Military Personnel:

DOD Comments on GAO's Report on More DOD Actions Needed to Address Servicemembers' Personal Financial Management Issues

GAO-05-638R: Published: May 11, 2005. Publicly Released: May 26, 2005.

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Derek B. Stewart
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In response to a Congressional request, we issued a report in April 2005 on the Department of Defense's (DOD) efforts to address personal financial management (PFM) issues encountered by its servicemembers and their families. In that report, we made recommendations to the Secretary of Defense to enhance servicemembers' financial conditions and the effectiveness of DOD's PFM programs and training. On March 17, 2005, we provided a draft of that report to DOD for review and comment. DOD did not provide comments in time to incorporate them in the final GAO report that went to printing on April 22, 2005. To present DOD's comments and provide our perspective on them, this report briefly summarizes our April 2005 report's objectives, results, and recommendations, along with DOD's comments and our evaluation of the comments. We answered three questions in our April 2005 report: (1) To what extent does deployment impact the financial conditions of active duty servicemembers and their families? (2) Does DOD have an oversight framework for evaluating military programs that assist both deployed and non-deployed servicemembers in managing their personal finances? And (3) To what extent are junior enlisted servicemembers receiving required personal financial management training?

We found that 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--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 for 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. In addition, DOD and installation officials as well as servicemembers told us that problems communicating with creditors during deployment can cause other financial difficulties. Servicemembers told us that limited Internet access, the high cost of calling from overseas, and delays in the delivery of mail often prevented them from promptly contacting creditors. Failure to avoid or promptly correct serious financial problems can result in negative consequences, such as bad credit ratings for these servicemembers and decreased morale and readiness for the servicemembers' units. We also found that DOD lacks an oversight framework--one with results-oriented performance measures and reporting requirements--for evaluating the effectiveness of PFM programs across the services. Although DOD's 2002 human capital strategic plan stated that a standardized evaluation system for PFM programs is a desired goal, 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. When asked why the evaluation and reporting requirements had been dropped, DOD officials indicated that the services objected to these additional 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 by service regulations. While each of the services implements PFM training differently to take into account service-specific constraints, all of the services have policies requiring that PFM training be provided to junior enlisted servicemembers. The extent to which the PFM training is 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 at most of the Army installations we visited acknowledged the need for PFM training but noted that current deployment schedules limit the time available to prepare soldiers for their warfighting mission. 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.

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