Military Personnel: More DOD Actions Needed to Address		 
Servicemembers' Personal Financial Management Issues (26-APR-05, 
GAO-05-348).							 
                                                                 
Congress and the Department of Defense (DOD) are concerned about 
the financial conditions of servicemembers and their families,	 
particularly in light of recent deployments to Iraq and 	 
Afghanistan. Serious financial issues can negatively affect unit 
readiness. According to DOD, servicemembers with severe financial
problems risk losing security clearances, incurring		 
administrative or criminal penalties or, in some cases, face	 
discharge. Despite increases in compensation and DOD programs on 
personal financial management (PFM), studies show that		 
servicemembers, particularly junior enlisted personnel, continue 
to report financial difficulties. GAO assessed (1) the extent	 
deployment impacts the financial condition of active duty	 
servicemembers and their families, (2) whether DOD has an	 
oversight framework for evaluating military programs designed to 
assist deployed and non-deployed servicemembers in managing their
finances, and (3) the extent junior enlisted servicemembers	 
receive required PFM training.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-348 					        
    ACCNO:   A22798						        
  TITLE:     Military Personnel: More DOD Actions Needed to Address   
Servicemembers' Personal Financial Management Issues		 
     DATE:   04/26/2005 
  SUBJECT:   Employee training					 
	     Financial management				 
	     Military dependents				 
	     Military personnel 				 
	     Program evaluation 				 
	     Surveys						 
	     Military pay					 
	     Internal controls					 
	     Evaluation criteria				 

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GAO-05-348

                 United States Government Accountability Office

           GAO	Report to the Honorable Richard J. Durbin, U.S. Senate

April 2005

MILITARY PERSONNEL

More DOD Actions Needed to Address Servicemembers' Personal Financial Management
                                     Issues

                                       a

GAO-05-348

[IMG]

April 2005

MILITARY PERSONNEL

More DOD Actions Needed to Address Servicemembers' Personal Financial Management
Issues

  What GAO Found

The financial conditions of deployed and non-deployed servicemembers and
their families are similar, but deployed servicemembers and their families
may face additional financial problems related to pay. In both a 2003
DODwide survey and non-generalizable focus groups that GAO conducted on 13
military installations in the United States and Germany, servicemembers
who were deployed reported similar financial conditions as those who were
not deployed. Some of GAO's focus group participants also noted that they-
like Army Reservists in GAO's 2004 report, Military Pay: Army Reserve
Soldiers Mobilized to Active Duty Experienced Significant Pay Problems-
had not received their $250 family separation allowance each month during
their deployment. Pay record data showed that almost 6,000 deployed
servicemembers had received more than the prescribed $250 in January 2005,
and 11 of them received a $3,000 catch-up, lump sum payment-the equivalent
of 12 months of the allowance. This pay problem was due, in part, to
service procedures being confusing and not always followed. Families who
do not receive this allowance each month may experience financial strain
caused by additional expenses such as extra childcare.

DOD lacks an oversight framework-with results-oriented performance
measures and reporting requirements-for evaluating the effectiveness of
PFM programs across the services. DOD's 2002 human capital strategic plan
stated that a standardized evaluation system for PFM programs is a desired
goal; however, DOD does not currently have such a system. In 2003, GAO
reported that DOD had included evaluative reporting measures in a draft of
its PFM instruction to the services. However, the final PFM instruction
issued by DOD in 2004 did not address outcome measures or contain a
requirement that the services report program results to DOD because the
services objected to these additional reporting requirements. Without a
policy requiring evaluation and a reporting relationship between DOD and
the services, DOD and Congress do not have the visibility or oversight
needed to address issues related to the PFM programs.

Some junior enlisted servicemembers are not receiving PFM training that is
required in service regulations. While each of the services implements PFM
training differently, all of the services have policies requiring that PFM
training be provided to junior enlisted servicemembers. Moreover, the
extent to which the PFM training is not received is unknown because most
of the services do not track the completion of PFM training at the service
level. Only the Army collected installation-level data and could provide a
service-wide estimate of PFM training completed by junior enlisted
servicemembers. Senior Army officers said PFM training had not been a
priority given the need to prepare for current operations. Top-level DOD
officials have repeatedly stated that financial issues directly affect
servicemembers' mission readiness and should be addressed. Therefore,
units whose servicemembers do not receive required PFM training risk
jeopardizing their ability to meet mission requirements.

United States Government Accountability Office

Contents

  Letter

Results in Brief
Background
Financial Conditions Similar for Deployed and Non-Deployed

Servicemembers, but Pay Administration and Communication Problems Exist
for Deployed Members DOD Does Not Have the Oversight Framework Needed to
Assess the Effectiveness of PFM Programs Some Junior Enlisted
Servicemembers Are Not Receiving Required

PFM Training Conclusions Recommendations for Executive Actions Agency
Comments

1 4 6

11

19

21 24 25 25

Appendixes                                                              
                Appendix I:             Scope and Methodology              27 
                                Sampling Error and Non-Sampling Error      32 
               Appendix II: Findings from GAO-led Focus Groups Held at 13  
                                            Installations                  34 
                             Resources Available to Assist Servicemembers  
              Appendix III:                 with Financial                 
                                                Issues                     54 
                                    Financial Management Training          54 
                             DOD's Financial Readiness Campaign Resources  54 
                                      Military Service Resources           56 
                                  Resources Available Outside of DOD       57 
              Appendix IV:      GAO Contact and Staff Acknowledgments      58 

  Related GAO Products

Tables	Table 1: Table 2:

Table 3: Table 4:

Hypothetical Examples ofMonthlyCash Compensationfor Servicemembers
Deployed to Iraq 13 January 2005 Payments of the $250 per Month Family
Separation Allowance to Servicemembers Deployed and Receiving Hostile Fire
Pay 15 Characteristics of Each Service's Required PFM Training for Junior
Enlisted Servicemembers 22 Installationsin the United Statesand Germany
Where GAO Conducted Site Visits from May to October 2004 27

Contents

Figures Figure 1:     Financial Management Assistance and Training         
                                  Available to Servicemembers              10
           Figure 2:  Self-Reported Financial Condition of Servicemembers  
                      Who Were and Were Not Deployed for at Least 30 Days  
                                              at                           
                          the Time They Completed the 2003 DOD Survey      12 
           Figure 3: Negative Financial Events for Servicemembers Who Were 
                       and Were Not Deployed for at Least 30 Days at the   
                                             Time                          
                              They Completed the 2003 DOD Survey           14 

Abbreviations

DOD Department of Defense
PFM Personal financial management

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protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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separately.

A

United States Government Accountability Office Washington, D.C. 20548

April 26, 2005

The Honorable Richard J. Durbin United States Senate

Dear Senator Durbin:

The finances of servicemembers and their families have been an ongoing
concern of Congress and the Department of Defense (DOD), especially in
light of more frequent deployments to support the war on terrorism and
conflicts in Iraq and Afghanistan. DOD's Social Compact,1 which is part of
DOD's human capital strategic plan, notes that mission readiness and
quality of life depend on whether servicemembers use their financial
resources responsibly. Some adverse effects that may result when
servicemembers experience serious financial problems include loss of
security clearances, criminal or non-judicial sanctions, or adverse
personnel actions including possible discharge from the military.
Servicemembers with serious financial issues may also adversely impact the
readiness of the unit. For example, servicemembers' financial problems may
take the servicemembers and possibly their unit commanders away from their
primary duties in order to address problems with creditors. In a 2002
report to Congress, the Navy identified an estimated $250 million in
productivity and salary losses due to servicemembers' poor personal
financial management.2

Congress and DOD have taken steps to decrease the likelihood that deployed
and non-deployed servicemembers will experience financial problems. Since
1999, DOD has requested and Congress has granted annual increases in
military basic pay for all active duty servicemembers and increases in
special pays and allowances for deployed servicemembers, such as the
family separation allowance and hostile fire/imminent danger pay. In
addition, out-of-pocket housing expenses for active duty military members
living in private-sector housing have decreased since 1999. Also, the
military has developed personal financial

1See Department of Defense, Deputy Assistant Secretary of Defense
(Military Community and Family Policy), A New Social Compact: A Reciprocal
Partnership between the Department of Defense, Service Members and
Families (July 2002).

2 See Department of Defense, Report on Personal and Family Financial
Management Programs (Mar. 31, 2002) in response to a House Committee on
Armed Services requirement in the National Defense Authorization Act for
Fiscal Year 2002.

management (PFM) programs to provide servicemembers with financial
literacy training, financial counseling, and other assistance to avoid or
mitigate the adverse effects associated with personal financial problems.3

Despite the added compensation and the assistance provided through the PFM
programs, studies in recent years by DOD and others show that active duty
servicemembers continue to report financial problems. For example, a 2002
study4 noted that 20 percent of junior enlisted servicemembers reported
that they struggled to make ends meet financially and another 4 percent
regarded themselves as "in over their heads" with respect to their
finances.

The information in this report supplements our February 2004 report to you
on bankruptcies among active duty servicemembers.5 As agreed with your
office, this report answers three questions: (1) To what extent does
deployment impact the financial condition of active duty servicemembers
and their families? (2) Does DOD have an oversight framework for
evaluating military programs that assist both deployed and non-deployed
servicemembers in managing their personal finances? and (3) To what extent
are junior enlisted servicemembers receiving required personal financial
management training? We also are reporting on the prevalence and effect of
predatory lending on servicemembers to fulfill your request for
information on the financial conditions of active duty servicemembers.6

3 Army Regulation 608-1, Army Community Service Center (Oct. 20, 2003).
Office of the Chief of Naval Operations Instruction 1740.5A, Personal
Financial Management Education, Training, and Counseling Program (Jan. 30,
2002). Marine Corps Order P1700.24B, Marine Corps Personal Services Manual
(Dec. 27, 2001), is being revised and will have a list of topics that each
installation will be required to cover during financial literacy training
for first-term Marines. Air Force Instruction 36-3009, Family Support
Center Program (July 1, 1998).

4 See RAND, Assessing the Personal Financial Problems of Junior Enlisted
Personnel, MR1444-OSD (2002). This report defines junior enlisted as those
enlisted servicemembers with less than 10 years of service. Our report
defines junior enlisted as servicemembers in pay grades E1 to E4.

5 See GAO, Military Personnel: Bankruptcy Filings among Active Duty
Service Members, GAO-04-465R (Washington, D.C.: Feb. 27, 2004).

6 See GAO, Military Personnel: DOD's Tools for Curbing the Use and Effects
of Predatory Lending Practices Not Fully Utilized, GAO-05-349 (Washington,
D.C.: Apr. 26, 2005).

In conducting this review, we limited the scope of our work to active duty
servicemembers, particularly those recently returning from deployments.7
Emphasis was also given to junior enlisted servicemembers, since DOD and
service officials have indicated that this subgroup is more likely to
encounter financial problems. Numerous methods were used to gather and
assess information for this work. We examined DOD, service, and
installation policies on PFM program requirements, as well as management
guidance provided in the Government Performance and Results Act of 1993.8
In addition, we reviewed reports by GAO, other congressional research
offices, DOD, and other organizations. We constructed, pretested, and
administered an e-mail survey to 225 installation-level PFM managers.
During site visits to 13 military installations located in the United
States and Germany, we requested documents pertaining to the
implementation and evaluation of each installation's PFM programs, and we
used structured interviews to gather data from a variety of personnel on
the 13 installations: command leaders, the manager of the PFM programs,
financial counselors, DOD civilian and military attorneys in the Judge
Advocate General corps,9 chaplains, and staff from the relief/aid
societies; and separate discussion groups composed of 232 officers, senior
enlisted personnel, and junior enlisted personnel who had recently
returned from deployment and 112 who had not deployed, as well as 76
spouses of servicemembers who had not deployed or had recently returned
from a deployment to address all three questions. While information from
these discussion groups is not generalizable to the entire DOD population
of active duty servicemembers, it provides context for findings in the
report. The in-depth information about the PFM programs on the 13
installations was supplemented with information obtained from 3 group
discussions with a total of 50 personnel affiliated with the PFM programs
while they attended a November 2004 conference. We obtained and reviewed
other

7 Our work focused on active duty servicemembers and DOD surveys of the
Army, Navy, Marine Corps, and Air Force servicemembers, excluding National
Guard and Reserve members who (1) have at least 6 months of service when
the survey is fielded and (2) are below flag rank when the sample is drawn
6 months prior to the survey. Information on the financial condition of
servicemembers in the Reserves and the National Guard can be found in GAO,
Military Personnel: DOD Needs More Data to Address Financial and Health
Care Issues Affecting Reservists, GAO-03-1004 (Washington, D.C.: Sept. 10,
2003), and GAO, Military Personnel: Observations Related to Reserve
Compensation, Selective Reenlistment Bonuses, and Mail Delivery to
Deployed Troops, GAO-04-582T (Washington, D.C.: Mar., 24, 2004).

8 Pub. L. No. 103-62, (Aug. 3, 1993).

9 Hereafter referred to as legal assistance attorneys in this report.

information such as service and installation PFM training materials and
installation accreditation reports. We reviewed and analyzed DOD's 2003
active duty survey to obtain information on the impact of deployment on
servicemembers' finances. The March 2003 survey had a response rate of 35
percent. DOD has conducted and reported on research to assess the impact
of this response rate on overall estimates. They found that, among other
characteristics, junior enlisted personnel (E1 to E4), servicemembers who
do not have a college degree, and members in services other than the Air
Force were more likely to be non-respondents. We have no reason to believe
that potential non-response bias not otherwise accounted for by DOD's
research is substantial for the variables we studied in this report.
Therefore, we concluded the data to be sufficiently reliable to address
our objectives. Further details regarding our scope and methodology are
presented in appendix I. Data obtained from our discussion groups at the
13 installations are summarized in appendix II. We performed our work from
March 2004 through February 2005 in accordance with generally accepted
government auditing standards.

Results in Brief	The financial conditions of deployed and non-deployed
servicemembers and their families are similar, but deployed servicemembers
and their families may face additional financial problems in receiving
their family separation allowance and communicating with creditors. In a
2003 DOD survey, responses from servicemembers who were deployed for at
least 30 days were similar to those of their non-deployed peers with
regards to their overall financial conditions. Moreover, while not a
generalizable sample, 90 percent of the 232 recently deployed
servicemembers in our focus groups indicated that their financial
situations either improved or remained about the same after a deployment.
Some of the recently deployed servicemembers in our focus groups also
noted that they-like Army reservists in our 2004 review10-had not received
their $250 family separation allowance on a monthly basis. Pay records
showed that nearly 6,000 servicemembers received more than the prescribed
$250 for January 2005, and 11 of those servicemembers received a $3,000
catch-up, lump

10 See GAO, Military Pay: Army Reserve Soldiers Mobilized to Active Duty
Experienced Significant Pay Problems, GAO-04-911 (Washington, D.C.: Aug.
20, 2004). We found that the procedures to determine entitlement and to
process family separation allowance were not well understood by either pay
technicians or soldiers themselves. We recommended that the Secretary of
the Army, in conjunction with the Under Secretary of Defense
(Comptroller), clarify and simplify procedures and forms implementing
family separation allowance entitlement policy.

sum payment-the equivalent of 12 months of the allowance. The failure to
pay the family separation allowance each month is occurring, in part,
because the services' procedures for initiating the allowance are
confusing or not always followed. For example, the Army's regulation
implies that soldiers will receive their allowance after returning from
deployment; however, in practice some installations allow servicemembers
to receive the allowance during deployment. Not receiving this
compensation each month to help defray household costs such as extra
childcare expenses can place a financial strain on the family when the
servicemembers are deployed. In addition, DOD and installation officials
as well as servicemembers told us that problems communicating with
creditors during deployment can cause other financial difficulties.
Servicemembers told us that limited Internet access, the high cost of
calling from overseas, and delays in the delivery of mail often prevented
them from promptly contacting creditors. Failure to avoid or promptly
correct serious financial problems can result in consequences for these
servicemembers, such as bad credit ratings or adverse effects on unit
readiness and morale.

DOD does not have an oversight framework that includes results-oriented
performance measures and the reporting requirements needed to evaluate the
effectiveness of DOD and service programs that assist servicemembers in
managing their personal finances. The principles of the Government
Performance and Results Act of 1993 offer federal agencies a sound
methodology for establishing such a framework. While DOD's 2002 human
capital strategic plan stated that a standardized evaluation system to
measure the effectiveness of the PFM programs is a desired goal, DOD does
not currently have such a system. One factor contributing to the absence
of adequate outcome measures and a standardized evaluation system is the
lack of DOD guidance to measure or report on the programs' results.
Although DOD had included evaluative reporting measures in a draft of its
PFM instruction to the services, the final instruction issued in 2004 did
not contain outcome measures or reporting requirements because the
services objected to the additional requirements. Without a policy
requiring the evaluation and reporting relationship between DOD and the
services, DOD has limited visibility and oversight to make improvements in
the program and limited ability to achieve a standardized evaluation
system. Moreover, Congress does not have the visibility or oversight it
needs to address issues related to DOD's PFM programs.

Some junior enlisted servicemembers are not receiving the required PFM
training. While each service implements PFM training differently, all of
the services have policies requiring that PFM training must be provided to

junior enlisted servicemembers. Moreover, the extent to which the PFM
training is not received is unknown because most of the services do not
track the completion of PFM training at the service level. The Army was
the only service that collected installation-level data and could provide
a servicewide estimate of PFM training completed by junior enlisted
servicemembers. Senior Army officers at most of the Army installations we
visited acknowledged the need for PFM training, but noted that PFM
training was not a priority because current deployment schedules limit the
time available to prepare soldiers for their warfighting mission.
Top-level DOD officials, however, have repeatedly stated that financial
issues directly affect unit readiness and morale and should be addressed.
Thus, units whose servicemembers do not receive required PFM training risk
jeopardizing their ability to meet mission requirements.

We are making four recommendations to DOD to enhance the financial
conditions of deployed servicemembers and improve the effectiveness of PFM
programs: (1) take steps to provide deployed servicemembers with their
family separation allowance on a monthly basis, (2) take steps to provide
better communications access for deployed servicemembers with their
creditors, (3) develop a DOD-wide oversight framework with an evaluation
plan for the PFM programs and formalize DOD's oversight role in the
evaluation by including evaluation and reporting requirements in the PFM
instruction, and (4) develop and implement a tactical plan with timebased
milestones to show how the appropriate service policy offices will monitor
and ensure required financial management training is provided to junior
enlisted servicemembers. On March 17, 2005, we provided a draft of this
report to DOD for review and comment. As of the time this report went to
final printing, DOD had not provided comments as requested.

Background	Because large numbers of Americans lack knowledge about basic
personal economics and financial planning, U.S. policymakers and others
have been focusing on financial literacy, i.e., the ability to make
informed judgments and to take effective actions regarding the current and
future use and

management of money.11 While informed consumers can choose appropriate
financial investments, products, and services, those who exercise poor
money management and financial decision making can lower their family's
standard of living and interfere with crucial long-term goals.

One vehicle for promoting the financial literacy of Americans is the
congressionally created Financial Literacy and Education Commission.12
Created in 2003, the Commission is charged with (1) developing a national
strategy to promote financial literacy and education for all Americans;
(2) coordinating financial education efforts among federal agencies and
among the federal government, state and local governments, non-profit
organizations, and private enterprises; and (3) identifying areas of
overlap and duplication among federal financial literacy activities.

To minimize financial burdens on servicemembers, DOD has requested and
Congress has increased cash compensation for active duty military
personnel over the last 5 years. For example, the average increases in
military basic pay have exceeded the average increases in private-sector
wages for each of the past 5 years.13 Also, DOD has a plan to totally
eliminate out-of-pocket expenses that servicemembers pay when living in
private-sector housing from 19 percent in fiscal year 2000 to zero in
fiscal year 2005.14

Furthermore, in April 2003, Congress increased the family separation
allowance from $100 to $250 per month and hostile fire/imminent danger pay
from $150 to $225 per month for eligible deployed servicemembers.15

11 See GAO, Highlights of a GAO Forum: The Federal Government's Role in
Improving Financial Literacy, GAO-05-93SP (Washington, D.C.: Nov. 15,
2004). This report resulted from a July 28, 2004, forum that GAO hosted to
develop recommendations on the role of the federal government in improving
financial literacy. The forum's participants included a select group of
individuals with expertise in financial literacy and education. They
included representatives of federal and state agencies, the financial
industry, non-profit organizations, and academic institutions.

12 Pub. L. No. 108-159, Title V, (Dec. 4, 2003).

13 See GAO-04-465R.

14 See GAO-04-465R.

15 Congress in the Ronald Reagan National Defense Authorization Act for
Fiscal Year 2005 (Pub. L. 108-375, Section 623 (Oct. 28, 2004)) made this
a permanent increase for servicemembers.

The family separation allowance16 is designed to provide compensation for
servicemembers with dependents for the added expenses incurred because of
involuntary separations such as deployments in support of contingency
operations like Operation Iraqi Freedom. The expenses include extra
childcare costs, automobile maintenance, or home repairs the deployed
servicemember would normally do while home. Hostile fire/imminent danger
pay provides special pay for "duty subject to hostile fire or imminent
danger" and is designed to compensate servicemembers for physical
danger.17 Iraq, Afghanistan, Kuwait, Saudi Arabia, and many other nearby
countries have been declared imminent danger zones.18 In addition to these
special pays, some or all income that active duty servicemembers earn in a
combat zone is tax free.19

Since at least the 1980s, the military services have offered PFM programs
to help servicemembers address their financial conditions. Among other
things, the PFM programs provide financial literacy training to
servicemembers, particularly to junior enlisted personnel during their
first months in the military. The group-provided financial literacy
training is supplemented with other types of financial management
assistance, often on a one-on-one basis. For example, servicemembers might
obtain one-onone counseling from staff in their unit or legal assistance
attorneys at the installation.

16 DOD Financial Management Regulation 7000.14.R, Volume 7A, Chapter 27,
Family Separation Allowance (FSA), (January 2005).

17 DOD Financial Management Regulation 7000.14R, Volume 7A, Chapter 10,
Special Pay-Duty Subject to Hostile Fire or Imminent Danger (November
2004).

18 See Congressional Research Service Report for Congress, Military Pay:
Controversy Over Hostile Fire/Imminent Danger Pay and Family Separation
Allowance Rates, (Washington, D.C.: Oct. 8, 2003).

19 Department of the Treasury, Internal Revenue Service, Armed Forces' Tax
Guide: For Use in Preparing 2003 Returns, Publication 3, Cat. No. 46072M.
This publication noted that all military pay for the month is excluded
from income when an enlisted service member, warrant officer, or
commissioned warrant officer served in a combat zone during any part of a
month or while hospitalized as a result of service in the combat zone. The
amount of the exclusion for a commissioned officer (other than a
commissioned warrant officer) is limited to the highest rate of enlisted
pay, plus hostile fire/imminent danger pay for each month during any part
of which an officer served in a combat zone or while hospitalized as a
result of service there.

In May 2003, the Office of the Under Secretary of Defense for Personnel
and Readiness,20 DOD's policy office for the PFM programs, established its
Financial Readiness Campaign, with objectives that include increasing
personal readiness by, among other things, (1) increasing financial
awareness and abilities and (2) increasing savings and reducing dependence
on credit.21 The Campaign attempts to accomplish these objectives largely
by providing on-installation PFM program providers with access to
national-level programs, products, and support through links from DOD's
Web site (www.dodpfm.org) to other Web sites, tools, and contacts.22

Figure 1 illustrates some of the major types of financial management
training and assistance available to servicemembers (see app. III for
additional details). For instance, most active duty military installations
have an on-site manager who implements the service's PFM programs. Among
other things, PFM program managers and others teach classes and offer
counseling on financial issues, ranging from basic budgeting and checkbook
management to purchasing a car. In addition, the PFM program managers
might work closely with the services' relief/aid societies. The relief/aid
societies offer grants or no interest loans for emergency situations.
Figure 1 also shows that servicemembers may choose to use non-DOD
resources if, for example, they do not want the command to be

20 The offices with PFM policy responsibility in the services include the
Army's Community and Family Support Center Directorate, Navy's Office of
the Deputy Chief of Naval Operations (Manpower and Personnel), Air Force's
Office of the Deputy Assistant Secretary of the Air Force for Force
Management and Personnel's Assistant Deputy for Family Programs, and the
Marine Corps Community Services.

21 See Office of the Deputy Under Secretary of Defense (Military Community
and Family Policy), Initial Assessment and Follow-on Plan for the
Department of Defense Financial Readiness Campaign (May 27, 2004).

22 DOD's 27 Campaign partners are Air Force Aid Society, Army Emergency
Relief Society, Association of Military Banks of America, Better Business
Bureau, Consumer Federation of America, Defense Credit Union Council,
Department of Labor, Department of the Treasury, Employee Benefits
Research Institute and American Savings Education Council, Federal
Citizen's Information Center, Federal Deposit Insurance Corporation,
Federal Reserve Board, Federal Trade Commission, Freddie Mac, InCharge
Institute of America, Jump$tart Coalition for Personal Financial Literacy,
Moneywise with Kelvin Boston, National Association of Federal Credit
Unions, National Endowment for Financial Education, National Foundation
for Credit Counseling, National Military Family Association, Navy and
Marine Corps Relief Society, North American Securities Administrators
Association, Securities and Exchange Commission, Social Security
Administration, U.S. Department of Agriculture Cooperative State Research
Education and Extension Service, and Women's Institute for Financial
Education.

aware of their financial conditions or they need products or support not
offered through DOD, the services, or the installation.

      Figure 1: Financial Management Assistance and Training Available to
                                 Servicemembers

            Sources: GAO analysis of DOD data; Image Art Explosion.

  Financial Conditions Similar for Deployed and Non-Deployed Servicemembers, but
  Pay Administration and Communication Problems Exist for Deployed Members

DOD-wide survey data suggest that the financial conditions of deployed and
non-deployed personnel are similar, but problems were found with the
administration of a special pay to deployed personnel, as well as the
ability of deployed servicemembers to communicate with creditors.
Servicemembers who were deployed for at least 30 days reported similar
levels of financial health or problems as those who had not deployed when
they responded to a 2003 DOD-wide survey. However, some deployed
servicemembers are not obtaining their family separation allowance on a
monthly basis while they are deployed and separated from the families.
And, problems communicating with creditors-caused by limited Internet
access, few telephones and high fees, and delays in receiving ground mail-
can affect deployed servicemembers' abilities to resolve financial issues.

    Data Suggest Financial Conditions of Deployed Servicemembers and Their
    Families Similar to Non-Deployed Servicemembers and Their Families

Data from DOD suggest that the financial conditions for deployed and
nondeployed servicemembers and their families are similar. Figure 2 shows
estimates of servicemembers' financial conditions based on their responses
to a 2003 DOD-wide survey.23 For each of the five response options, the
findings for servicemembers who were on a deployment for at least 30 days
were very similar to those of servicemembers who had not deployed during
that time. An additional analysis of the responses for only junior
enlisted personnel showed similar responses for the two groups. For
example, 3 percent of the deployed group and 2 percent of the non-deployed
group indicated that they were in "over their heads" financially; and 13
percent of the deployed group and 15 percent of non-deployed group
responded that they found it "tough to make ends meet but keeping your
head above water" financially. These responses are consistent with the
findings that we obtained in a survey of all PFM program managers and
during our 13 site visits. In the survey of PFM program managers, about 21
percent indicated that they believed servicemembers are better off
financially after a deployment; about 54 percent indicated that the
servicemembers are about the same financially after a deployment; and
about 25 percent believed the servicemembers are worse off financially
after a deployment. Also, 90 percent of the 232 recently deployed
servicemembers surveyed in

23 DOD's March 2003 survey sample consisted of 34,929 individuals
identified by stratified random sampling procedures. DOD reported that
completed surveys were received from 10,828 respondents, which resulted in
an overall weighted response rate for eligibles, corrected for
non-proportional sampling of 35 percent.

our focus groups24 said that their financial situations either improved or
remained about the same after a deployment.

Figure 2: Self-Reported Financial Condition of Servicemembers Who Were and
Were Not Deployed for at Least 30 Days at the Time They Completed the 2003
DOD Surveya

2

In over your head

1

                                     11 10

Tough to make ends meet but keep your head above water

                                     26 26

Occasionally have some difficulty making ends meet

43 45

Able to make ends meet without much difficulty

18

Very comfortable and secure

17

0 10 20 30 40 50 60 70 80 90100

Percent of servicemembers with the above responses

Deployed

Not deployed

Source: GAO analysis of DOD data.

aSampling errors of estimates for servicemembers who were not deployed do
not exceed +/-2 percentage points. Sampling errors of estimates for
servicemembers who were deployed do not exceed +/-5 percentage points.
These sampling errors do not include errors due to other sources, such as
potential bias attributable to the overall 35 percent response rate. DOD
conducted research to assess the impact of this response rate on overall
estimates. We have no reason to believe that potential non-response bias
not otherwise accounted for by DOD's research is substantial for the
variables we studied in this report.

The special pays and allowances that some servicemembers receive when
deployed, particularly to dangerous locations, may be one reason for the
similar findings for the deployed and non-deployed groups. The
hypothetical situations shown in table 1 demonstrate that
deploymentrelated special pays and allowances can increase servicemembers'
total cash compensation by hundreds of dollars per month. Moreover, as we
noted previously in the Background section of this report, some or all

24 Findings from our focus groups do not represent the population of
servicemembers and therefore are not generalizable.

income that servicemembers earn while serving in a combat zone is tax
free.

 Table 1: Hypothetical Examples of Monthly Cash Compensation for Servicemembers
                                Deployed to Iraq

                                                  Hypothetical   Hypothetical 
                    Hypothetical   Hypothetical   situation 4:   situation 5: 
    Hypothetical    situation 2:   situation 3:        (E-6) a        (O-3) a 
    situation 1:          (E-3)a         (E-3)a       Years of       Years of 
          (E-3)a Years of        Years of          service: 10    service: 10 
                 service: 3      service: 3                    
        Years of      Dependents     Dependents     Dependents     Dependents 
      service: 3                                               
No dependents On-installation Private-sector Private-sector Private-sector 
        Barracks                                                              
         housing         housing        housing        housing        housing

              Base compensation $1,641 $1,641 $1,641 $2,687 $4,729

Basic allowance for housing In kind (living in In kind (living in
onbarracks) base housing) 622 793

Basic allowance for subsistence In kind (eating in mess halls) 267 267 267

Subtotal: Basic military
compensation $1,641 $1,908 $2,530 $3,747 $5,827

Family separation allowance 0 250 250 250

Hostile fire/Imminent danger
pay 225 225 225 225

Per diem 105 105 105 105

Hardship duty pay 100 100 100 100

Subtotal: Deployment related
compensation $430 $680 $680 $680 $680

                    Total $2,071 $2,588 $3,210 $4,427 $6,507

Source: GAO analysis of DOD data.

a E = enlisted servicemember, O = Officer.

Note: Some values are rounded to the nearest whole dollar. Also, housing
data are for Fort Campbell, Kentucky.

The 2003 DOD survey also asked servicemembers whether they had experienced
various types of negative financial events. The differences in percentages
were small between the deployed and non-deployed groups. As figure 3
shows, the largest of the three differences was 4 percentage points and
pertained to falling behind in paying bills.

Figure 3: Negative Financial Events for Servicemembers Who Were and Were
Not Deployed for at Least 30 Days at the Time They Completed the 2003 DOD
Surveya

19

Pressured by creditors

17

Fell behind in paying bills

                           Bounced two or more checks

21

16

                        0 10 20 30 40 50 60 70 80 90100

Percent of servicemembers with the above responses

Deployed Not deployed Source: GAO analysis of DOD data.

aSampling errors of estimates for Servicemembers who were not deployed do
not exceed +/-2 percentage points. Sampling errors of estimates for
Servicemembers who were deployed do not exceed +/-5 percentage points.
These sampling errors do not include errors due to other sources, such as
potential bias attributable to the overall 35 percent response rate. DOD
conducted research to assess the impact of this response rate on overall
estimates. We have no reason to believe that potential non-response bias
in the estimates not otherwise accounted for by DOD's research is
substantial for the variables we studied in this report.

    Several Thousand Deployed Servicemembers Not Receiving Family Separation
    Allowance Promptly

Based on DOD data for January 2005, almost 6,000 of 71,000 deployed
servicemembers who have dependents did not obtain their family separation
allowance25 in a timely manner. The family separation allowance of $250
per month is designed to compensate servicemembers for extra expenses that
result when they are involuntarily separated from their families.
Servicemembers in our focus groups told us that the family separation
allowance helps their families with added costs encountered during their
absence such as childcare costs, automobile maintenance, and home repairs.
Delays in obtaining family separation allowances could cause undue
hardship for some families faced with such extra expenses.

Table 2 shows the amount of family separation allowance received in
January 2005 by servicemembers who were deployed and receiving hostile
fire pay. No Marines received more than the prescribed $250 monthly
allowance for January, but approximately 10 percent of the Army and Navy

25 37 U.S.C. 427.

servicemembers and nearly 5 percent of the Air Force personnel who were
entitled to the $250 monthly allowance received more than that prescribed
amount. This indicates that servicemembers for three of the services had
not received the $250 allowance on a monthly basis and were given catchup,
lump sum payments. In total, almost 6,000 servicemembers received more
than the prescribed $250 monthly allowance, with 11 servicemembers (1.5
percent) receiving a $3,000 catch-up, lump sum payment-the equivalent of
12 months of family separation pay.26 We have previously reported similar
findings for the administration of family separation allowance to Army
Reserve soldiers and recommended that the Secretary of the Army, in
conjunction with the DOD Comptroller, clarify and simplify procedures and
forms for implementing the family separation allowance entitlement
policy.27

Table 2: January 2005 Payments of the $250 per Month Family Separation
Allowance to Servicemembers Deployed and Receiving Hostile Fire Paya

                   Army      Navy       Marine Corps Air Force      Total  
    Amount of                                                              
     payment    Numberb  %  Numberb   %  Numberb %    Numberb   %  Numberb  % 
$500-$3,000c   2,479  6      545   6          0 0        28  2    3,052 
$251-$499 c    2,335  5      401   4          0 0        43  3    2,779 
      $250d      40,120 89    8,727 90     12,672 85     1,168 94   62,687 88 
     $1-$249e        89  0       21   0     2,201 15         9  1    2,320 
      Total      45,023 100   9,694 100   14,873 100     1,248 100  70,838 99 

Source: GAO analysis of DOD data.

aDOD supplied information on servicemembers who were eligible to receive
family separation allowance while in Afghanistan, Algeria, Angola, Arabian
Sea, Bahrain, Belarus, Bosnia and Herzegovina, Colombia, Croatia,
Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia,
Georgia, Gulf of Aden, Haiti, Indonesia, Iraq, Israel, Jordan, Kenya,
Kuwait, Kyrgyzstan, Lebanon,

26 See GAO, DOD Systems Modernization: Management of Integrated Military
Human Capital Program Needs Additional Improvement, GAO-05-189
(Washington, D.C.: Feb. 11, 2005) and GAO, Military Pay: Army National
Guard Personnel Mobilized to Active Duty Experienced Significant Pay
Problems, GAO-04-89 (Washington, D.C.: Nov. 13, 2003). We have found
serious problems in DOD's systems supporting military personnel and pay,
noting that they were error prone and required manual data reconciliation,
correction, and entry across nonintegrated systems. While we noted that a
significant system enhancement project is under way to improve military
pay, it is likely the department will continue to operate with existing
system constraints for several more years.

27 See GAO-04-911.

Liberia, Macedonia, Malaysia, Oman, Pakistan, Palestine, Persian Gulf,
Philippines, Qatar, Red Sea, Saudi Arabia, Serbia, Sierra Leone, South
Africa, Tajikistan, Turkey, United Arab Emirates, Uzbekistan, Yemen, and
30 locations that were simply identified as "other locations."

bThe Defense Finance and Accounting Service identified the number of
servicemembers who were receiving hostile fire and eligible to receive
family separation allowance.

cAmounts in these rows represent the number of servicemembers who received
a catch-up, lump sum payment that exceeded the $250 per month.

dAmounts in this row represent the number of servicemembers who received
the prescribed $250 per month family separation allowance.

eAmounts in this row represent the number of servicemembers who received
partial payment for the $250 per month family separation allowance.

The services have different procedures that servicemembers must perform to
obtain the family separation allowance, and some of these procedures are
confusing and are not always followed. For example, an Army regulation28
states that soldiers must file a DD Form 1561 (Statement to Substantiate
Payment of Family Separation Allowance) to substantiate eligibility to
receive the allowance, along with a copy of the travel voucher to indicate
the period of entitlement-which implies family separation allowance is
received after deployment because substantiating documents are generally
provided upon completion of travel with a voucher. The Army's pay manual,
however, states that only a DD Form 1561 is required to receive family
separation allowance.29 Officials at the Defense Finance and Accounting
Service and Army Finance Office stated that, although they were following
this regulation, they were requiring the DD Form 1561 prior to departure
so soldiers could receive family separation allowance during deployment,
which is contrary to the Army regulation.30 In contrast, Defense Finance
and Accounting Service procedures for Air Force servicemembers31 state
that servicemembers may substantiate eligibility to receive family
separation allowance prior to departure, using the travel order and the DD
Form 1561. By using the travel order, Air Force servicemembers can receive
family separation allowance during

28 Army regulation 37-104-4, Military Pay and Allowances Policy and
Procedures Active Component (Sept. 30, 1994).

29 Military Pay Procedures Manual, January 1995, Section 4.3.32.25, Family
Separation Allowance.

30 An Army finance official at Fort Bragg, North Carolina, provided local
guidance, which stated that his installation was allowed to obtain
substantiating documents for family separation allowance before the
servicemember's departure.

31 See Defense Finance and Accounting Service-DEM 7073-1, Chapter 27,
Family Separation Allowance (Jan. 15, 1998).

deployment. However, elsewhere in the Defense Finance and Accounting
procedures, it notes that most Air Force members are paid family
separation allowance upon returning from deployment. In April 2003, Air
Force officials attempted to clear up any confusion over how Air Force
personnel should initiate payments of family separation allowance, by
sending a message to a Defense Finance and Accounting official stating
that family separation allowance paperwork should be filed before
servicemembers depart for deployment.32 Despite this subsequent change,
Air Force servicemembers in our June 2004 focus group noted that they
hadnot received thefamily separation allowanceduring their deployments. An
August 2004 message from the Defense Finance and Accounting Service
reminded Air Force finance officials of this policy change.

DOD officials suggested many factors other than policy-implementation
differences to explain why some eligible servicemembers are not receiving
their family separation allowance on a monthly basis. Officials at the
Defense Finance and Accounting Service and at service finance offices
suggested that servicemembers might not obtain the allowance monthly
because they are not aware of the benefit, they do not file the required
eligibility form, they file incorrect documentation, or errors or delays
occur when the unit enters the information into the pay system. Others
noted

32 An April 2003 message from the Air Force Accounting and Finance Office
requested the change in its current business practice of paying family
separation allowance to servicemembers at the completion of a deployment
or temporary duty of 30 days or more. It further stated that the Air Force
agreed with the Army's and Navy's approaches as to the purpose of the
allowance-i.e., to defray additional costs incurred because of the forced
separation and should be paid to the servicemembers during temporary duty,
which includes deployment.

that servicemembers may elect to receive the allowance as a one-time lump
sum payment.33

    Problems Communicating with Creditors and Families During Deployment May
    Cause Financial Difficulties

Servicemembers may experience financial difficulties as a result of
communication constraints while deployed. In our March 2004 testimony, we
documented some of the problems associated with mail delivery to deployed
troops. With regard to deployed servicemembers' financial management, our
focus group participants, surveyed PFM program managers, and interviewed
installation officials noted that delays in receiving correspondence from
creditors have resulted in late payments and possibly longer-term problems
for servicemembers. The longer-term problems might include negative
information about the late payments being entered in one's financial
credit report, which could make it more difficult or expensive for
servicemembers to obtain credit in the future. Similarly, limited access
to telephones or Internet can have negative financial effects such as (1)
delaying or preventing contact with a creditor when a financial issue
arises, (2) making it impossible to electronically transfer money from a
financial institution to a creditor, and (3) incurring overdraft expenses
because the spouse could not be informed in a timely manner about a cash
advance that the servicemember requested.

Individuals in our focus groups suggested that the access to Internet and
telephones may not be the same across the pay grades and services. For
example, some servicemembers noted that deployed junior enlisted personnel
sometimes had less access to Internet than did senior deployed personnel,
making it difficult for the former to keep up with their bills. In
addition, some Army servicemembers told us that they (1) could not call

33 Allowing the government to keep the allowance until the end of the
deployment is contrary to the purpose of the allowance, which is to
compensate servicemembers for the added monthly expenses incurred due to
being involuntarily separated from their families. In addition, allowing
servicemembers to choose to wait until the end of a deployment to receive
a catch-up, lump sum amount of family separation allowance is probably not
a prudent financial decision because interim payments could have been
invested, for example, in the government-sponsored Savings Deposit
Program. This program guarantees servicemembers that they will receive a
10 percent return on money deposited in the program during their
deployment. According to DOD's Financial Management Regulation, Volume 7A,
Chapter 51, members of the armed forces serving outside the United States
or its possessions under arduous conditions (as determined by the
Secretary of Defense) in connection with a designated contingency
operation are authorized to make deposits of unallocated current pay and
allowances and earn interest under this program. Amounts up to $10,000
(including accrued interest) can be deposited with interest accrual at the
rate of 10 percent per year.

stateside toll-free numbers because the numbers were inaccessible from
overseas or (2) incurred substantial costs-sometimes $1 per minute-to call
stateside creditors. In contrast, Air Force servicemembers in Germany said
that the cost of calls to stateside creditors from Iraq or Afghanistan was
not an issue for them because the Air Force had provided telephone calling
cards that could be used to make such calls free of charge.

Failure to avoid or promptly correct financial problems can result in
negative consequences for servicemembers. This includes increased debt for
servicemembers, bad credit histories, and poor performance of their duties
when distracted by financial problems. In addition, servicemembers who
cannot stay on top of their finances, while deployed, may require
assistance from officials in their chain of command to address financial
problems, which takes those officials from their normal military duties.
This can translate into adverse effects on a unit's readiness and morale.

  DOD Does Not Have the Oversight Framework Needed to Assess the Effectiveness
  of PFM Programs

DOD lacks the results-oriented, departmentwide data needed to assess the
effectiveness of its PFM programs and provide the necessary oversight. The
principles of the Government Performance and Results Act of 1993 offer
federal agencies a methodology to establish a results-oriented framework
that includes strategic plans for program activities that identifies,
among other things, program goals, performance measures, and reporting on
the degree to which goals are met.34 These principles would assist DOD in
shifting the focus of accountability for its PFM program from outputs,
such as the number of training classes provided, to outcomes, such as
impact of training on servicemembers' financial behavior.

The November 2004 DOD instruction that provides guidance to the services
on servicemembers' financial management does not address program
evaluation or the reports that services should supply to DOD for its
oversight role.35 However, an earlier draft of the instruction included
these

34 Pub. L. No. 103-62, (Aug. 3, 1993). See GAO, The Results Act: An
Evaluator's Guide to Assessing Agency Annual Performance Plans,
GAO/GGD-10.1.20 (Washington, D.C.: Apr. 1, 1998) for a discussion of key
performance indicators, the means used to verify and validate the measured
values, and other characteristics such as those GAO identified in its
report on assessing an agency's annual performance plans.

35 DOD Instruction 1342.17, Personal Financial Management for Service
Members (Nov. 12, 2004).

requirements. In our 2003 report,36 we noted that the earlier draft
instruction emphasized evaluating the programs and cited metrics such as
the number of delinquent government credit cards, servicemembers with
wages garnished, and administrative actions for financial indebtedness and
irresponsibility taken under the Uniform Code of Military Justice. When
asked what caused the evaluation and oversight reporting requirements to
be dropped from the finalized instruction, DOD officials said that they
were eliminated because of objections voiced by the services. The DOD
officials told us that the services did not want the additional reporting
requirements.

DOD's 2002 Social Compact noted that the impact of efforts to improve
financial literacy cannot be determined without effective evaluation. The
Social Compact also stated that a systematic approach to measuring PFM
programs is needed to identify best practices and improved program
performance. Currently, the only DOD-wide evaluative data available for
assessing the PFM programs and servicemembers' financial conditions are
obtained from a general-purpose annual survey that focuses on the
financial conditions of servicemembers as well as a range of other
nonrelated issues. The data are limited because DOD policy officials for
the PFM programs can only include a few financial related items to this
general-purpose survey. Additionally, a response rate of 35 percent on the
March 2003 active duty survey leads to questions about the
generalizability of the findings. Furthermore, DOD has no means for
confirming the selfreported information for survey items that ask about
objective events such as filing for bankruptcy. Without a policy requiring
common evaluation DOD-wide and reporting relationships among DOD and the
services, DOD will continue to have limited oversight to make improvements
in the PFM programs and limited ability to achieve a standardized
evaluation system. In addition, Congress will not have the visibility or
oversight it needs to address issues related to DOD's financial management
training and assistance to servicemembers.

Currently, service-specific efforts to assess the PFM programs are largely
in their early stages. The services told us that they are developing
outcome measures for evaluating their PFM programs, but none was
operational at the time of our review. In Spring 2005, the Navy plans to
develop and refine Navy-wide metrics such as the number of sailors
performing good and poor financial behaviors, e.g., participating in the
government's retirement plan, filing for bankruptcy, and bouncing checks.
Similarly, in the third quarter

36 See GAO-03-1004.

of fiscal year 2005, Army officials said they expect to implement outcome
measures for assessing programs such as Financial Readiness, Family
Advocacy, and Relocation Readiness. The Marine Corps and Air Force did not
provide details for their plans to develop results-oriented data or
indicate when evaluation systems would be operational. Additionally, our
visits to 13 installations in the United States and Germany revealed much
variability with regard to the use of performance metrics. The
installations that provided us with their metrics often used output
measures such as the number of people trained, rather than
results-oriented outcome measures.

  Some Junior Enlisted Servicemembers Are Not Receiving Required PFM Training

Some junior enlisted servicemembers are not receiving the required PFM
training. While each of the services implements PFM training differently,
all of the services have policies requiring that PFM training must be
provided to junior enlisted servicemembers. At the time of our review, the
services' policies varied on where and when the initial training should
occur. For example, the Army, Marine Corps, and Air Force regulations
required the training at the servicemembers' first duty station; however,
the Navy guidance required such training prior to the servicemembers'
first duty station.

Despite having these policies, some servicemembers have not received the
required training, but the extent to which the training is not received is
unknown because servicewide totals are not always collected. Table 3 shows
how each service monitors PFM training. The Marine Corps, for example,
only tracks PFM training at the unit level and does not tabulate these
data for a servicewide total. As shown in the table, the Army was the only
service that collected installation-level PFM data and could provide a
rough servicewide estimate of PFM training completed by junior enlisted
servicemembers. Overall, the Army estimates that about 82 percent of its
junior enlisted soldiers completed PFM training in fiscal year 2003,
leaving 18 percent who did not receive training. PFM program staff at five
of the six Army installations we visited told us that required PFM
training was not being provided to all first-term soldiers. Some of the
senior Army officers at these installations acknowledged the need to
provide the PFM training to junior enlisted servicemembers but also noted
that current deployment schedules limited the time available to prepare
soldiers for their warfighting mission. The officers said they believed
that improving servicemembers' ability to perform duties related to their
mission (e.g., firing a weapon) was more important than improving their
personal financial literacy.

  Table 3: Characteristics of Each Service's Required PFM Training for Junior
                            Enlisted Servicemembers

    Characteristic        Army          Navy      Marine Corps    Air Force   
     How does the    Monitored at   Monitored by  Monitored at  Monitored at  
        service      installation       Navy       unit level;  squadron      
    monitor whether  level; data    Education and data are not   level; data  
       required      then compiled    Training    compiled for     are not    
                          for       Command; data higher-level   compiled for 
    PFM training is   servicewide   are not           total      higher-level 
                         total                                  
      completed?                    compiled for                    total     
                                    higher-level                
                                        total                   
Is the number of                                                           
       hours of           Noa            Yes           No            No
required training                                            
         in a                                                   
      servicewide                                               
      regulation?                                               

How many hours of PFM training are required, according to the service's
PFM program oversight office?

 12 16 No minimum requirement No minimum requirement When is the PFM training 2
  hours during basic 16 hours during Within 45 days of arrival Upon arrival at
                                   first duty

provided to servicemembers?

training, 2 hours during advanced individual training, and 8 hours at the
first duty station advanced individual training

                         at first duty station station

Source: GAO analysis of DOD data.

aThe Army oversight office stated the number of PFM training hours it
requires is in a 1998 memorandum to the Army Chief of Staff.

In addition to how the services monitor servicemembers' completion of PFM
training, table 3 also shows that the services' requirements for PFM
training for junior enlisted personnel differ on three other
characteristics: where the requirements are documented, the length of
training, and when the training is administered.

o 	The Navy is the only service that specifies in servicewide regulations
the number of hours of PFM training that junior enlisted servicemembers
must complete. The oversight office for the Army identified the number of
hours of required PFM training for first-term soldiers in a 1998
memorandum to the Army Chief of Staff.37 The Air Force and Marine Corps do
not specify the number of hours in servicewide regulations or other
documents.

37 Memorandum for Army Chief of Staff regarding: Proposed Weekly Summary
Item- Financial Readiness Training for First Term Soldiers (Nov. 23,
1998).

o 	The Navy's required length of PFM training for junior enlisted
servicemembers is 4 hours longer than the Army requirement. The Air Force
and Marine Corps have no minimum requirement pertaining to the length of
the PFM training provided on its installations.

o 	The services use different schedules for identifying when PFM training
is to be administered. PFM managers noted that these schedules take into
account service-specific constraints, such as the length of time available
for PFM training at servicemembers' first duty station.

Top-level DOD officials have stated repeatedly that financial issues have
a direct effect on servicemembers' mission readiness and that the lack of
basic consumer skills and training in finances sets the stage for
financial difficulties. For example, we reported in 2003 that a 2002 Navy
report to Congress had identified $250 million in productivity and salary
losses due to poor personal financial management by servicemembers.38
Therefore, units whose servicemembers do not receive required PFM training
risk jeopardizing their ability to meet mission requirements.

Some services are taking steps to improve their monitoring of PFM
training. During the second quarter of 2005, the Army officials said they
hope to implement Army's Client Tracking System that will allow the
service as well as current and future installations to track the financial
counseling and training that servicemembers receive. The Marine Corps is
updating its order on personal services and developing a system to track
financial management training. While such steps may improve the monitoring
of PFM training completion-an important output-they still do not address
the larger issues of training outcomes such as whether or not PFM training
helps servicemembers to manage their finances better.39

38 See GAO-03-1004.

39 The new DOD Instruction 1342.17, dated November 2004, states that
"within 3 months after arriving at the first permanent duty station, a
servicemember shall demonstrate a basic understanding of pay and
entitlements, banking and allotments, checkbook management, budgeting and
saving (to include the thrift savings plan), insurance, credit management,
car buying, permanent change of station moves and information on obtaining
counseling or assistance on financial matters." The instruction, however,
does not specify how this is to be measured. It simply says that such an
understanding means to comprehend the underlying principles of a subject
and apply them to everyday life situations.

Conclusions	Although DOD-wide data show that the financial conditions for
deployed and non-deployed servicemembers and their families are similar,
some deployed servicemembers experience delays in obtaining their monthly
family separation allowance. Not receiving this compensation each month to
help defray extra household costs incurred when the servicemembers are
deployed can result in financial hardship for the servicemembers' family.
Without changes to the administration of the family separation allowance,
DOD risks placing a further financial strain on servicemembers. In
addition, problems communicating with creditors during deployment can
cause financial difficulties for servicemembers. Limited Internet access,
delays in ground mail, and the high cost of calling from overseas often
prevent servicemembers from promptly contacting creditors when financial
issues arise. Delays in responding to creditors can result in serious
consequences, including bad credit ratings for the servicemembers and
adverse effects on unit readiness and morale.

While DOD states in its Social Compact that a standardized evaluation
system to measure the effectiveness of the PFM programs is a desired goal,
the department does not have an oversight framework that includes the
performance measures and reporting requirements needed to fully measure
results from its programs. In addition, the absence of evaluation and
reporting requirements in DOD's newly issued instruction on personnel
financial management suggests that DOD will continue to have limited
visibility and oversight over the PFM programs and little ability to
require standardized assessments of the PFM programs. These deficiencies,
in turn, will limit Congress' ability to address issues related to DOD's
PFM programs.

While DOD and service officials have acknowledged that the lack of PFM
training sets the stage for servicemembers having financial difficulties
later, high deployment levels limit the time available for some
servicemembers to take the PFM training. The absence of servicewide
systems for monitoring the completion of this required training could
result in some servicemembers never being provided such training if they
are unable to take it at the prescribed time. Moreover, the lack of a
monitoring system also will hamper efforts to improve PFM training since
it will be impossible to establish a measurable relationship between
whether or not someone completed training and how well they subsequently
managed their finances.

  Recommendations for Executive Actions

To address issues related to servicemembers' financial management, we
recommend that the Secretary of Defense direct the Under Secretary of
Defense for Personnel and Readiness to take the following four actions:

o 	Take the necessary steps, in conjunction with the Defense Finance and
Accounting Service and the services, to ensure servicemembers receive
family separation allowances on a monthly basis during deployments. These
steps might include those recommended in our prior review of Army Reserve
pay,40 such as clarifying and simplifying procedures and forms
implementing family separation allowance entitlements or having DOD and
the operational components of the services work together to ensure family
separation allowance entitlement eligibility form is received by the
Defense Finance and Accounting Service to start the allowance when the
servicemember is entitled to it.

o 	Identify and implement, with the services, steps that can be taken to
allow deployed servicemembers better communications with creditors. These
steps may include increasing Internet access and providing tollfree
telephone access for deployed servicemembers when they need to address
personal financial issues.

o 	Develop and implement, in conjunction with the services, a DOD-wide
oversight framework with a results-oriented evaluation plan for the PFM
programs and formalize DOD's oversight role by including evaluation and
reporting requirements in the PFM instruction.

o 	Require the services to develop and implement a tactical plan with
timebased milestones to show how the appropriate service policy office
will monitor financial management training and thereby ensure that junior
enlisted servicemembers receive the required training.

Agency Comments	On March 17, 2005, we provided a draft of this report to
DOD for review and comment. As of the time this report went to final
printing, DOD had not provided comments as requested.

40See GAO-04-911.

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after its issue date. At that time we will provide copies of this report
to interested congressional committees and the Secretary of Defense. We
will also make copies available to others upon request. This report will
be available at no charge on GAO's Web site at http://www.gao.gov.

If you or your staff have any questions regarding this report, please
contact me at (202) 512-5559 ([email protected]) or Jack E. Edwards at
(202) 5128246 ([email protected]). Other staff members who made key
contributions to this report are listed in appendix IV.

Sincerely yours,

Derek B. Stewart Director, Defense Capabilities and Management

Appendix I

Scope and Methodology

In addressing the objectives of our engagement, we limited our scope to
active duty servicemembers because we have previously issued a number of
reports on the compensation, benefits, and pay-related problems of
reservists.1 Emphasis was placed on servicemembers who had returned from a
deployment within the last year because these individuals were most likely
to have recent personal knowledge of deployment-related financial issues,
as well as familiarity with financial issues of servicemembers serving on
installations in the United States. During the course of our work, we
visited 13 installations with high deployment levels, as identified by
service officials2 (see table 4). During these site visits to
installations in the United States and Germany, special emphasis was given
to ascertaining the financial conditions of junior enlisted servicemembers
because DOD and service officials have reported that this subgroup is more
likely to encounter financial problems.

Table 4: Installations in the United States and Germany Where GAO
Conducted Site Visits from May to October 2004

                              Service Installation

Army Fort Bragg, North Carolina Fort Campbell, Kentucky Fort Drum, New
York Fort Lewis, Washington Fort Stewart, Georgia Ray Barracks, Friedberg,
Germany

Navy Naval Air Station Jacksonville, Florida Naval Station San Diego,
California

1 Our work focused on active duty servicemembers, with the exception of
DOD active duty surveys where the survey population included reservists
serving on active duty assignments for at least 6 months. The Related GAO
Products section at the end of this report lists several products that
focus on reservists and their compensation, benefits, and pay-related
problems that result from deployment.

2 Bolling Air Force Base, Washington, D.C., did not have high deployment
rates; however, Air Force officials suggested we visit this installation
to quickly obtain information on the financial condition of junior
enlisted servicemembers in an area with a high cost of living.

Appendix I Scope and Methodology

(Continued From Previous Page)

                              Service Installation

Marine Corps

                          Camp Lejeune, North Carolina

Camp Pendleton, California

Air Force

                    Bolling Air Force Base, Washington, D.C.

Langley Air Force Base, Virginia

Ramstein Air Base, Germany

Source: GAO.

To address the extent to which there is a financial impact of deployment
on active duty servicemembers and their families, we reviewed and analyzed
laws, policies, and directives governing military pay, such as the
Servicemembers Civil Relief Act3 and DOD's Financial Management Regulation
7000.14R, Volume 7A, as well as documents related to the tax treatment of
military pay, including the Internal Revenue Service Armed Forces' Tax
Guide: For Use in Preparing 2003 Returns. We also reviewed and analyzed
GAO reports on military compensation and deployment and reports from other
agencies, including DOD, the Congressional Research Service, and the
Congressional Budget Office. We contacted the Federal Trade Commission to
ascertain what data were available through Military Sentinel4 on
servicemembers' financial conditions and complaints. We conducted focus
groups and surveyed servicemembers and spouses and held individual
interviews with PFM program managers, noncommissioned officers, and legal
assistance attorneys at installations we visited to obtain their
perspectives on the impact of deployment on servicemembers. We also
compared and contrasted results of our survey of servicemembers and
spouses with data obtained through DOD-wide active duty surveys from 2003
for face validity and to identify trends and other indicators of financial
impact. We assessed the reliability of survey data that DOD uses to obtain
information on the financial conditions of servicemembers and their
families. The March 2003 survey had a response rate of 35 percent. DOD has
conducted and reported on research to assess

3 50 U.S.C. App. S: 501.

4 According to the Federal Trade Commission, Military Sentinel is a joint
initiative with DOD that aims to improve consumer protection for
servicemembers. Military Sentinel is designed to centralize the online
collection of consumer complaints from DOD and military communities, which
is intended to, among other things, help target law enforcement actions.

Appendix I Scope and Methodology

the impact of this response rate on overall estimates. They found that,
among other characteristics, junior enlisted personnel (E1 to E4),
servicemembers who do not have a college degree, and members in services
other than the Air Force were more likely to be non-respondents. We have
no reason to believe that potential non-response bias not otherwise
accounted for by DOD's research is substantial for the variables we
studied in this report. Therefore, we concluded the data to be
sufficiently reliable to address our objectives. Additional perspectives
regarding the financial impact of deployment were obtained in interviews
with DOD and service policy officials. Still other perspectives were
obtained from installation officials using the structured interviews and
an e-mail survey to all PFM program managers. This information was
supplemented with information obtained from three group discussions with a
total of 50 personnel affiliated with the PFM programs while they attended
a November 2004 conference. We also reviewed family separation allowance
data from the Defense Finance and Accounting Service for servicemembers
who were deployed and receiving imminent danger pay in January 2005.5

To facilitate the data gathering process for all three questions,6 we
developed and pre-tested four types of data collection instruments. The
content of the instruments was identified through review of policies,
reports, and other materials, and from interviews with DOD and service
officials.

o 	Structured questionnaires and focus group protocols were used to
increase the likelihood that the questions were asked and procedures were
conducted in a standardized manner, regardless of which GAO analyst
conducted the interviews and focus groups during the 13 site visits. While
the interviews and focus groups provided valuable

5Over the years, we found serious problems in DOD's systems supporting
military personnel and pay. We noted that the systems were error prone and
required manual data reconciliation, correction, and entry across
nonintegrated systems. While we noted that a significant system
enhancement project is under way to improve military pay, it is likely the
department will continue to operate with existing system constraints for
several more years. See GAO-05-189 and GAO-04-89.

6 In this engagement, we assessed (1) the extent deployment impacts the
financial condition of active duty servicemembers and their families, (2)
whether DOD has an oversight framework for evaluating military programs
designed to assist both deployed and nondeployed servicemembers in
managing their personal finances, and (3) the extent junior enlisted
servicemembers receive required PFM training.

Appendix I Scope and Methodology

qualitative data to illustrate important issues, the findings were not
generalizeable to the population of all active duty servicemembers because
of the small non-random samples of personnel who participated in the data
collection sessions.

o 	Separate structured interview protocols were created for seven types of
officials: installation commanders, PFM program managers, senior
non-commissioned officers (E8 to E9), legal assistance attorneys,
chaplains, command financial specialists, and officials representing
service relief/aid societies. While some of the questions were the same or
very similar for some issues, the content of the structured interviews was
tailored to the type of official interviewed.

o 	A single focus group protocol, with seven central questions and
follow-up questions, was used to solicit information from each of the four
types of homogeneous groups: junior enlisted servicemembers (E1 to E4),
non-commissioned officers (E5 to E9), company-grade officers (O1 to O3),
and spouses of servicemembers who had recently returned from deployments.

o 	An anonymous survey was administered at the beginning of each focus
group to obtain specific, sensitive (e.g., financial difficulties
experienced by the servicemembers and their families) information that
focus group participants might not feel comfortable discussing with other
servicemembers present. Administering the survey before the focus group
questions were asked allowed us to quantify participants' perspectives and
situations, without the servicemembers being influenced by the subsequent
discussions.

o 	An e-mail survey was administered to the DOD-wide population of 225 PFM
program managers identified by service officials. The response rate for
the survey was 74 percent. Because we surveyed the population of PFM
program managers and obtained a sufficiently high response rate, the
findings from this survey are generalizeable to the population of all PFM
managers.

To assess the adequacy of DOD's oversight framework for evaluating
military programs that assist both deployed and non-deployed
servicemembers in managing their personal finances, we reviewed DOD's, the
services', and selected installations' PFM program policies, along with
DOD's strategic and tactical plans for implementing the PFM programs. In
addition, we reviewed DOD's 2002 report on Personal and Family Financial

Appendix I Scope and Methodology

Management Programs submitted to the House of Representatives Armed
Services Committee. The Government Performance and Results Act of 19937
and Standards for Internal Control in the Federal Government8 provided
model criteria for determining the adequacy of the oversight framework. We
gathered perspectives about the outcome measures to evaluate the PFM
programs from DOD and service-level officials, along with responses from
the previously mentioned discussion groups at the November 2004 conference
and the DOD-wide survey of PFM managers. We reviewed and analyzed data
related to the effectiveness of the PFM programs from DOD-wide active duty
survey conducted in 2003. We also reviewed accreditation reports for
installation PFM programs, where available, and other materials
documenting the use or effectiveness of PFM programs. Finally, we attended
a GAO-sponsored forum in November 2004, in which a select group of
individuals with expertise in financial literacy and education developed
recommendations on the role of the federal government in improving
financial literacy among consumers.9

To assess the extent to which DOD and the services provide PFM training to
junior enlisted servicemembers, we examined the regulations and other
materials that document PFM training requirements such as the number of
hours of training provided and when the training should occur. We reviewed
DOD's, the services', and selected installations' PFM training materials,
and procedures for monitoring completion of the training. We also reviewed
reports issued by GAO, DOD, and other organizations that addressed the PFM
programs or the content and delivery of similar programs designed to
either increase financial literacy or address financial problems.
Additionally, we interviewed service headquarters, as well as installation
PFM officials about required training for junior enlisted servicemembers
and how it is administered and monitored.

7 Pub. L. No. 103-62 (Aug. 3, 1993).

8 See GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-0021.3.1 (Washington, D.C.: November 1999).

9 See GAO-05-93SP.

                        Appendix I Scope and Methodology

                     Sampling Error and Non-Sampling Error

The e-mail survey that was administered by GAO to the DOD-wide population
of 225 PFM program managers is not subject to sampling error since it was
sent to the universe of PFM program managers. With a response rate for the
survey of 74 percent and no clear differences between respondents and
non-respondents, the findings from this survey are generalizeable to the
population of all PFM managers. Our PFM survey had differential response
rates that were as low as 65 percent for the Air Force and as high as 89
percent for the Navy.

The questionnaire provided to focus group participants was to gather
supplemental information only and is not generalizable to DOD, but rather
to those who participated in our focus groups only.

Because DOD surveyed a sample of servicemembers in its 2003 active duty
survey, their results are estimates and are subject to sampling errors.
However, the practical difficulties in conducting surveys of this type may
introduce other types of errors, commonly known as non-sampling errors.
Non-sampling errors can include problem(s) with the list from which the
sample was selected, non-response in obtaining data from sample members,
and/or inadequacies in obtaining correct data from respondents. These
errors are in addition to the sampling errors. In this survey, the
response rate was 35 percent. The estimates obtained from the respondents
will differ from the population value to the extent that values for
non-respondents are different, in the aggregate, from values for
respondents.

  Non-Sampling Error and Data Quality

We conducted in-depth pre-testing of the PFM program manager survey, as
well as the questionnaire disseminated to focus group participants, to
minimize measurement error. However, the practical difficulties in
conducting surveys of this type may introduce other types of errors,
commonly known as non-sampling errors. For example, measurement errors can
be introduced if (1) respondents have difficulty interpreting a particular
question, (2) respondents have access to different amounts of information
in answering a question, or (3) those entering raw survey data make
key-entry errors. We took extensive steps to minimize such errors in
developing the questionnaire, collecting the data, and editing and
analyzing the information. For example, we edited all surveys for
consistency before sending them for key-entry. All questionnaire responses
were double keyentered into our database (that is, the entries were 100
percent verified), and a random sample of the questionnaires was further
verified for

Appendix I Scope and Methodology

completeness and accuracy. In addition, we performed computer analyses to
identify inconsistencies and other indicators of errors.

DOD also pre-tested its questionnaire to minimize measurement error and
performed analysis to assess non-response error.

We performed our work from March 2004 through February 2005 in accordance
with generally accepted government auditing standards.

Appendix II

Findings from GAO-led Focus Groups Held at 13 Installations

We held focus group sessions at the 13 military installations we visited
during the course of this engagement to obtain servicemembers'
perspectives on a broad range of topics, including the impact of
deployment on servicemembers' finances and the types of lenders military
families use, along with the PFM training and assistance provided to
servicemembers by DOD and service programs (see app. I for a list of
installations visited). Servicemembers who participated in the focus
groups were divided into three types of groups: junior enlisted personnel
(E1 to E4), mid-grade and senior enlisted personnel (E5 to E9), and junior
officers (O1 to O3). Although we requested to meet with servicemembers who
had returned from a deployment within the last 12 months, some
servicemembers who had not yet deployed also participated in the focus
groups. At some installations, we also held separate focus groups with
spouses of servicemembers. Typically, focus groups consisted of 6 to 12
participants.

We developed a standard protocol, with seven central questions and several
follow-up questions, to assist the GAO moderator in leading the focus
group discussions. The protocol was pre-tested during our first
installation visit and was used at the remaining 12 installations. During
each focus group session, the GAO moderator posed questions to
participants who, in turn, provided their perspectives on the topics
presented. We essentially used the same questions for each focus group,
with some slight variations to questions posed to the spouse groups.

We sorted the 2,090 summary statements resulting from the 60 focus groups
into categories of themes through a systematic content analysis. First,
our staff reviewed the responses and agreed on response categories. Then,
two staff members independently placed responses into the appropriate
response categories. A third staff member resolved any discrepancies.

Below, we have identified the seven questions and sample
responses/statements associated with each question. The themes and the
number of installations for which a statement about a theme was cited are
provided in italics. Also, two examples of the statements categorized in
the theme are provided. Only those themes cited at a minimum of three
installations are presented. The number of installations-rather than the
number of statements-is provided because (1) the focus of this engagement
was on DOD-wide issues and (2) a lengthy discussion in a single focus
group may have generated numerous comments.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

1. How has deployment affected military families financially in your unit?

1.a. Other reason deployment affects families financially (N=13)1

o 	Example: Financial problems stem from relationship problems. Many
Marines file for divorce when they return from a deployment.

o 	Example: Another sailor said they have to buy a lot of supplies, such
as stocks of deodorant and other toiletries, to take on the deployment.
The government does not pay for those supplies.

1.b. Better financially - increased income (N=13)

o 	Example: A soldier stated that his family was barely making ends meet
when he left for a deployment. However, when he returned, his wife had
paid off all of the bills and saved some of the money. He and his wife
look forward to deployments as a way to catch up on expenses and savings.

o 	Example: Some cited receiving additional hazardous/combat duty pay and
attendant tax exemptions during deployment as reasons for the financial
benefits. In addition, some servicemembers mentioned that they no longer
had to pay rent and incur related household expenses such as food and
other household goods while deployed. The additional money allowed
families to pay off debts and outstanding bills.

1.c. Worse financially - increased needs (e.g., childcare and
transportation) (N=12)

o 	Example: Deployment worsens some servicemembers' finances because
childcare expenses increased. In many instances, to avoid having childcare
expenses, one parent will work during the day and one during the night.
When the servicemember deploys, the remaining spouse must find suitable
daycare for the children. This is an added expense the deployment forces
on the family.

1 N=number of installations out of a possible 13, where the theme was
cited.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: During a deployment there are more expenses because the spouse
has to pay for things that the servicemember would usually do personally,
like house and car repairs.

1.d. Worse financially - other (N=11)

o 	Example: The military encourages soldiers to obtain a power of attorney
before they deploy, but the power of attorney gives the spouse access to
all of the soldier's finances. In many cases, the spouse has used this
power to spend all of the soldier's money. One soldier returned from his
deployment to find that he only had $80 left in his bank account.

o 	Example: One unmarried soldier said he was 5 months behind in paying
his bills because he's single and did not have anyone to help him while he
was deployed.

1.e. No change financially because of deployment (N=11)

o 	Example: Overall, servicemembers are not really making more money when
they are deployed. The additional pay and allowances make up for the
increased spending that a family must do when the servicemember is not at
home.

o 	Example: Another servicemember stated that she was a single parent and
had to send her child back to the west coast with her parents. She stated
she came out about even financially because the extra money she made was
spent on the additional expenses to care for her son.

1.f. Effect issue - servicemember has dependents (N=11)

o 	Example: Single parents face an entirely different set of issues during
a deployment. For example, in many cases, the member will be the only
parent for a child; therefore, when that member is deployed long-term
childcare must be arranged. In most situations, the member will arrange
for an immediate or extended family member to assume the childcare
responsibilities.

o 	Example: Some Navy servicemembers said that the status of personal
finances during a deployment will vary based on the marital

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

status of the sailor. For example, sailors with dependents will collect
more entitlements than those who are single.

1.g. Worse financially - increased wants (N=11)

o 	Example: Some soldiers were buying expensive cars with their deployment
pays. However, when the servicemembers returned from deployment to their
regular pay they were not able to afford their deployment standards of
living because the increase in income and tax free status no longer
applied.

o 	Example: The spouse may be depressed during the deployment and spend
the money the soldier is being paid. In these cases, they have no one
around telling them to save it or to pay the bills. They shop to fight the
depression and to make themselves feel better.

1.h. Better financially - other (N=10)

o 	Example: In some cases, the family's finances actually improve because
the spouse takes control of the bills during the deployment.

o 	Example: Another participant stated that she and her husband are more
financially responsible now compared to when they were younger. Thus, they
are able to benefit more from the monetary benefits of deployment.

1.i. Effect issue - personal ability to manage money (N=9)

o 	Example: Poor post-deployment spending habits (e.g., buying a new
expensive car) of some single servicemembers caused them to lose extra
income earned during deployment. This left them with more debt than before
they left for the deployment.

o 	Example: In many cases, it is when the soldier returns from the
deployment that families will get into financial troubles. During the
deployment, there is a significant increase in pay and an increase in
spending. After the deployment, the servicemember's pay returns to normal
and the family may have trouble dealing with the loss of income, which can
encourage increased debt.

1.j. Effect issue - servicemember does not have dependents (N=7)

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: Single servicemembers seemed to fare better financially
because they do not incur the same expenses as married couples, such as
childcare and transportation costs. The single member is more likely to be
living with roommates and when deployed, he/she only has a small amount to
pay for rent. The married servicemember, on the other hand, still has a
mortgage to pay back home, along with the additional expenses previously
mentioned.

o 	Example: Single servicemembers are better off financially because they
only have to take care of themselves financially.

1.k. Effect issue - where deployed (N=6)

o 	Example: The effect on finances depends on the location to which a
servicemember is deployed. The pay and allowances that a soldier receives
vary from location to location. In some places, soldiers can make a lot of
money; in others, they will not.

o 	Example: The financial impact of deployment depends on where an officer
was deployed. In South Korea, servicemembers pay taxes and do not receive
extra pay, as did those who served in combat zones. In addition,
individuals deployed to South Korea lost their Basic Allowance for
Housing, even though they needed it while deployed. The officer needed to
live off base because of a lack of housing on base there. This meant
paying for two households, one on deployment and one for the spouse and
children at home.

1.l. Worse financially - loss of income (N=5)

o 	Example: Some spouses mentioned that they know of some soldiers that
had to give up their second jobs when they left on the deployment and the
loss of this income had a big impact on the family's finances.

o 	Example: While at their home station, sailors collect commuted rations,
also referred to as comrats. Commuted rations are a pay allowance given to
sailors to cover the cost of meals incurred off base when they are not
serving on and eating aboard the ship. When a sailor goes out to sea, the
commuted rations payments are stopped and sea pay is started. Also, a
sailor is entitled to Career Sea special pay, or sea pay, at a monthly
rate of up to $750. The actual amount of sea pay varies based on the
sailor's rank and number of years served

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

and can range from $70 to $750 a month. However, younger sailors do not
have enough time accrued on their sea pay clock to make up for the loss of
commuted rations pay. Therefore, some families will actually lose money
during the deployment.

1.m. Better financially - decreased expenses (N=5)

o 	Example: At some deployment locations, there is nowhere to spend the
extra income. There are no bars, no daily expenses like gasoline, and no
phone bills. Yet the Marines are being paid the additional entitlements
and pay.

o 	Example: One participant said she thought her family's finances were in
better shape during her husband's deployment because he was not able to
spend the extra money he earned and the family was able to save more money
while he was deployed.

2. Could you tell me about servicemembers you know who have gone through
any financial difficulties such as declaring bankruptcy, falling behind on
bills, or having a car or appliance repossessed?

2.a. Overspending/bad money management (N=13)

o 	Example: There were servicemembers who ran into severe financial
problems after they returned from deployment due to overspending and
overextending themselves financially while they were deployed.

o 	Example: Another participant said that he knew of a few junior enlisted
servicemembers who spent all their money on expensive cars and other
things, once they returned from deployment. They did not save any of the
extra money they received.

2.b. Other experiences with financial difficulties (N=13)

o 	Example: One airman experienced a situation in which a creditor would
not accept the automatic money transfer that was set up before the
deployment.

o 	Example: One soldier's ex-wife took him to court while he was deployed
in an attempt to obtain additional child support money. Because of the
additional entitlements and pay that the soldier was

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

collecting, the court increased the payments to match. The soldier was
unable to return home or communicate to prevent the action or mediate in
the situation.

2.c. Defense Finance and Accounting Service errors (N=11)

o 	Example: One of the airmen had a series of late payments during a
deployment because Defense Finance and Accounting Service did not process
an allotment correctly and the money was not getting sent to the correct
place.

o 	Example: Almost all of the airmen knew someone who did not have their
pay entitlements stopped after returning from the deployment. In most
instances, Defense Finance and Accounting Service was continuing to pay
the entitlement for several months; unfortunately, once the problem was
resolved, Defense Finance and Accounting Service took back the amount owed
in one lump sum. This left the airmen with paychecks amounting to zero
dollars.

2.d. Communication problems (lack of Internet/e-mail/mail/phone) (N=10)

o 	Example: A servicemember stated that a major issue with deployment was
not being able to pay bills on time because the infrastructure down range
(combat zone) was not immediately set up to deliver/send mail.

o 	Example: During deployments, the junior enlisted personnel do not have
as much access to the Internet as the senior Marines. This can have a
negative impact on their ability to access their checking and other
financial accounts, thereby impacting their ability to manage their
finances.

2.e. Difficulty maintaining checkbook/finances (N=10)

o 	Example: Many servicemembers have the mentality that because they earn
the money it is theirs to manage. When the soldier is at home, he or she
controls the finances; and when the soldier leaves, the spouse does not
know how to handle the bills, finances, or budget.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: In many situations, single sailors may not have someone back
home to take care of their bills or manage their finances.

2.f. Car repossessed (N=9)

o 	Example: Some soldiers spent their money quickly after they returned
from the deployment and bought expensive cars. In a few instances, these
cars were repossessed because the soldiers could not make the monthly
payments.

o 	Example: A soldier stated that some servicemembers' allotments were not
processed, which resulted in their cars being repossessed. This also left
the servicemembers with a bad credit rating.

2.g. Did not experience financial difficulties during deployment (N=6)

o 	Example: A participant stated he knew of very few soldiers who were
negatively affected financially because of deployment.

o 	Example: Those who fared well with their finances had relationships
with helpful people/spouses who were able to manage their finances for the
servicemembers while they were deployed.

2.h. Fell behind in bills (N=6)

o 	Example: A servicemember said that he and his spouse had fallen behind
on paying their bills.

o 	Example: A soldier said that a servicemember's phone was disconnected
because his spouse went to another state to visit relatives for 2 months
and the phone bill was not paid.

2.i. Bankruptcy (N=5)

o 	Example: Participants stated that they had heard of very few
servicemembers who had to file for bankruptcy as a result of deployment.

o 	Example: One of the officers was aware of a sergeant who had to file
bankruptcy upon returning from deployment. During the

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

deployment, the sergeant's spouse spent all of the extra money and took
out "a ton" of additional debt.

2.j. Problems with government credit card (N=4)

o 	Example: The government travel card causes more problems than other
cards. Sailors are traveling back to back with several deployments and
take out back to back debts. The Travel Processing Center may not process
the travel claims in 10 days like they are supposed to, so people are
running up debt on the government travel card that they cannot pay off.

o 	Example: Sometimes servicemembers have had to pay (their government
travel card bill) with their own money while waiting for funds to be
provided/reimbursed by the government. This takes money out of their
household and can affect their credit rating. It can take up to 2 months
to get their money from the Defense Finance and Accounting Service.

3. During your deployment, how did servicemembers in your unit handle
situations when there were financial problems at home?

3.a. Used in-theatre resources (chain of command, e-mail, Internet) (N=10)

o 	Example: Soldiers had to go through their chain of command to take care
of some of their financial situations and the issues were resolved with
the assistance of the chain of command.

o 	Example: Most of the other participants said they had a noncommissioned
officer log them onto the Internet to check on their bills, and this
helped them.

3.b. Used resources at home (family support center, family readiness
officer) (N=8)

o 	Example: There are many people on base that help spouses during the
deployment. The key volunteers group that meets once or twice a week is a
good resource for the families to use if they need assistance during the
deployment.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: On Air Force bases, there is an abundance of assistance for
servicemembers with financial problems. Information is provided through:
First Term Airman Center, Personal Financial Counseling, Air Force Aid
Society, Air Force Assistance Fund, First Sergeants, Finance, and the
Judge Advocate General. These are some of the resources available to
servicemembers for finance-related issues.

3.c. Other financial problems on homefront (N=5)

o 	Example: Sometimes a single servicemember will leave advance rent
checks for the landlord of the apartment and the landlord will deposit all
of the checks at once, which results in overdrafts for the servicemember.

o 	Example: There are many instances of spouses back home that spend all
of the additional income that the Marine is making during the deployment.
When the Marine returns, he or she will find all of their money gone and
nothing to show for it.

3.d. Waited until they got home (N=5)

o 	Example: Some participants said they just waited to handle the problems
until after they returned home if they do not have anyone to help them and
the situation had not been brought to the command's attention. They did
not want the command involved in their finances.

o 	Example: In instances where the servicemember's spouse spends all of
the money, the member normally is not able to do anything until he or she
returns from the deployment.

4. What kind of financial assistance does your service or the military
need to take care of financial problems when people are deployed?

4.a. Pre-deployment briefs (more information or briefs before deployment
notice received) (N=11)

o 	Example: More financial awareness training prior to the deployment
would have helped alleviate many problems that individuals experienced.
The current 2-minute brief is not enough.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: Even though the base legal office offers a will and power of
attorney class every Tuesday, some Marines are unable to attend. The
information in the classes needs to be incorporated into the predeployment
briefings.

4.b. Other kinds of financial assistance needed (N=9)

o 	Example: Small groups, such as married servicemembers with children or
single servicemembers, should be given specific attention or focus when
information on finances is distributed because the different groups have
different needs when it comes to finances.

o 	Example: The First Term Airmen Center should give out warnings to new
airmen about which lenders around base are good to work with and which
ones are not so good.

4.c. Sustained training (provided throughout career) (N=7)

o 	Example: Financial training should occur upfront and be proactive- not
be reactive, like it is now. Currently, classes are required only if the
soldier has written bad checks.

o 	Example: More overall financial education is needed. One soldier was
enlisted for 5 years before he got any formal financial management
training, and that was only because he got in trouble. Education is the
key in improving financial management.

4.d. Early training (boot camp, Advanced Individual Training) (N=6)

o 	Example: The military needs to provide more financial training in
basic/boot camp to include in-depth discussions of allotments, deductions,
and leave and earnings statements. One soldier said he did not know what a
leave and earnings statement was until he came to his unit.

o 	Example: Financial training courses should be incorporated into basic
training or technical school. By conducting this training early, DOD may
have an impact on initial purchase decisions made by servicemembers.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

5. What kinds of experiences have your fellow servicemembers or
subordinates had with predatory lenders?

5.a.Other issues regarding experiences with predatory lenders (N=13)

o 	Example: Business representatives will tell young Marines that they can
buy an item for a certain amount each month. They keep the Marine focused
on the low monthly payments and not on the interest rate or the term of
the loan.

o 	Example: Some Marines feel that a business would not take advantage of
them because they are in the military. This leads them to be more trusting
of the local businesses than they should be, which in turn, leads the
businesses to take advantage of them.

5.b. Predatory lender used - car dealers (N=11)

o 	Example: Most of the participants stated that the car dealerships
around the base were the worst predatory lenders because they charge high
interest rates and often provide cars that are "lemons." They said that
most of the sales people at the dealerships are former military who know
how to talk to servicemembers to obtain the members' trust. The
servicemember does not expect this.

o 	Example: One captain had a Marine in his unit who signed a contract
with a car dealer for a loan with 26 percent interest rate. The captain
took the Marine to the Marine Credit Union and got him a new loan with 9.5
percent interest rate.

5.c. Predatory lender used - payday lenders (N=10)

o 	Example: A master sergeant got caught in the check-cashing cycle. He
would write a check at one payday lender in order to cover a check written
at another lender during a previous week.

o 	Example: One participant told us that when he was a younger Marine he
got caught up with a payday lender. The problem did not resolve itself
until he deployed and was not able to go to the lender anymore.

5.d. Reason for using predatory lender - get fast cash and no hassle
(N=10)

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: People use payday lenders because they are quick and easy. All
the soldiers have to do is to provide their leave and earnings statement
and they get the money.

o 	Example: Most of the participants say they know people who have used a
payday lender, and those soldiers use them because they have bad credit
and can get quick cash.

5.e. Predatory lender targeting - close proximity and clustering around
bases (N=9)

o 	Example: It is almost impossible to be unaware of lenders and
dealerships because many are clustered in close proximity to the
installation. They also distribute flyers and use pervasive advertising in
local and installation papers.

o 	Example: The stores and car lots near the installation use signs that
say "E1 and up approved" or "all military approved" to get the attention
of the military servicemembers.

5.f. Command role when contacted by creditors (N=8)

o 	Example: The non-commissioned officers offer to go with the junior
enlisted to places like car dealers; but the young soldiers do not take
them up on these offers.

o 	Example: One participant said that debt collectors do call his house
and the command. He noted that one lender called him nine times in one day
and his Chief Petty Officer eventually asked the lender to stop harassing
his sailor.

5.g. Predatory lender targeting - advertising in installation/local
newspaper (N=7)

o 	Example: Soldiers are being targeted by predatory lenders in a variety
of ways; for example, flyers are left on parked cars at the barracks,
advertising is done at installation functions, and words such as
"military" are used on every piece of advertising to make the
servicemember believe that the company is part of or supported by the
military. The servicemember would normally trust lenders associated with
the military.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: Most predatory lenders have signs that say "military approved"
or have commercials that say the same thing or "E1 and above approved."

5.h. Reason for using predatory lender - urgent need (N=6)

o 	Example: Many soldiers use payday lenders because they are in a bind
for money and they know these lenders can provide quick cash.

o 	Example: Soldiers will use a payday lender because they need money for
a child, the kids, the house payment, etc. In many cases, it does not
matter why they need it; they just need it. So, they go where they can get
cash the fastest and the easiest way possible.

5.i. Predatory lender used - furniture/rent-to-own (N=6)

o 	Example: One of the participants stated that he had obtained a loan to
purchase a new washer and dryer. The loan had a 55 percent interest rate
and the appliances cost a lot more than they should have.

o 	Example: Rent-to-own businesses are widely used by soldiers. One
soldier paid $3,000 for an $800 washer and dryer set.

5.j. No problem with predatory lenders (N=5)

o 	Example: There have not been any problems with predatory lenders
lately. The state of Florida has been using legislation to shut them down.

o 	Example: The participants said that they had never encountered an
officer that had to use payday lenders or predatory lenders. Most of the
officers' problems come when they have a bitter divorce.

5.k. Reason for using predatory lender - other reasons (N=5)

o 	Example: One soldier stated that his credit was so bad that he had no
other option but to use high interest rate lenders. He stated that, "I
have bad credit and I will always get bad credit."

o 	Example: One participant said he has several friends that use payday
lenders because they are E1s or E2s and don't make much money.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

5.l. Predatory lender targeting - employing former military members (N=4)

o 	Example: The people running and working for the predatory businesses
are usually former military servicemembers. They will use their knowledge
of the system to take advantage of Marines.

o 	Example: Many times the predatory lenders are veterans, former Marines,
or retirees. The participant said that by using these types of people, it
gives the younger Marines a false sense of trust and then the lenders will
take advantage of the servicemember or "stab them in the back."

5.m. Reason for using predatory lender - command will not know financial
conditions (N=3)

o 	Example: When a soldier needs money, a payday loan can be used without
notifying the chain of command. Any of the Army forms of assistance
require a soldier to obtain approval from "a dozen people" before they can
get any money.

o 	Example: The most significant reason that people use payday lenders is
privacy. The spouses stated that if you try to obtain assistance through
the Air Force, you must use the chain of command to obtain approval. By
doing so, everyone in the unit will know your business.

6. What types of financial services have fellow servicemembers and/or
subordinates in your unit used?

6.a. Service relief/aid societies (N=13)

o 	Example: Servicemembers are often reluctant to approach Army Emergency
Relief Society because they have to complete too much paperwork. Some have
concerns that their superiors will find out that they used these services
and superiors may think this is a sign of weakness or failure on the part
of the servicemember.

o 	Example: One soldier stated that he used the Army Emergency Relief
Society because he did not have good credit and needed $1,400 as a
security deposit. He said they gave him a loan and that he is paying them
back at $60 per month.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

6.b. Other types of services used/aware of (N=13)

o 	Example: Assistance is available for Marines with financial problems.
For example, there is a Key Volunteers Network made up of enlisted and
officers' wives.

o 	Example: One of the sailors was having financial problems and did not
want the command to know, so he sought help from the Federal Credit Union.
The credit union was able to help with the $50,000 he had accumulated in
debt. They contacted the lenders for him and told them not to contact
anyone in the command about the problem. The debt was re-organized and
repayment began. All of this was accomplished without the help of the
Navy.

6.c. Community service center/family support center's personal financial
managers (N=13)

o 	Example: Some servicemembers who have problems have received help from
Army Community Services. Army Community Services does not provide money or
loans but does give some household items such as pots and pans and these
items do provide some help to those in financial trouble.

o 	Example: When supervisors recognize a subordinate is having financial
problems, most of them will refer the subordinate to the family support
center for counseling, budget planning, and basic personal finance skills
like balancing a checkbook.

6.d. DOD Financial Readiness Campaign/services' Internet resources (N=11)

o 	Example: None of the participants had heard of the Financial Readiness
Campaign.

o 	Example: Only one of the 11 participants was aware of the Financial
Readiness Campaign. The servicemember that did know about it said that the
information was difficult to sort through and may not be helpful to those
without a basic knowledge of finances.

6.e. Servicemembers Civil Relief Act (N=9)

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: One airman said that he used the Servicemembers Civil Relief
Act to reduce his total indebtedness during his deployment. In fact, after
returning from the deployment, the credit companies kept the interest
rates at 6 percent or less.

o 	Example: One of the participants talked about how he used the
Servicemembers Civil Relief Act to get out of a lease prior to deployment.

6.f. No services used or not aware that any service was used (N=7)

o 	Example: One participant said that there are financial services
available but because they are not very well advertised, many
servicemembers do not know about them.

o 	Example: The spouse stated she was not aware of any available
assistance programs because information about programs does not get
communicated well at the installation.

6.g. Legal office (N=6)

o 	Example: There is a legal office that can review purchase contracts
while the sailor is at home and a legal assistance attorney onboard ship
who can provide assistance.

o 	Example: Sometimes the family at home cannot take care of financial
issues, even if they have power of attorney. The best solution is to
obtain help from the on base legal office.

6.h. Command financial specialists (N=5)

o 	Example: Soldiers have used the command financial specialist within
their units to receive counseling, training, and information.

o 	Example: Most of the participants said that they had a command
financial specialist in their unit but did not use these individuals,
primarily because of a lack of trust. They said that if a servicemember
talked about financial problems with these people, it would end up through
the chain of command. If someone were to see a servicemember in the
command financial specialist's office, then they would know/assume the
servicemember had a financial problem.

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

7. Is there additional assistance that could be provided to servicemembers
or subordinates by the chain of command or DOD to improve the financial
condition of military families?

7.a. Additional financial management training at installation and
throughout career (N=13)

o 	Example: Some of the participants said the briefings provided to
soldiers during base "in processing" are too quick. They normally last
about 10 minutes and that is not enough time to discuss financial matters.

o 	Example: There should be financial management training points
throughout a sailor's career. For example, basic training, Advanced
Individual Training, reenlistment, and then annual recurring training.

7.b. Other additional assistance (N=12)

o 	Example: A soldier stated that the offices that provide finance
information are closed when the servicemembers get off work. Their hours
should be longer because the soldiers' unit will not allow them time off
to go to the finance centers just to browse and acquire general financial
information.

o 	Example: The military credit unions should be combined into one
institution. No more Marine, Navy, or Army Federal Credit Unions, just one
large credit union. This would lead to more lending power and better
interest rates.

7.c. More money (N=10)

o 	Example: All military members should get pay raises. The pay increase
should be significant and not just a few dollars every paycheck. People
are dying every day for their country, so they should get paid well.

o 	Example: Servicemembers, particularly in the junior enlisted ranks,
should be given more pay.

7.d. Improve timeliness/accuracy of Defense Finance and Accounting Service
(N=7)

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: Make the finance office provide more timely reimbursement for
vouchers. One soldier just got back from Iraq and said that currently, it
takes the Defense Finance and Accounting Service about 6 months to pay the
voucher.

o 	Example: The deployment actually messes up the servicemember's
paychecks. When starting the deployment, the addition of certain pay and
allowances and the subtraction of other allowances are never done quickly
and efficiently. Defense Finance and Accounting Service is always either
overpaying or underpaying the Marine. When they overpay, they take the
money back in one shot, not over a period of time.

7.e. Armed Forces Disciplinary Control Board/off-limits list (N=7)

o 	Example: When the Armed Forces Disciplinary Control Board does put a
business on the off-limits list, the word is not put out and it is never
enforced.

o 	Example: The Navy needs to blacklist places that practice predatory
lending. One participant, who is a legal officer in her unit, does provide
a list of places to avoid to her sailors when they check in even though
she is not allowed to do this. She does not understand why the Navy is
allowed to tell sailors not to go to a porn shop, but is not supposed to
tell them not to go to predatory lenders. The Navy needs some type of list
of businesses that have done questionable things. It does not necessarily
have to be an "off-limits" list.

7.f. Care packages (N=6)

o 	Example: It is common for spouses to send care packages to soldiers
during a deployment. The expense of shipping these packages is
significant. In addition, they generally include items for friends of
soldiers who do not have spouses or families sending items.

o 	Example: Care packages can be expensive for the family, especially when
they have to send equipment that is not supplied by the military.

7.g. Improve Internet access during deployment (N=5)

Appendix II Findings from GAO-led Focus Groups Held at 13 Installations

o 	Example: Navy should have better Internet access on the ships. They
could provide Internet access in the library. Right now the junior
enlisted have to ask officers to log them on.

o 	Example: The Navy needs to increase the number of computers on ships
and the access to the Internet. It is not beneficial to have
Internet-based resources if no one can access the Internet during a
deployment. Furthermore, when the sailors are at home station, the work
computers are used for work and not for personal use. Therefore, the
sailors still cannot access information on the Financial Readiness
Campaign.

Appendix III

Resources Available to Assist Servicemembers with Financial Issues

Several resources exist to assist servicemembers with financial issues.
These include military-sponsored PFM training, DOD's Financial Readiness
Campaign, individual service resources, such as command financial
specialists and personal financial managers, and resources outside of DOD
such as those provided through on- and off-installation banks and credit
unions.

  Financial Management Training

All four military services require PFM training for servicemembers, and
the timing and location of the training varies by service. The Army begins
this training at initial military, or basic, where soldiers receive 2
hours of PFM training. Training continues at Advanced Individual Training
schools, where soldiers receive an additional 2 hours of training and at
the soldiers' first duty station, where they are to receive an additional
8 hours of PFM training. In contrast, Navy personnel receive 16 hours of
PFM training during Advanced Individual Training. The Marine Corps and the
Air Force, on the other hand, begin training servicemembers on financial
issues at their first duty stations.

Events, such as deployment or a permanent change of station, can trigger
additional financial management training for servicemembers. The length of
this additional training and the topics covered can vary by installation
and command. Also, unit leadership may refer servicemembers for financial
management training or counseling if the unit command is made aware of an
individual's financial problems. For example, the Army requires refresher
financial training for personnel who have abused checkcashing privileges.

  DOD's Financial Readiness Campaign Resources

DOD's Financial Readiness Campaign, which was launched in May 2003,
supplements PFM programs offered by the individual services. The Under
Secretary of Defense for Personnel and Readiness stated that the
department initiated the campaign to improve the financial management
available to servicemembers and their families and to stimulate a culture
that values financial health and savings. The campaign allows
installationlevel providers of PFM programs to access national programs
and services developed by federal agencies and non-profit organizations.
The primary components of the campaign are the Web-based resources and
partnerships with federal agencies and non-profit organizations.

                                  Appendix III
                         Resources Available to Assist
                      Servicemembers with Financial Issues

    DOD's Web-based Resources

The primary tool of the Financial Readiness Campaign is a Web site1
designed to assist PFM program managers in developing installation-level
campaigns to meet the financial management needs of their local military
community. This Web site, which is also available to the public, contains
important documents for the campaign as well as links to partners' Web
sites. For example, the DOD Web site contains the original memorandum
announcing the start of the campaign, overall campaign objectives, as well
as the names of, agreements with, and links to the campaign's 27 partner
organizations. DOD's May 2004 assessment of the campaign2 noted, however,
that installation-level PFM staffs have made minimal use of the campaign's
Web site. DOD campaign officials stated that it was early in
implementation of campaign efforts and that they have been brainstorming
ideas to repackage information given to PFM program managers, as well as
servicemembers and their families. For example, officials are considering
distributing financial information to servicemembers and military families
at off-installation locations, as well as implementing "financial fairs"
and "road shows" at military communities to increase awareness and
encourage financial education.

    Partnerships with 27 Organizations

DOD has partnered with 27 organizations that have pledged to support DOD
in implementing its Financial Readiness Campaign. For example, the
Association of Military Banks of America is a not-for-profit association
of banks that operate (1) on military installations, (2) off military
installations but serving military customers, and (3) within military
banking facilities designated by the U.S. Treasury. That association is
supporting the Financial Readiness Campaign by encouraging member banks to
provide, participate in, and assist DOD with financial training events.
Another partner, the InCharge Institute of America, is producing a
quarterly periodical called Military Money. The periodical is aimed at
promoting financial awareness among the spouses of servicemembers.

1 See http://www.dodpfm.org.

2 Office of the Deputy Under Secretary of Defense (Military Community and
Family Policy), Initial Assessment and Follow-on Plan for the Department
of Defense Financial Readiness Campaign (May 27, 2004).

                                  Appendix III
                         Resources Available to Assist
                      Servicemembers with Financial Issues

Military Service 	Each military service has several resources available at
the installation level to assist servicemembers with financial issues.
These include

Resources	command financial specialists, the PFM program managers and
staff, legal services, and service relief/aid societies.

    Command Financial Specialists

Command financial specialists are senior enlisted personnel (usually E6
and above) who are trained by PFM program managers to assist
servicemembers at the unit level, by providing financial education and
counseling. These non-commissioned officers may perform the role of the
command financial specialist as a collateral duty in some units or as a
fulltime duty in others. The Navy, Marine Corps, and Army use command
financial specialists to provide unit assistance to servicemembers in
financial difficulties; the Air Force does not use command financial
specialists within the unit, but has the squadron First Sergeant provide
first-level counseling.

    PFM Program Managers and Staff

Individual servicemembers who require counseling beyond the capability of
the command financial specialists or First Sergeant in the Air Force can
see the installation's PFM program manager or PFM staff. The PFM program
manager is a professional staff member designated and trained to organize
and execute financial planning and counseling programs for the military
community. PFM program managers and staff offer individual financial
counseling as well as group classes on financial issues.

Army, Navy, and Marine Corps regulations state that each installation
should have a manager for PFM issues. The Air Force no longer designates
one staff member as the PFM program manager, but it uses "work life
consultants" in its family support centers to provide PFM training and
counseling. The DOD's November 2004 PFM instruction3 places certain
requirements on staff who provide PFM training and counseling. For
example, it states that the one staff member within a family support
center shall be designated and trained to organize and execute financial
planning and counseling programs for the military community. In addition,
that staff member must receive continuing education on PFM annually and
maintain professional certification.

3See DOD Instruction 1342.17, Personal Financial Management for Service
Members (Nov. 12, 2004).

                                  Appendix III
                         Resources Available to Assist
                      Servicemembers with Financial Issues

Legal Services	Individual installation legal offices also offer financial
services to servicemembers. For example, the legal assistance attorneys
may review purchase contracts for large items such as homes and cars. In
addition, the legal assistance attorneys offer classes on varying
financial issues including powers of attorney, wills, and divorces.

Service Relief/Aid Societies	Each service has a relief or aid society
designed to provide financial assistance to servicemembers. The Army
Emergency Relief, Navy-Marine Corps Relief Society, and the Air Force Aid
Society are all private, nonprofit organizations. These societies provide
counseling and education as well as financial relief through grants or
no-interest loans to eligible servicemembers experiencing emergencies.
Emergencies include funds needed to attend the funeral of a family member,
repair of a primary vehicle, or funds for food. For example, in 2003, the
Navy-Marine Corps Relief Society provided $26.6 million in interest-free
loans and $4.8 million in grants to servicemembers who needed the loans
for emergencies.

Resources Available	Servicemembers may utilize financial resources outside
of DOD, which are available to the general public. These can include banks
or credit unions

Outside of DOD	for competitive rates on home or automobile loans,
commercial Web sites for interest rate quotes on other consumer loans,
consumer counseling for debt restructuring, and financial planners for
advice on issues such as retirement planning.

Appendix IV

                     GAO Contact and Staff Acknowledgments

GAO Contact Jack E. Edwards (202) 512-8246

Acknowledgments	In addition to the individual named above, Leslie C.
Bharadwaja; Alissa H. Czyz; Marion A. Gatling; Gregg J. Justice, III;
David A. Mayfield; Brian D. Pegram; Terry L. Richardson; Minette D.
Richardson; and Allen D. Westheimer made key contributions to this report.

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E-mail: [email protected] Programs Automated answering system: (800)
424-5454 or (202) 512-7470

Congressional	Gloria Jarmon, Managing Director, [email protected] (202)
512-4400 U.S. Government Accountability Office, 441 G Street NW, Room 7125

Relations Washington, D.C. 20548

Public Affairs	Paul Anderson, Managing Director, [email protected] (202)
512-4800 U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
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