do not receive the
    transition services they and their families need to make a successful
    readjustment to civilian status. Needed improvements include but are
    not limited to:

             Funding to develop tailored Transition Assistance
            Program (TAP) services in the hometown area following release
            from active duty.
             Expansion of VA outreach to provide ``benefits
            delivery at discharge'' services in the hometown setting.
             Authority for mobilized Guard and Reserve members to
            file ``FSA'' claims for a prior reporting year after return
            from active duty.
             Authority for employers and employees to contribute to
            401k and 403b accounts during mobilization.
             Enactment of academic protections for mobilized Guard
            and Reserve students including: academic standing and refund
            guarantees; and, exemption of Federal student loan payments
            during activation.
             Automatic waivers on scheduled licensing/
            certification/promotion exams scheduled during a mobilization.
             Authority for reemployment rights for Guard and
            Reserve spouses who must suspend employment to care for
            children during mobilization.

        The Coalition appreciates the work of this subcommittee in seeking
    to address some of these needs in the NDAA for Fiscal Year 2008, but
    more remains to be done.
        The Coalition urges the subcommittee to continue and expand its
    efforts to ensure Guard and Reserve members and their families receive
    needed transition services to make a successful readjustment to
    civilian status.
                               retirement issues
        The Military Coalition is extremely grateful to the subcommittee
    for its support of maintaining a strong military retirement system to
    help offset the extraordinary demands and sacrifices inherent in a
    career of uniformed service.
    Concurrent Receipt
        In the NDAA for Fiscal Year 2004, Congress acknowledged the
    inequity of the disability offset to earned retired pay and established
    a process to end or phase out the offset for all members with at least
    20 years of service and at least a 50 percent disability rating. That
    legislation also established the Veterans' Disability Benefits
    Commission and tasked the Commission to review the disability system
    and recommend any further adjustments to the disability offset law.
        Now the Commission has provided its report to Congress, in which it
    recommended an end to the VA compensation offset for all disabled
    military retirees, regardless of years of service, percentage of
    disability, or source of the service-connected disability (combat vs.
    non-combat).
        In the interim, congressional thinking has evolved along similar
    lines. The Coalition is thankful for the subcommittee's efforts in the
    NDAA for Fiscal Year 2008 to extend Combat-Related Special Compensation
    to disabled retirees who had their careers forced into retirement
    before attaining 20 years of service, as well as ending the offset for
    retirees rated unemployable by the VA.
        Despite this important progress, major inequities still remain that
    require the subcommittee's immediate attention. Many retirees are still
    excluded from the same principle that eliminates the disability offset
    for those with 50 percent or higher disabilities. The Coalition agrees
    strongly with the Veterans' Disability Benefits Commission that
    principle is the same for all disabled retirees, including those not
    covered by concurrent receipt relief enacted so far.
        The one key question is, ``Did the retired member fully earn his or
    her service-based retired pay, or not, independent of any disability
    caused by military service in the process?'' The Coalition and the
    Disability Commission agree that the answer has to be ``Yes.'' Any
    disability compensation award should be over and above service-earned
    retired pay.
        If a service-caused disability is severe enough to bar the member's
    continuation on active duty, and the member is forced into medical
    retirement short of 20 years of service, the member should be
    ``vested'' in service-earned retired pay at 2.5 percent times pay times
    years of service.
        To the extent that a member's military disability retired pay
    exceeds the amount of retired pay earned purely by service, that
    additional amount is for disability and therefore is appropriately
    subject to offset by VA disability compensation.
        The principle behind eliminating the disability offset for Chapter
    61 retirees with less than 20 years of service with combat-related
    disabilities is no less applicable to those who had their careers cut
    short by other service-caused conditions. It is simply inappropriate to
    make such members fund their own VA disability compensation from their
    service-earned military retired pay, and it is unconscionable that
    current law forces thousands of severely injured members with as much
    as 19 years and 11 months of service to forfeit most or all of their
    earned retired pay.
        The Coalition urges the subcommittee to act expeditiously on the
    recommendations of the Veterans' Disability Benefits Commission and
    implement a plan to eliminate the deduction of VA disability
    compensation from military retired pay for all disabled military
    retirees.
    Uniformed Services Retiree Entitlements and Benefits
        The Coalition awaits the results of the 10th Quadrennial Review of
    Military Compensation, which was tasked with reviewing the
    recommendations of the Defense Advisory Committee on Military
    Compensation (DACMC). The Coalition does not support the DACMC (nor the
    Commission on the National Guard and Reserve) recommendations to modify
    the military retirement system to more closely reflect civilian
    practices, including vesting for members who leave Service short of a
    career and delaying retired pay eligibility for those who serve a
    career.
        Many such proposals have been offered in the past, and have been
    discarded for good reasons. The only initiative to substantially
    curtail/delay military retired pay that was enacted--the 1986 REDUX
    plan--had to be repealed 13 years later after it began inhibiting
    retention.
        The Coalition believes such initiatives to ``civilianize'' the
    military retirement system in ways that reduce the value of the current
    retirement system and undermine long-term retention are based on a
    seriously flawed premise. The reality is that unique military service
    conditions demand a unique retirement system. Surveys consistently show
    that the military retirement system is the single most powerful
    incentive to serve a full career under conditions few civilians would
    be willing to endure for even 1 year, much less 20 or 30. A civilian-
    style retirement plan would be appropriate for the military only if
    military service conditions were similar to civilian working
    conditions--which they most decidedly are not. The Coalition believes
    strongly that, if such a system as recommended by the DACMC existed for
    today's force under today's service conditions, the military services
    would already be mired in a much deeper and more traumatic retention
    crisis than they have experienced for many of the past several years.
        TMC urges the subcommittee to resist initiatives to ``civilianize''
    the military retirement system in ways that reduce the compensation
    value of the current retirement system and undermine long-term
    retention.
    Permanent Identification Card Eligibility
        The advent of TFL, expiration of TFL-eligible spouses' and
    survivors' military identification cards--and the threatened denial of
    health care claims--have caused many frail and elderly members and
    their caregivers significant administrative and financial distress.
        Previously, those who lived miles from a military installation or
    who resided in nursing homes and assisted living facilities simply did
    not bother to renew their identification cards upon the 4 year
    expiration date. Before enactment of TFL, they had little to lose by
    not doing so. But now, identification card expiration cuts off their
    new and all-important health care coverage.
        Congress has agreed with the Coalition's concerns that a 4-year
    expiration date is reasonable for younger family members and survivors
    who have a higher incidence of divorce and remarriage, but it imposes
    significant hardship and inequity upon elderly dependents and
    survivors.
        In the NDAA for Fiscal Year 2005, Congress authorized permanent ID
    cards for spouses and survivors who have attained age 75 (vs. the
    Coalition-recommended age 65), recognizing that many elderly spouses
    and survivors with limited mobility or who live in residential care
    facilities find it difficult or impossible to renew their military ID
    cards. Subsequently, Congress expanded that eligibility to permanently
    disabled dependents of retired members, regardless of age.
        Coalition associations continue to hear from a number of
    beneficiaries below the age of 75 who are disabled, living in
    residential facilities, are unable to drive, or do not live within a
    reasonable distance of a military facility. The threat of loss of
    coverage is forcing many others to try to drive long distances--
    sometimes in adverse weather and at some risk to themselves and
    others--to get their cards renewed.
        For administrative simplicity, the Coalition believes the age for
    the permanent ID card for spouses and survivors should coincide with
    the advent of TFL. To the extent an interim step may be necessary, the
    eligibility age could be reduced to 70.
        The Coalition urges the subcommittee to direct the Secretary of
    Defense to authorize issuance of permanent military identification
    cards to uniformed services family members and survivors who are age 65
    and older.
                                survivor issues
        The Coalition is grateful to the subcommittee for its significant
    efforts in recent years to improve the SBP. We particularly note that,
    as of April 1, thanks to this subcommittee's efforts, the minimum
    annuity for all SBP beneficiaries, regardless of age will be 55 percent
    of covered retired pay.
        We also appreciate Congress' initiative in last year's defense bill
    that establishes a special survivor indemnity allowance that is the
    first step in a longer-term effort to phase out the DIC offset to SBP
    when the member died of a service-caused condition.
    SBP-DIC Offset
        The Coalition believes strongly that current law is unfair in
    reducing military SBP annuities by the amount of any survivor benefits
    payable from the VA DIC program.
        If the surviving spouse of a retiree who dies of a service-
    connected cause is entitled to DIC from the Department of Veterans
    Affairs and if the retiree was also enrolled in SBP, the surviving
    spouse's SBP benefits are reduced by the amount of DIC. A pro-rata
    share of SBP premiums is refunded to the widow upon the member's death
    in a lump sum, but with no interest. This offset also affects all
    survivors of members who are killed on active duty.
        The Coalition believes SBP and DIC payments are paid for different
    reasons. SBP is purchased by the retiree and is intended to provide a
    portion of retired pay to the survivor. DIC is a special indemnity
    compensation paid to the survivor when a member's service causes his or
    her premature death. In such cases, the VA indemnity compensation
    should be added to the SBP the retiree paid for, not substituted for
    it. It should be noted as a matter of equity that surviving spouses of
    Federal civilian retirees who are disabled veterans and die of
    military-service-connected causes can receive DIC without losing any of
    their Federal civilian SBP benefits.
        The Coalition is concerned that, in authorizing the special
    survivor indemnity allowance in last year's NDAA, the conferees did not
    use the precise language proposed by this subcommittee, but adopted a
    technical language change that had the effect of limiting eligibility
    for the new allowance to survivors of members who were either retired
    or in the ``gray area'' Reserve at the time of death. That is, it
    excluded survivors of members who died while serving on active duty.
        The Coalition believes strongly that the latter group of survivors
    is equally deserving of the new allowance. Some have argued that relief
    should be allowed only for those who paid a cash premium in retirement.
    The Coalition strongly disagrees, noting that a severely injured member
    who dies 1 month after his military disability retirement and who paid
    1 month of SBP premiums is little different than the case of a member
    who is more severely injured and expires more rapidly. Further, the new
    law authorizes coverage for ``gray area'' retirees who have paid no
    premiums, since their retired pay and SBP premiums don't begin until
    age 60.
        But the Coalition believes the issue goes beyond any such hair-
    splitting. The reality is that, in every SBP/DIC case, active duty or
    retired, the true premium extracted by the service from both the member
    and the survivor was the ultimate one--the very life of the member--and
    that the service was what caused his or her death.
        The Coalition knows that the subcommittee is aware that the
    military community (and especially the survivors concerned) view the
    amount of the new allowance--$50 per month initially, and growing to
    $100 over the course of several years--as grossly inadequate. We
    appreciate that the subcommittee could have elected to do nothing
    rather than incur the expected negative feedback about the small
    amount. In that regard, we applaud you for having the courage to
    acknowledge the inequity and take this first step, however small, to
    begin trying to address it.
        But we also urge the subcommittee to work hard to accelerate
    increases in the amount of the allowance, to send the much-needed
    message to these survivors who have given so much to their country that
    Congress fully intends to find a way to address their loss more
    appropriately.
        The Coalition strongly urges the subcommittee to take further
    action to expand eligibility for the special survivor indemnity
    allowance to include all SBP-DIC survivors and continue progress toward
    completely repealing the SBP-DIC offset for this most-aggrieved group
    of military widows.
    Final Retired Paycheck
        The Military Coalition believes the policy requiring recovery of a
    deceased member's final retired paycheck from his or her survivor
    should be changed to allow the survivor to keep the final month's
    retired pay.
        Current regulations require the survivor to surrender the final
    month of retired pay, either by returning the outstanding paycheck or
    having a direct withdrawal recoupment from her or his bank account.
        The Coalition believes this is an extremely insensitive policy
    imposed by the government at a most traumatic time for a deceased
    member's next of kin. Unlike his or her active duty counterpart, a
    retiree's survivor receives no death gratuity. Many older retirees do
    not have adequate insurance to provide even a moderate financial
    cushion for surviving spouses. Very often, the surviving spouse already
    has had to spend the final month's retired pay before being notified by
    the military finance center that it must be returned. Then, to receive
    the partial month's pay of the deceased retiree up to the date of
    death, the spouse must file a claim for settlement--an arduous and
    frustrating task, at best--and wait for the military's finance center
    to disburse the payment. Far too often, this strains the surviving
    spouse's ability to meet the immediate financial obligations
    commensurate with the death of the average family's ``bread winner.''
        TMC urges the subcommittee to end the insensitive practice of
    recouping the final month's retired pay from the survivor of a deceased
    retired member.
                               health care issues
        The Coalition very much appreciates the subcommittee's strong and
    continuing interest in keeping health care commitments to military
    beneficiaries. We are particularly grateful for your support for the
    last 2 years in refusing to allow the DOD to implement disproportional
    beneficiary health fee increases.
        The Coalition is more than willing to engage substantively in
    TRICARE fee and copay discussions with DOD. In past years, the
    Coalition and the DOD have had regular and substantive dialogues that
    proved very productive in facilitating reasonably smooth implementation
    of such major program changes as TRICARE Prime and TRICARE for Life.
    The objective during those good-faith dialogues has been finding a
    balance between the needs of the Department and the needs of
    beneficiaries.
        It is a great source of regret to the Coalition that there has been
    substantively less dialogue on the more recent fee increase
    initiatives. From its actions, it is hard to draw any other conclusion
    than the Department's sole concern is to extract a specified amount of
    budget savings from beneficiaries. The savings are intended to come
    from increased revenues from higher fees and less utilization by
    military retirees. The Coalition and Congressional Budget Office
    believe that DOD's approach will not achieve the projected savings.
        The unique package of military retirement benefits--of which a key
    component is a top-of-the-line health benefit--is the primary offset
    afforded uniformed servicemembers for enduring a career of unique and
    extraordinary sacrifices that few Americans are willing to accept for 1
    year, let alone 20 or 30. It is an unusual--and essential--compensation
    package that a grateful Nation provides for the relatively few who
    agree to subordinate their personal and family lives to protecting our
    national interests for so many years.
    Full Funding for the Defense Health Program
        The Coalition very much appreciates the subcommittee's support for
    maintaining--and expanding where needed--the health care benefit for
    all military beneficiaries, consistent with the demands imposed upon
    them.
        The DOD, Congress, and The Military Coalition all have reason to be
    concerned about the rising cost of military health care. But it is
    important to recognize that the bulk of the problem is a national one,
    not a military-specific one. To a large extent, military health cost
    growth is a direct reflection of health care trends in the private
    sector.
        It is true that many private sector employers are choosing to shift
    an ever-greater share of health costs to their employees and retirees.
    In the bottom-line-oriented corporate world, many firms see their
    employees as another form of capital, from which maximum utility is to
    be extracted at minimum cost, and those who quit are replaceable by
    similarly experienced new hires. But that can't be the culture in the
    military's closed personnel, all volunteer model, whose long-term
    effectiveness is utterly dependent on establishing a sense of mutual,
    long-term commitment between the servicemember and his/her country.
        Some assert active duty personnel costs have increased 60 percent
    since 2001, of which a significant element is for compensation and
    health costs. But much of that cost increase is due to conscious
    decisions by Congress to correct previous shortfalls--including easing
    the double-digit military ``pay gap'' of that era and correcting the
    unconscionable situation before 2001 when military beneficiaries were
    summarily dropped from TRICARE coverage at age 65. Additionally, much
    of the increase is due to the cost of war and increased operating tempo
    (OPTEMPO).
        Meanwhile, the cost of basic equipment soldiers carry into battle
    (helmets, rifles, body armor) has increased 257 percent (more than
    tripled) from $7,000 to $25,000 since 1999. The cost of a Humvee has
    increased seven-fold (600 percent) since 2001 (from $32,000 to
    $225,000).
        While we have an obligation to do our best to intelligently
    allocate these funds, the bottom line is that maintaining the most
    powerful military force in the world is expensive--and doubly so in
    wartime.
        The Coalition assumes that DOD will again propose a reduction to
    the defense health budget based on the assumption that Congress will
    approve beneficiary fee increases for fiscal year 2009 at least as
    large as those as outlined last year. The Coalition objects strongly to
    the administration's arbitrary reduction of the TRICARE budget
    submission. DOD has typically overestimated its health care costs as
    evidenced by a recent GAO report on the TRICARE Reserve Select
    premiums. The Coalition deplores this inappropriate budget
    ``brinksmanship'', which risks leaving TRICARE significantly
    underfunded, especially in view of statements made for the last 2 years
    by leaders of both Armed Services Committees that the Department's
    proposed fee increases were excessive.
        The Coalition understands only too well the very significant
    challenge such a large and arbitrary budget reduction would pose for
    this subcommittee if allowed to stand. If the reduction is not made up,
    the Department almost certainly will experience a substantial budget
    shortfall before the end of the year. This would then generate
    supplemental funding needs, further program cutbacks, and likely
    efforts to shift even more costs to beneficiaries in future years--all
    to the detriment of retention and readiness.
        The Coalition particularly objects to DOD's past imposition of
    ``efficiency wedges'' in the health care budget, which have nothing to
    do with efficiency and everything to do with imposing arbitrary budget
    cuts that impede delivery of needed care. We are grateful at the
    subcommittee's strong action on this topic, and trusts in your
    vigilance to ensure that such initiatives will not be part of this
    year's budget process.
        The Military Coalition strongly urges the subcommittee to take all
    possible steps to restore the reduction in TRICARE-related budget
    authority and ensure continued full funding for Defense Health Program
    needs.
    Protecting Beneficiaries Against Cost-Shifting
        The Task Force on the Future of Military Health Care had a great
    opportunity for objective evaluation of the larger health care issues.
    Unfortunately, the Coalition believes the Task Force missed that mark
    by a substantial margin.
        The bulk of its report cites statistics provided by the DOD and
    focuses discussions of cost-sharing almost solely on government costs,
    while devoting hardly a sentence to what the Coalition views as an
    equally fundamental issue--the level of health coverage that members
    earn by their arduous career service, the value of that service as an
    in-kind, upfront premium pre-payment, and the role of lifetime health
    coverage as an important offset to the unique conditions of military
    service. The Task Force focused on what was ``fair to the taxpayer''
    and felt the benefit should be ``generous but not free''.
        The Task Force gave short shrift to what the Coalition sees as a
    fundamental point--that generations of military people have been told
    by their leaders that their service earned them their health care
    benefit, and the DOD and Congress reinforced that perception by
    sustaining flat, modest TRICARE fees over long periods of time. But now
    the Department and the Task Force assert that the military retirement
    health benefit is no longer earned by service. They now say beneficiary
    costs should be ``restored'' to some fixed share of DOD costs, even
    though no such relationship was ever stated or intended in the past.
    The Task Force report acknowledges that DOD cost increases over the
    intervening years have been inflated by military/wartime requirements,
    inefficiency, lack of effective oversight, structural dysfunction, or
    conscious political decisions by the Administration and Congress. Yet
    they assert that the government should foist a fixed share of those
    costs on beneficiaries anyway.
        The Coalition believes the Task Force's fee recommendations (see
    charts below)--which actually propose larger fee increases than DOD
    had--would be highly inequitable to beneficiaries and would pose a
    significant potential deterrent to long-term career retention.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Task Force cited GAO and other government reports to the effect
    that DOD financial statements and cost accounting systems are not
    auditable because of system problems and inadequate business processes
    and internal controls. Despite those statements, the Task Force
    accepted DOD data as the basis for assessing and proposing beneficiary
    cost-sharing percentages. The Coalition has requested information
    concerning the 1996 calculation and has never received an adequate
    accounting as to what was included in the calculation.
        The Task Force refers to its fee increases as ``modest'' and
    suggests the changes would be more generous than those offered by 75
    percent to 80 percent of all organizations in the private sector that
    offer health care benefits. The Coalition finds it telling that the
    Task Force would be content that 20 percent to 25 percent of U.S. firms
    offer their employees--most of whom never served 1 day for their
    country--a better benefit than the DOD provides in return for two or
    three decades of service and sacrifice in uniform.
        The Coalition is very grateful that Congress has expressed a much
    greater recognition of beneficiary perspectives, and has sought a more
    comprehensive examination of military health care issues. In that
    regard, the Coalition testimony will outline several specific concerns
    and address some principles that the Coalition believes need to be
    addressed in statute, just as there are statutory standards and
    guidelines for other major compensation elements--pay raises, housing
    and subsistence allowances, retired pay COLAs, etc.
    People vs. Weapons
        Defense officials have provided briefs to Congress indicating that
    the rising military health care costs are ``impinging on other service
    programs.'' Other reports indicate that DOD leadership is seeking more
    funding for weapons programs by reducing the amount it spends on
    military health care and other personnel needs.
        The Military Coalition continues to assert that such budget-driven
    trade-offs are misguided and inappropriate. Cutting people programs to
    fund weapons ignores the much larger funding problem, and only makes it
    worse.
        The Coalition believes strongly that the proposed defense budget is
    too small to meet national defense needs. Today's defense budget (in
    wartime) is only about 4 percent of GDP, well short of the average for
    the peacetime years since World War II.
        The Coalition believes strongly that America can afford to and must
    pay for both weapons and military health care.
    Military vs. Civilian Cost-Sharing Measurement
        Defense leaders assert that substantial military fee increases are
    needed to bring military beneficiary costs more in line with civilian
    practices. But merely contrasting military vs. civilian cash cost-
    shares is a grossly misleading, ``apple-to-orange'' comparison.
        For all practical purposes, those who wear the uniform of their
    country are enrolled in a 20- to 30-year pre-payment plan that they
    must complete to earn lifetime health coverage. In this regard,
    military retirees and their families paid enormous ``upfront'' premiums
    for that coverage through their decades of service and sacrifice. Once
    that pre-payment is already rendered, the government cannot simply
    pretend it was never paid, and focus only on post-service cash
    payments.
        The DOD and the Nation--as good-faith employers of the trusting
    members from whom they demand such extraordinary commitment and
    sacrifice--have a reciprocal health care obligation to retired
    servicemembers and their families and survivors that far exceeds any
    civilian employer's to its workers and retirees.
        The Task Force on the Future of Military Health Care acknowledges
    that its recommendations for beneficiary fee increases, if enacted,
    would leave military beneficiaries with a lesser benefit than 20-25
    percent of America's corporate employees. The pharmacy copayment
    schedule they propose for military beneficiaries is almost the same--
    and not quite as good in some cases--as the better civilian programs
    they reviewed.
        The Coalition believes that military beneficiaries from whom
    America has demanded decades of extraordinary service and sacrifice
    have earned coverage that is the best America has to offer--not just
    coverage that is at the 75th percentile of corporate plans.
    Large Retiree Fee Increases Can Only Hurt Retention
        The reciprocal obligation of the government to maintain an
    extraordinary benefit package to offset the extraordinary sacrifices of
    career military members is a practical as well as moral obligation.
    Mid-career military losses can't be replaced like civilians can.
        Eroding benefits for career service can only undermine long-term
    retention/readiness. Today's troops are very conscious of Congress'
    actions toward those who preceded them in service. One reason Congress
    enacted TFL is that the Joint Chiefs of Staff at that time said that
    inadequate retiree health care was affecting attitudes among active
    duty troops.
        The current Joint Chiefs have endorsed increasing TRICARE fees only
    because their political leaders have convinced them that this is the
    only way they can secure funding for weapons and other needs. The
    Military Coalition believes it is inappropriate to put the Joint Chiefs
    in the untenable position of being denied sufficient funding for
    current readiness needs if they don't agree to beneficiary benefit
    cuts.
        Those who think retiree health care isn't a retention issue should
    recall a quote by then Chief of Naval Operations and now Chairman of
    Joint Chiefs of Staff, Admiral Mike Mullen, in a 2006 Navy Times:
        ``More and more sailors are coming in married. They talk to me more
    about medical benefits than I ever thought to when I was in my mid-20s.
    I believe we have the gold standard . . . for medical care right now,
    and that's a recruiting issue, a recruiting strength, and it's a
    retention strength.''
        That's more than backed up by two independent Coalition surveys. A
    2006 Military Officers Association of America survey drew 40,000
    responses, including more than 6,500 from active duty members. Over 92
    percent in all categories of respondents opposed the DOD-proposed plan.
    There was virtually no difference between the responses of active duty
    members (96 percent opposed) and retirees under 65 (97 percent
    opposed). A Fleet Reserve Association survey showed similar results.
        Reducing military retirement benefits would be particularly ill-
    advised when recruiting is already a problem and an overstressed force
    is at increasing retention risk.
    Proposed Increases Far Exceed Inflation Increases
        The increases proposed by the administration and the Task Force are
    grossly out of line with TRICARE benefit levels originally enacted by
    Congress, even allowing for interim inflation since current fees were
    established.
        If the $460 family Prime enrollment fee had been increased by the
    same Consumer Price Index (CPI) percentage increase as retired pay, it
    would be $642 for fiscal year 2009--far less than either the $1512
    envisioned in the fiscal year 2008 budget request or the $900-$1,700
    cited by the Task Force as its ultimate target fees.
        If the $300 deductible for TRICARE Standard were CPI-adjusted for
    the same period, it would be $419 by 2009--far short of the $1,210 in
    annual deductible and new fees proposed by DOD in 2007, or the $610-
    $1,080 Task Force target.
        Further, both the administration and the Task Force propose
    adjusting beneficiary fees by medical cost growth, which has been two
    to three times the inflation-based increase in members' retired pay.
    The Task Force estimates the annual increase would be 7.5 percent.
        Both methodologies would ensure that medical costs would consume an
    ever-larger share of beneficiaries' income with each passing year. The
    Coalition realizes that this has been happening to many private sector
    employees, but believes strongly that the government has a greater
    obligation to protect the interests of its military beneficiaries than
    private corporations feel for their employees.
        Pharmacy copay increases proposed by the Task Force are even more
    disproportional. They would increase retail copays from $3 (generic),
    $9 (brand), and $22 (nonformulary) to $15, $25, and $45, respectively.
    Those represent increases of 400 percent, 178 percent, and 100 percent,
    respectively. Despite citing experience in civilian firms that
    beneficiary use of preferred drugs increased when their copays were
    reduced or eliminated, the Task Force actually proposes the highest
    percentage copay increases for the medications TRICARE most wants
    beneficiaries to use. That huge increase for retail generics flies in
    the face of recent commercial initiatives such as Wal-Mart's offering
    of many generics to the general public for a $4 copay. If the purpose
    is to push military beneficiaries to use Wal-Mart instead of TRICARE,
    it might indeed save the government some money on those medications,
    but it won't make military beneficiaries feel very good about their
    military pharmacy benefit. It shouldn't make Congress feel good about
    it, either.
        The Coalition particularly questions the need for pharmacy copay
    increases now that Congress has approved Federal pricing for the
    TRICARE retail pharmacy system.
    Retirees Under 65 ``Already Gave'' 10 percent of Retired Pay
        The large proposed health fee increases would impose a financial
    ``double whammy'' on retirees and survivors under age 65.
        Any assertion that military retirees have been getting some kind of
    ``free ride'' because TRICARE fees have not been increased in recent
    years conveniently overlooks past government actions that have
    inflicted far larger financial penalties on every retiree and survivor
    under 65--penalties that will grow every year for the rest of their
    lives.
        That's because decades of past budget caps already depressed
    lifetime retired pay by an average of 10 percent for military members
    who retired between 1984 and 2006. For most of the 1980s and 1990s,
    military pay raises were capped below private sector pay growth,
    accumulating a 13.5 percent ``pay gap'' by 1998-99--a gap which has
    been moderated since then but persists at 3.4 percent today.
        Every member who has retired since 1984--exactly the same under-65
    retiree population targeted by the proposed TRICARE fee increases--has
    had his or her retired pay depressed by a percentage equal to the pay
    gap at the time of retirement. That depressed pay will persist for the
    rest of their lives, with a proportional depression of SBP annuities
    for their survivors.
        As a practical example, a member who retired in 1993--when the pay
    gap was 11.5 percent--continues to suffer an 11.5 percent retired pay
    loss today. For an E-7 who retired in 1993 with 20 years of service,
    that means a loss of $2,000 this year and every year because the
    government chose to cap his military pay below the average American's.
    An O-5 with 20 years of service loses more than $4,300 a year.
        The government has spent almost a decade making incremental
    reductions in the pay gap for currently serving members, but it still
    hasn't made up the whole gap--and it certainly hasn't offered to make
    up those huge losses for members already retired. Under such
    circumstances, it strikes the Coalition as ironic that defense
    officials now propose, in effect, billing those same retirees for
    ``back TRICARE fee increases''.
    Fee-Tiering Scheme Is Inappropriate
        Both the administration and the Task Force have proposed multi-
    tiered schemes for proposed beneficiary fee increases, with the
    Administration's based on retired pay grade and the Task Force's based
    on retired pay amount. The intent of the plan is to ease opposition to
    the fee increases by introducing a means-testing initiative that
    penalizes some groups less than others.
        The Coalition rejects such efforts to mask a fundamental inequity
    by trying to convince some groups that the inequity being imposed on
    them is somehow more acceptable because even greater penalties would be
    imposed on other groups.
        Any such argument is fundamentally deceptive, since the Task Force
    plan envisions adjusting fee levels by medical inflation (7-8 percent a
    year), while retired pay thresholds would be adjusted by retiree COLAs
    (2-3 percent a year). That would guarantee ``tier creep''--shifting
    ever greater numbers of beneficiaries into the top tier every year.
        Surveys of public and private sector health coverage indicate that
    less than 1 percent of plans differentiate by salary. No other Federal
    plan does so. The Secretary of Defense has the same coverage as any GS
    employee, and the Majority Leader of the Senate has the same coverage
    as any Senate's lowest-paid staff member.
        The Coalition believes strongly that all military retirees earned
    equal health benefits by virtue of their career service, and that the
    lowest fee tier proposed by either the Administration or the Task Force
    would be an excessive increase for any military beneficiary (see chart
    at appendix A).
    TRICARE for Life (TFL) Trust Fund Accrual Deposit Is Dubious Excuse
        According to DOD, most of the growth in defense health spending (48
    percent) was attributable to the establishment of the accrual
    accounting methodology for the TFL trust fund (which doesn't affect
    current outlays). The next largest contributor is medical care cost
    inflation (24 percent). Increase in usage by retirees and their
    dependents under age 65 accounted for 7 percent of the increase. Other
    benefit enhancements weigh in at 5 percent while global war on terror
    and other factors account for the remaining 15 percent. However, the
    affect of shifting beneficiaries from military treatment facilities to
    the civilian network was not discussed.
        When the DOD began arguing 3 years ago that the trust fund deposit
    was impinging on other defense programs, the Coalition and the
    subcommittee agreed that that should not be allowed to happen. When the
    Administration refused to increase the budget top line to accommodate
    the statutorily mandated trust fund deposit, Congress changed the law
    to specify that the entire responsibility for TFL trust fund deposits
    should be transferred to the Treasury. Subsequently, Administration
    budget officials chose to find a way to continue charging that deposit
    against the defense budget anyway.
        In the Coalition's view, this represents a conscious and
    inappropriate Administration decision to cap defense spending below the
    level needed to meet national security needs. If the Administration
    chooses to claim to Congress that its defense budget can't meet those
    other needs, then Congress (which directed implementation of TFL and
    the trust fund deposit) has an obligation to increase the budget as
    necessary to meet them.
    TRICARE For Life Enrollment Fee is Inappropriate
        The Coalition disagrees strongly with the Task Force's
    recommendation to impose a new $120 annual enrollment fee for each TFL
    beneficiary. The Task Force report acknowledged that this would be
    little more than a ``nuisance fee'' and would be contrary to Congress'
    intent in authorizing TFL.
        The Task Force report cites data highlighting that costs are higher
    for beneficiaries age 65 and older, as if neither the Administration
    nor Congress envisioned in 2001 that older beneficiaries might need
    more medications and more care.
        Congress authorized TFL in 2001 in recognition that, prior to that
    date, most older beneficiaries had to pay for all of their care out of
    their own pockets after age 65, since most had been summarily ejected
    from any military health or pharmacy coverage. Congress also required
    that, to be eligible for TFL, beneficiaries must enroll in Medicare
    Part B, which already entails a substantial and rapidly growing annual
    premium. Therefore, TRICARE only pays the portion of costs not covered
    by Medicare.
        When the current administration came to office in 2001, military
    and civilian Defense leaders praised TFL, as enacted, as an appropriate
    benefit that retirees had earned and deserved for their career service.
    The Coalition asks, ``What has changed in the 6 intervening years of
    war that has somehow made that service less meritorious?''
    Alternative Options to Make TRICARE More Cost-Efficient
        The Coalition continues to believe strongly that the DOD has not
    sufficiently investigated other options to make TRICARE more cost-
    efficient without shifting costs to beneficiaries. The Coalition has
    offered a long list of alternative cost-saving possibilities,
    including:

             Promote retaining other health insurance by making
            TRICARE a true second-payer to other insurance (far cheaper to
            pay another insurance's copay than have the beneficiary migrate
            to TRICARE).
             Reduce or eliminate all mail-order co-payments to
            boost use of this lowest-cost venue.
             Change electronic claim system to kick back errors in
            real time to help providers submit ``clean'' claims, reduce
            delays/multiple submissions.
             Size and staff military treatment facilities (least
            costly care option) in order to reduce reliance on non-MTF
            civilian providers.
             Promote programs to offer special care management
            services and zero copays or deductibles to incentivize
            beneficiaries to take medications and seek preventive care for
            chronic or unusually expensive conditions.
             Promote improved health by offering preventive and
            immunization services (e.g., shingles vaccine, flu shots) with
            no copay or deductible.
             Authorize TRICARE coverage for smoking cessation
            products and services (it's the height of irony that TRICARE
            currently doesn't cover these programs that have been long and
            widely acknowledged as highly effective in reducing long-term
            health costs).
             Reduce long-term TRICARE Reserve Select costs by
            allowing members the option of a government subsidy (at a cost
            capped below TRS cost) of civilian employer premiums during
            periods of mobilization.
             Promote use of mail-order pharmacy system via mailings
            to users of maintenance medications, highlighting the
            convenience and individual expected cost savings.
             Encourage retirees to use lowest-cost-venue military
            pharmacies at no charge, rather than discouraging such use by
            limiting formularies, curtailing courier initiatives, etc.

        The Coalition is pleased that the DOD has begun to implement at
    least some of our past suggestions, and stands ready to partner with
    DOD to investigate and jointly pursue these or other options that offer
    potential for reducing costs.
    TRICARE Still Has Significant Shortcomings
        While DOD chooses to focus its attention on the cost of the TRICARE
    program to the government, the Coalition believes there is insufficient
    acknowledgement that thousands of providers and beneficiaries continue
    to experience significant problems with TRICARE. Beneficiaries at many
    locations, particularly those lacking large military populations,
    report difficulty in finding providers willing to participate in the
    program. Doctors complain about the program's low payments and
    administrative hassles. Withdrawal of providers from TRICARE networks
    at several locations has generated national publicity.
        Of particular note is a 2007 GAO survey of Guard and Reserve
    personnel, also cited by the DOD Task Force on the Future of Military
    Health Care, in which almost one-third of respondents reported having
    difficulty obtaining assistance from TRICARE, and more than one-fourth
    reported difficulty in finding a TRICARE-participating provider.
        That problem is getting worse rather than better. The Task Force
    report stated that all military beneficiary categories report more
    difficulty than civilians in accessing care, and that military
    beneficiaries' reported satisfaction with access to care declined from
    2004 to 2006. The problem is exacerbated in areas like Alaska where a
    combination of physician shortages and an unwillingness to take TRICARE
    make it very difficult to find a physician.
        The Coalition urges the subcommittee to require DOD to pursue
    greater efforts to improve TRICARE and find more effective and
    appropriate ways to make TRICARE more cost-efficient without seeking to
    ``tax'' beneficiaries and make unrealistic budget assumptions.
    TMC Health Care Cost Principles
        The Military Coalition believes strongly that the current fee
    controversy is caused in part by the lack of any statutory record of
    the purpose of military health benefits and the degree to which cost
    adjustments are or should be allowable. Under current law, the
    Secretary of Defense has broad latitude to make administrative
    adjustments to fees for TRICARE Prime and the pharmacy systems. As a
    practical matter, the Armed Services Committees can threaten to change
    the law if they disapprove of the Secretary's initiatives. But absent
    such intervention, the Secretary can choose not to increase fees for
    years at a time or can choose to quadruple fees in 1 year.
        Until recently, this was not a particular matter of concern, as no
    Secretary had previously proposed dramatic fee increases. Given recent
    years' precedents, the Coalition believes strongly that the
    subcommittee needs to establish more specific and permanent principles,
    guidelines, and prohibitions to protect against dramatic administrative
    fluctuations in this most vital element of servicemembers' career
    compensation incentive package.
        Other major elements of the military compensation package have much
    more specific standards in permanent law. There is a formula for the
    initial amount of retired pay and for subsequent annual adjustments.
    Basic pay raises are tied to the ECI, and housing and food allowances
    are tied to specific standards as well.
        A 2006 survey of military retirees indicates that 65 percent of
    retirees under 65 have access to private health insurance. What the
    Task Force report does not measure is the percent of retirees that do
    not embark on a second career and thus depend solely on their
    retirement income. If fees are allowed to be tiered, up to one third of
    retirees could see a large portion of their retirement eaten up by
    health care costs.
        The Coalition most strongly recommends Rep. Chet Edwards' and Rep.
    Walter Jones' H.R. 579 and Sen. Frank Lautenberg's and Sen. Chuck
    Hagel's S. 604 as models to establish statutory findings, a sense of
    Congress on the purpose and principles of military health care
    benefits, and explicit guidelines for and limitations on adjustments.

             Active duty members and families should be charged no
            fees except retail pharmacy co-payments, except to the extent
            they make the choice to participate in TRICARE Standard or use
            out-of-network providers under TRICARE Prime.
             For retired and survivor beneficiaries, the percentage
            increase in fees, deductibles, and co-payments that may be
            considered in any year should not exceed the percentage
            increase beneficiaries experience in their compensation.
             The TRICARE Standard inpatient copay should not be
            increased further for the foreseeable future. At $535 per day,
            it already far exceeds inpatient copays for virtually any
            private sector health plan.
             There should be no enrollment fee for TRICARE Standard
            or TIRCARE For Life (TFL), since neither offers assured access
            to TRICARE-participating providers. An enrollment fee implies
            enrollees will receive additional services, as Prime enrollees
            are guaranteed access to participating providers in return for
            their fee. Congress already has required TFL beneficiaries to
            pay substantial Medicare Part B fees to gain TFL coverage.
             There should be one TRICARE fee schedule for all
            retired beneficiaries, just as all legislators, Defense leaders
            and other Federal civilian grades have the same health fee
            schedule. The TRICARE schedule should be significantly lower
            than the lowest tier recommended by the DOD, recognizing that
            all retired members paid large upfront premiums for their
            coverage through decades of arduous service and sacrifice.

    TRICARE Standard Enrollment
        Last year, the DOD proposed requiring beneficiaries to take an
    additional step of signing an explicit statement of enrollment in
    TRICARE Standard. The Department proposed a one-time $25 enrollment
    fee. The Task Force on the Future of Military Health Care also endorsed
    enrollment, and proposed an annual enrollment fee of $120.
        The proposals are based on three main arguments:

             Enrollment is needed to define the population that
            will actually use the program
             Enrollment would allow more accurate budgeting for
            program needs
             The fee would help offset DOD's cost of implementing
            the enrollment system (DOD rationale) and ``impose some
            personal accountability for health care costs'' (Task Force
            rationale).

        The Coalition believes none of these arguments stands up to
    scrutiny.
        Department officials already know exactly which beneficiaries use
    TRICARE Standard. They have exhaustive records on what doctors they've
    seen and what medications they've used on what dates and for what
    conditions. They already assess trends in beneficiary usage and project
    the likely effect on those trends for current and future years--such as
    the effect of changes in private employer changes on the likely return
    of more beneficiaries to the TRICARE system.
        The DOD does not have a good record on communicating policy changes
    to Standard beneficiaries. That means large numbers of beneficiaries
    won't get the word, or appreciate the full impact if they do get it.
    They have always been told that their eligibility is based on the
    Defense Enrollment Eligibility Reporting System. A single, bulk-mail
    communication can't be expected to overwrite decades of experience.
        Hard experience is that many thousands of beneficiaries would learn
    of the requirement only when their TRICARE Standard claims are rejected
    for failure to enroll. Some would involve claims for cancer, auto
    accidents and other situations in which it would be unacceptable to
    deny claims because the beneficiary didn't understand an administrative
    rule change. DOD administrators who casually dismiss this argument as
    involving a relative minority of cases see the situation much
    differently if they found their family in that situation--as hundreds
    or thousands of military families certainly would.
        Inevitably, most beneficiaries who do receive and understand the
    implications of an enrollment requirement will enroll simply ``to be
    safe'', even if their actual intent is to use VA or employer-provided
    coverage for primary care--thus undercutting the argument that
    enrollment would increase accuracy of usage projections.
        The arguments for a Standard enrollment fee also don't hold water.
    First, it's inequitable to make beneficiaries pay a fee to cover the
    cost of an enrollment system that's established solely for the benefit
    and convenience of the government, with no benefit whatsoever for the
    beneficiary. Second, the Task Force acknowledges that a $120 fee is
    more a ``nuisance fee'' than a behavior modifier, and existing
    deductibles and copays provide a much more immediate ``accountability''
    sense to the beneficiary. Third and most important, one who pays an
    enrollment fee expects something extra in return for the fee. An
    enrollment fee for TRICARE Prime is reasonable, because it buys the
    beneficiary guaranteed access to a participating provider. TRICARE
    Standard provides no such guarantee, and in some locations it's very
    difficult for beneficiaries to find a TRICARE provider.
        For all these reasons, establishing an enrollment requirement will
    neither better define the user population nor better define budget
    needs.
        The Coalition believes the real intent of the enrollment proposal
    is simply to reduce TRICARE costs by allowing DOD to reject payment for
    any claims by beneficiaries who fail to enroll.
        To the extent any enrollment requirement may still be considered
    for TRICARE Standard, such enrollment should be automatic for any
    beneficiary who files a TRICARE claim. Establishing an enrollment
    requirement must not be allowed to become an excuse to deny claims for
    members who are unaware of the enrollment requirement.
        The Coalition strongly recommends against establishment of any
    TRICARE Standard enrollment system; to the extent enrollment may be
    required, any beneficiary filing a claim should be enrolled
    automatically, without denying the claim. No enrollment fee should be
    charged for TRICARE Standard until and unless the program offers
    guaranteed access to a participating provider.
    Private Employer Incentive Restrictions
        Current law, effective January 1, 2008, bars private employers from
    offering incentives to TRICARE-eligible employees to take TRICARE in
    lieu of employer-sponsored plans. This law is well-intended, but
    inadvertently imposes unfair penalties on many employees of companies
    that are not, in fact, attempting to shift costs to TRICARE.
        The Armed Services Committees have tasked the Secretary of Defense
    for a report on the issue, which may not protect current beneficiaries
    and, even with a favorable response, in no way restricts future
    Secretaries of Defense who may impose a strict interpretation of the
    law.
        In the meantime, Coalition associations have heard from hundreds of
    TRICARE beneficiaries whose civilian employers are using the new law to
    bar equal payments to TRICARE beneficiaries that are available to other
    company employees (e.g., if the company offers $100 per month to any
    employee who uses insurance available through a spouse's coverage or a
    previous employer).
        TRICARE coverage is an extremely important career benefit that is
    earned by decades of service in uniform. TMC believes it is
    contradictory to the spirit of this earned benefit to impose statutory
    provisions that deny access to TRICARE by those who have earned it or
    that deny TRICARE beneficiaries the same options available to non-
    TRICARE beneficiaries who work for the same civilian employer.
        The Coalition recommends Congress modify the law restricting
    private employer TRICARE incentives to explicitly exempt employers who
    offer only cafeteria plans (i.e., cash payments to all employees to
    purchase care as they wish) and employers who extend specific cash
    payments to any employee who uses health coverage other than the
    employer plan (e.g., FEHBP, TRICARE, or commercial insurance available
    through a spouse or previous employer).
    TRICARE Standard Improvements
        The Coalition very much appreciates the subcommittee's continuing
    interest in the specific problems unique to TRICARE Standard
    beneficiaries. In particular, we applaud your efforts to expand TRICARE
    Standard provider and beneficiary surveys and establish Standard
    support responsibilities for TRICARE Regional Offices. These are needed
    initiatives that should help make it a more effective program. We
    remain concerned, however, that more remains to be done. TRICARE
    Standard beneficiaries need assistance in finding participating
    providers within a reasonable time and distance from their home. This
    will become increasingly important with the expansion of TRICARE
    Reserve Select, as these individuals are most likely not living within
    a Prime Service Area.
    Provider Participation Adequacy
        We are pleased that Congress added the requirement to survey
    beneficiaries in addition to providers. The Coalition believes this
    will help correlate beneficiary inputs with provider inputs for a more
    accurate view of participation by geographic location.
        The Coalition is concerned that DOD has not yet established any
    standard for the adequacy of provider participation. Participation by
    half of the providers in a locality may suffice if there is not a large
    Standard beneficiary population. The Coalition hopes to see an
    objective participation standard (perhaps number of beneficiaries per
    provider) that would help shed more light on which locations have
    participation shortfalls of Primary Care Managers and Specialists that
    require positive action.
        The Coalition is grateful to the subcommittee for provisions in the
    NDAA for Fiscal Year 2008 that will require DOD to establish benchmarks
    for participation adequacy and follow-up reports on actions taken.
        The Coalition urges the subcommittee to continue monitoring DOD and
    GAO reporting on provider participation to ensure proper follow-on
    action.
    Administrative Deterrents to Provider Participation
        The Coalition is pleased that Congress has directed DOD to modify
    current claims procedures to be identical to those of Medicare. We look
    forward to implementation with the next generation of Managed Care
    Support Contracts. Feedback from providers indicates TRICARE imposes
    additional administrative requirements on providers that are not
    required by Medicare or other insurance plans. On the average, about 50
    percent of a provider's panel is Medicare patients, whereas only 2
    percent are TRICARE beneficiaries. Providers are unwilling to incur
    additional administrative expenses that affect only a small number of
    patients. Thus, providers are far more prone to non-participation in
    TRICARE than in Medicare.
        TRICARE still requires submission of a paper claim to determine
    medical necessity on a wide variety of claims for Standard
    beneficiaries. This thwarts efforts to encourage electronic claim
    submission and increases provider administrative expenses and delays
    receipt of payments. Examples include speech therapy, occupational/
    physical therapy, land or air ambulance service, use of an assistant
    surgeon, nutritional therapy, transplants, durable medical equipment,
    and pastoral counseling.
        Another source of claims hassles and payment delays involve cases
    of third party liability (e.g., auto insurance health coverage for
    injuries incurred in auto accidents). Currently, TRICARE requires
    claims to be delayed pending receipt of a third-party-liability form
    from the beneficiary. This often delays payments for weeks and can
    result in denial of the claim (and non-payment to the provider) if the
    beneficiary doesn't get the form in on time. Recently, a major TRICARE
    claims processing contractor recommended that these claims should be
    processed regardless of diagnosis and that the third-party-liability
    questionnaire should be sent out after the claim is processed to
    eliminate protracted inconvenience to the provider of service.
        Additionally, changes to the TRICARE pharmacy formulary are
    becoming increasingly burdensome for providers. The number of
    medications added to non-formulary status ($22 copay) has increased
    tremendously, and changing prescriptions has added to the providers'
    workload, as have increases in prior-authorization (Step Therapy)
    requirements. The increase in the number of third tier drugs and DOD's
    reliance on pharmacy medical necessity requests has increased provider
    workload to the extent that many now charge beneficiaries extra to
    complete this form. For others, it's yet another TRICARE-unique
    administrative hassle that makes them less likely to agree to see
    TRICARE beneficiaries.
        The Coalition urges the subcommittee to continue its efforts to
    reduce administrative impediments that deter providers from accepting
    TRICARE patients.
    TRICARE Reimbursement Rates
        Physicians consistently report that TRICARE is virtually the
    lowest-paying insurance plan in America. Other national plans typically
    pay providers 25-33 percent more. In some cases the difference is even
    higher.
        While TRICARE rates are tied to Medicare rates, TRICARE Managed
    Care Support Contractors make concerted efforts to persuade providers
    to participate in TRICARE Prime networks at a further discounted rate.
    Since this is the only information providers receive about TRICARE,
    they see TRICARE as even lower-paying than Medicare.
        This is exacerbated by annual threats of further reductions in
    TRICARE rates due to the statutory Medicare rate-setting formula.
    Doctors are unhappy enough about reductions in Medicare rates, and many
    already are reducing the number of Medicare patients they see.
        But the problem is even more severe with TRICARE, because TRICARE
    patients typically comprise a small minority of their beneficiary
    caseload. Physicians may not be able to afford turning away large
    numbers of Medicare patients, but they're more than willing to turn
    away a small number of patients who have low-paying, high-
    administrative-hassle TRICARE coverage.
        Congress has acted to avoid Medicare physician reimbursement cuts
    for the last 4 years, but the failure to provide a payment increase for
    2006 and 2007 was another step in the wrong direction, according to
    physicians. Further, Congress still has a long way to go in order to
    fix the underlying reimbursement determination formula.
        Correcting the statutory formula for Medicare and TRICARE physician
    payments to more closely link adjustments to changes in actual practice
    costs and resist payment reductions is a primary and essential step. We
    fully understand that is not within the purview of this subcommittee,
    but we urge your assistance in pressing the Finance Committee for
    action.
        In the meantime, the rate freeze for 2006 and 2007 along with a
    small increase for the first part of 2008 makes it even more urgent to
    consider some locality-based relief in TRICARE payment rates, given
    that doctors see TRICARE as even less attractive than Medicare.
    Additionally, the Medicare pay package that was enacted in Public Law
    109-432 included a provision for doctors to receive a 1.5 percent bonus
    next year if they report a basic set of quality-of-care measures. The
    TRICARE for Life beneficiaries should not be affected as their claims
    are submitted directly to Medicare and should be included in the
    physicians' quality data. But there's been no indication that TRICARE
    will implement the extra increases for treating beneficiaries under 65,
    and this could present a major problem. If no such bonus payment is
    made for TRICARE Standard patients, then TRICARE will definitely be the
    lowest payer in the country and access could be severely decreased.
        The TRICARE Management Activity has the authority to increase the
    reimbursement rates when there is a provider shortage or extremely low
    reimbursement rate for a specialty in a certain area and providers are
    not willing to accept the low rates. In some cases a State Medicaid
    reimbursement for a similar service is higher than that of TRICARE. As
    mentioned previously, the Department has been reluctant to establish a
    standard for adequacy of participation and should use survey data to
    apply adjustments nationally.
        The Coalition urges the subcommittee to exert what influence it can
    to persuade the Finance Committee to reform Medicare/TRICARE statutory
    payment formula. To the extent the Medicare rate freeze continues, we
    urge the subcommittee to encourage the DOD to use its reimbursement
    rate adjustment authority as needed to sustain provider acceptance.
        The Coalition urges the subcommittee to require a Comptroller
    General report on the relative propensity of physicians to participate
    in Medicare vs. TRICARE, and the likely effect on such relative
    participation of a further freeze in Medicare/TRICARE physician
    payments along with the affect of an absence of bonus payments.
    Minimize Medicare/TRICARE Coverage Differences
        A 2006 DOD report to Congress contained the coverage differences
    between Medicare and TRICARE. The report showed that there are at least
    a few services covered by Medicare that are not covered by TRICARE.
    These include an initial physical at age 65, chiropractic coverage,
    respite care, and certain hearing tests. We believe TRICARE coverage
    should at least equal Medicare's in every area and include recommended
    preventive services at no cost. As an example, the Army Medical
    department has implemented the ``Adult Pneumovax'' program and projects
    savings of $500 per vaccine given.
        Our military retirees deserve no less coverage than is provided to
    other Federal beneficiaries.
        The Coalition urges the subcommittee to align TRICARE coverage to
    at least match that offered by Medicare in every area and provide
    preventive services at no cost.
    National Guard and Reserve Health Care
        The Coalition is grateful to the subcommittee for its leadership in
    extending lower-cost TRICARE eligibility to all drilling National Guard
    and Reserve members. This was a major step in acknowledging that the
    vastly increased demands being placed on Selected Reserve members and
    families needs to be addressed with adjustments to their military
    compensation package.
        While the subcommittee has worked hard to address the primary
    health care hurdle, there are still some areas that warrant attention.
        TRICARE Reserve Select (TRS) Premium
        The Coalition believes the premium-setting process for this
    important benefit needs to be improved and was incorrectly based upon
    the basic Blue Cross Blue Shield option of the FEHBP. This adjustment
    mechanism has no relationship either to the Department's military
    health care costs or to increases in eligible members' compensation.
        When the program was first implemented, the Coalition urged DOD to
    base premiums (which were meant to cover 28 percent of program costs)
    on past TRICARE Standard claims data to more accurately reflect costs.
    Now a GAO study has confirmed that DOD's use of Blue Cross Blue Shield
    data and erroneous projections of participation resulted in
    substantially overcharging beneficiaries.
        GAO found that DOD projected costs of $70 million for fiscal year
    2005 and $442 million for fiscal year 2006, whereas actual costs proved
    to be $5 million in fiscal year 2005 and about $40 million in fiscal
    year 2006. GAO found that DOD estimates were 72 percent higher than the
    average single member cost and 45 percent higher than average family
    cost. If DOD were to have used actual fiscal year 2006 costs, the
    annual individual premium would have been $48/month instead of $81/
    month. The corresponding family premium would have been $175/month
    instead of $253/month.
        GAO recommended that DOD stop basing TRS premiums on Blue Cross
    Blue Shield adjustments and use the actual costs of providing the
    benefit. DOD concurred with the recommendations and says, ``it remains
    committed to improving the accuracy of TRS premium projections.''
    However, GAO observed that DOD has made no commitment to any timetable
    for change.
        The Coalition believes our obligation to restrain health cost
    increases for Selected Reserve members who are periodically being asked
    to leave their families and lay their lives on the line for their
    country is should be even greater than our obligation to restrain
    government cost increases. These members deserve better than having
    their health premiums raised arbitrarily by a formula that has no real
    relationship to them.
        The Coalition believes strongly that TRS premiums should be reduced
    immediately to $48/month (single) and $175/month (family), with
    retroactive refunds to those who were overcharged in the past.
        For the future, as a matter of principle, the Coalition believes
    that TRS premiums should not be increased in any year by a percentage
    that exceeds the percentage increase in basic pay.
        The Coalition also is concerned that members and families enrolled
    in TRS are not guaranteed access to TRICARE-participating providers and
    are finding it difficult to locate providers willing to take TRICARE.
    As indicated earlier in this testimony, the Coalition believes that
    members who are charged a fee for their health coverage should be able
    to expect assured access, and hopes the subcommittee will explore
    options for assuring such access for TRS enrollees.
        The Coalition recommends reducing TRS premiums to $48/month
    (single) and $175/month (family), as envisioned by the GAO, with
    retroactive refunds as appropriate. For the future, the percentage
    increase in premiums in any year should not exceed the percentage
    increase in basic pay.
        The Coalition further recommends that the subcommittee request a
    report from the DOD on options to assure TRS enrollees' access to
    TRICARE-participating providers.
    Private Insurance Premium Option
        The Coalition thanks Congress for authorizing subsidy of private
    insurance premiums for reservists called to active duty in cases where
    a dependent possesses a special health care need that would be best met
    by remaining in the member's civilian health plan.
        The Coalition believes Congress is missing an opportunity to reduce
    long-term health care costs by failing to authorize eligible members
    the option of electing a partial subsidy of their civilian insurance
    premiums during periods of mobilization. Current law already authorizes
    payment of up to 24 months of FEHBP premiums for mobilized members who
    are civilian employees of the DOD.
        Congress directed GAO to review this issue and submit a report in
    April 2007--a report that, to our knowledge, has not been completed. We
    hope that report will address not only the current wartime situation,
    but the longer-term peacetime scenario. Over the long term, when Guard
    and Reserve mobilizations can be expected at a considerably lower pace,
    the Coalition believes subsidizing continuation of employer coverage
    during mobilizations periods offers considerable savings opportunity
    relative to funding year-round family TRICARE coverage while the member
    is not deployed.
        In fact, the Department could calculate a maximum monthly subsidy
    level that would represent a cost savings to the government, so that
    each member who elected that option would reduce TRICARE costs.
        The Coalition recommends developing a cost-effective option to have
    DOD subsidize premiums for continuation of a Reserve employer's private
    family health insurance during periods of deployment as an alternative
    to permanent TRICARE Reserve Select coverage.
        Involuntary Separatees
        The Coalition believes it is unfair to deny TRS coverage for IRR
    members who have returned from deployment or terminate coverage for
    returning members who are involuntarily separated from the Selected
    Reserve (other than for cause).
        The Coalition recommends authorizing 1 year of post-TAMP TRS
    coverage for every 90 days deployed in the case of returning members of
    the IRR or members who are involuntarily separated from the Selected
    Reserve. The Coalition further recommends that voluntarily separating
    reservists subject to disenrollment from TRS should be eligible for
    participation in the CHCBP.
        Gray Area Reservists
        The Coalition is sensitive that Selected Reserve members and
    families have one remaining ``hole'' in their military health coverage.
    They are eligible for TRS while currently serving in the Selected
    Reserve, then lose coverage while in ``Gray area'' retiree status, then
    regain full TRICARE eligibility at age 60.
        The Coalition believes some provision should be made to allow such
    members to continue their TRICARE coverage in gray area status.
    Otherwise, we place some members at risk of losing family health
    coverage entirely when they retire from the Selected Reserve. We
    understand that such coverage likely would have to come with a higher
    premium.
        The Coalition urges the subcommittee to authorize an additional
    premium-based option under which members entering ``gray area'' retiree
    status would be able to avoid losing health coverage.
        Reserve Dental Coverage
        The Coalition remains concerned about the dental readiness of the
    Reserve Forces. Once these members leave active duty, the challenge
    increases substantially, so the Coalition believes the services should
    at least facilitate correction of dental readiness issues identified
    while on active duty. DOD should be fiscally responsible for dental
    care to reservists to ensure servicemembers meet dental readiness
    standards when DOD facilities are not available within a 50 mile radius
    of the members' home for at least 90 days prior and 180 days post
    mobilization.
        The Coalition supports providing dental coverage to reservists for
    90 days pre- and 180 days post-mobilization (during TAMP), unless the
    individual's dental readiness is restored to T-2 condition before
    demobilization.
    Consistent Benefit
        As time progresses and external changes occur, we are made aware of
    pockets of individuals who for one reason or another are denied the
    benefits that they should be eligible for. DOD and its health
    contractors were leaders in modifying policy and procedures to assist
    Katrina victims. Additionally, Congress' action to extend eligibility
    for TRICARE Prime coverage to children of deceased active duty members
    was truly the right thing to do.
        Restoration of Survivors' TRICARE Coverage
        When a TRICARE-eligible widow/widower remarries, he/she loses
    TRICARE benefits. When that individual's second marriage ends in death
    or divorce, the individual has eligibility restored for military ID
    card benefits, including SBP coverage, commissary/exchange privileges,
    etc.--with the sole exception that TRICARE eligibility is not restored.
        This is out of line with other Federal health program practices,
    such as the restoration of CHAMPVA eligibility for survivors of
    veterans who died of service-connected causes. In those cases, VA
    survivor benefits and health care are restored upon termination of the
    remarriage.
        Remarried surviving spouses deserve equal treatment.
        The Coalition recommends restoration of TRICARE benefits to
    previously eligible survivors whose second or subsequent marriage ends
    in death or divorce.
        TRICARE Prime Remote Exceptions
        Longer deployments and sea/shore and overseas assignment patterns
    leave many military families faced with tough decisions. A spouse and
    children may find a greater level of support by residing with or near
    relatives during extended separations from the active duty spouse. DOD
    has the authority to waive the requirement for the spouse to reside
    with the servicemember for purposes of TRICARE Prime Remote eligibility
    if the service determines special circumstances warrant such coverage.
    We remain concerned about the potential for inconsistent application of
    eligibility. The special authority is a step in the right direction,
    but there is a wide variety of circumstances that could dictate a
    family separation of some duration, and the Coalition believes each
    family is in the best situation to make its own decision.
        The Coalition recommends removal of the requirement for the family
    members to reside with the active duty member to qualify for the
    TRICARE Prime Remote Program, when the family separation is due to a
    military-directed move or deployment.
    Base Realignment and Closure, Rebasing, and Relocation
        Relocation from one geographic region to another and base closures
    brings multiple problems. A smooth health care transition is crucial to
    the success of DOD and Service plans to transform the force. That means
    ensuring a robust provider network and capacity is available to all
    beneficiary populations, to include active and Reserve component and
    retirees and their family members, and survivors at both closing and
    gaining installations. It is incumbent upon the Department and its
    Managed Care Support Contractors to ensure smooth beneficiary
    transition from one geographic area to another. We stress the
    importance of coordination of construction and funding in order to
    maintain access and operations while the process takes place.
        The Coalition recommends codifying the requirement to provide a
    TRICARE Prime network at all areas impacted by BRAC or rebasing.
    Additionally, we recommend that DOD be required to provide an annual
    report to Congress on the adequacy of health resources, services,
    quality and access of care for those beneficiary populations affected
    by transformation plans.
    Pharmacy
        The TRICARE Pharmacy benefit must remain strong to meet the
    pharmaceutical needs of millions of military beneficiaries. While we
    are pleased at the overall operation of the program, the Coalition has
    significant concerns about certain recent trends.
        Beneficiary Migration
        One issue highlighted by the Task Force report is that a large
    share of the growth in retail pharmacy use has been the result of
    beneficiaries migrating from military treatment facilities to local
    retail pharmacies. In that regard, the number of beneficiaries using
    only military pharmacies declined by 900,000 between fiscal year 2002
    and fiscal year 2007, whereas the number of beneficiaries using only
    retail pharmacies increased by about 1,000,000 in the same period.
        Some of the shift is because enactment of TFL and TSRx meant that
    Medicare beneficiaries who live some distance from military
    installations no longer have to make long treks to the military
    pharmacy.
        But the change also coincides with the onset of increased wartime
    deployments and installation security measures. The deployment of large
    numbers of military medical professionals has forced shifting more
    beneficiaries of all kinds to see civilian providers, which reduces
    proximity access to the military pharmacy and ease the convenience of
    using retail stores. Increased installation security measures also
    increase the ``hassle factor'' for retirees to use on-base facilities.
    Finally, local budget pressures and DOD ``core formulary'' guidance
    removes many medications from the installation formulary that retirees
    use, leaving many no choice but to use alternative venues.
        Coalition associations have heard anecdotal reports that some local
    commanders have actively discouraged retirees from using the military
    pharmacies, primarily for budget savings purposes. What's worse is that
    MTFs have failed to educate beneficiaries of the next most cost-
    effective venue--the TRICARE Mail Order Pharmacy (TMOP).
        The point is that it is inappropriate to punish beneficiaries
    (through higher retail copayments) for migration that may be dictated
    more by military operational and budget requirements than by retiree
    preferences.
        Pharmacy Co-payment Changes
        The Coalition thanks the subcommittee for freezing pharmacy co-
    payments for fiscal year 2008. The Coalition believes strongly that
    uniformed services beneficiaries deserve more stability in their
    benefit levels, and that DOD has not performed due diligence in
    exploring other ways to reduce pharmacy costs without shifting such
    increased expense burdens to beneficiaries. The DOD Health Care Task
    Force would dramatically raise most military pharmacy copays. For
    example, they'd raise the copay for generic drugs purchased in retail
    pharmacies from the current $3 to $15. But Wal-Mart is now dispensing
    generic drugs to the general public for $4. Shouldn't the military
    pharmacy benefit be better than what civilians can get through Wal-
    Mart?
        One important consideration in the mail-order-vs.-retail discussion
    is that some medications are simply not appropriate or available for
    delivery through the TMOP. If the purpose of imposing higher retail
    copays is to incentivize beneficiaries to use military or mail-order
    pharmacies, application of this philosophy is inappropriate when the
    beneficiary has no access to those lower-cost venues.
        The Coalition believes any further discussion of pharmacy copayment
    increases should be deferred pending review of the implications of
    requiring Federal pricing in the retail system. We believe that this
    action by Congress in the fiscal year 2008 has shifted the dynamic of
    pharmacy costs, and that the primary cost differential may no longer be
    the venue of dispensing.
        Rather, the Coalition urges the subcommittee to consider the
    findings of RAND, Pharma, and others cited by the Task Force that
    considerable cost savings can be gained by establishing positive
    motivations for beneficiaries with chronic diseases to take any of the
    medications--regardless of generic, brand, or nonformulary--that reduce
    the adverse effects of their conditions over the long term. Those steps
    included eliminating copays for the lowest-cost and most effective
    medications, reducing copays for some effective nonformulary
    medications, and reducing prior authorization requirements that impede
    beneficiaries from using the medications they and their doctors believe
    are best for them.
        We note with regret that the Department has declined to comply with
    Congress' urging to eliminate copayments for generic medications in the
    mail-order system--a recommendation echoed by the Task Force. In this
    case, the administrative cost of processing the co-pay actually wipes
    out a large percentage of the co-pay revenue.
        The Coalition believes pharmacy cost growth concerns have missed
    the mark by focusing on current-year dollars rather than long-term
    effects. For example, the Task Force report highlights as part of the
    cost ``problem'' that some drugs, including medications to treat
    diabetes, grew more than 15 percent in a single year. Viewed in terms
    of long-term effects, it's a good thing to identify patients who have
    diabetes and a good thing for diabetes patients to take their
    medications. So growing use (and cost) of medications for such chronic
    diseases is a positive, not a negative, and the copay structure should
    be remodeled to incentivize beneficiaries and make it as easy as
    possible for them to take whatever medication will mitigate the effects
    of their condition through whatever venue they are most likely to be
    satisfied with and therefore will be most likely to take their
    medications.
        The Coalition recommends deferral of any pharmacy copay increases
    pending assessment of the effects of the new Federal pricing law on
    usage and cost patterns for the different venues, and that the
    subcommittee instead urge DOD to pursue copay reductions and ease prior
    authorization requirements for medications for chronic diseases, based
    on private sector experience that such initiatives reduce long-term
    costs associated with such diseases.
        Rapid Expansion of ``Third Tier'' Formulary
        The Coalition very much appreciated the efforts of Congress to
    protect beneficiary interests by establishing a statutory requirement
    for a BAP to give beneficiary representatives an opportunity in a
    public forum to voice our concerns about any medications DOD proposes
    moving to the third tier ($22 co-pay). We were further reassured when,
    during implementation planning, Defense officials advised the BAP that
    they did not plan on moving many medications to the third tier.
        Unfortunately, this has not been the case. To date, DOD has moved
    over 90 medications to the third tier. While the BAP did not object to
    most of these, the BAP input has been universally ignored in the small
    number of cases when it recommended against a proposed
    reclassification. The Coalition is also concerned that the BAP has been
    denied access to information on relative costs of the drugs proposed
    for reclassification and the DOD has established no mechanism to
    provide feedback to the BAP on why its recommendations are being
    ignored.
        The Coalition believes Congress envisioned that the BAP would be
    allowed substantive input in the Uniform Formulary decision process,
    but that has not happened. In fact, BAP discussion issues and
    recommendations (other than the final vote tallies) are routinely
    excluded from information provided to the Assistant Secretary of
    Defense (Health Affairs) for decisionmaking purposes, and there has
    been no formal feedback to the BAP on the reasons why their
    recommendations were not accepted.
        Although Congress has tasked GAO for a report on the effectiveness
    of the BAP process, that report has not been issued to date.
        The Coalition urges the subcommittee to reassert its intent that
    the BAP should have a substantive role in the formulary-setting
    process, including access to meaningful data on relative drug costs in
    each affected class, consideration of all BAP comments in the
    decisionmaking process, and formal feedback concerning rationale for
    rejection of BAP recommendations.
    TRICARE Prime and MCSC Issues
        DOD and its health contractors are continually trying to improve
    the level of TRICARE Prime service. We appreciate their inclusion of
    Coalition associations in their process improvement activities and will
    continue to partner with them to ensure the program remains
    beneficiary-focused and services are enhanced, to include: beneficiary
    education, network stability, service level quality, uniformity of
    benefit between regions (as contractors implement best business
    practices), and access to care.
        Referral and Authorization System
        There has been much discussion and consternation concerning the
    Enterprise Wide Referral and Authorization System. Much time, effort,
    and money have been invested in a program that has not come to
    fruition. Is adding to the administrative paperwork requirements and
    forcing the civilian network providers into a referral system really
    accomplishing what DOD set out to do? Rather than forcing unique
    referral requirements on providers, perhaps DOD should look at
    expanding its Primary care base in the Prime Service Areas and capture
    the workload directly.
        The Coalition recommends that Congress require a cost analysis
    report, including input from each Managed Care Support Contractor,
    concerning the referral process within DOD and reliance on Civilian
    Network Providers within an MTF's Prime Service Area.
    Health-Related Tax Law Changes
        The Coalition understands fully that tax law changes are not within
    the subcommittee's jurisdiction. However, there are numerous military-
    specific tax-related problems that are unlikely to be addressed without
    the subcommittee's active advocacy and intervention with members and
    leaders of the Finance Committee.
        Deductibility of Health and Dental Premiums
        Many uniformed services beneficiaries pay annual enrollment fees
    for TRICARE Prime, TRICARE Reserve Select, and premiums for
    supplemental health insurance, such as a TRICARE supplement, the
    TRICARE Dental and Retiree Dental Plans, or for long-term care
    insurance. For most military beneficiaries, these premiums are not tax-
    deductible because their annual out-of-pocket costs for health care
    expenses do not exceed 7.5 percent of their adjusted gross taxable
    income.
        In 2000, a Presidential directive allowed Federal employees who
    participate in FEHBP to have premiums for that program deducted from
    their pay on a pre-tax basis. A 2007 court case extended similar pre-
    tax premium payment eligibility to certain retired public safety
    officers. Similar legislation for all active, Reserve, and retired
    military and Federal civilian beneficiaries would restore equity with
    private sector employees and retired public safety officers.
        The Coalition urges all Armed Services Committee members to seek
    the support of the Finance Committee to approve legislation to allow
    all military beneficiaries to pay TRICARE-related insurance premiums in
    pre-tax dollars, to include TRICARE dental premiums, TRICARE Reserve
    Select premiums, TRICARE Prime enrollment fees, premiums for TRICARE
    Standard supplements, and long-term care insurance premiums.
                                   conclusion
        The Military Coalition reiterates its profound gratitude for the
    extraordinary progress this subcommittee has made in advancing a wide
    range of personnel and health care initiatives for all uniformed
    services personnel and their families and survivors. The Coalition is
    eager to work with the subcommittee in pursuit of the goals outlined in
    our testimony. Thank you very much for the opportunity to present the
    Coalition's views on these critically important topics.

        Senator Ben Nelson. Thank you very much, Colonel.
        The first question I have--and we'll start with you,
    Colonel, and then open it up to the panel--is with respect to
    the co-pay. I know you're objecting to the amount of the
    increase. Would you oppose any increase, or is it because this
    increase is such a high percentage increase--is there any room
    for negotiation here, between the DOD and the retired
    servicemember?
        Colonel Strobridge. Sir, I think we come back to the issue
    that--what we want to do is get out of the drill where the
    budget drives the negotiation, where all we're talking about is
    money. That's where we come down to the principles that we'd
    like to put in law to recognize that military people do pay
    more than cash. You'll notice, we have always supported S. 604,
    which does not say--we recognize that it's unrealistic to say
    ``no fee increases, ever.'' What we're trying to do is
    establish reasonable principles. What S. 604 does is, it puts
    some constraints on the Secretary's authority, so you don't go
    10 years recommending no increases and then try to quadruple
    them in 1 year. S. 604 says, we'll put that cap at saying the
    percentage increase in any year can't exceed the percentage
    increase in compensation.
        Senator Ben Nelson. You certainly have a sympathetic ear--
    --[laughter] with us, because we've been concerned about that
    steep increase all of a sudden after 10 years of nothing.
        Colonel Strobridge. Yes, sir.
        Senator Ben Nelson. So, that's why I want to explore if
    there was any room for negotiation.
        Would there be any other comments about that? Do you share
    Colonel Strobridge's view, or are we faced with the choice,
    doing what he's suggesting--TRICARE for Life, with no change?
        Master Chief Barnes. Senator, I would concur with the
    Colonel's remarks. I would also expand on his comments with
    regard to career enlisted personnel that retired before the
    significant pay hikes that have been enacted since 1999. The
    drastic nature of these hikes after no adjustments, which DOD
    was authorized to implement since, I believe, 1995, has been
    met with serious concern.
        Also, it's a morale issue within the ranks of those
    currently serving, and we hear a great deal of comment about
    that, and anxiety about what the future holds.
        Ms. Beck. Sir, if I could, on a related issue, those who
    are medically retired and are so severely injured that they're
    actually eligible for Medicare, they not only have to pay these
    fees, they have to pay for Medicare Part B, as well. So, what
    it turns out is, the person who is the most severely injured
    ends up paying the most for their care, and I'm not sure that
    that's quite what we intended on that issue. So, that's a
    related issue to address.
        Senator Ben Nelson. Ms. Moakler?
        Ms. Moakler. You brought up TRICARE for Life. We do believe
    that those folks who are paying for TRICARE for Life are
    already paying more than those who are paying for the retiree
    care of TRICARE Prime. So we certainly would not like to see an
    extra payment for those folks for TRICARE for Life, because
    they're already paying in other ways.
        We agree with TMC, that we would not like to see the
    drastic increase, but we do believe that there is a call for a
    certain increase to go along with rising medical prices. We
    wouldn't like to see increase in the co-payments at this time.
        Senator Ben Nelson. In terms of access to health care, what
    are you hearing from your membership about access to health
    care under TRICARE? Obviously, there may be some differences
    between Guard and Reserve and others, but generally what are
    you hearing?
        Ms. Beck?
        Ms. Beck. The access question coming from the doctors is
    that it's so difficult for them to take TRICARE, due to the
    bureaucratic issues, that they actually usually have to hire
    someone, in addition to the people that they have, just to
    process their bills for TRICARE. The servicemembers themselves
    are--it's not necessarily a question of the TRICARE, they--
    again, on the injured side; they get caught between the two
    systems, in that one is supposed to be paying for it; the other
    one's supposed to be paying for it, and then no one's paying
    for it. So, the question for them is--you can be in the most
    urban area and still be stuck without care.
        The Wades are a good example, again. They live in Chapel
    Hill, in the Research Triangle, and they weren't able to access
    the care that they needed, because of the restrictions in
    TRICARE on cognitive therapy, and then due to certain
    restrictions within the VA. So, it's not a Guard and Reserve
    issue, but it's also an issue of regulations that are in place,
    and not allowing people to enjoy the benefits of that.
        Senator Ben Nelson. Having a care-manager assigned, would
    that be beneficial in trying to smooth out those challenges
    that occur because you have a couple of different programs?
        Ms. Beck. The recovery coordinators that have been
    established have been tremendously helpful to the families who
    have received them. It takes a very proactive person to
    understand both of these systems, as well as the private
    sector, and to understand how to maneuver between them. The
    problem is, there are currently only six Federal recovery
    coordinators, with approximately 50-some servicemembers that
    they're serving. While that has been very helpful, without that
    overlap of benefits that Steve mentioned and that was included,
    and the proper implementation of that, then we're not going to
    be giving them the authority they need to resolve the problems.
    Often, they run up against the law in providing the services.
        Colonel Strobridge. Sir, if I may comment on that.
        One of the things that we've heard for years is anecdotal
    evidence--``Gee, I can't find a doctor to take either Medicare
    or TRICARE in this area or that area.'' We appreciate what the
    committee's done to try to help us survey participation. That's
    been a big help. But, because of this annual problem with the
    Medicare cuts, and because TRICARE is tied to those cuts, we're
    really seeing an escalation of that. It's ironic that you
    mention it, because last week we got a letter from my spouse's
    doctor saying, ``We're dropping you.'' They had previously
    stopped taking new TRICARE patients, but had grandfathered her.
    Now we have a letter saying, ``I'm sorry, we're just not going
    to put up with it, this sort of annual cuts is--and, plus, the
    administrative requirements--is too much of a hassle.''
        So, even in this area, where there are a lot of doctors,
    you can find people who accept TRICARE patients, but it can
    take some effort. More and more of those are saying--even
    military people, who are very sympathetic--``look, I just can't
    lose money this way.''
        Senator Ben Nelson. Sergeant?
        Sergeant Cline. Mr. Chairman, as you're aware--and I know
    Senator Graham is well aware of this--because of the remote
    locations of Guard and Reserve people, multiply that problem
    out there with them trying to gain access. We know for a fact
    that in Alaska most doctors will not accept TRICARE because of
    the bureaucracy that they have to go through.
        Ms. Moakler. We're hearing from families about their
    problems with access to specialty care, because so many in the
    military treatment facilities, so many of the specialty care
    doctors are in theater, and there may not be robust enough
    support in the network to take care of those families.
        Senator Ben Nelson. That might be true even in the Active
    Duty situation, as well?
        Ms. Moakler. Yes.
        Colonel Strobridge. Sir, something that I meant to put in
    my testimony, and I just remembered it, and Meredith talked
    about the mental health issue, and we all know the terrible
    problem we had, the national problem with not enough mental
    health providers to see these folks. It's even worse with
    TRICARE, because, last year, you may know that Medicare, and
    thus TRICARE, actually cut the amounts they pay mental health
    providers. So it's tougher to get them than anybody else. We
    are going to have a real disaster coming up.
        One of the things that I meant to ask you was to look at
    increasing payments, statutorily, for TRICARE for mental health
    providers. We have to do almost anything possible to try to
    find ways to get people the care that they're not getting now.
    If we have to increase it until we do something else--to me,
    that's something we really need to look at.
        Ms. Beck. One last point. The question that Steve mentioned
    on mental health, one proposal would be to allow Active Duty to
    use some of the 200-and-some vet centers that are around the
    country to, not only get the help that they need, but also to
    avoid the stigma of having to report through the chain of
    command.
        Senator Ben Nelson. There are efforts, in some areas to try
    to coordinate Active Duty care with veterans programs, veterans
    hospitals, clinics, and what have you, recognizing that many
    Guard and Reserve members are, in fact, stranded away in remote
    locations by comparison. So making that available seems to be
    one of the answers to the problem that we ought to take under
    advisement to make sure that the mental health care is being
    adequately compensated.
        Master Chief Barnes. Senator, if I could also expand on the
    Guard and Reserve remote access issue, this is also a serious
    issue for personnel serving on Active Duty on recruiting duty,
    also with members of the United States Coast Guard that rely on
    the system for care. Many of them are assigned some distance
    from military treatment facilities, and this is a big challenge
    for them.
        Senator Ben Nelson. Well noted, thank you.
        Senator Graham.
        Senator Graham. Thank you, Mr. Chairman. As always, this is
    very informative.
        What did people do before TRICARE?
        Colonel Strobridge. They used CHAMPUS and had similar
    problems.
        Senator Graham. Okay. Right, and before CHAMPUS?
        Colonel Strobridge. That was before my time, Senator.
    [Laughter.]
        Senator Graham. Basically, what we're talking about is
    third-party payer coverage has worked its way into the military
    community, which has been a good thing. Because if you go back
    before CHAMPUS, you'd go to a VA center or some other DOD
    facility; if you were lucky, you would get in. So, the whole
    idea of expanding the network to include private hospitals and
    private physicians has been a good idea. The problems you're
    talking about are just endemic to third-party payment--the
    coverage issue.
        There are a thousand anecdotal stories about chelation
    therapy. Now, Medicare may not authorize that, there may be a
    body of people saying, ``That sounds good, but we don't think
    it's something we want to invest in.'' So, that's why this is
    important for you to tell us the type of services that are
    available out there and you're not getting covered, and we can
    look at it and see whether or not, from our point of view, it
    should be added to the mix.
        In 1987, when TRICARE came along, you're right, there have
    been no premium increases. We have to deal with it. But, I
    agree with you, they've just dumped it all over, all at one
    time.
        In terms of a good deal, in 1987 9 percent of the Services
    were covered by the patient. Now, that ratio has changed to
    where it's not 9 percent anymore, it's a lot less. So, from the
    government's point of view, the amount of coverage being
    offered is out of kilter with the private sector, but, at the
    same time, you don't make it all up at once, and you don't put
    a burden on people that 400 percent premium increase.
        It is budget-driven, to some extent, I'll be honest with
    you. Since there's not unlimited resources to run every program
    in the government, 12 percent, 14 percent of the budget in
    DOD's going to be health care in the next 20 years, and that
    competes with all the other things that are important to
    families and readiness.
        So, what I want to do is take your 16 suggestions about how
    to save money, sit down, go over it myself with DOD, then come
    up with a way to implement some premium changes that are not
    draconian, look at how you can save money and how you can
    expand services. The one thing I want to look at TRICARE is how
    to make it--not just from the costs--a better quality benefit.
    There are probably some things that could be offered in TRICARE
    that are not being offered that would keep you out of the
    hospital. There are some things that we could do.
        Now, when it comes to coordinating between the DOD and the
    VA, that is being a military lawyer for 25 years, one of the
    big things you want to do is keep everybody on Active Duty who
    wants to stay on Active Duty. One of the big fights that most
    servicemembers have is, they don't want to leave the military.
    So, we want to make sure that those medical boards that are
    held give people a chance to make the case that, ``I can still
    serve.'' Then, to those who obviously can't serve, to make it
    just as painless as possible, not get caught up in this
    bureaucracy.
        The committees coordinating is never going to happen, I
    think, until you get a seamless system out there that works,
    because the committee oversight probably just makes no sense.
        So, I'm going to focus on trying to make sure that, from
    the moment you leave the battlefield, injured, that there is no
    gap in coverage, and that you have as much access as possible
    from every available system, whether it be DOD, VA, or the
    private sector, and you get what you need, because that's the
    whole point of the Wounded Warrior Act.
        Now this idea of GI benefits, that's going to be a big
    issue in this Congress. The one thing that I've been thinking
    of for quite a long time is, how can you take that GI benefit
    and use it to the maximum benefit of the servicemember and
    their families? That's where transferability needs to be put in
    the mix. I am convinced that a lot of people would stay on
    Active Duty if their benefit could be transferred to their
    spouse or their children. After 3 years, you get 36 months of
    tuition assistance at $1,100. The average cost of a State
    school now, Mr. Chairman, is $1,500. So, we need to bump it up.
    We need to bump up the benefit.
        I think what we need to add into the mix is maybe after 6
    years of Active Duty service, you could transfer half your
    benefit to your spouse or your child; and after 12 years, you
    could transfer all of it. Half the people eligible for VA
    educational benefits never avail themselves of it. So, my
    program may actually be more expensive than some other ideas
    out there, but I think it would make the program more
    meaningful.
        The goal is that, if you'll serve our country to the 12-
    year point, that, when it comes time to send a kid to college,
    that you'll have that college paid for through your VA
    benefits; you may not use it, but your child can use it, and I
    think that would really help families out there a lot.
        So, those are the type of things that we're talking about,
    and the VEAP--who mentioned that?
        Master Chief Barnes. I did.
        Senator Graham. We're not going to leave those people
    behind.
        Master Chief Barnes. Thank you.
        Senator Graham. Now, that's just the right thing to do.
    Whatever I do is going to include a benefit for those folks.
    Going back to 2001 is a good idea in terms of the early
    retirement.
        But, having said all of that, every benefit that we build
    into the system has an out-year cost, and the goal is to treat
    people fairly, to get the best health care we can as soon as we
    can to those who are the most severely injured, to make it an
    attractive endeavor to stay in the military--that a rewarding
    career that has a benefit to you and the ones that you love
    most, and that when your 20 years are up, or your 30 years are
    up, you can look back with pride and say, ``Not only did I
    serve my country well, but I'll have a lifetime annuity and
    access to decent health care.'' That's the goal.
        So your testimony, as far as I'm concerned, Mr. Chairman,
    is invaluable, and we're going to deal with the growth of
    medical costs in the budget; we're going to phase in some
    increases that have to be confronted in a way that's not
    draconian, so we can get this back on a sustainable field.
        Just as important to me is to, maybe, expand TRICARE, in
    terms of what's available out there, to make it a more robust
    benefit, a benefit that keeps people well. I think we could do
    more there.
        So, I just appreciate your testimony, and we'll be rolling
    out a veterans GI enhanced benefit bill here soon that will
    have transferability in it, something I think will help
    families out there.
        God bless you.
        Senator Ben Nelson. Thank you.
        Master Chief Barnes. Thank you for your leadership on all
    these issues, Senator. Very much appreciated.
        Senator Graham. I think Senator Nelson and I understand
    that we have this job at an unbelievable time. No one has ever
    envisioned a war like this. It's an All-Volunteer Force. There
    are more contractors in theater, in many ways, than our Active
    Duty people. We've never gone to war with a contract force like
    this. We've never gone to war with this much participation by
    the Guard and Reserve over a sustained period. So it's now time
    to reshape the benefit package to meet the reality of a war
    that is forever changed the Guard and Reserve. I think it's
    forever changed the family service component of the volunteer
    force. We're going to get more soldiers and more marines.
    That's coming, and that will help.
        Ms. Beck. Sir, if I could, one point on that, this is a
    different type of warfare than we've ever experienced, and we
    have far fewer casualties than we've had in the past, and this
    is an opportunity to take those families who are injured and
    who are so severely injured, and treat them as individuals, and
    not as a statistic or a number or a category.
        Senator Graham. Absolutely.
        Ms. Beck. It'll save money in the long term to do it right
    the first time.
        Senator Graham. That's the least we can do, and the
    casualties that we have sustained have been, in many cases--
    there are people living in this war that would have never lived
    through any other war. That is the great news, and hats off to
    the doctors and nurses and health care providers who have
    pulled them off the battlefield, and back home. But, some of
    them are coming back home in really, really bad shape. So we'll
    do our part to help them.
        Sergeant Cline. Senator, if I can add something--while
    you're looking at the health care benefit, one of the things
    that has recently come to light is--the Task Force on Health
    Care said that they could save $24 million for every 1 percent
    that move to the TRICARE mail-order pharmacy program. What we
    would like to see is that that mail-order pharmacy be at no
    cost to the member, and it would save TRICARE an immense
    amount--currently, only 8 percent of the people out there are
    using the mail-order pharmacy.
        Senator Graham. I've heard that. A lot of pharmacies push
    back. But it makes sense to me, particularly about some
    average, everyday drugs, that you just go get them refilled.
        Thank you all.
        Senator Ben Nelson. Thank you, Senator Graham.
        Clearly, the stress on the families, as well as the
    servicemembers, has been incredible. Changing the Guard and
    Reserve to an operational force, as opposed to their previous
    capacity, I think, has changed, significantly, the nature of
    the military for the future. Obviously, the TRICARE program and
    other benefits programs have to be patterned to deal with the
    reality of where the Guard and Reserve, for example, are, as
    well as the Active Duty. So, I think that we have a lot to do,
    but I think we have some sort of a blueprint as to how to go
    about doing this.
        In that regard, if I could move from talking about the
    health care portion and go more to the cumulative effect of
    being at war for over 6 years, and what the implications are to
    the family. Both the Army Chief of Staff and the Commandant of
    the Marine Corps have referred to what they call,
    ``brittleness'' of military families because of this cumulative
    effect of 6 years. I'd ask you to comment on what your members
    tell you about the impact on military families of 15-month
    deployments, although we're seeking to have that changed.
        Ms. Moakler. I think the 15-month deployments, we were
    hearing from families that the servicemember was missing two
    Christmases or two birthdays or two anniversaries. Somehow that
    just made that second iteration that much more poignant and
    harder to deal with, and families are getting tired. They were
    resilient in the first deployment. They figured, ``We've
    already been through it once, so we can certainly get through
    another deployment.'' But, each deployment is different,
    because the families are not in the same place. The couple with
    no children the first deployment might have toddlers the second
    deployment, or you might have an elderly parent that now the
    spouse that's left behind has to shoulder the burden for. So,
    it's a continual learning experience, because it's never the
    same.
        I can attest to this, because my daughter had two
    deployments--the burden is still there. The burden is always
    there. But, the way that you have to react to different things
    that happen to the deployment is always a challenge.
        Colonel Strobridge. Sir, I think we're almost in a surreal
    situation. We've been in situations in the past, back when we
    were capping pay raises and everybody was saying, ``Gee, you
    can't keep doing this. You're going to have a problem, sooner
    or later,'' and everybody would say, ``Gee, retention is
    fine.'' That's kind of what we're hearing now. Everybody says,
    ``Gosh, retention is fine, and it's even higher in the deployed
    units.'' It's almost as if they're saying people like being
    deployed. Well, that just defies common sense. To us, it's sort
    of like driving in the rearview mirror. If you're only
    measuring what's happened in the past, and not listening to
    people about what they're saying they're going to do, you're
    headed for a problem. I realize it's very difficult to do much
    about it. You either have to deploy less or get a much bigger
    force, and either of those is pretty hard to do in the short
    term, but I just can't help feeling we're whistling past the
    graveyard on retention.
        Senator Ben Nelson. We had a letter: this is the most
    unusual letter that I can recall, saying, ``Please deploy my
    son.'' [Laughter.]
        That is the exception, and for obvious reasons. Some of the
    rest of you might have some thoughts about this, from your own
    experience and talking to your members.
        Master Chief Barnes. Mr. Chairman, I just want to comment
    on the impact to the individual augmentees with regard to the
    Navy. I believe the total is in the 10,000 to 11,000 range.
        When these individual augmentees receive orders, they are
    pulled out, and that impacts staffing, manning, based on their
    job specialty and what have you, certain job specialties,
    ratings in the Navy are significantly more impacted than
    others. It's my understanding that the Navy's continuing
    drawdown does not take that into effect, and that's a concern,
    and I've heard it voiced informally in interaction with
    uniformed senior enlisted leaders. So, I just wanted to make
    that point with regard to the Navy, and the Coalition--it's
    referenced in our statement--the Coalition remains concerned
    about the ambitious continuing drawdown with both the Air Force
    and the Navy, given the challenges associated with bringing
    personnel back, should the drawdown have to be reversed. It's
    impossible to just grow these folks with technical skills
    overnight.
        Senator Graham. Mr. Chairman, I don't mean to interrupt,
    but that's a good point. The Air Force and the Navy--the Air
    Force is running, for the most part, Camp Bucca, the largest
    military prison, probably, ever in history. You have an Air
    Force where a lot of enlisted guys are driving trucks from
    Kuwait. Then, there's just a ton of Navy people out there,
    doing things to augment the Army and the Marine Corps. That's
    why I share your concern about drawing the Air Force--the Air
    Force gave up on end strength so they could just have some
    money to put into an aging air fleet. The bottom line is, Mr.
    Chairman, the country doesn't spend enough on defense. We're at
    about 3.6 of GDP; historically, it's been over 5 percent since
    Vietnam; it was 18 or 19 percent during World War II. Part of
    the problem, I think, is we just don't have enough money to
    meet all of our defense needs.
        Sergeant Cline. Mr. Chairman, while we see in the Guard and
    Reserve some pushback from first-time enlistees who have been
    mobilized, and it may have some impact on our career guardsmen
    and reservists, but where we're starting to see problems arise
    now is with the employers. When a soldier is gone for 2 or 3
    years, it has a definite impact, and we're starting to see more
    and more of that as employers are not hiring Guard and Reserve
    people, and are starting to give them more hassles where
    they've had to turn to the Department of Labor to get resolved.
        Senator Ben Nelson. There certainly has been a lot of
    forbearance on the part of employers in many cases, but it has
    to wear thin at some point when you have the multiple
    deployments, and not very clear on whether there'll be another
    deployment in the near future, having gone through the military
    as much as the deployments have.
        Ms. Moakler, you stated that the NMFA held a summit on
    military children in a time of war, and I think that's an
    excellent amount of research that, I'm sure, was compiled. Can
    you tell us more, from your perspective, about that project?
        Ms. Moakler. We have piggybacked the research, as it is, on
    our Operation Purple Camps. It provided a perfect area to look
    at the children. We surveyed not only the children but also the
    parents. The children, on how they felt that they were dealing
    with deployment; and the parents, on how they felt the children
    were dealing with deployments. The survey was done, the
    research is being done by the RAND Corporation, and the results
    will be released within the next week or two. But, overall,
    we're concerned about what the impact is going to be on these
    children.
        Senator Ben Nelson. What age of children did they test?
        Ms. Moakler. They were campers, 6 or 7 years old, to 18
    years old.
        But, we're also working with the 0-3 folks, looking at the
    impact of deployments on very young children, and that they are
    also included when we are looking at the overall effects of
    deployment on children.
        Senator Ben Nelson. Will the study tell us whether there
    are differences between the reaction of younger children versus
    older children?
        Ms. Moakler. The study that's coming out right now will
    not. We expect to do expanded research. We just received
    funding to do that over the next several years, and we're
    hoping to include the effect on younger children in that
    research.
        Senator Ben Nelson. In terms of childcare, Ms. Moakler, you
    stated that the NMFA was disappointed to learn that the Air
    Force is no longer funding Air Force families that are not
    currently enrolled in either Military Child Care in Your
    Neighborhood or Operation Military Child Care, leaving over 375
    Air Force families on an indefinite wait-list. Can you tell us
    more about the programs and what the lack of funding is
    depriving these families of?
        Ms. Moakler. The Military Child Care in Your Neighborhood
    is a program that is available to folks who are located near
    military installations. It's a program that's available in the
    capital region. It would be available outside of any major
    installation, to accept the overflow or the inadequacies of the
    spaces that are available at the Child Development Center on
    the installation. What it does is, it subsidizes the children
    of mostly Active Duty servicemembers for childcare in civilian
    child development centers.
        The Operation Military Child Care is a program that is
    specifically for activated Guard and Reserve, and gives a
    subsidy to those families and allows them to have childcare
    when the servicemember is deployed.
        Just recently, we learned that the Air Force is not funding
    this program. They are continuing to fund those families that
    were already in the program, but they are not allowing any new
    families to take part in the program, causing a lot of
    consternation with folks who read about the programs,
    understand that they're out there, and then suddenly find the
    door shut in their face. The Air Force has piggybacked on the
    Navy program to pay for those positions that are already
    occupied by families, but we are concerned that we have an
    unequal benefit for those families, and we're not offering the
    same benefit to those Air Guard, Air Force Reserve, and,
    indeed, Active Duty Air Force families that are available to
    the families of the other Services.
        Senator Ben Nelson. So, the other Services are making those
    funds available.
        Ms. Moakler. Yes. Originally, it was a DOD program run out
    of global war on terrorism funds, and then those funds went
    away, and the other Services absorbed that cost.
        Senator Ben Nelson. Sounds like one of those budget issues,
    Colonel, that you referenced earlier.
        The service requirement for members who leave service short
    of 20 years and delay the date at which a servicemember may
    draw retired pay, the Commission believes the current
    generation of young people today would prefer and expect such a
    retirement system. You've already raised the question about the
    retirement program. What, besides extending Senator Chambliss's
    bill, should be done for military retirement? Is there
    anything, beyond what's currently before us?
        Colonel Strobridge. Sir, the things that are out there now,
    I think we have a lot of doubts about. The things that are
    coming out of the Defense Advisory Committee on Military
    Compensation and the Guard and Reserve Commission, where
    they're talking about merging the retirement systems and having
    early vesting and delay payment of retired pay on immediate
    annuity until 57 to 62, I think those of us who have been force
    managers in the past have a lot of concern. I look at today's
    force and try to put myself in the shoes, as hard as it would
    be, of a person with 10 years of service who's facing orders
    for their third or fourth tour in Iraq, and they have a choice
    between saying, ``I'll let you take part of your retirement if
    you walk, but if you stay and serve a career, you have to stay
    until age 57 and keep doing this to get an immediate
    annuity''--we don't see that as a positive retention tool.
        Senator Ben Nelson. More of a disincentive for retention,
    isn't it?
        Colonel Strobridge. Exactly. Historically, sir, over the
    last several decades, we've had lots of retirement proposals.
    For very good reasons, most of them have been looking to save
    money, one way or another. The thing we're concerned about is,
    if you have a new proposal that essentially pays a lot of money
    to people who voluntarily leave, who don't get money now, that
    money is probably going to come from the pockets of the people
    who stay for a career, and we're very concerned about that.
        Senator Ben Nelson. In the corporate world when they do
    that, it's usually considered a buy-out for a reduction in the
    number of personnel; whereas, with the military, we're
    constantly looking for ways to retain more, with bonuses and
    other incentives, and then you face certain disincentive
    programs. It's in conflict.
        Colonel Strobridge. Right. The concern we have about the
    health care, very frankly, one of the big ones, is, it's
    tantamount to a reduction of a couple thousand dollars a year
    in retirement benefits, which reduces the pull to retirement.
    So to us, any of these things--the retirement system is the big
    force-management tool, the 20-year ``cliff vesting,'' there's
    no doubt, it's a very blunt instrument. But somebody from the
    CRS used a phrase I like what it lacks in subtlety, it makes up
    for in impact. [Laughter.]
        It's a very powerful tool, and I think we have to be very
    careful to mess with it. I think one of the reasons we're still
    seeing the retention we are, despite all these terrible things
    we're imposing on people, is the power of the 20-year
    retirement system.
        Master Chief Barnes. Mr. Chairman, I just wanted to expand
    on Steve's comments.
        There's a really strong emphasis on comparing military
    benefits to civilian benefits. A point we continually make is
    that service in the military is much different than working in
    the civilian world.
        The second point is, there's also a dollars-and-cents
    aspect of cost analysis that is usually predominant, not taking
    into consideration the importance of military service, and the
    value of military service, in conjunction with maintaining our
    national defense and security.
        Sergeant Cline. Mr. Chairman, I would like to just reflect
    on the Guard and Reserve. Going to age 62, I believe, with the
    increased operational tempo (OPTEMPO) of the Guard and Reserve,
    the fact that, just a few short years ago, we mobilized 50,000
    national guardsmen to serve down in the Gulf Coast for
    Hurricane Katrina, there is not a day that goes by that the
    National Guard isn't being mobilized for one thing or another,
    and the OPTEMPO keeps getting bigger and bigger and bigger.
    What we're doing is, we're saying, ``Well, we're not going to
    give you an early retirement, we're going to defray it for
    another 2 years.'' I think it would be a big dissatisfaction to
    our Guard and Reserve members.
        Senator Ben Nelson. Yes, we should not lose sight of the
    fact that the Guard, in particular, is under the direction of
    the Governor for domestic issues such as disasters and, like in
    your State--having been a Governor and having had a TAG report
    to me, I'm very much aware, and very sensitive to making sure
    that our Guard is able to be responsive to the needs of the
    State when those needs arise. So, we absolutely need to keep
    that in mind, because that's potentially part of the OPTEMPO
    that can be faced. You can be deployed back, you can be
    deployed domestically in your State for 2 or 3 or more weeks to
    respond to a national disaster. That's not necessarily on the
    drawing board of the Guard planning here in Washington, at the
    Pentagon.
        Sergeant Cline. Yes, sir.
        Senator Ben Nelson. What about full-time staffing? Sergeant
    Cline, you state in your testimony that with the heavier
    commitments and more deployments, the Guard's full-time support
    program is critical to mission success and the Army Guard is
    funded for less than 60 percent of their full-time support
    requirements. The last Baseline Requirements Assessment
    performed by the Army Guard, according to the information
    provided to the subcommittee, was completed back in 1999. Would
    you agree that the Army and the Air Force should complete a
    top-to-bottom reassessment of full-time manning requirements
    before Congress increases these levels beyond the agreed-upon
    ramp that DOD is currently considering?
        Sergeant Cline. I don't think you can stop the ramp, sir.
    The reason I say that is, when you already have an understaffed
    force, that you need to get up to this 90 or 95 percent level
    of full-time manning. You have to remember these are the people
    that work day-in and day-out to support these guardsmen.
    They're the ones that are at the armories helping to recruit
    soldiers and airmen. When the call from the Governor comes,
    they're the ones that are on the phone getting these soldiers
    and airmen to report in so that we can deploy. They're also the
    ones that are making sure that our equipment is maintained at a
    level that we can deploy, whether it be for a domestic mission
    or OEF or OIF. So, I think while we wait for a study, I think
    we have to continue on the Army's ramp to bring that full-time
    manning level up.
        One of the things that we're concerned with is, back in the
    1970s and 1980s we used to have an Active-Duty Army advisor in
    a lot of units. We find that most Active component soldiers do
    not understand the National Guard. Then you also have the
    problem that if the Governor calls, what's this Active-Duty
    soldier to do? Can he deploy with the unit? Then you have the
    rotational problem. You don't have that history of somebody
    being in that unit that knows the people, knows the unit, knows
    the mission.
        Senator Ben Nelson. So, bringing in Active-Duty personnel
    to fill those slots is not the answer to the staffing issue.
        Sergeant Cline. Not in our opinion, it's not, sir. I think
    the Active Guard Reserve program that we currently have, and
    the military technician program we have, have been a huge
    success. These people are overworked; in my opinion, underpaid;
    and they continue to perform, day-in and day-out.
        Senator Ben Nelson. Any other thoughts with regard to that?
    I guess, primarily, the Army-Air Force.
        One other subject in the prepared testimony by TMC, it
    advocates the adoption of flexible spending accounts for
    servicemembers. Since TRICARE covers and pays for many types of
    care that traditional civilian health plans don't, perhaps
    somebody could explain the benefits that a servicemember and/or
    his dependents could realize from a flexible spending account.
        Colonel Strobridge. Yes, sir. It's really ironic that just
    about the only people in America who don't have access to
    flexible spending accounts are military people--Active-Duty,
    Guard, and Reserve. When you look at the military program,
    people have expenses for things like eyeglasses, contacts,
    copayments on braces, copayments on pharmaceuticals--childcare
    is a big one. We deploy a parent; obviously, they need more
    childcare, which is one of the elements of the flexible
    spending account. Yet these folks are the only people in
    America that we don't allow this tax deduction for. We realize
    that is not under your jurisdiction. We appreciate the support
    that the committee has given us on this. The odd thing is, it
    doesn't take a law change. DOD has the authority to do it. They
    have just chosen not to, for some unknown reason. To us--we
    just can't understand why military people shouldn't be able to
    use the same benefit that everybody else in America has.
        Senator Ben Nelson. At least we ought to write a letter to
    DOD and ask them why they draw a distinction between TRICARE
    beneficiaries and the rest of the population.
        Colonel Strobridge. But, please remember, it's not just
    health care, it is childcare, as well.
        Senator Ben Nelson. Sure.
        Ms. Beck. Sir, and there are, again, a number of things
    that TRICARE does not cover, that could be helpful in this
    arena. Medicare--there are certain prosthetics that Medicare
    will cover and TRICARE won't. The co-pay for that is $20,000.
    So, to be able to accommodate that with that type of care would
    be helpful.
        Senator Ben Nelson. Have you developed any idea of what
    level the flexible spending account should be? From what figure
    to what figure would you be recommending? Or have you looked at
    it, at that level?
        Colonel Strobridge. Sir, all we've proposed is, make them
    eligible for the same program that is currently available to
    Federal civilians, just like we've done with the Thrift Savings
    Plan. To us, that would be perfectly acceptable.
        Senator Ben Nelson. One further thing. Chief Barnes, in
    your written testimony, you advocate a larger role for the DOD
    in providing the opportunity for overseas servicemembers to
    vote. Obviously, with this election coming up, it's important
    for us to have more information about your thoughts. How can
    Congress or DOD improve the current system, keeping in mind
    that, under the U.S. Constitution, voting is primarily a matter
    of State law and that DOD is somewhat limited in what it can
    require of servicemembers? So, we're at somewhat of a
    disadvantage, but do you have any thoughts about how we might
    be able to overcome that disadvantage?
        Master Chief Barnes. Yes, Mr. Chairman. Thank you for that
    question.
        We are very concerned about statistics that indicate that
    less than half of the absentee ballots that were cast in the
    last presidential election were actually counted, because of
    various challenges associated with casting those ballots, with
    requesting absentee ballots, with regard to postmarks, with
    regard to how the ballots are handled, as you say, at the State
    level. We believe that there's an opportunity to perhaps
    explore using technology more effectively, to request ballots
    and communicate the need for ballots, and then submit them via
    regular channels or cast the ballots via the mail service. We
    are working with the Pew Charitable Trusts on this issue,
    trying to learn more about this. We're also mindful that
    considerable resources have been committed to demonstrations of
    voting via the Internet, and there have been security concerns,
    and those have not been successful. So, thank you for that
    question. We continue working that issue.
        Senator Ben Nelson. I think it's legitimate to continue to
    work on it. I really do, and I hope that you're able to come up
    with some suggestions that will work. There are security
    issues, obviously. There are States that are moving away from
    the voting machines, going back to paper ballots. So, the U.S.
    mail probably will continue to be a significant part of the
    process. But, I hope that we could find a way to facilitate, so
    that you don't end up with, as many as you are suggesting,
    maybe half of the ballots not getting counted because of
    technical deficiencies, which are important and can't be
    ignored, but how do we get the process streamlined to where we
    don't run into those, where you have a postmark problem or
    delay in getting the ballot? Technology may be able to help us
    in that regard, at least.
        Master Chief Barnes. Yes, sir. The participation in the
    process is very important. It's a high priority for the
    Association and our Coalition partner organizations. We
    appreciate your attention to that, and we will continue working
    this issue and share any additional information we may have on
    that, or recommendations, to yourself and the staff.
        Senator Ben Nelson. Sure. Thank you.
        We're coming close to the time to end. But, before we do,
    what have we not asked that we should have? What do we not know
    that we should know, from your perspective? Please feel free.
        Colonel?
        Colonel Strobridge. I think the only comment that I would
    like to add when Senator Graham was talking about the relative
    share of DOD costs, one of the things that we think is
    essential to recognize on that--and, very frankly, when DOD
    talks about that, we have a great deal of problem with it--is
    not to recognize that costs have an increase, but the other
    part of that equation, whenever you're dealing with a fraction,
    you have a numerator and a denominator. That denominator is
    influenced by procurement holidays--if the denominator goes
    down, all of a sudden the percentage that's consumed by health
    care is bigger. The other part is that the DOD health care
    system is not built for efficiency. It says, very frankly, that
    the retired customer is last. They get whatever is left. The
    DOD health care system is built for readiness. When we deploy
    people overseas, we deploy the doctors, and that means that the
    patients have to go downtown, which is more expensive. We have
    commanders robbing money from the hospitals to meet their
    readiness costs; that means you reduce the number of drugs in
    the formulary, people have to go downtown. The commander
    doesn't care, because that cost goes to DOD.
        We have three different Services competing for money, we
    have three contractors competing for money--four contractors,
    with the pharmacists. A lot of them don't talk to each other. A
    lot of them don't like each other. The last thing they do,
    really, is work together effectively.
        So to us, a big share of the cost increases that DOD talks
    about are readiness-driven cost increases, they're costs of
    doing military business. To us, the beneficiaries should not
    share any percentage of that. So, talking about percentage of
    DOD cost, to us, doesn't make any sense. That's why we come
    back to the standard of saying it should be tracked to their
    income increases, not to DOD costs. We've pushed a lot of
    initiatives to try to reduce DOD costs. DOD has resisted them.
        Master Chief Barnes. Mr. Chairman, an issue that is very
    challenging is reform of the Uniformed Services Former Spouses
    Protection Act. We're mindful that, I believe, for the second
    year in a row, the Department has forwarded some
    recommendations from the study to look at that issue. So, I'd
    just bring that to your attention. That's addressed in our
    statement also.
        Senator Ben Nelson. Okay.
        Ms. Moakler. I agree with Joe Barnes on that. We do believe
    that there are inequities, and that both sides would be well
    served by implementing the recommendations of the DOD report.
        I just want to remind the committee about expectations of
    military families. We have wonderful programs out there. We
    want to fulfill the expectation of military families, that they
    be able to access them, no matter where they go, no matter what
    installation they're at, no matter the state of that
    installation because of BRAC or reorganization, or depending on
    the component to which they belong. The President, in his State
    of the Union Address, established an expectation for military
    families on this transferability of the GI Bill. We hope that
    if and when it is included in a new GI Bill, or changes to the
    GI Bill, that we consider all the ramifications so that we
    don't disappoint any of those spouses and children who are
    expecting to be able to access that across the board.
        Ms. Beck. I was just going to touch, one last time, on the
    idea of the oversight. Since September 11, we have changed our
    force structure, we've changed how we go to war, but we haven't
    structurally addressed how we treat these servicemembers when
    they come back either injured or severely injured. While we
    debate back and forth over whose responsibility they are to
    take care of, they fall through the cracks. Starting with
    Congress having that joint committee, that Joint Subcommittee
    on Transition, or something similar to it, would be hugely
    beneficial to the servicemembers directly. It may not be the
    most interesting topic in the world to them, and they not know
    it, but having that joint oversight would really help to
    address a number of the near misses as we discuss this.
        Senator Ben Nelson. It would be wonderful if we can
    implement the changes that will be necessary to make sure that
    it is seamless.
        Ms. Beck. These agencies are blurring the lines, and now
    we're asking Congress to do the same thing.
        Senator Ben Nelson. It's not that there's no interest or
    that there's no effort, because there is both interest and
    effort, it's just that it's a herculean task to be able to
    overcome it and accomplish that desired seamless service.
        Sergeant Cline?
        Sergeant Cline. Sir, one of the biggest problems that we're
    having in the mobilization process is dental funding and
    readiness. Ninety days is just not enough time to get a soldier
    ready to go, or an airmen ready to go, before they actually
    deploy. The current Delta Dental Program will not take somebody
    who's enrolled in a program from a category 3 to a category 2
    for mobilization purposes. So, we need to improve that dental
    program, but we also need to give the Services the ability--and
    they know, a year out now, what units are going to go. In rare
    cases, some units don't have that flexibility. But, we need to
    start allowing dental readiness as soon as we know a unit's
    going to deploy, start the process then, not wait until 90 days
    out, where we have to pull somebody's teeth to get them to be
    able to deploy.
        Colonel Strobridge. Sir, I'm a little concerned that we may
    have talked about a couple of things so often that I want to
    make sure that I foot-stomp a couple of specific examples, and
    they entail mandatory spending, which I know is difficult for
    the committee. We'll be dealing with amendments, I'm sure. But,
    a couple of specific examples.
        The committee did a wonderful thing last year in taking
    care of the combat-related special compensation for the people
    under 20. We are very grateful for that. The Disability
    Commission, though--and most of us have recognized that making
    a distinction between combat-related and noncombat-related is
    an awfully tough thing to do. We have a case of a person who
    pre-flighted a combat mission in an aircraft in bad weather,
    slipped on the wing, fell off and broke his back on the
    equipment. That was deemed noncombat-related. It was a weather
    condition. These are the kinds of distinctions that we make.
        We have, now, under current law, with all the good things
    that Congress has done, a person who is early-retired with 15
    years of service and a 50 percent disability is now a noncombat
    disability and is on their way to have that phased out over a
    period of about 4 more years.
        A person who has a 10 percent combat-related disability
    with 20 years, gets their full retired pay.
        But, a person who is in that circumstance, a person with 19
    years, 7 months of service, has to lose their full disability,
    full retired pay. We just think that's wrong. We need to do
    something for the high-disability people who are forced into
    retirement before 20 years of service for noncombat reasons. We
    have to do something to ease that inequity.
        The other thing is the survivors. We realize that Congress
    did the $50 last year. You didn't have to do that, and we have
    spent a lot of effort trying to make sure that the survivors
    who see that as a slap in the face, very frankly, understand
    that this was done by people who are trying to take a step to
    help.
        One thing I ask you to be aware of, just because it was
    brought forcefully to us, that even with that, and with the
    modest increases that go forth, just the COLA adjustments on
    the current DIC means they're losing another $20 a month every
    year that goes by. We would ask you, in your deliberation in
    conference and on the amendments, to be sensitive to that.
    We're hoping, now that Congress has recognized the inequity, to
    get to the point where we can look ahead and see an end to
    that, or see significant progress, where the amount of money
    those widows are losing every month isn't increasing. We need
    to make real progress toward eliminating the offset.
        Senator Ben Nelson. Anything further?
        Sergeant Cline. I'd like to add something to surviving
    spouses, something that won't cost the government anything.
    That's to give surviving spouses space-A privileges. The
    airplane is going to go to a location. If there's a seat
    available on there--that spouse has made the ultimate
    sacrifice. Why not give them the seat on that aircraft, if it's
    available? Knowing that if they have to pay their own way home,
    they know that. Chances are, most of them won't take the
    benefit, but it's Congress, the DOD saying, ``We recognize your
    sacrifice, and we're going to make this available to you as a
    benefit.''
        Senator Ben Nelson. Sounds like something that should be
    considered. I'm sure there's a bureaucracy associated with that
    sort of thing that will have an idea or two about it.
        Sergeant Cline. Leave it up to DOD, sir. There's always a
    bureaucracy.
        Senator Ben Nelson. Thank you, everybody. I appreciate your
    candor, your suggestions, and we will take them under
    consideration.
        [The prepared statement of the Reserve Officers Association
    follows:]
     Prepared Statement by the Reserve Officers Association of the United
                                     States
                                  introduction
        The Reserve Officers Association (ROA) thanks the chairman and
    members of the committee for the provisions passed in the National
    Defense Authorization Act for Fiscal Year 2008. With over 100
    provisions that help serving members and their families, at least 24
    directly affected ROA members. ROA further applauds the ongoing efforts
    by this committee to address recruiting and retention as this will be
    an ongoing challenge as we continue to fight a war.
                               executive summary
        The ROA tries to look beyond just benefits for our members with a
    focus on building a Reserve component for the 21st century. In keeping
    with our Congressional Charter we attempt to ``promote the development
    and execution of a military policy for the United States that will
    provide adequate national security.''
        The ROA Calendar Year 2008 Legislative Priorities are:

             Assure that the Reserve and National Guard continue in
            a key national defense role, both at home and abroad.
             Reset the whole force to include fully funding
            equipment and training for the National Guard and Reserves.
             Providing adequate resources and authorities to
            support the current recruiting and retention requirements of
            the Reserves and National Guard.
             Support citizen warriors, families, and survivors.

        Issues supported by the ROA are:
    Recommendations on the Commission on the National Guard and Reserves'
            Final Report.
             A report by the Department of Defense (DOD) on how to
            develop a framework for an Integrated Total Force utilizing a
            continuum of service for both Active and Reserve components.
             A study by DOD on what statutory and policy changes
            would be required to create an Operational Reserve that is
            sustainable.
             Reports from Departments of Defense and Homeland
            Security further developing the framework of homeland security
            and defense, clarifying statutory responsibilities, and further
            defining the roles of the National Guard and Reserve in the
            homeland.
             A need for hearings about the Reserve Force Policy
            Board structure and authority.
             Various other provisions.
    Changes to retention policies:
             Continue to support incentives for affiliation,
            reenlistment, retention, and continuation in the Reserve
            component.
             Permit service beyond the current ROPMA limitations.
             Ensure that new non-prior servicemembers, who are over
            40 years of age, are permitted to qualify for non-regular
            retirement.
             Continue to correct and improve legislation on
            reducing the Reserve component retirement age.
             Permit mobilized retirees to earn additional
            retirement points.
    Pay and Compensation:
             Ensure Army policy on mobilization and allowances
            doesn't destabilize retention.
             Seek differential pay for Federal employees.
             Provide professional pay for Reserve component medical
            professionals.
             Eliminate the 1/30th rule for Aviation Career
            Incentive Pay, Career Enlisted Flyers Incentive Pay, Diving
            Special Duty Pay, and Hazardous Duty Incentive Pay.
             Simplify the Reserve duty order system without
            compromising drill compensation.
    Education:
             Place all GI Bill funding and administration belongs
            under the jurisdiction of the Senate and House committees on
            Veteran Affairs.
             Include deployed reservists under MGIB-Active to allow
            qualification by accumulating active duty time; earning up to
            36 months of benefit at 100 percent.
             Extend MGIB-SR, chapter 1606, eligibility for 10 years
            following separation or transfer from the Selected Reserve in
            paid drill status.
             Return the MGIB-SR (Chapter 1606) payment rate to 47
            percent of MGIB-Active.
             Include 4-year as well as 6-year reenlistment
            contracts to qualify for a prorated MGIB-SR (Chapter 1606)
            benefit.
             Stipulate that Reserve component personnel can use
            their education benefits while mobilized.
             Transfer unused benefits for career servicemembers to
            family members.
             Allow use of the MGIB benefit to pay off student
            loans.
    Spouse Support:
             Repeal the SBP-Dependency Indemnity Clause (DIC)
            offset.
    Health Care:
             Medical and Dental Readiness
             Continuity of Health Care
             Parity of Care for Reserve Component Wounded
             TRICARE Fee Recommendations.

        Only issues needing additional explanation are included below.
    Self-explanatory or issues covered by other testimony will not be
    elaborated upon, but ROA can provide further information if requested.
          final report: commission for the national guard and reserves
        The ROA was extremely pleased with much of what we found in the
    final report from the Commission on the National Guard and Reserves
    (CNGR). The Commission got the big issues right.
        ROA has participated in this process since its inception over 2
    years ago, and are gratified to see many of our ideas and
    recommendations reflected in today's report. While there may be some
    differences in opinion on specifics, ROA certainly concurs with the
    Commission's main conclusions:

             That a strong Reserve component is essential to
            sustaining the All-Volunteer Force.
             That since 2001, the availability of the Reserve and
            National Guard for worldwide missions has saved the country
            from a draft.
             That the men and women of the Guard and Reserve have
            performed magnificently.
             That the Reserve component is an extraordinary
            ``bargain'' for the taxpayers.
             That the Nation needs both an ``Operational'' and a
            ``Strategic'' Reserve, and that an effective ``continuum of
            service'' policy is essential to achieving the right balance
            between these two parts of our Reserve.
             That the Nation's employers play a critical role in
            the success of the Reserve components and deserve additional
            support.

        ROA is concerned about how some others are reading the report. ROA
    believe that some may be drawing the wrong conclusions on three very
    important issues.

              1. Should the National Guard should be exclusively a homeland
            defense force? ROA believes that the National Guard and
            Reserves should be trained and equipped for service both at
            home and abroad. This is not a big change from today, except
            that the Department of Defense (DOD) has not bought enough
            equipment or provided enough training. What the CNGR report
            recommends is that DOD expressly recognizes that both home and
            overseas missions are important, and that equipment and
            training decisions must reflect that reality.
              2. Does the report propose to cut the pay of reservists? It
            says exactly the opposite. What the Commission did say was that
            the old way of calculating reservists pay was a problem, and
            should be simplified. Anyone who has served in the Reserves
            knows that to be the case. The Commission expressly says this
            simplification should be done ``. . . without reducing
            compensation for current servicemembers.''
              3. Is the concept of a sustainable ``Operational'' Reserve
            achievable? ROA believes that it is. ROA likes the Commission's
            idea of carefully identifying units and individuals in the
            operational portion of the National Guard and Reserve, while
            others are identified as being in the ``Strategic'' Reserve.
            Some units can fill both roles depending on where they are in
            the readiness cycle. ROA agrees with the idea that these
            different parts of the Reserve could be equipped and funded in
            accordance with their missions, and that Congress should put
            controls in place to make sure that is happening.

        ROA also supports.

             The office of the Assistant Secretary of Defense for
            Reserve Affairs must be strengthened. We don't favor
            eliminating that office. We continue to recommend the
            appointment of an Undersecretary, perhaps combining the
            responsibilities of Reserve Affairs and Homeland Defense. (#95)
             That all Reserve component chiefs should be appointed
            from the Reserve component of that Service. (#93) USNR and
            USMCR are current exceptions.
             The Reserve Force Policy Board needs to be examined.
            Section 1823 of the National Defense Authorization Act of 2008
            mandated that the Secretary of Defense reports to Congress on
            the organization, membership, functions, procedures and
            legislative framework of the Reserve Forces Policy Board (RFPB)
            no later than July 1, 2008.

        To assist in the information gathering process for this report, the
    ROA recently held a forum on the Reserve Forces Policy Board that
    reviewed all major aspects of its role, organization, membership,
    functions, and procedures. The forum participants reached the following
    conclusions--most of them on a unanimous basis:

              (1) The RFPB must report directly to the Secretary of
            Defense. The present system of reporting ``through'' other
            offices in the DOD has caused the Board's advice to be less
            effective than if received by the Secretary of Defense
            directly.
              (2) The RFPB must function as a truly independent Board, with
            all members being free to give their unvarnished opinions
            without regard to those of their superiors.
              (3) The role of the RFPB is primarily to provide Secretary of
            Defense with policy advice. In accomplishing this purpose it
            has an information gathering and dissemination role as well as,
            in a more limited way, an action role, primarily in sharing its
            findings.
              (4) A majority of the participants thought the current
            membership on the RFPB should be maintained and augmented. This
            would include continuing representation from all the Reserve
            components, regular officers, representation by each Service's
            Assistant Secretaries for Manpower and Reserve Affairs, and an
            appointment of a chairman. Noncommissioned officers be added to
            the Board.
              (5) The Commission on the National Guard and Reserves
            recommended composing the Board entirely from persons ``. . .
            from civilian life.'' Forum participants unanimously disagreed
            with this view, but a minority did believe that augmenting the
            Board with some non-DOD civilians was appropriate.
              (6) The participants believed that the RFBP annual report the
            to the Secretary of Defense should continue to be transmitted
            to the President and Congress as provided in 10 U.S.C.
            113(c)(2).

         As different groups have differing opinions, congressional
    hearings on the RFPB should be conducted at the earliest possible time
    this year. ROA's hope is that early hearings will permit legislative
    action on this topic this year.

        The CNGR has made a number of additional recommendations which can
    be included in this year's National Defense Authorization Act. ROA
    supports the following.

             Requiring total force equipment requirements to be
            included in service and joint planning and delivery. CNGR
            recommendation (#42)
             Requiring the active services should conduct a
            baseline review of Reserve component equipment requirements.
            (#44)
             Amending the mobilization statutes to involuntarily
            mobilize for 60 days in 4 months, 120 days in 2 years for
            natural or manmade disasters. (#8)
             Directing a report on current Reserve component
            systems for developing and maintaining a civilian skills
            database and recommend methods of standardization between the
            Services. (#19)
             Removing Reserve designators from all titles,
            signature blocks, and unit designators. (#85)
             Eliminating the 30 day minimum on Active Duty for
            receipt of Basic Allowance for Housing. (#52)
             Reimbursing servicemembers for travel expenses in
            excess of 50 miles at discretion of Service Secretaries,
            delegatable to Reserve component Chief (#53).
             Amending law to permit Reserve component members to
            use MGIB-SR after their discharge, as long as they are subject
            to recall. (#54).
             Expanding DOD's authority to pay a stipend or tax
            credit as reimbursement for cost of keeping employer health
            care. (#63).
             Increasing DOD funding to family support services to
            include paid staff. (#65)
             Implementing an information campaign to educate
            Reserve component members and families about Military OneSource
            (#66)
             Expanding efforts to educate families about benefits,
            health care, family support programs, potential demobilization
            issues, and other family concerns. (#67) * Directing all
            Federal agencies to follow guidance on appropriate behavior
            with regard to employees who are reservists: compliance to
            USERRA. (#70)
             Revising pre-deployment health assessment to establish
            baseline health data on psychological as well as physical
            health. (#74).
             Resuming monthly drills immediately after
            demobilization. (#75)
             Providing transition assistance information not just
            at TAMP but at first several post demobilization drills, and
            include family members. (#79)
             Tracking post-deployment health reassessments to
            ensure they are completed within 90-180 days. Provide
            appropriate counseling and health care. (#76)
             Developing protocols to ensure needed services are
            available to Reserve component members who do not demobilize at
            their home or who are [Individual Mobilization Augmentees or]
            Individual Ready Reserve members. (#77)
             Providing demobilized Reserve component members with
            one year of dental care coverage through military treatment,
            Veteran Affairs Hospitals, or contracted civilians. (#78)
             Establishing a single reintegration standard of care,
            regardless of frequency of tours, or Service/Reserve component
            component category. (#80)

        The DOD should be directed to study the following on how to:

             Qualitatively assess and credit proficiency based on
            knowledge, skills, and abilities on Active and Reserve joint
            duty. (#16)
             Implement a combined pay and personnel system. (#21)
             Remove all vestiges of cultural prejudice between
            Reserve component and AD which remain in law. (#84)
             Resolve problems in providing family health support to
            families outside of Military Treatment Facility networks. (#61)
             Replacing Social Security Numbers as a DOD unique
            identifier. (#60)
             Develop an expanded joint family assistance program
            via Internet and phone. (#64)
             Expand ESGR mission to help employers find information
            on a wide range of topics including: Department of Labor, Small
            Business Administration, Department of Veterans Affairs, health
            issues including traumatic brain injury and post-traumatic
            stress disorder. Also, to hire more ombudsmen, and if any
            changes to the reporting path to the Secretary of Defense are
            needed. (#68)
             Have the Reserve Forces Policy Board Employer Advisory
            council report directly to Secretary of Defense. (#69)
             Have DOD explore creating and implementing a
            ``contracted Reserve,'' seeking volunteer civilian employers
            and employees to provide the U.S. Government with specialized
            skills in the Reserve Force. (#72)

        ROA concurs with the Commission that creating a Reserve and
    National Guard for the 21st century is essential. The country cannot
    have an All-Volunteer Force unless it has a strong and capable Reserve
    component--unless we want to go back to the draft.
             pay and compensation discussion--proposed legislation
    Retirement:
        ROA would like to thank the committee for passing the early
    retirement benefit in the National Defense Authorization Act for Fiscal
    Year 2008, as a good first step toward changing the retirement
    compensation for serving Guard and Reserve members.

        1. ROA endorses S.2836, the National Guard and Reserve Retirement
    Pay Equity Act, which is a corrective measure to the National Defense
    Authorization Act for Fiscal Year 2008, including those Guard and
    Reserve members who have been mobilized since September 11, 2001. Over
    600,000 were excluded. ROA recognizes the expense of this corrective
    measure scored by CBO at $1.8 billion over 10 years, but some times
    fair trumps fiscal.
        2. With changes in the maximum recruitment age, ROA urges Congress
    to ensure that new non-prior servicemembers, who are over 40 years old,
    are permitted to qualify for non-regular retirement. While Congress
    took action to extend the military Mandatory Retirement Age (MRA) to 62
    years, services aren't necessary electing to increase their MRA
    policies.
        3. An additional problem has arisen for O-4 officers who, after a
    break in service, have returned to the Reserve component. After being
    encouraged to return a number of officers find they are not eligible
    for non-regular retirement. When reaching 20 years of commissioned
    service they find they may have only 15 good Federal years. Current
    policy allows these individuals to have only 24 years of commissioned
    time to earn 20 good Federal years. ROA urges Congress to make changes
    to allow O-4s with 14 to 15 good Federal years to remain in the Reserve
    until they qualify for non-regular retirement.
    Differential Pay for Federal Reservists:
        The Federal Government is one of the largest employers of Guard and
    reservists. While DOD asks private employers to support deployed
    employees, and praises employers who pay the differential between
    civilian and military salaries, the Federal Government does not have a
    similar practice. Federal pay differential should be viewed as a no
    cost benefit, as this pay has been budgeted to Federal agencies before
    the individual Guard or Reserve member is recalled. As the pay
    differential will be less than the agency's budgeted pay, there will be
    a net savings. Because of this, ROA feels that each Federal agency, and
    not the DOD, should pay this differential. ROA urges Congress to enact
    legislation that would require a Federal agency to pay the difference
    between the Federal Government civilian and military pays of its
    reservist-employees who are mobilized.
    Education:
        Montgomery ``GI'' Bill-Selected Reserve (MGIB-SR): To assist in
    recruiting efforts for the Marine Corps Reserve and the other uniformed
    services, ROA urges Congress to reduce the obligation period to qualify
    for MGIB-SR (Section 1606) from 6 years in the Selected Reserve to 4
    years in the Selected Reserve plus 4 years in the Individual Ready
    Reserve, thereby remaining a mobilization asset for 8 years.
                          medical and dental readiness
        Medical and dental screening and care in advance of mobilization
    were authorized in section 701 of the National Defense Authorization
    Act (NDAA) for Fiscal Year 2004 for 90 days prior to activation. This
    has not solved the problem as medical and dental readiness is still the
    number one disqualifier preventing mobilization.
        ROA supports legislation introduced this week by Senator Clinton
    (NY) that was entitled ``National Guard and Reserve Medical Readiness
    Act'' which lengthens the eligibility period for medical and dental
    screening and care.
        Because of the changing status of Guard and Reserve members between
    inactive and active status, health care for reservists is a complex
    challenge. Prior to mobilization some members are without coverage,
    many have opted into the new TRICARE Reserve Select, still others
    covered by employment health coverage. Once alerted, these individuals
    are covered by TRICARE.
        Currently, the burden to maintain such readiness falls upon the
    individual reservist. Even individuals who participate in TRICARE
    Reserve Select and the TRICARE Dental Plan have to pay premiums for
    these health plans. Unit commanders are hesitant to direct individuals
    to maintain certain medical and dental standards because the individual
    would carry the cost of corrective measures.
        The Commission on the National Guard and Reserves recommends that
    in order to enhance medical readiness, and sustain an Operational
    Reserve (#34) DOD must:

             Have annual dental and medical screening
             Adopt policies for individuals to be medically ready
             Hold units responsible for medical & dental readiness.
                           continuity of health care
        Some Reserve component members who have taken TRICARE Reserve
    Select Health coverage are nearing retirement, and have recognized that
    once they leave the Selected Reserve that they will not have TRS
    coverage.

             ROA recommends a Gray area retiree buy-in to TRS. TRS
            buy-in would be at the full monthly cost, but at least this
            would provide a continuity of coverage for those waiting for
            TRICARE retirement.
                   parity medical care for wounded reservists
        Suggested Enhancements:

             The DOD needs an electronic medical records system
            that is compatible with the systems from the Veterans Affairs.
             The interagency DOD and DoVA connectivity and
            cooperation needs to continue to be enhanced to better serve
            those that have served.
             Reservists need proper education and counseling in
            benefits, allowances, and assistance that are offered to
            wounded service personnel. A reservist returns to a civilian
            community that may not have a nearby military installation.
             Wounded warriors should be assigned to units local to
            their homes for the purpose of accountability and tracking
            their progress through the medical system. The military needs
            to take responsibility for monitoring and advocating for their
            people until they are fully integrated into the Veterans
            Affairs system.
             Reservists should have the option to return home while
            awaiting surgery, physical therapy or other medical treatment.
            They should also have the choice to receive these services from
            local TRICARE medical professionals at DOD expense.
             Line of duty determinations must be made in a timely
            manner, with the ability to perform home status duty, while
            waiting the outcome from medical or physical evaluation boards.
             Long waits for medical or physical evaluation boards,
            in some cases a year or more, without drilling can cause
            reservists to lose a satisfactory year. These non-qualifying
            years can affect promotion opportunities and retirement
            eligibility.
             Benefits must be equal for all wounded warriors. All
            disparity in annual disability payments between the Active and
            Reserve components must be eliminated.
             Extensive mental health assessments should be given
            immediately upon return to home units with follow-up
            assessments as prescribed by mental health officials. When
            reservists return to their civilian lives they may develop
            mental complications not previously noticed.
             Traumatic Brain injury is the signature wound from
            Iraq. Predeployment baseline tests should be taken to measure
            changes in returning warriors.
                          tricare fee recommentations
        Encourage hearings on recommendations and fee structures made by
    the Task Force on the future of Military Health care.
    TRICARE Prime:
             Adjustments to the enrollment fee are acceptable if
            tied to true health care costs.
             It is important to review the independently evaluation
            of the current total cost of DOD health care benefits. Such an
            audit will permit Congress to validate proposals made by all
            parties.
             Cost-sharing adjustments should be spread over at
            least 5 years to permit household budgets to adjust.
             Annual increases should not be tied to the market-
            driven Federal Employee Health Benefits Plan (FEHBP).
    TRICARE Standard:
             ROA does not endorse an annual enrollment fee for
            either DOD or VA beneficiaries.
             If TRICARE Standard requires beneficiary enrollment,
            it should be only a one-time minimal administrative fee.
             Adjustments to TRICARE Standard should be made to the
            deductibles.
             Because of larger co-payments of 25 percent after the
            deductible, the costs of TRICARE standard must to be analyzed
            from a total cost rather than initial cost perspective. TRICARE
            Standard's cost deductible automatically adjusts with
            escalating health care costs.
             TRICARE standard deductible increases should not be
            rolled over into TRS as reservists pay more upfront. Family
            Premiums and deductible for an operational reservist are $3,336
            per year for calendar year 2007 compared to a proposed combined
            cost of $1,120 for TRICARE Standard in fiscal year 2008.
    TRICARE Reserve Select (TRS):
             Review and reduce the TRS premium structure found to
            be excessive by GAO.
             Continue to improve health care continuity to all
            drilling reservists and their families by:

                     providing the individual reservist an option
                    of DOD paying a stipend toward employer's health care.
                     allowing demobilized reservists, involuntarily
                    returning to IRR, 1 year of TRS coverage for each 3
                    months of service.
                     allowing demobilized Retirees to qualify for
                    coverage provided the IRR.
                     allowing demobilized FEHBP the option of TRS
                    coverage.
                     extending military coverage for restorative
                    dental care following deployment as a means to insure
                    dental readiness for future mobilization.
                     requiring physicians who accept Medicare must
                    accept TRICARE.
    Pharmacy Co-payments:
             ROA believes higher retail pharmacy co-payments should
            not apply on initial prescriptions, but on maintenance refills
            only.
             ROA supports DOD efforts to enhance the mail-order
            prescription benefit.
                                   conclusion
        ROA reiterates its profound gratitude for the progress in providing
    parity on pay and compensation between the Active and Reserve
    components, yet the subcommittee also understands the difference in
    service between the two components.
        ROA looks forward to working with the personnel subcommittee where
    we can present solutions to these and other issues, and offers our
    support in anyway.

        Senator Ben Nelson. This subcommittee is now adjourned.
        [Questions for the record with answers supplied follow:]
             Questions Submitted by Senator Hillary Rodham Clinton
              mental and dental readiness of the reserve component
        1. Senator Clinton. Colonel Strobridge and Sergeant Cline, in your
    prepared testimony, you identified medical and/or dental care as a
    major readiness challenge. Indeed, lack of medical or dental readiness
    often means that our Guard and Reserve units must deploy with less than
    100 percent of their personnel or reach into other units to fill their
    empty positions. Earlier this year, the Commission on the National
    Guard and Reserves found that ``five of the seven Reserve components
    are not satisfactorily meeting the Department of Defense (DOD) medical
    readiness standards,'' defined as 75 percent of personnel being rated
    fully medically ready.
        The DOD's own assessment identifies only the Air Guard and the Navy
    Reserve as meeting medical readiness standards in the second half of
    fiscal year 2007. The Reserve components that have been most stressed
    by the wars in Iraq and Afghanistan--the Army National Guard, Army
    Reserve, and Marine Corps Reserve--are the first, second, and fourth
    least medically ready of the five Reserve components, according to DOD.
    The problem is particularly acute among the Army National Guard and
    Army Reserve where only 21.3 percent and 23.7 percent of soldiers were
    rated fully medically ready in the first quarter of fiscal year 2008.
        Ensuring individual medical readiness among our National Guard and
    Reserves is both a quality of life issue for our brave citizen-soldiers
    and a national security imperative. The era of the weekend warrior--of
    service in the National Guard and Reserves meaning a commitment of 1
    weekend a month and 2 weeks a year--has ended, and we must step up to
    ensure that the benefits, including medical and dental care, to which
    they are entitled, are adequate to meet their needs.
        Considering this deeply concerning National Guard and Reserve
    medical and dental readiness data, what steps has DOD taken to improve
    readiness levels among the Guard and Reserves?
        Colonel Strobridge. MOAA and the Coalition don't feel qualified to
    try to detail the Defense Department's actions in this area, and would
    defer to the Department to do so. We note, however, that DOD itself and
    the Commission on the National Guard and Reserves acknowledge
    significant shortcomings in medical readiness especially in Reserve
    component ground forces. For one example, DOD created a joint
    partnership Federal Strategic Health Alliance (FEDS-HEAL), a joint
    initiative of support services between the DOD, Veterans Health
    Administration and Federal Occupational Health. More information is
    available at http://fhp.osd.mil/about.jsp?topic=6#feds-heal and http://
    www.navy.mil/search/display.asp?story--id=33268.
        Sergeant Cline. Enlisted Association of the National Guard of the
    United States (EANGUS) cannot speak for the Defense Department, and we
    believe this question should be directed to the Department for a
    definitive answer.
        As stated in a recent news article (http://www.ngb.army.mil/news/
    archives/2008/03/032008-dental--health.aspx), the Army National Guard
    and the Department of the Army signed a memorandum of agreement on
    February 11, 2008, which is likely to result in $107 million for dental
    treatment for all soldiers who are non-deployable due to dental issues.
    Currently, only soldiers whose units have been alerted for mobilization
    are funded for dental treatment. 55 percent of all Army Guard members
    fall into non-deployable readiness status due to dental issues, either
    because they have not been examined recently or need corrective dental
    measures. The funding for the dental work is expected to arrive in
    fiscal year 2009 but added treatments could begin sooner. The
    memorandum signed in February will allow for treatment for all Guard
    members regardless of their alert status. The $107 million earmarked
    for dental treatment would represent an increase of about $50 million
    from the current $50-$60 million spent annually on dental exams and
    treatment during alerts. The vast majority of the corrective dental
    procedures would be contracted out to civilian dentists and clinics.
    The Army National Guard currently has only 156 dentists in its ranks
    out of a total of about 350,000 soldiers. We commend the Army for its
    efforts, but believe this effort should have begun in March 2003 and
    not March 2008.
        As evidenced in a recent Government Accountability Office (GAO)
    report (http://www.gao.gov/new.items/d08104.pdf), the Defense
    Department has a history of overestimating its medical costs and
    overcharging its beneficiaries, and then disregarding the
    recommendations to change their processes. In this particular study,
    the GAO found that TRICARE Reserve Select (TRS) beneficiaries were
    overcharged for their portion of the health care premiums due to
    overestimates of costs by DOD. In our opinion, DOD has received
    literally millions and millions of taxpayer dollars to operate TRS,
    beginning in fiscal year 2004 with a $300 million down payment, and has
    not provided any greater access to providers or increase in quality of
    care for our National Guard members. TRS is not a viable program at all
    in the State of Alaska, where almost 4,400 Guard members (about 9.5
    percent of the National Guard) (http://www.gov.state.ak.us/omb/results/
    view--details.php?p=190) are assigned, due to restrictions in the
    TRICARE Operations Manual. This practice of overestimation and
    overcharging continues today without relief from DOD.
        TRICARE Reserve Dental program is expensive, especially when the
    premiums are combined with TRS premiums. For member and family
    coverage, the cost is about $84 per month, and is scheduled to increase
    another $4 per month in February 2009. Coupled with TRS family rates,
    Guard members must pay about $337 per month for medical and dental
    premiums using TRICARE, not including co-payments and deductibles. In
    times of financial stress and difficulty, TRICARE dental is one of the
    first expenses to be jettisoned from the family budget. Without dental
    coverage, dental readiness suffers.

        2. Senator Clinton. Colonel Strobridge and Sergeant Cline, have
    those efforts produced any results?
        Colonel Strobridge. MOAA is not satisfied with the results as
    reported by DOD. It is inconsistent to tout an ``operational Reserve''
    policy but not provide the resources and authority for members of the
    National Guard and Reserve Forces to maintain Active Duty medical
    readiness standards. In our view, it's not enough simply to expect
    reservists to meet deployment health standards without underwriting the
    cost to do so.
        Sergeant Cline. It is too early to determine if the limited efforts
    of the Defense Department or the Department of the Army have produced
    any results. Results have to be quantifiable, and there are no
    quantitative standards for medical or dental readiness for homeland
    security or homeland defense. In the 6 years of its existence, Northern
    Command (NORTHCOM) has yet to fully embrace the National Guard or set
    any quantitative measures on which to base individual or unit readiness
    for homeland security or defense missions.

        3. Senator Clinton. Colonel Strobridge and Sergeant Cline, what
    efforts should DOD be taking that they have not taken?
        Colonel Strobridge. MOAA would recommend:

              (a) Making the Department responsible for facilitating
            correction of dental readiness issues identified while on
            Active Duty. That is, the Department should pay the cost of
            care for at least 90 days pre-mobilization and 180 days post-
            mobilization, unless the individual's dental readiness is
            restored to P-2 condition before demobilization.
              (b) Holding leaders accountable for their unit medical and
            dental readiness (e.g., issuing reminders of 6 month dental
            exams, annual/physicals).
              (c) Authorize more mobile medical/dental units that can
            deploy to serve Reserve units and locations far from military
            installations.
              (d) Increase partnership with the VA to allow servicemembers
            to use VA facilities for medical and dental care.
              (e) Maximize participation in TRS health coverage by reducing
            premiums, as recommended by the GAO. The GAO indicated premiums
            are 72 percent too high for single members and 45 percent too
            high for family coverage.

        Sergeant Cline. In our opinion, the Defense Department is relying
    on either the civilian health care system or the individual reservist's
    financial solvency to maintain combat readiness. It would seem to the
    casual observer that if the Defense Department wanted to ensure combat
    readiness medically and dentally, they would provide adequate providers
    and services to achieve that goal, which they do not for Guard members
    who do not live close to Federal enclaves. If they provide medical and
    dental combat readiness to the Active Forces at no cost, they should
    provide parity with their operational Reserves, which they do not.
        In addition, DOD and NORTHCOM have yet to determine any
    quantitative measures on which to base individual or unit readiness for
    homeland security or defense missions. The Commission on the National
    Guard and Reserve recommended the Department of Homeland Security (DHS)
    determine these metrics, but DHS is not suited nor staffed nor able to
    adequately determine standards or metrics for homeland security. In the
    absence of action by DHS, NORTHCOM should have already developed these
    standards and metrics by utilizing the extensive expertise of the
    National Guard, but has shunned anything but cursory involvement from
    the Guard.

        4. Senator Clinton. Colonel Strobridge and Sergeant Cline, what
    legislative steps could be taken in the near-term to improve the
    medical and dental readiness of our reservists?
        Colonel Strobridge. MOAA would recommend statutory adjustments as
    necessary to implement the initiatives mentioned in response to the
    previous question, especially the pre- and post-mobilization dental
    coverage and the adjustment of the TRS premiums.
        Sergeant Cline. We support Senate Bill 2854 that would extend
    TRICARE benefits to Guard members upon receipt of alert orders, which
    is typically happening about 1 year out from the date of mobilization.
    However, this only really helps Army Guard members, and not Air Guard
    members. The Air Guard is already incorporated into the Air Force AEF
    cycles, and they don't receive alert orders. Refining the legislation
    to allow for TRICARE 1 year out from date of AEF rotation for the Air
    Forces will solve that discrepancy in the bill.

                        traumatic brain injury patients
        5. Senator Clinton. Ms. Beck, in your testimony, you noted that
    medical boards are initiating the process of medical retirement too
    quickly for the most severely injured traumatic brain injury (TBI)
    patients, limiting access to critical services. You reported that
    TRICARE does not cover cognitive rehabilitation services for the
    medically retired, leading to a dangerous termination of care. In a
    study released April 17, 2008, the RAND Corporation found a lack of
    coordination between the DOD and the Department of Veteran's Affairs
    (VA) for those servicemen and women with severe TBI, leaving families
    to ``navigate these systems alone,'' severely impacting quality of life
    for servicemembers and families. For those most severely impacted by
    TBI as a result of their service to our country, we should make a full
    range of service options available.
        Considering the current situation for severely injured TBI
    patients, what is the demonstrated impact on their health as a result
    of rushed medical retirement?
        Ms. Beck is no longer with the Wounded Warrior Project and
    therefore no answers have been provided for the record.

        6. Senator Clinton. Ms. Beck, what services did they lose access to
    immediately?
        Ms. Beck is no longer with the Wounded Warrior Project and
    therefore no answers have been provided for the record.

        7. Senator Clinton. Ms. Beck, how were their families and
    caregivers impacted?
        Ms. Beck is no longer with the Wounded Warrior Project and
    therefore no answers have been provided for the record.

        8. Senator Clinton. Ms. Beck, what legislative steps could be taken
    in the near-term to improve health care options for severely wounded
    TBI patients?
        Ms. Beck is no longer with the Wounded Warrior Project and
    therefore no answers have been provided for the record.
                                     ______

                 Question Submitted by Senator Saxby Chambliss
                           reserve retirement system
        9. Senator Chambliss. Colonel Strobridge, Master Chief Barnes, and
    Sergeant Cline, first let me express my gratitude to all your
    organizations for the service and dedication you invest in continuous
    support to our military and military communities. Colonel Strobridge,
    in your testimony, you urge the subcommittee to continue to progress
    towards revamping our Reserve retirement system and continue to provide
    adequate compensation to our National Guard and Reserve Forces. The
    National Defense Authorization Act (NDAA) for Fiscal Year 2008 included
    a provision that reduces the age at which Guard and Reserve members can
    receive retired pay by 3 months for every 90 days a member serves in a
    deployed status per fiscal year. Also, just recently I, along with a
    dozen other members of the Senate, introduced the National Guard and
    Reserve Retired Pay Equity Act of 2008 which would make the provision
    in the NDAA for Fiscal year 2008 retroactive to September 11, 2001.
        From your associations' perspective, I would appreciate your
    feedback on how these provisions will help shape and incentivize our
    Reserve component forces, and any additional ways that you think we
    should craft the Reserve retirement benefit that would help best shape
    and incentivize our servicemembers.
        Cololonel Strobridge. MOAA and The Military Coalition strongly
    support your National Guard and Reserve Retired Pay Equity Act, Senator
    Chambliss. We believe we must, at a bare minimum, credit all activated
    service since September 11, 2001, for retirement age recalculation
    purposes. To say that future service warrants adjustment to the Reserve
    retirement age, but multiple combat tours already served do not, is
    just a miscarriage of justice. As for other ways to properly
    incentivize our servicemembers, one way would be to credit all
    activated service since the onset of Gulf War I, for the same reason.
    We believe that interim service in Iraq, Kuwait, Kosovo, et cetera, is
    no less worthy of recognition for this purpose.
        Master Chief Barnes. FRA believes that reform of the Reserve
    retirement program is an equity issue given the significantly increased
    reliance on these personnel to support of the war on terror and other
    demanding operational commitments. Reform of the Reserve retirement
    system is overdue and a top concern for Reserve senior enlisted
    leaders. This is also essential to retaining critical mid-career
    personnel for a full careers. The Association appreciates the NDAA for
    Fiscal Year 2008 provision that would lower the Reserve retirement age
    by 3 months for each cumulative 90 days of Active Duty on contingency
    operation orders and views this as a first step on this issue. At a
    minimum, the new authority should be expanded to include all Reserve
    personnel who've served since September 11, 2001. Regarding other ways
    to improve the Reserve retirement benefit package, FRA strongly
    supports the improvements to other retention and retirement related
    programs including Reserve health care coverage and options, increased
    MGIB program funding, improving family readiness, and ensuring adequate
    transition support when reservists transition to retiree status.
        Sergeant Cline. We at EANGUS see the early retirement provisions as
    an incentive for those who have the most experience in the Guard, those
    with over 20 years of honorable and selfless service. Currently, those
    in this category have no bonuses or special incentives to remain in our
    forces, and are leaving us prematurely. Early retirement provisions
    that Senator Chambliss championed give them an incentive to remain
    until they are closer to age 55 or 60, and the Guard retains their
    skills, talents, abilities, and valuable experience, and we thank him
    for his leadership and tenaciousness in this issue.
        The 2006 Defense Advisory Committee on Military Compensation
    reported that, of all who serve in the military, only 47 percent of the
    officers and 15 percent of the enlisted force serve long enough to
    achieve eligibility for retirement at 20 years. In addition, of those
    who achieve retirement eligibility at 20 years service, only 10 percent
    of officers and less than 5 percent of enlisted remain until 30 years
    service. http://www.defenselink.mil/prhome/docs/dacmc--retirement--
    705.pdf (page 4).
        When applying these metrics against National Guard demographics,
    only 5,227 of a possible 460,000 force will reach 30 years service and
    possibly be eligible for early retirement. Of those 5,227, a certain
    percentage of those will be dual-status military technicians who will
    want to serve until age 60 or beyond to reach full annuity status for
    their civil service retirement, reducing the number below 5,000 for
    certain.
        Those with over 20 years service need and deserve an incentive to
    remain in service to their Nation, beyond their patriotism, that is
    tangible and materially affects them and their families. We support
    such legislative efforts to make the provisions in Public Law 110-181
    retroactive to September 11, 2001. With well over 600,000 National
    Guard and reservists who already have mobilized and deployed in the war
    on terror, not making the provisions retroactive totally discounts
    their courageous service and sends the wrong message. This wrong
    message to them will definitely have an effect on future retention and
    recruiting, for as the Army Guard and now the Army have discovered, the
    best recruiters for the military are those serving in the military.
    Word of mouth and individual referrals are the key to successful
    recruiting and retention. By intentionally excluding those who have
    already served, the price to raise and maintain an All-Volunteer Force
    will be steep. We believe it is key to include this group in the
    provisions, and applaud the legislation for retroactivity.

        [Whereupon, at 4:12 p.m., the subcommittee adjourned.]