Hagel outlines compensation reform proposals in budget request

7 Mar 2014 | Army Sgt. 1st Class Tyrone C. Marshall Jr.

Defense Secretary Chuck Hagel addressed compensation reform over the past two days during testimony before Congress on the Defense Department’s fiscal year 2015 budget proposal.

Speaking to the House Armed Services Committee March 6, 2014, Hagel called compensation a “critical” issue.

“Regarding compensation reform, taking care of our people … means providing them with both fair compensation as well as the training and tools they need to succeed in battle and always return home safely,” he said. “To meet those obligations under constrained budgets, we need some modest adjustments to the growth of pay and benefits.”

The secretary described those adjustments and noted all the potential savings would be re-invested in training and equipping troops.

“First, we will continue to recommend pay raises,” he said. “They won’t be as substantial as in the past years, but they will continue.”

In his written statement submitted to the Senate Armed Services Committee yesterday, Hagel said a little more than two-thirds of department’s fiscal 2015 budget -- $341.3 billion -- funds day-to-day costs, which includes pay and benefits for military and civilian personnel. Military pay and benefits, including health care and retirement benefits, are $167.2 billion, or about 34 percent of the total base budget, the statement notes.

“And there are no proposals to change retirement in this budget,” Hagel said.

The defense secretary’s second statement on compensation pertained to the continuation of subsidies for off-base housing.

“The 100 percent benefit of today will be reduced,” Hagel said, “but only to 95 percent, and it will be phased in over the next several years.”

The defense secretary also noted “we are not shutting down any commissaries.”

“We recommend gradually phasing out some, … but only for domestic commissaries that are not in remote locations,” he said.

The fourth adjustment is the merging of the department’s health care systems. “We recommend simplifying and modernizing our three TRICARE programs, merging them into one TRICARE system,” he said.

This system, Hagel said, would have modest increases in co-pays and deductibles for retirees and family members, and would encourage use of the most affordable means of care.

“Active duty personnel will still receive health care that is entirely free,” he added.

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