To minimize financial burdens on servicemembers, DOD has requested  and Congress has increased cash compensation for active duty military  personnel. Additionally, some financial products marketed to servicemembers may  negatively affect their financial condition. Data Suggest Financial Conditions of Deployed Servicemembers and Their Families Similar to Nondeployed Servicemembers and Their Families

In a 2003 DOD-wide survey, servicemembers who were deployed for at  least 30 days reported similar levels of financial health or problems as  those who had not deployed. For example, an analysis of the responses for  only junior enlisted personnel showed that 3 percent of the deployed  group and 2 percent of the nondeployed group indicated that they were in  “over their heads” financially; and 13 percent of the deployed group and 15  percent of the nondeployed group responded that they found it “tough to  make ends meet but keeping your head above water” financially. Figure 1  shows estimates of financial conditions for all servicemembers based on  their responses to this survey. Deployed Servicemembers Faced Problems Receiving Family Separation Allowance and Communicating with Creditors

Deployed servicemembers experienced problems receiving their family’s  separation allowance promptly and communicating with creditors and  families. Regarding family separation allowance, DOD pay data for  January 2005 showed that almost 6,000 of 71,000 deployed  servicemembers who have dependents did not receive their family  separation allowance in a timely manner. Servicemembers may also experience financial difficulties as a result of  communication constraints while deployed. DOD Has Taken Steps to Assist Servicemembers with Financial Concerns, but Some Assistance Is Underutilized

DOD has taken a number of steps to assist servicemembers with their  financial concerns, including providing military-sponsored PFM training,  establishing a Financial Readiness Campaign, providing command  financial specialists, and using Armed Forces Disciplinary Control Boards. 2). Services Require Financial Management Training

All four military services require PFM training for servicemembers, and  the timing and location of the training varies by service. Free Legal Assistance Offered, but Servicemembers Do Not Make Full Use of This Assistance

DOD provides free legal assistance on contracts and other financial  documents at installations, but servicemembers do not make full use this  assistance. They stated that junior enlisted servicemembers who want  their purchases or loans immediately may not take the time to visit the  attorney’s office for such a review. Additionally, the legal assistance  attorneys noted that some servicemembers feared information about their  financial problems would get back to the command and limit their career  progression. Service Relief/Aid Societies Provide Financial Assistance

Each service has a relief or aid society designed to provide financial  assistance to servicemembers. These societies provide counseling and education  as well as financial relief through grants or no-interest loans to eligible  servicemembers experiencing emergencies. Some servicemembers in our focus groups stated that they would not use  grants or no-interest loans from a service society because they take too  long, are intrusive because the financial institution or relief/aid society  requires in-depth financial information in the loan or grant application, or  could be career limiting if the command found out the servicemembers  were having financial problems. Non-DOD Resources May Be Used When Sevicemembers Need Additional Financial Support or Confidentiality

Servicemembers may choose to use non-DOD resources if they do not  want the command to be aware of their financial conditions or they need  financial products or support not offered through DOD, the services, or  the installation. DOD Lacks Oversight Framework for Assessing and Monitoring PFM Program Effectiveness

Although DOD has made resources available to assist servicemembers, it  lacks the results-oriented, departmentwide data needed to assess the  effectiveness of its PFM programs and provide necessary oversight. Without an  oversight framework requiring common evaluation DOD-wide and  reporting relationships among DOD and the services, DOD and Congress  do not have the visibility or oversight they need to assess the effectiveness  of DOD’s financial management training and assistance to  servicemembers. Concluding Observations

In summary, as mentioned earlier in my testimony, Congress and DOD  have taken steps to decrease the likelihood that deployed and  nondeployed servicemembers will experience financial problems.
Why GAO Did This Study

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 conflicts in Iraq and Afghanistan. Adverse effects that may result when servicemembers experience financial problems include loss of security clearances, criminal or nonjudicial sanctions, adverse personnel actions, or adverse impacts on unit readiness. To decrease the likelihood that servicemembers will experience financial problems, 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. The military has also developed personal financial management (PFM) programs to help avoid or mitigate adverse effects associated with personal financial problems. However, studies published in 2002 showed that servicemembers continue to report financial problems. This testimony provides a summary of GAO's prior work examining (1) the extent to which deployments have affected the financial conditions of active duty servicemembers and their families, and (2) steps that DOD has taken to assist servicemembers with their financial needs.

What GAO Found

DOD data suggests that deployment status does not affect the financial condition of active duty servicemembers, although some deployed servicemembers faced certain problems. Data from a 2003 DOD-wide survey suggests that servicemembers who were deployed for at least 30 days reported similar levels of financial health or problems as those who had not deployed. For example, of junior enlisted personnel, 3 percent of the deployed group and 2 percent of the nondeployed group indicated that they were in "over their heads" financially; and 13 percent of the deployed group and 15 percent of the nondeployed group responded that they found it "tough to make ends meet but keeping your head above water" financially. However, problems receiving family separation allowance and communicating with creditors may result in financial difficulties for some deployed servicemembers. Based on DOD pay data for January 2005, almost 6,000 of 71,000 deployed servicemembers who had dependents did not obtain their family separation allowance in a timely manner. Furthermore, 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. Additionally, some financial products marketed to servicemembers may negatively affect their financial condition. DOD has taken a number of steps to assist servicemembers with their financial needs, although some of this assistance has been underutilized. These steps include PFM training for servicemembers, which is required by all four military services. DOD also provides free legal assistance on purchase contracts for large items and other financial documents. However, according to the attorneys and other personnel, servicemembers do not make full use of available legal services because they may not take the time to visit the attorney's office or they fear information about a financial problem would get back to the command and limit their career progression. In addition, each service has a relief or aid society designed to provide financial assistance through counseling and education as well as financial relief through grants or no-interest loans. Some servicemembers in our focus groups stated that they would not use relief from a service society because they take too long, are intrusive, require too much in-depth financial information, or may be career limiting if the command found out. Servicemembers may use non-DOD resources if they do not want the command to be aware of their financial conditions or they need products or support not offered through DOD, the services, or the installation. Although DOD has taken these steps to assist servicemembers with their financial needs, it does not have the results-oriented departmentwide data needed to assess the effectiveness of its PFM programs and provide necessary oversight. Without an oversight framework requiring evaluation and a reporting relationship between DOD and the services, DOD and Congress do not have the visibility or oversight needed to assess the effectiveness of DOD's financial management training and assistance to servicemembers.