Military Personnel: DOD Comments on GAO's Report on More DOD
Actions Needed to Address Servicemembers' Personal Financial
Management Issues (11-MAY-05, GAO-05-638R).
In response to a Congressional request, we issued a report in
April 2005 on the Department of Defense's (DOD) efforts to
address personal financial management (PFM) issues encountered by
its servicemembers and their families. In that report, we made
recommendations to the Secretary of Defense to enhance
servicemembers' financial conditions and the effectiveness of
DOD's PFM programs and training. On March 17, 2005, we provided a
draft of that report to DOD for review and comment. DOD did not
provide comments in time to incorporate them in the final GAO
report that went to printing on April 22, 2005. To present DOD's
comments and provide our perspective on them, this report briefly
summarizes our April 2005 report's objectives, results, and
recommendations, along with DOD's comments and our evaluation of
the comments. We answered three questions in our April 2005
report: (1) To what extent does deployment impact the financial
conditions 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?
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-638R
ACCNO: A24019
TITLE: Military Personnel: DOD Comments on GAO's Report on More
DOD Actions Needed to Address Servicemembers' Personal Financial
Management Issues
DATE: 05/11/2005
SUBJECT: Employee training
Evaluation criteria
Financial management
Internal controls
Military dependents
Military pay
Military personnel
Program evaluation
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GAO-05-638R
A
United States Government Accountability Office Washington, D.C. 20548
May 11, 2005
The Honorable Richard J. Durbin United States Senate
Subject: Military Personnel: DOD Comments on GAO's Report on More DOD
Actions Needed to Address Servicemembers' Personal Financial Management
Issues
Dear Senator Durbin:
In response to your request, we issued a report in April 2005 on the
Department of Defense's (DOD) efforts to address personal financial
management (PFM) issues encountered by its servicemembers and their
families.1 In that report, we made recommendations to the Secretary of
Defense to enhance servicemembers' financial conditions and the
effectiveness of DOD's PFM programs and training. On March 17, 2005, we
provided a draft of that report to DOD for review and comment. DOD did not
provide comments in time to incorporate them in the final GAO report that
went to printing on April 22, 2005. To present DOD's comments and provide
our perspective on them, this report briefly summarizes our April 2005
report's objectives, results, and recommendations, along with DOD's
comments and our evaluation of the comments. DOD's comments, which were
provided by the Under Secretary of Defense for Personnel and Readiness,
are included as an enclosure to this report.
Summary of Objectives, Results, and Recommendations
We answered three questions in our April 2005 report: (1) To what extent
does deployment impact the financial conditions 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?
1 See GAO, Military Personnel: More DOD Actions Needed to Address
Servicemembers' Personal Financial Management Issues, GAO-05-348
(Washington, D.C.: Apr. 26, 2005).
We found that 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 DOD-wide 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 report2-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 for 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.
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
negative consequences, such as bad credit ratings for these servicemembers
and decreased morale and readiness for the servicemembers' units.
We also found that DOD lacks an oversight framework-one with
resultsoriented performance measures and reporting requirements-for
evaluating the effectiveness of PFM programs across the services. Although
DOD's 2002 human capital strategic plan stated that a standardized
evaluation system for PFM programs is a desired goal, 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,
2 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.
did not address outcome measures or contain a requirement that the
services report program results to DOD. When asked why the evaluation and
reporting requirements had been dropped, DOD officials indicated that the
services objected to these additional 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 by service regulations. While each of the services implements PFM
training differently to take into account service-specific constraints,
all of the services have policies requiring that PFM training be provided
to junior enlisted servicemembers. The extent to which the PFM training is
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
at most of the Army installations we visited acknowledged the need for PFM
training but noted that current deployment schedules limit the time
available to prepare soldiers for their warfighting mission. Toplevel 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.
To address issues related to servicemembers' financial management, we
recommended in our April 2005 report 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,3 such as clarifying and simplifying procedures and forms implementing
family separation allowance entitlements or having DOD and the operational
components of the services to work together to ensure the family
separation allowance entitlement eligibility form is
3 See GAO-04-911.
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 and Our Evaluation
DOD's comments on a draft of our April 2005 report are summarized below
and reproduced in the enclosure. Regarding our four recommendations, DOD
concurred with one and partially concurred with the remaining three.
DOD concurred with our recommendation to 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.
DOD partially concurred with our recommendation to identify and implement,
with the services, steps (such as increasing Internet access and providing
toll-free telephone access) to allow deployed servicemembers better
communications with creditors. DOD stated that servicemembers are to
establish extended absence plans for their personal finances to ensure
that their obligations are covered. It also noted that the Servicemembers
Civil Relief Act was established to allow servicemembers in training and
on a deployment, the opportunity to set aside certain personal financial
concerns and focus on the mission at hand. It further noted that, in all
situations, additional capability to communicate, particularly with
creditors, may not be appropriate due to operational requirements and that
deployed units maintain a rear echelon to assist servicemembers in working
out unforeseen financial issues that may arise
during deployment. We agree that operational constraints need to be
considered in any effort to enhance servicemembers' abilities to
communicate with creditors and that servicemembers should be responsible
for maintaining their financial affairs by developing extended absence
plans and using appropriate laws. Those points notwithstanding, we
reported that some servicemembers nevertheless encountered financial
problems because of emergencies and possibly lack of planning.
Additionally, we recognize that the rear echelon may be able to provide
assistance when such emergencies arise, but we also noted in our report
that some servicemembers are reluctant to let their chain of command know
of their financial troubles and therefore may not use militaryprovided
support for private matters, such as financial problems. Our
recommendation seeks a way to proactively address financial issues before
the issues resulted in the negative consequences for servicemembers and we
continue to believe it should be implemented by DOD.
DOD also partially concurred with our recommendation to develop and
implement, with the services, a DOD-wide oversight framework with a
results-oriented evaluation plan for PFM programs and to formalize DOD's
oversight role by including evaluation and reporting requirements in the
PFM instruction. DOD noted that the department is pursuing management
information that includes personal finance and has developed an
information model that supports mission accomplishment and includes
monitoring force management risk. It further stated that personal finance
is seen as an important part of this model and that a key aspect of
assessing personal finances will be the policies established in the
November 2004 DOD Instruction 1342.17, Personal Financial Management
Programs for Servicemembers. We agree with DOD's response that personal
finance is an important part of any information model to support mission
accomplishment. However, as we stated in our report, the current DOD PFM
instruction does not contain program evaluation requirements or reports
that the services should routinely provide to DOD for its PFM oversight
role. The total absence of evaluative and reporting requirements in the
PFM instruction is particularly notable given that DOD acknowledged the
importance of the requirements in two earlier documents: (1) the 2002
human capital strategic plan, which stated that a standardized evaluation
system for PFM programs is a desirable goal, and (2) an earlier draft of
the instruction that contained evaluative and reporting requirements.
Moreover, DOD did not provide us with documentation for how the
information model would be used to address deficiencies in the current PFM
instruction. We continue to believe, as we have recommended, that this
instruction should make explicit DOD's
requirements for (1) results-oriented evaluation of the PFM programs and
(2) the services to provide reports to DOD on their PFM programs.
Additionally, DOD partially concurred with our recommendation to require
the services to develop and implement a tactical plan with time-based
milestones to show how the appropriate service policy office will monitor
whether servicemembers receive required financial management training. DOD
noted that it had established sufficient procedures within its November
2004 PFM instruction to allow the military departments flexibility in
their approach to having servicemembers "demonstrate a basic
understanding" of important personal financial topics. We agree that the
services may need some flexibility in the delivery of required PFM
training. However, DOD's response does not address the services' lack of
monitoring to determine whether required PFM training is actually received
by the servicemembers. While DOD notes that the military services are
delegated responsibility for achieving the requirements listed in the
November 2004 instruction and that the services are responsible for
monitoring fulfillment of the policy, we still believe, as we have
recommended, that a service-level tactical plan with time-based milestones
is needed to show how the appropriate service policy office will ensure
that junior enlisted servicemembers receive required PFM training. DOD
also stated that it would continue to monitor the behavior of
servicemembers as the outcome of the training and evaluation accomplished
by the services. At this point, DOD and the services do not monitor
training completion- an output. Therefore, it will be impossible to
determine whether the desired outcome of training-improved financial
behavior-is being achieved.
We continue to believe that our recommendations have merit and will
strengthen the department's oversight and the effectiveness of the PFM
programs and training; consequently, we are not revising them. DOD also
provided two technical comments on our draft report. We corrected one
before receiving the DOD comments, and the other was an editorial change
we did not believe was needed.
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) 512-8246 ([email protected]). Other key contributors to this report
were Marion A. Gatling, David A. Mayfield, and Terry L. Richardson.
Sincerely yours,
Derek B. Stewart Director, Defense Capabilities and Management
Enclosure
Enclosure I
Comments from the Department of Defense
Enclosure I
Comments from the Department of Defense
3
Enclosure I
Comments from the Department of Defense
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