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ARLINGTON, Va. — Should the Defense Department take the money it spends on benefits and offer it as cash for servicemembers to spend as they see fit?

That is one of the questions the Defense Department’s advisory committee on military compensation tackled during its third public meeting Wednesday.

Defense Secretary Donald Rumsfeld chartered the committee in early spring, directing its members to come up with recommendations for improving the Pentagon’s military compensation system in a report due in April 2006.

The compensation committee spent its Wednesday meeting discussing options on five specific categories: special and incentive pays; retirement pay, including pensions and medical benefits; Guard and Reserve compensation; medical benefits for serving forces; and family issues, such as housing and spouse employment opportunities.

The notion of offering cash instead of benefits, such as DOD-sponsored child care or fitness facilities, came up during the quality-of-life discussion.

Beth Asch, a senior analyst on the quality of life committee, presented an Office of Management and Budget report that showed the Pentagon spent about $16.8 billion on quality-of-life benefits in 2004 for its 1.4 million people in the active military forces, according to the Office of Management and Budget.

In fact, each active-duty enlisted member receives approximately $12,000 worth of quality-of-life benefits each year, according to the OMB report.

The problem, Asch said, “is that it’s not clear programs are always tied closely to objectives,” such as encouraging recruiting and retention. “We really don’t know what works and what doesn’t.”

Many of those benefits go to support married servicemembers and their families. More than 70 percent of officers are married; while 50 percent of enlisted personnel have spouses, Asch said. And among the married servicemembers, 70 percent have children.

Committee members expressed concern that those single servicemembers who do not have children in effect “lose pay,” because so many DOD benefits are directed at spouses and families.

However, it is less expensive for the Pentagon to provide benefits such as childcare, because of the volume discount, Asch noted.

And for servicemembers, getting benefits instead of cash can save money, because paychecks are taxed, she said.

Special incentive pays was another area under consideration by the committee.

Senior analyst Pat Mackin noted that there are now 60 different incentive pays, ranging from hazardous duty pay to flight pay, which cost $43 billion in 2004.

Macklin said the “proliferation” of pay is a weakness.

“There are so many different pays for so many different reasons,” he said.

Yet with few exceptions, such as sea pay, which varies by pay grade, “there is no structure to motivate personnel to perform,” Macklin noted.

Mackin proposed three potential changes to the incentive pay system: consolidating the pays so there are fewer of them; increasing the value of the pays, so they account for a larger percent of an individual’s paycheck (today the average value is five percent of total pay, he said); and changing the system of incentive pays “to reward performance.”

The compensation committee is due to present an interim report on its findings in late September.


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