Military Personnel: Reserve Compensation Has Increased Significantly and Is Likely to Rise Further as DOD and VA Prepare for the Implementation of Enhanced Educational Benefits

In past reports, we have raised a number of concerns about the effectiveness of DOD's approach to compensation. For example, in our 2005 report on the challenges facing the United States in the 21st century, we emphasized the need for a baseline review of all major federal programs and policies, including military compensation, to ensure that they are efficiently and effectively meeting their objectives, particularly in light of concerns about the affordability and sustainability of federal spending. In 2005 and 2007, we assessed the active duty and reserve compensation systems and found the cost to provide compensation was substantial and rising. We also found that DOD's piecemeal approach to compensation involved increasing or making changes to compensation without completely understanding the impact that these changes might have on recruitment and retention. As DOD increasingly relies on the reserve components to carry out its military operations domestically and abroad, DOD and Congress have taken steps to improve recruitment and retention by increasing compensation. One example involves expanding educational benefits for mobilized reservists. The recently enacted Post 9-11 Veterans Educational Assistance Act (Post 9-11 VEAA), which becomes effective on August 1, 2009, provides active and reserve component servicemembers who qualify for the maximum benefit with a more generous benefit than existing benefits by providing (1) full tuition and fees up to the amount of tuition and fees regularly charged to in-state students at the most expensive public institution in a given reservist's state, (2) a monthly stipend for living expenses, and (3) an annual stipend for books and required educational expenses. In addition, the new Post 9-11 VEAA benefit allows eligible servicemembers to use educational benefits after discharge or release from active duty and authorizes the Secretary of Defense to give the service Secretaries authority to allow qualifying servicemembers to transfer unused educational benefits to spouses and dependents. Section 535 of the National Defense Authorization Act for Fiscal Year 2008 (NDAA 2008) directed the Secretary of Defense, in cooperation with the Secretary of Veterans Affairs, to submit a report to the congressional defense committees and the House and Senate Committees on Veterans Affairs, by September 1, 2008, on the feasibility and merits of transferring the administration of existing educational assistance programs available to reservists--the Montgomery GI Bill-Selected Reserves (GI Bill-SR) and the Reserve Educational Assistance Program (REAP)--from DOD to the Department of Veterans Affairs (VA). The act also required that we assess the report and report to Congress by November 1, 2008. DOD has not met its reporting deadline; however, should DOD submit a report to Congress on the transfer of administration, we will assess it as required by section 535 of the 2008 NDAA. DOD has attributed the delay in meeting its reporting deadline to a need to broaden the scope of its assessment to include the new Post 9-11 VEAA. Both the Senate and House Armed Services Committee expressed interest to us on issues related to reserve compensation, including the Post 9-11 VEAA, and the status of DOD's assessment on the transfer of administration of educational assistance programs from DOD to VA. As agreed with committee offices, this report discusses (1) the trends in total reservists' compensation and the projected cost of the Post 9-11 VEAA and (2) the progress that DOD and VA have made in assessing the merits and feasibility of transferring the administration for existing educational benefits from DOD to VA and the steps taken to prepare for the implementation of the Post 9-11 VEAA.