Military Personnel: Higher Allowances Should Increase Use of	 
Civilian Housing, but Not Retention (31-MAY-01, GAO-01-684).	 
								 
Since servicemembers tend to prefer civilian housing, increasing 
the housing allowance to eliminate additional costs to them	 
should help the Department of Defense (DOD) satisfy		 
servicemembers' preferences. Of those that receive an allowance  
or live in military housing, about 72 percent said they would	 
prefer civilian housing if the costs were the same, but only	 
about two-thirds now live in civilian housing. Thus, if military 
members' housing preferences were satisfied, thousands of	 
additional personnel would be in civilian housing instead of	 
military housing. As DOD increases the housing allowance over the
next five years, the overall demand for civilian housing should  
increase, while the demand for military housing should decline.  
As a result, DOD should be in a better position to implement its 
stated policy of relying on the private sector first for housing.
DOD cannot expect a substantial increase in retention to result  
solely from increasing housing allowances. Together, housing and 
housing allowances were cited by less than one percent of those  
surveyed as reasons for leaving the military. Overall, of those  
living in military housing, more were satisfied than		 
dissatisfied. Of those living in civilian housing, a high	 
proportion were satisfied with the homes they chose. However, 57 
percent were dissatisfied with their housing allowance. 	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-684 					        
    ACCNO:   A01098						        
  TITLE:     Military Personnel: Higher Allowances Should Increase Use
             of Civilian Housing, but Not Retention                           
     DATE:   05/31/2001 
  SUBJECT:   Housing allowances 				 
	     Military expense allowances			 
	     Military housing					 
	     Quality of life					 
	     Surveys						 
	     Military personnel 				 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Testimony.                                               **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-01-684
     
A

Report to the Chairman and Ranking Minority Member, Subcommittee on Military
Personnel, Committee on Armed Services, House of Representatives

May 2001 MILITARY PERSONNEL

Higher Allowances Should Increase Use of Civilian Housing, but Not Retention

GAO- 01- 684

GAO United States General Accounting Office

Page i GAO- 01- 684 Military Personnel Letter 1

Appendix I Scope and Methodology 17

Appendix II Comments From the Department of Defense 19

Appendix III Contacts and Staff Acknowledgments 21

Tables

Table 1: National Median Out- of- Pocket Costs for Civilian Housing for
Married Personnel, for Selected Pay Grades, Per Month 4

Figures

Figure 1: Where Military Personnel Live 5 Figure 2: Housing Options Chosen
by Servicemembers, by Years of

Service 6 Figure 3: Preference for Civilian and Military Housing, if Costs

Were Equal 7 Figure 4: Satisfaction with Military Housing and Its
Relationship to

Satisfaction with the Military Way of Life and Intent to Stay in the
Military for 20 Years 9 Figure 5: Satisfaction with Housing Allowances and
Its

Relationship to Satisfaction with the Military Way of Life and Intent to
Stay in the Military for 20 Years 10 Figure 6: Satisfaction with Military
Housing, Based on Where

Personnel Live 11 Figure 7: Satisfaction with Specific Characteristics of
Military

Housing 12 Figure 8: Satisfaction with Specific Characteristics of Civilian

Housing 13 Contents

Page 1 GAO- 01- 684 Military Personnel

May 31, 2001 The Honorable John M. McHugh Chairman The Honorable Martin T.
Meehan Ranking Minority Member Subcommittee on Military Personnel Committee
on Armed Services House of Representatives

Reported inadequate military housing and the need to improve the quality of
life for military personnel have been prominent topics over the past several
years. The Department of Defense (DOD) has heavily invested in its people
and has thus been looking for ways to retain them by improving their quality
of life. As part of its compensation package, DOD provides its military
members with either an allowance to help defray the cost of civilian
(private sector) housing or free military housing. The Department's policy
is for its military members to rely on the private sector first for housing,
but those who receive a housing allowance may pay out of pocket up to $200
or more each month. Last year, the Secretary of Defense announced an
initiative to increase the housing allowance for military members to reduce
their additional costs to zero by 2005.

In response to your request for information about the effect of the
increased housing allowance on servicemembers, we analyzed the results of
the broad- based 1999 Survey of Active Duty Personnel. We assisted in the
design of this survey and previously testified to the Subcommittee on the
preliminary results. 1 On the basis of our analysis of the final survey data
and other reports, we determined (1) how increasing the housing allowance
will satisfy the preferences of servicemembers, and (2) how satisfaction
with housing and allowances relates to servicemembers' intent to stay in the
military.

1 Military Personnel: Preliminary Results of DOD's 1999 Survey of Active
Duty Members

(GAO/ T- NSIAD- 00- 110, Mar. 8, 2000).

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 684 Military Personnel

Since servicemembers tend to prefer civilian housing, increasing the housing
allowance to eliminate additional costs to them should help the Department
satisfy servicemembers' preferences. Of those that receive an allowance or
live in military housing, about 72 percent said they would prefer civilian
housing if the costs were the same, but only about twothirds now live in
civilian housing. Thus, if military members' housing preferences were
satisfied, thousands of additional personnel would be in civilian housing
instead of military housing. The primary reason servicemembers live in
military housing is the economic benefit; the housing and utilities are
free, so they avoid additional costs associated with living in civilian
housing. Other perceived benefits, like security and family support
available to those living in military housing, run a distant second to the
economic benefit. As DOD increases the housing allowance over the next 5
years, the overall demand for civilian housing should increase, while the
demand for military housing should decline. As a result, DOD should be in a
better position to implement its stated policy of relying on the private
sector first for housing.

DOD cannot expect a substantial increase in retention to result solely from
increasing housing allowances. Together, housing and housing allowances were
cited by less than 1 percent of those surveyed as reasons for leaving the
military, trailing far behind the top reasons like basic pay, amount of
personal/ family time, and quality of leadership. The survey data show that
some concerns about inadequate housing are warranted, but allegations of
widespread problems may be overstated. Overall, of those living in military
housing, more were satisfied (45 percent) than dissatisfied (36 percent).
About one- third of personnel living in military housing were dissatisfied
with the space, privacy, or quality of their residence. Of those living in
civilian housing, a high proportion were satisfied with the homes they
chose. However, 57 percent were dissatisfied with their housing allowance.
This dissatisfaction with the allowance is consistent with the high
dissatisfaction reported on all compensation- related survey items.

DOD reviewed a draft of this report and partially concurred with our
findings. The Department did not raise any questions or concerns about our
conclusion that higher housing allowances should increase the demand for
civilian housing by military personnel. But, DOD indicated it believed that
improvements to housing allowances are effectively pay increases and would
have a positive effect on retention. While we agree that increasing
compensation may have a positive effect on the overall level of retention
and stated so in our report, DOD does not have a problem with overall
retention. Instead, DOD?s retention problems are focused in certain
occupations, career levels, and grades. As we have Results in Brief

Page 3 GAO- 01- 684 Military Personnel

reported earlier, we continue to emphasize that such specific retention
problems should be addressed with more targeted retention incentives rather
than across- the- board increases.

Amid reports of low military morale, Congress has sought reliable
information to assess the proposals proffered by DOD to improve the quality
of life for military members, such as the proposal to increase housing
allowances for military personnel. In 1999, we worked with DOD to design the
Survey of Active Duty Personnel to gather military members' views on wide
range of issues, including their views on military housing and allowances.
The Department administered the survey in the fall of 1999 to a stratified
random sample of over 66,000 military personnel and received responses from
51 percent.

In addition, Rand reported on the housing options available for military
families in a 1999 study. 2 The report analyzes military families'
preference for types of housing, and the specific factors that influence
their choices. Rand based its findings on responses to a survey designed to
collect information on how military members selected housing as well as
information about how military members might respond to changes in housing
policies.

DOD will spend more than $10 billion in fiscal 2001 to provide housing for
military members and their families, either by paying a cash allowance for
servicemembers to live in private sector housing or by assigning families to
government- owned or -leased housing. The Department's policy is for its
military members to rely on the private sector first for housing. Military
members who live off base in civilian housing are entitled to the basic
allowance for housing. This allowance is intended to provide servicemembers
equitable housing compensation based on pay grade, number of dependents, and
the local median monthly cost of housing. Housing costs include current
market rent, average utilities, and renter's insurance. Currently, military
members are expected to pay 15 percent of the housing costs themselves.
(Table 1 shows the average out- of- pocket expenses, by pay grade.) DOD
plans to reduce the out- of- pocket expense to zero by 2005 for those
servicemembers who live in civilian housing.

2 An Evaluation of Housing Options for Military Families (MR- 1020- OSD,
1999). Rand surveyed military personnel, using a cluster sample of 4,400
military members at 12 bases across the country. Background

Page 4 GAO- 01- 684 Military Personnel

Table 1: National Median Out- of- Pocket Costs for Civilian Housing for
Married Personnel, for Selected Pay Grades, Per Month

Enlisted Officers

E1- E3 $116 O- 1 $137 E- 4 123 O- 2 153 E- 5 135 O- 3 179 E- 6 153 O- 4 201
E- 7 163 O- 5 216 E- 8 173 O- 6 218 E- 9 185

Note: These costs reflect the 15 percent out- of- pocket expense for
civilian housing applicable in 2001.

Source: GAO generated from DOD- provided data.

Personnel who live in government- provided housing forfeit their housing
allowance but pay nothing out of pocket for housing or utilities. However,
DOD reports that many of its government- owned houses are in poor condition.
The Department estimates that it would take 30 years and $16 billion to
upgrade or replace existing inadequate family housing. To improve military
housing faster and more economically than could be achieved if only
traditional military construction appropriations were used, the Congress
enacted legislation at DOD's request authorizing a program termed the
Military Housing Privatization Initiative, to allow private sector
financing, ownership, operation, and maintenance of military housing. Under
the initiative, DOD can provide direct loans, loan guarantees, and other
incentives to encourage private developers to construct and operate housing
either on or off military installations. 3

About 919,000 personnel (74 percent of the active duty force) live in
military family housing or receive an allowance for civilian housing. The
remaining 329,000 personnel (26 percent) live in barracks (dormitories or
bachelor quarters) or aboard ships. 4 For the rest of the analyses, we will
focus specifically on those that live in civilian or military housing and
exclude those in barracks or aboard ships. Figure 1 shows the proportion

3 10 U. S. C. 2871 et seq. 4 The data used in this report comes from DOD's
1999 Survey of Active Duty Personnel. It has been weighted to represent the
total population in the military services with 6 months or more of service
as of May 1999.

Page 5 GAO- 01- 684 Military Personnel

of military personnel that live in civilian or military housing and the
proportion that live in barracks or aboard ships.

Figure 1: Where Military Personnel Live

Source: Responses to the 1999 Survey of Active Duty Personnel.

Of those living in civilian or military family housing, about 619,000
personnel (67 percent) live in civilian housing, while about 300, 000
personnel (33 percent) live in military housing. Officers are more likely to
live in civilian housing than enlisted personnel. Also, personnel are more
likely to live in civilian housing as they gain seniority. By the time
personnel have 20 years or more service, 75 percent live in civilian
housing. Figure 2 shows the type of housing in which servicemembers live,

74% * Civilian/ military housing

26% 

Barracks/ aboard ship

67%  Civilian housing

33% 

Military housing

Page 6 GAO- 01- 684 Military Personnel

by years of service.

Figure 2: Housing Options Chosen by Servicemembers, by Years of Service

Source: Responses to the 1999 Survey of Active Duty Personnel.

Home ownership also increases dramatically with years of service, while
renting decreases. For military personnel with 5 years of service or less,
14 percent own their home. By 20 years or more of service, the proportion
increases to 53 percent. In total, about 277, 000 personnel (30 percent)
owned a home when the survey was administered in the fall of 1999. It is
important to note that while the housing allowance is calculated based on
the rental market, military members may apply their allowance toward
purchasing a home, potentially gaining equity and enjoying the tax
advantages of home ownership. However, the frequent moves required by
military service may make home ownership difficult or impractical.

5 years or less 6- 10

years 11- 15 years 16- 19

years 20+ years

Military housing Civilian housing rent Civilian housing own

100 0 20

40 60 In percent

80

Page 7 GAO- 01- 684 Military Personnel

According to DOD's 1999 Survey of Active Duty Personnel, 72 percent of
military personnel would prefer civilian housing if costs were equal (see
fig. 3). Similarly, Rand reported that servicemembers prefer civilian
housing if cost was not a factor, and concluded that DOD should consider
decreasing military housing and encouraging military members to live off
base. In making this conclusion, Rand recognized the inherent link between
housing allowances and military housing; that is, increasing the housing
allowance should lessen the need for military housing.

Figure 3: Preference for Civilian and Military Housing, if Costs Were Equal

Source: Responses to the 1999 Survey of Active Duty Personnel.

Mismatches between where people would prefer to live and where they actually
live were significant. Not everyone who prefers civilian housing is living
in civilian housing, and vice versa. Overall, the number of personnel in
civilian housing would increase by about 45,000 if the preferences of all
personnel were satisfied, and the number in military housing would decrease
by a like amount. This is because about 176,000 personnel that prefer
civilian housing now live in military housing. And about 130,000 of those
that prefer military housing now live in civilian housing. It must be noted
that the availability of housing varies location by location, so it would
likely never be possible to satisfy all servicemembers' preferences.
According to DOD officials, civilian housing is often unavailable in
sufficient numbers in remote locations; conversely, some bases have
relatively little military housing. Housing Allowance

Increase Will Better Satisfy Preference for Civilian Housing

72%  Prefer civilian housing

28% 

Prefer military housing

Page 8 GAO- 01- 684 Military Personnel

Department officials anticipate that increasing the housing allowance will
decrease demand for military housing. At least part of this conclusion is
based on Rand's 1999 report, which noted that only 18 to 20 percent of the
military members surveyed preferred military housing, regardless of cost and
waiting time. Using Rand's estimate, the core requirement for those
preferring military housing would be more than 120,000 less than the number
now living there. Department officials also believe that the housing
allowance increase will ultimately change the composition of the population
in military housing. Rand's analysis indicated that demographic
characteristics are the main factor in the demand for military housing.
Those who prefer military housing include lower income personnel (especially
junior enlisted personnel), those with spouses that do not work outside the
home, and those with a greater number of children. Military members with
larger families are entitled to a larger residence in military housing than
they would likely be able to afford on the civilian market (civilian housing
allowances increase by pay grade).

Some installations have long waiting lists for military housing, which would
seem to evidence a strong demand for military housing. Department officials
warned us that the lists can be misleading because many personnel on them do
not take military housing when offered because they have already found
suitable civilian housing while waiting. In addition, DOD recognizes
concerns among service leaders that housing military personnel off
installations in civilian housing would weaken the sense of military
community. According to Rand, however, the demand for military housing seems
largely dependent on it being economical; servicemembers simply want to
avoid the additional costs associated with civilian housing. More than 60
percent reported that they lived in military housing for economic reasons.
The economic benefit dominated all other factors, including security,
proximity to work, availability, better schools, and having military
neighbors. Military members in focus group discussions "scoffed" at the
notion that being in military housing helped them to do a better job.

DOD should not expect a substantial increase in personnel retention solely
from its initiative to increase the housing allowance. Although increased
dissatisfaction with military housing and allowances is linked with
dissatisfaction with the military way of life, the proportion of military
personnel that indicated an intent to stay in the military for a 20- year
career does not change as dissatisfaction increases (see figs. 4 and 5).
This is not unexpected, since we previously testified that the retention
decision is complicated, highly personal, and usually a function of many
factors No Clear Link

Between Housing and Retention

Page 9 GAO- 01- 684 Military Personnel

including the prospects for other employment. Because pay is the top factor
cited in retention decisions- both to stay and to leave, DOD may accrue some
benefit from increasing the housing allowance because the military member's
paycheck will increase by the amount of the allowance.

Figure 4: Satisfaction with Military Housing and Its Relationship to
Satisfaction with the Military Way of Life and Intent to Stay in the
Military for 20 Years

Source: Responses to the 1999 Survey of Active Duty Personnel.

In percent 0 20

40 60

80 100

Very satisfied Satisfied Neither dissatisfied Very dissatisfied 74

63 66 64 51

62 48

66 35

62

Satisfaction with military way of life Intent to stay for 20 years

Page 10 GAO- 01- 684 Military Personnel

Figure 5: Satisfaction with Housing Allowances and Its Relationship to
Satisfaction with the Military Way of Life and Intent to Stay in the
Military for 20 Years

Source: Responses to the 1999 Survey of Active Duty Personnel.

Responses to another survey question lend additional support to the
conclusion that housing and housing allowances do not seem to drive the
retention decision for many personnel. Survey respondents were asked to
choose among 37 aspects of military life to identify the top issues causing
them to leave, or think about leaving, the military. Military housing was
cited as the top reason by only .2 percent, while housing allowances were
cited by .5 percent- together, less than 1 percent of the active duty force.
The top reasons included basic pay (27 percent), amount of personal/ family
time (9 percent), quality of leadership (8 percent), and deployments (7
percent).

Concerns about the quality of military housing are warranted but seem
overstated as a factor in retaining personnel, based on the survey data.
Overall, more personnel who live in military housing were satisfied than
dissatisfied. Of those living in military housing, about 45 percent were
satisfied, while 36 percent were dissatisfied (see fig. 6). The perception
of military housing appears to be worse than the reality experienced by
those living in military housing. Those personnel living in civilian housing
at the Satisfaction with Military

Housing

In percent 0 20

40 60

80 100

Very satisfied Satisfied Neither dissatisfied Very dissatisfied 75

68 66 61

55 63

52 65

40 64

Satisfaction with military way of life Intent to stay for 20 years

Page 11 GAO- 01- 684 Military Personnel

time the survey was administered that chose to rate military housing had
much less satisfaction (9 percent) with it than those living in military
housing (45 percent).

Figure 6: Satisfaction with Military Housing, Based on Where Personnel Live

Note: Percentages may not add due to rounding. Source: Responses to the 1999
Survey of Active Duty Personnel.

On the basis of our analysis of specific attributes of military housing,
personnel living in military housing were more satisfied than dissatisfied
with all of the measured characteristics. The greatest dissatisfaction was
with the space, privacy, and quality- related characteristics of their
housing, as shown in figure 7.

In percent 0 20

40 60

80 100

Satisfied Neither Dissatisfied 45

9 19

23 36

67

Military housing Civilian housing

Page 12 GAO- 01- 684 Military Personnel

Figure 7: Satisfaction with Specific Characteristics of Military Housing

Note: Percentages may not add due to rounding. Source: Responses to the 1999
Survey of Active Duty Personnel.

Servicemembers were generally satisfied with specific aspects of the
civilian residence they chose but were dissatisfied with their housing
allowance, the distance from their homes to work, and their living space
(see fig. 8). Only about 26 percent of those receiving housing allowances
were satisfied, while 57 percent were dissatisfied. This is partly because
personnel must pay additional costs to live in civilian housing. However, a
relatively high proportion of servicemembers were dissatisfied with other
Satisfaction with Civilian

Housing

35 12 53 35 21 44

30 22 48 30 15 55 18 16 67

16 21 63 12 13 75 10 8 82 9 24 67 0 20 40 60 80 100 120 In percent Space

Privacy Quality of

area Quality of residence

Distance to shopping

Distance to recreation

Safety Distance to

workplace Cost

Dissatisfied Neither Satisfied

Page 13 GAO- 01- 684 Military Personnel

pay- related survey items, for example, basic pay (59 percent dissatisfied),
reenlistment and continuation pay (65 percent), and retirement pay (57
percent).

Figure 8: Satisfaction with Specific Characteristics of Civilian Housing

Note: Percentages may not add due to rounding. Source: Responses to the 1999
Survey of Active Duty Personnel.

18 14 68 12 14 74 14 18 68

10 14 76 10 15 75

14 21 65 11 15 74 19 16 64

30 19 52 Space Privacy Quality of

area Quality of residence Distance to

shopping Distance to

recreation Safety Distance to

workplace Cost

Dissatisfied Neither Satisfied

0 20 40 60 80 100 In percent

120

Page 14 GAO- 01- 684 Military Personnel

We provided a draft of this report to the Department of Defense for comment.
The Department partially concurred with our report. DOD?s comments are
presented in their entirety in Appendix II. DOD did not raise any questions
or concerns about our conclusion that higher housing allowances should
increase the demand for civilian housing by military personnel. The
Department, however, indicated it did ?not concur that improvements to
housing allowances, which are effectively pay increases, would not have a
positive effect on retention.? That statement, however, mis- characterizes
what we actually said. We stated that ?DOD should not expect a substantial
increase in personnel retention solely from its initiative to increase the
housing allowance.? While we agree that increasing compensation may have a
positive effect on the overall level of retention and stated so in our
report, DOD does not have a problem with overall retention. Instead, DOD?s
retention problems are focused in certain occupations, career levels, and
grades. 5 We have reported before that such specific retention problems
should be addressed with more targeted retention incentives aimed at
particular segments of the force that are experiencing retention shortfalls.
6 Housing allowances, and other across- the- board increases, do little to
address specific retention problems.

DOD also raised a concern about the use of the data from DOD?s 1999 Survey
of Active Duty Personnel, indicating that individual responses to survey
questions are highly subjective and that information from one survey
administered almost two years ago was not sufficient evidence. While we
agree that survey responses are subjective, that is the strength of survey
data- it provides the views of actual servicemembers rather than those of
policymakers. DOD?s Survey of Active Duty Personnel was a well- designed
omnibus survey sent to a large sample that was projectable to military
personnel across DOD. These survey results provide the most recent and most
reliable data available to the Department on the views of military personnel
across the services.

DOD stated that improvements to housing allowances are essentially pay
increases and would therefore have a positive effect on retention. DOD
stated that important characteristics that influence the relationship

5 Military Personnel: Systematic Analysis Needed to Monitor Retention in Key
Careers and Occupations (GAO/ NSIAD- 00- 60, March 8, 2000). 6 Military
Retirement: Proposed Changes Warrant Careful Analysis (GAO/ T- NSIAD- 99-
94, February 24, 1999). Agency Comments

and Our Evaluation

Page 15 GAO- 01- 684 Military Personnel

between housing allowances and retention were not analyzed. However, DOD did
not identify what those characteristics were. Nevertheless, to recheck our
conclusion that satisfaction with the housing allowance has only a marginal
impact on retention, we used a statistical technique called partial
correlation analysis to screen out the effects of variables known to be
related to retention, such as years of service and overall satisfaction.
This analysis showed that once the effects of years of service and overall
satisfaction were accounted for, satisfaction with the housing allowance
contributed virtually nothing to our ability to predict career intent-
accounting for only about two- tenths of 1 percent of the total variance.

To bolster its argument that increased housing allowances lead to higher
retention rates, DOD cited an analysis based on an Army economic model. This
model predicted that an increase of 10 percent in the housing allowance
would result in an increase of approximately 1.6 percentage points in the
Army?s fiscal year 2000 first- term reenlistment rate of 51.3 percent.
However, this example actually illustrates a key underlying point- that
housing allowances, like other across- the- board benefit increases, are
very expensive and not very useful for addressing specific retention
shortfalls. First of all, the Army does not have a problem retaining first-
term personnel. DOD recently reported that the Army exceeded its fiscal year
2000 goal for first- term reenlistments by 7 percent. 7 Second, even if the
Army were concerned about first- term reenlistment, increasing housing
allowances would be a poor choice as an incentive since more than three-
quarters of the Army?s first- termers live in military housing and therefore
do not receive a housing allowance. Consequently, very little of the
incentive would actually reach the target group and much of it would likely
go to those who are already inclined to remain in the military. Lastly,
DOD?s example indicates that a 10 percent increase in the housing allowance
would yield only a 3 percent increase in overall retention within that
target group. This again points to the lack of cost- effectiveness of
treating pockets of problems with incentives that apply to the entire force.

Nothing we have said in this report should be taken as meaning that military
housing and housing allowances should not be improved. Rather, we are saying
that these decisions should be based on their own merits,

7 Government Performance and Results Act (GPRA)- FY 2000 Performance Report
Office of the Secretary of Defense, Program Analysis and Evaluation, March
16, 2001).

Page 16 GAO- 01- 684 Military Personnel

not on the expectation that such actions will address DOD?s retention
problems in specific specialties or year groups.

We are sending copies of this report to appropriate congressional
committees; the Honorable Donald H. Rumsfeld, Secretary of Defense; and the
Honorable Charles L. Cragin, Acting Under Secretary of Defense, Personnel
and Readiness. Copies will also be made available to other interested
parties upon request.

If you or your staff have any questions about this report, please contact me
at 202- 512- 5559. A list of additional contacts and staff acknowledgments
is in appendix III.

Derek B. Stewart Director Defense Capabilities and Management

Appendix I: Scope and Methodology Page 17 GAO- 01- 684 Military Personnel

Reliable assessments of military climate are essential for congressional
policymakers as they consider the quality- of- life proposals offered by the
Department of Defense (DOD). To provide such data, we worked with the
Department to design the 1999 Survey of Active Duty Personnel. It was mailed
in the fall of 1999 to a stratified, random sample of over 66,000 military
personnel. DOD provided the final survey data to us in late 2000. Technical
details about the survey are provided below.

To determine how increasing the housing allowance would satisfy the
preference of servicemembers, we analyzed the results of the survey,
focusing our analyses on the stated preference reported by servicemembers
living in military and civilian housing. We compared our results to those
reported in a DOD- sponsored report by Rand and discussed the results with
officials from the Office of Secretary of Defense.

To assess how satisfaction with housing and allowances relates to
servicemembers' intent to stay in the military, we used the survey data to
examine the relationships between satisfaction and retention. Specifically,
we performed cross- tabulations between satisfaction with housing and
allowances and overall satisfaction with military life and intent to stay in
the military. We examined these relationships by service, pay grade, and
years of service. To better understand the reasons for servicemembers'
housing choices and preferences, we analyzed the results of the active duty
survey as well as Rand's results.

We performed our work between October 2000 and May 2001 in accordance with
generally accepted government auditing standards.

The active duty survey is a recurring survey that DOD last administered in
1992. When the Department learned that the Subcommittee on Military
Personnel had asked us to administer a separate survey to military
personnel, the Acting Assistant Secretary of Defense (Force Management
Policy) offered to allow us to include questions on the survey DOD was
already planning to conduct. We worked with DOD staff to refine the survey
instrument and address additional content areas. The survey was pretested
and refined at Navy bases around Jacksonville, Florida; Pope Air Force Base,
Fayetteville, North Carolina; and the U. S. Marine base at Quantico,
Virginia. Time constraints prevented additional pretesting with Army and
Coast Guard personnel beyond that performed by DOD on an earlier version of
the survey. Appendix I: Scope and Methodology

Development of DOD's Active Duty Survey

Appendix I: Scope and Methodology Page 18 GAO- 01- 684 Military Personnel

The sample of 66,040 military members was drawn from a May 1999 population
of 1,419,269 active duty DOD and U. S. Coast Guard personnel who were below
the rank of admiral or general and had at least 6 months of service. The
sample was stratified on five variables: service; pay grade; gender;
location; that is, inside or outside the continental United States; and
marital status. DOD survey experts used response rates from prior surveys to
adjust the sample for groups with differing expected rates of survey
completion. Also, the sample was designed to provide varying levels of
precision for numerous subgroups (e. g., + 3 percentage points for each
service or pay grade group and + 5 percentage points for senior officers in
the Army).

As of January 2000, DOD had received 37,119 surveys between the start of the
survey administration and the end of the fielding period. Some surveys were
eliminated because they (1) had been returned blank, (2) were duplicates
from the same individual, or (3) came from respondents who had left active
duty before the fielding period ended. DOD computed a weighted response rate
of 51 percent. The Department used a contractor to administer the survey. We
did not test the contractor's procedures or validate the data provided to
us. We did review DOD's and its contractor's quality control procedures for
a similar large survey.

Data were weighted to reflect the population of interest. The weights
reflected (a) the probability of selection for that servicemember, (b) a
nonresponse adjustment to minimize bias arising from differential response
rates among demographic subgroups, and (c) a poststratification factor for
September 1999- the month in which the questionnaire was first distributed.

DOD assumed that nonrespondents would have answered like respondents- an
often- used assumption in survey methodologies. There is some risk of
nonresponse bias, but it would take elaborate and timeconsuming work to test
for this bias. In recent years, both military and civilian surveys have
experienced decreased response rates. Although weighting can adjust for the
differing sampling rates and response rates within the sampling cells,
weighting cannot adjust for possible differences between those who do and
those who do not respond to a survey. However, it should be recognized that
the active duty survey is the only source of DOD- wide information for many
issues, and it is far more reliable than anecdotal information or
information generated by smaller, nonrepresentative samples. Sample
Construction

Survey Administration Weighting Responses

Appendix II: Comments From the Department of Defense Page 19 GAO- 01- 684
Military Personnel

Appendix II: Comments From the Department of Defense

Appendix II: Comments From the Department of Defense Page 20 GAO- 01- 684
Military Personnel

Appendix III: Contacts and Staff Acknowledgments

Page 21 GAO- 01- 684 Military Personnel

William E. Beusse (202) 512- 3517 John H. Pendleton (404) 679- 1816

In addition to those named above, Kristy Williams, Jack Edwards, Aisha
Mahmood, Gary Phillips, Margaret Skiba, and Matthew Ullengren made important
contributions to this report. Appendix III: Contacts and Staff

Acknowledgments GAO Contacts Acknowledgments

(350001)

The first copy of each GAO report is free. Additional copies of reports are
$2 each. A check or money order should be made out to the Superintendent of
Documents. VISA and MasterCard credit cards are also accepted.

Orders for 100 or more copies to be mailed to a single address are
discounted 25 percent.

Orders by mail:

U. S. General Accounting Office P. O. Box 37050 Washington, DC 20013

Orders by visiting:

Room 1100 700 4 th St., NW (corner of 4 th and G Sts. NW) Washington, DC
20013

Orders by phone:

(202) 512- 6000 fax: (202) 512- 6061 TDD (202) 512- 2537

Each day, GAO issues a list of newly available reports and testimony. To
receive facsimile copies of the daily list or any list from the past 30
days, please call (202) 512- 6000 using a touchtone phone. A recorded menu
will provide information on how to obtain these lists.

Orders by Internet

For information on how to access GAO reports on the Internet, send an email
message with ?info? in the body to:

Info@ www. gao. gov or visit GAO?s World Wide Web home page at: http:// www.
gao. gov

Contact one:

 Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm

 E- mail: fraudnet@ gao. gov

 1- 800- 424- 5454 (automated answering system) Ordering Information

To Report Fraud, Waste, and Abuse in Federal Programs
*** End of document. ***