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. 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. Despite this subsequent change,  Air Force servicemembers in our June 2004 focus group noted that they  had not received the family separation allowance during their deployments. However, an earlier draft of the instruction included these  requirements. The DOD officials  told us that the services did not want the additional reporting requirements. 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. 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. 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. 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. 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. Therefore,  units whose servicemembers do not receive required PFM training risk  jeopardizing their ability to meet mission requirements. 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. 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. 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. 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 Act 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. 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. 2.a. Military Pay: Army Reserve Soldiers Mobilized to Active Duty  Experienced Significant Pay Problems.
Why GAO Did This Study

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.

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 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 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.