San Diego Military Advisory Council (SDMAC) Positon Paper on the Report of the Military Compensation and Retirement Modernization Commission

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1 San Diego Military Advisory Council (SDMAC) Positon Paper on the Report of the Military Compensation and Retirement Modernization Commission Background: The National Defense Authorization Act of FY2013 established and tasked the Commission to provide to the President of the United States and Congress specific recommendations to modernize pay and benefits of the Uniformed Services. The Commission consisted of nine members, with a Chair appointed by the President and two commission members each appointed by the majority and minority leaders of House and Senate. The Commission has three basic mandates: Ensure long-term viability of the all-volunteer force Enable the quality of life for members of the Armed Forces and their families. Modernize and achieve fiscal sustainability for the compensation and retirement systems of the Armed Forces. The Commission issued its report on 29 January 2015 with findings and 15 recommendations. The report is under review by the Services and the Department of Defense (DOD). The White House recently released a statement that the President will report on his priorities for implementing the recommendation by 30 April Summary The Commission s recommendations, if implemented, would have minimal impact on the Military Economic Impact to the San Diego region, but could have an impact on the quality of life of the approximately 110,000 active duty and reservists stationed in the San Diego region. This could potentially require them to pay increased out of pocket expenses in this high cost of living area for benefits to the member and their family that are today no cost to the service member. It should be noted, however, that if and when these recommendations are implemented, current active duty, reservists, and retirees Page 1 of 7

2 will be grandfathered and they will only affect those entering the service after implementation. SDMAC supports the Commission s effort to address the changing demographics and cultural influences of the all-volunteer force which was established 42 years ago. SDMAC firmly believes that a strong, capable military is essential to the security of the nation to respond not only to today s threats but also to any projected threats in the future. SDMAC believes that the nation will not revert back to conscription, but will rely on an all-volunteer Military Force construct for the future security of the nation. A strong capable all volunteer military force requires the ability to recruit and retain quality personnel. This necessitates a health benefit and retirement system that enables recruitment and retention. Historical data demonstrates that when compensation is perceived as less than adequate, recruitment and retention is negatively affected. SDMAC believes that to compare or try to model military health benefits and retirement after the private sector is a mistake because of the difference in the environments and the demands placed on members of the military and their families. SDMAC strongly cautions our elected officials and DOD leadership against using the recommendations in the Commission Report as a vehicle to implement cost cutting measures in the federal budget at the expense of fair and equitable treatment of the military men and women and their families who serve so selflessly in the defense of our country. SDMAC Position on the 15 Specific Recommendations: PAY AND RETIREMENT 1. Help more service members save for retirement earlier in their careers, leverage the retention power of traditional uniformed services retirement, and give the Services greater flexibility to retain quality people in demanding career fields by implementing a modernized retirement system. SDMAC supports the testimony and analysis of DOD officials and senior military to Congress over the years: that the current 20 year retirement program is affordable and sustainable. SDMAC also supports the initiative of providing some degree of retirement credits to those who serve less than 20 years and suggests Page 2 of 7

3 that a benchmark to start retirement credit computations should be for those who continue after their second enlistment or after the 8 year mark of service. If the Commission s recommendations on the revised retirement program are considered (SDMAC strongly opposes this ), SDMAC believes there needs to be more detailed analysis on the recommendation of a blended retirement system, service member s contributions to a Thrift Savings Plan (TSP), and the impact of these contributions in high cost of living areas. The detailed analysis should use more realistic discount rates and returns on investment (ROI), from defined contribution plans based on historical averages. The analysis should be conducted over the lifetime of the service member. If the Commission s recommendations on the revised retirement program are considered (SDMAC strongly opposes this), SDMAC believes there needs to be consideration for service members in high cost of living areas not participating in a defined contribution plan and there needs to be further clarification and analysis on active component (AC) service members choice of receiving their retirement annuity and how it affects their social security. 2. Provide more options for service members to protect their pay for their survivors SDMAC is concerned that this recommendation would require service members to pay more out of pocket for the same benefit that is now provided and it would be another financial challenge in a high cost of living area such as the San Diego region. This could adversely affect surviving spouses and reduce or eliminate compensation for their service members honorable service to their country, placing additional financial hardships on those who make significant sacrifices as military spouses to support their country. SDMAC recommends ensuring that the provisions of the Veterans Benefits Act of 2003 which eliminated the SBP-DIC offset for surviving spouses who remarry after attaining the age of 57 is repealed regardless of whether the Commission s recommendation is accepted or not. 3. Provide more options for Service members to protect their pay for their survivors by offering new Survivor Benefit Plan coverage without Dependency and Indemnity Compensation offset. SDMAC supports providing service members and their spouse s financial education as a basic tenant of the service members training program for duration of service. Page 3 of 7

4 4. Increase efficiency within the Reserve Component by consolidating 30 Reserve Component duty statuses into six broader statuses. SDMAC generally support this recommendation as long as all benefits earned by reserve component members are adequately addressed. HEALTH BENEFITS 5. Ensure service members receive the best possible combat casualty care by creating a joint readiness command, new standards for essential medical capabilities, and innovative tools to attract readiness-related medical cases to military hospitals SDMAC supports this recommendation as long as it provides standardization in patient care and treatment and achieves efficiencies resulting in quality and timely patient care. The Joint Readiness Command needs to be given the authority and resources to meet the objectives of the recommendation. SDMAC has some reservations in that historically adding a level of bureaucracy tends to increase complexity, cost, and time. The San Diego region military medicine is the best in the nation and routinely receives praise by all active duty, reserve, and retired personnel who use the system. SDMAC does not want this recommendation to adversely affect this very positive benefit for those receiving superb care in the San Diego region. 6. Increase access, choice, and value of health care for active-duty family members, reserve component members, and retirees by allowing beneficiaries to choose from a selection of commercial insurance plans offered through a Department of Defense health benefit program. SDMAC is opposed to eliminating TRICARE and that recommendations need further evaluation. Fixing or improving the array of TRICARE Prime programs (prime, senior, remote, reserve) should be strongly considered. The inherent weakness of all Prime programs is specialty, availability, and network adequacy. Discontinuing TRICARE in favor of the private sector with a Basic Allowance for Healthcare, (BAHC), does not automatically address or solve this problem. Health care benefits for service members and dependents, reserve and retirees are critical to recruitment and retention. Current recommendations could require active duty, reserve and retirees to pay more out of pocket for comparable health care to today s system. In the high cost of living area like the San Diego region this could have an adverse effect on quality of life. Elimination of TRICARE Page 4 of 7

5 without an adequately defined and evaluated alternative is of concern in this high cost of living area. 7. Improve support for service members dependents with special needs by aligning services offered under the Extended Care Health Option to those of state Medicaid waiver programs. SDMAC strongly supports this recommendation. It s a Quality of Life and Readiness issue and varies from state to state. This recommendation address and provides funding and standardization for military families facing this challenge. 8. Improve collaboration between the Departments of Defense and Veterans Affairs by enforcing coordination on electronic medical records, a uniform formulary for transitioning service members, common services, and reimbursements. SDMAC strongly supports this recommendation and hopes it is enacted with legislation and enforcement and verification. It will help solve challenges that retirees and transitioning veterans face today. QUALITY OF LIFE PROGRAMS 9. Protect both access to and savings at DOD commissaries and exchanges by consolidating these activities into a single defense resale organization. SDMAC recommends further analysis of this recommendation. Specifically what it will mean to the active duty, reserve, guard and retired in the San Diego region. Currently the region s Commissaries and Exchanges have heavy usage and provide cost savings to those that use them. The exchanges provide dollars to MWR/MCCS activities that benefit Active Duty, Reserve, Guard and retirees in the area. Historically, consolidations have not led to the projected cost savings and efficiencies and could lead to availability access challenges to those in the San Diego region. 10. Improve access to child care on military installations by ensuring the Department of Defense has the information and budgeting tools to provide child care within 90 days of need. Page 5 of 7

6 SDMAC supports this recommendation as it benefits the military members and their families in providing adequate and safe child care. This is important in the high cost of living area of the San Diego region where frequently both parents work to meet financial needs. SDMAC recommends that additional consideration be given to provide safe and adequate child care and reduced waiting times within reasonable distances of service member s residence. 11. Safeguard education benefits for service members by reducing redundancy and ensuring the fiscal sustainability of education programs. SDMAC generally supports this recommendation as it provides needed education benefits to service members, veterans, and dependents but believes that the end to housing stipends and unemployment compensation should be further evaluated as it could have an adverse effect on active duty military veterans and dependents in the cost of education benefits in the high cost of living area of the San Diego region. 12. Better prepare service members for transition to civilian life by expanding education and granting states more flexibility to administer the Jobs for Veterans State Grants program. SDMAC strongly supports this recommendation. Veteran transition in the San Diego region is a challenge with most transitioning veterans ill prepared for the transition. There are many organization and groups in the San Diego region whose purpose is to assist veterans in transition. This recommendation will provide needed training and assistance to the service member prior to transition to better prepare the service member. SDMAC recommends the training be offered more than one time in a service member s career. SDMAC hopes the coordination between the military, the VA, Department of Labor at the Federal and State level will occur to help the transitioning veteran. In San Diego a project aimed at improving the process for transitioning service members called Zero 8 Hundred is off to a promising start, and if successful could be used as a model in all areas where there is a large concentration of military bases and facilities. Page 6 of 7

7 13. Ensure service members receive financial assistance to cover nutritional needs by providing them cost-effective supplemental benefits. SDMAC supports this recommendation as it will enhance the wellness of military members and their families. SDMAC would encourage further actions in this area after data collection and analysis. 14. Expand Space-Available travel to more dependents of service members by allowing travel by dependents of Service members deployed for 30 days or more. SDMAC supports this recommendation to help service members and dependents deal with extended deployments. 15. Measure how the challenges of military life affect children s school work by implementing a national military dependent student identifier. SDMAC strongly supports this recommendation and has worked in the past to provide equity in California and region schools for the children of service members who move into and out of the state into and out of various schools systems due to military member s orders and change of duty stations. This recommendation will help baseline military dependent s in school systems throughout the country and help ensure equity in grade levels and academic levels. In California there have been several attempts to pass legislation which would allow dependent children of active duty military in California schools to be specifically identified. For CY year, SDMAC is supporting (SB 369) that would establish the identifier in the state database for schoolchildren. Page 7 of 7