MILITARY PAY INCREASES The CHAIRMAN. Do you have any further questions? If you will The CHAIRMAN. If you gentlemen will all excuse me now. run on for about 15 minutes more and then adjourn until 2:30, if that is agreeable. Senator BYRD (presiding). Mr. Secretary, continuing questioning you on manpower and costs, as I understand the information on page 25, from between January 1964 and January 1972, there have been 10 salary increases for the military, is that not correct? Mr. KELLEY. Yes, that is correct. Senator BYRD. During that 8-year period there were 10 increases. Mr. KELLEY. Excuse me. Did you say for the military or for the civilians? Senator BYRD. I said for the military. Is that right? Mr. KELLEY. These are civilian at the top of page 25. Senator BYRD. Where is the military? Mr. KELLEY. I do not know if General Benade happens to have with him a schedule of the military increases that occurred during that same period of time, but there was, as my statement notes, a 13-year period until 19 Senator BYRD. I am aware of that but I would like to get a table comparable to this table. Mr. KELLEY. Right. Senator BYRD. In other words, I would like to start with January of 1964. Mr. KELLEY. We will see if we have it here, Senator Byrd. Senator BYRD. Fine. General BENADE. Do you want me to read from it? Senator BYRD. Let me take a look at it and then I will put it in the record. It would appear to me from—if I am reading it correctly, that there have been 10 increases in that 8-year period. General BENADE. Yes, sir. That would be about right. Senator BYRD. We will put this in the record-I want it comparable, so I will not put the entire table in-you go back to 45 here, but I would like to start in January of 1964 to make it comparable to the figures that you previously submitted. General BENADE. My recollection is that here was a military pay increase in 1963. There was one-2.3 percent-in 1964. There has been an annual increase since 1965, two increases in 1971, and that would add up to 10 increases. Senator BYRD. There were two increases in 1971. What about 1970? General BENADE. There was an increase in 1970. Senator BYRD. There was one increase in 1970 and two in 1971, so there were three increases in 2 years. General BENADE. Yes, sir. The second increase in 1971 as you will recall, Senator, was an integral part of the Draft Extension Act and became effective on November 14 so far as the pay portion. Senator BYRD. Thank you. (The table follows:) TABLE 5.-DEPARTMENT OF DEFENSE PAY INCREASES AND PAY AND PRICE INDEXES SINCE 1963 1 Noncompensation component of the deflator for Federal purchases of goods and services. 2 55 percent for personnel with less than 2 years of service, and 2 percent for those with over 2 years. 3 Reflects Jan. 1, 1972, pay raise and assumes slightly smaller pay raise Jan. 1, 1973, plus enactment of proposed volunteer-related pay legislation effective July 1, 1972. NOTE: Military basic pay and civilian salaries are not comparable. A 4 percent increase in basic pay is approximately equivalent to a 3 percent salary increase. Source: 1949-71, Department of Commerce. Fiscal year 1972 and fiscal year 1973, estimated (3.7 percent increase for fiscal year 1972 and 2.8 percent increase for fiscal year 1973). Senator BYRD. What is the second column on page 25? Mr. KELLEY. The second column on page 25 shows the Wage Board employees in the civilian sector as distinguished from the General Schedule, Wage Board being essentially blue collar and General Schedule being white collar. Senator BYRD. On that same page you say military members are eligible to retire with a substantial annuity after 20 years of service. Would you submit for the record-and send a copy to my office, what the annuity would be under the new schedules for-we will take a general, take a colonel, a lieutenant colonel, and so forth. Mr. KELLEY. I assume you would like to have some enlisted grades, too. Senator BYRD. And also some enlisted grades, yes. (The information follows:) SELECTED EXAMPLES OF MILITARY RETIRED PAY ANNUITIES 1 Nondisability retirements based on Jan. 1, 1972 basic pay rates. 2 Total lifetime retired pay for persons retiring on or after Jan. 1, 1972, based on the 1937 standard annuity table with entry age 23 for officers and 19 for enlisted-nondisability retirements. 3 More than 4 years service as an enlisted man. NEED FOR REENLISTMENT BONUS Senator BYRD. Since there have been these substantial changes in salaries, has there been a review as to the necessity for a reenlistment bonus? Mr. KELLEY. Yes, sir. The Second Quadrennial Review, which was reported in January of this year, includes a review of the effectiveness of a variety of special pays including the reenlistment bonus. If I may make a general comment about the reenlistment bonus, we find that to be cost-ineffective. Senator BYRD. Explain what you mean by cost-ineffective. Mr. KELLEY. Well, simply that the amount of money spent in bonus does not have a good payoff in terms of the number of people retained for the money invested. Senator BYRD. Do you plan to eliminate the reenlistment bonus? Mr. KELLEY. The final recommendations based on the Quadrennial Review study will require further discussion within DOD and the executive branch. We will be making final recommendations after that review has taken place. On the basis of our Quadrenniel Review study which was supervised by General Benade and which I have carefully gone over, I believe that there should be changes made in the area of reenlistment and variable reenlistment bonus. I think we should pay a bonus to those people who are in short supply and whom we need and might lose but for the paying of a bonus. I do not think we should pay a bonus to everyone who reenlists. Senator BYRD. And you found on the basis of your Quadrennial study, you found it to be cost-ineffective? Mr. KELLEY. Yes, sir. We are spending, if my memory serves me, almost $200 million a year in the standard or straight reenlistment bonus. We are spending an additional amount of money for the variable reenlistment bonus. I think in this area our annual expenditures are slightly over a half billion dollars in reenlistment and variable reenlistment bonuses and proficiency pay. Senator BYRD. Which is over and above, of course, the normal pay scale. Mr. KELLEY. Yes, sir. And there is evidence that the variable reenlistment bonus, which is varied according to the criticality of the supply problem and the availability of people, has proved to be a costeffective way of maintaining force stability in the specialized categories where you are facing a critical shortage. But paying a reenlistment bonus to everyone who reenlists is a terribly expensive way of running the system. Senator BYRD. I am glad that you are reexamining it because it seems to me, in the light of the very substantial changes that have been made in the military pay in recent years, that that should be reexamined. Mr. KELLEY. That is precisely why it should be, Senator. Perhaps there was some justification for paying a reenlistment bonus to people who were otherwise underpaid, but when your pay scales are competitive there remains no justification for paying a reenlistment bonus to people who are not in short supply. RETIREMENT SCHEDULES Senator BYRD. As a result of the changes that have been made in military pay, are you also reexamining the retirement schedules? Mr. KELLEY. Yes, sir. We have done this through the Interagency Committee study and the recommendations of the Interagency Committee study are being further examined by a special DOD study group which I am chairing. And those further studies will be completed about the end of March. Senator BYRD. The next question I ask, would you submit for the record, the retirement cost years beginning 1960 through your estimates for 1973. Your estimate as I recollect, is $4 billion, is it, for 1973? Mr. KELLEY. $4.9 billion, which includes $300 million recommended by the President for reform of military retirement pay. Senator BYRD. It is not $4 billion but $5 billion. $4.9 billion. Senator BYRD. Thank you. And if you would supply the other years for the record. Mr. KELLEY. Yes, sir. (The information follows:) 1 As of the end of the fiscal year, based on pay rates in effect on that date for fiscal years prior to Note 1: None of the above figures make any allowance for increases in basic pay rates or for in- Note 2: No reduction in accruing or accrued costs has been made for nonpayment of retired pay by reason of VA waiver, dual compensation laws, etc. Accrual costs are calculated at 31⁄2 percent Note 3: Figures are unavailable for fiscal years 1960, 1961 and 1962. |