(The information follows:) SELECTED EXAMPLES OF MILITARY RETIRED PAY ANNUITIES 1 Nondisability retirements based on Jan. 1, 1972 basic pay rates. 2 Total lifetime retired pay for persons retiring on or after Jan. 1, 1972, based on the 1937 standard annuity table with entry age 23 for officers and 19 for enlisted-nondisability retirements. a More than 4 years service as an enlisted man. NEED FOR REENLISTMENT BONUS Senator BYRD. Since there have been these substantial changes in salaries, has there been a review as to the necessity for a reenlistment bonus? Mr. KELLEY. Yes, sir. The Second Quadrennial Review, which was reported in January of this year, includes a review of the effectiveness of a variety of special pays including the reenlistment bonus. If I may make a general comment about the reenlistment bonus, we find that to be cost-ineffective. Senator BYRD. Explain what you mean by cost-ineffective. Mr. KELLEY. Well, simply that the amount of money spent in bonus does not have a good payoff in terms of the number of people retained for the money invested. Senator BYRD. Do you plan to eliminate the reenlistment bonus? Mr. KELLEY. The final recommendations based on the Quadrennial Review study will require further discussion within DOD and the executive branch. We will be making final recommendations after that review has taken place. On the basis of our Quadrenniel Review study which was supervised by General Benade and which I have carefully gone over, I believe that there should be changes made in the area of reenlistment and variable reenlistment bonus. I think we should pay a bonus to those people who are in short supply and whom we need and might lose but for the paying of a bonus. I do not think we should pay a bonus to everyone who reenlists. Senator BYRD. And you found on the basis of your Quadrennial study, you found it to be cost-ineffective? Mr. KELLEY. Yes, sir. We are spending, if my memory serves me, almost $200 million a year in the standard or straight reenlistment bonus. We are spending an additional amount of money for the variable reenlistment bonus. I think in this area our annual expenditures are slightly over a half billion dollars in reenlistment and variable reenlistment bonuses and proficiency pay. Senator BYRD. Which is over and above, of course, the normal pay scale. Mr. KELLEY. Yes, sir. And there is evidence that the variable reenlistment bonus, which is varied according to the criticality of the supply problem and the availability of people, has proved to be a costeffective way of maintaining force stability in the specialized categories where you are facing a critical shortage. But paying a reenlistment bonus to everyone who reenlists is a terribly expensive way of running the system. Senator BYRD. I am glad that you are reexamining it because it seems to me, in the light of the very substantial changes that have been made in the military pay in recent years, that that should be reexamined. Mr. KELLEY. That is precisely why it should be, Senator. Perhaps there was some justification for paying a reenlistment bonus to people who were otherwise underpaid, but when your pay scales are competitive there remains no justification for paying a reenlistment bonus to people who are not in short supply. RETIREMENT SCHEDULES Senator BYRD. As a result of the changes that have been made in military pay, are you also reexamining the retirement schedules? Mr. KELLEY. Yes, sir. We have done this through the Interagency Committee study and the recommendations of the Interagency Committee study are being further examined by a special DOD study group which I am chairing. And those further studies will be completed about the end of March. Senator BYRD. The next question I ask, would you submit for the record, the retirement cost years beginning 1960 through your estimates for 1973. Your estimate as I recollect, is $4 billion, is it, for 1973? Mr. KELLEY. $4.9 billion, which includes $300 million recommended. by the President for reform of military retirement pay. Senator BYRD. It is not $4 billion but $5 billion. $4.9 billion. Senator BYRD. Thank you. And if you would supply the other years for the record. Mr. KELLEY. Yes, sir. (The information follows:) 1 As of the end of the fiscal year, based on pay rates in effect on that date for fiscal years prior to Note 1: None of the above figures make any allowance for increases in basic pay rates or for in- Note 2: No reduction in accruing or accrued costs has been made for nonpayment of retired pay by reason of VA waiver, dual compensation laws, etc. Accrual costs are calculated at 3% percent Note 3: Figures are unavailable for fiscal years 1960, 1961 and 1962. Senator BYRD. Incidentally, do you happen to have the other years handy? General BENADE. I can give you figures for 1967, which I happen to have. For 1967, $1.831 billion, and the estimated cost for 1973 is $4.358 billion, and the balance is accounted for Senator BYRD. What is the total? That is what I want. General BENADE. It is $4.9 billion, but I think it is important to recognize, Senator, that that $4.9 billion includes two other factors. One is the proposed recomputation of retired pay that Secretary Kelley referred to. The other is an anticipated cost-of-living increase. Senator BYRD. I think it is fine to have the details of that but what I want to try to understand is the figure. Now, the figure for military pay retirement, military retirement, is $4.9 billion. General BENADE. In total, Senator. Senator BYRD. That is what I am saying. I am interested in total figures. General BENADE. Yes, sir. Senator BYRD. The total is $4.9 billion. General BENADE. Yes, sir. Senator BYRD. What was it in 1967? General BENADE. $1.8 billion. Senator BYRD. $1.8 billion. General BENADE. Yes, sir. Senator BYRD. You might as well give me 1968. General BENADE. $2.093 billion. 1969 is $2.443 billion. 1970, $2.859 billion. 1971, $3.389 billion. Senator BYRD. So, it has gone up $2 billion in 2 years. What have you got for 1972? General BENADE. $3.931 billion. Senator BYRD. What was 1971? General BENADE. 1971 is $3.389 billion. Senator BYRD. $3.389 billion. On page 39, I do not understand the term "grade creep.' Mr. KELLEY. The term "grade creep" is concerned with the average grade of those people who are employed on the civilian side of manpower in either DOD or Government-wide, as the case may be. "Grade creep" is a term indicating that, over a period of years, we are classifying people higher to do the work which in an earlier period of time was classified lower. Senator BYRD. I note on page 39 under Government-wide employment for 1971, 1972, and 1973, you state it is not available, the figures are not available. Would not those figures be available? Mr. KELLEY. I am sorry, Senator. I cannot comment on their nonavailability, and I should be able to, but I will Senator BYRD. 1971 is already through. Somebody must have known how many people were employed in 1971. 1972 is almost through. Somebody must know how many persons you were employing. On 1973, there must be some estimate yours must be an estimate because we have not gotten to 1973 yet. Mr. KELLEY. We will provide that information. (The information follows:) Grade Trends (General Schedule Positions) Government-wide employment (thousands): Senator BYRD. Thank you, Mr. Secretary. I will hold my other questions and yield to Senator Thurmond. Mr. Secretary, if you feel you should let someone answer this for the record, just say so. Are there not significant shortages of properly trained personnel in the U.S. Army, Europe? Mr. KELLEY. There are shortages, and they are in the process of being corrected and will be corrected by later this year. Correcting those shortages will also correct the problem of severe turbulence and instability which has plagued the Army for several years. Senator THURMOND. The information I have, for instance, was that in September 1971 [deleted] and so forth. Is it not a fact, Mr. Secretary, while the Army may have physically present the men authorized in Europe, that there is a severe shortage of personnel with the necessary military skills required to carry out the Army's assigned combat missions? Mr. KELLEY. I do not think it is a fact that there is a severe shortage of the skills required to carry out the Army's mission. But on examining the facts further, we will provide additional information for the record Senator THURMOND. Thank you. Mr. KELLEY (continuing). If my answer is not entirely correct. (Information classified and retained in committee files.) Senator THURMOND. How would you overcome these shortages if war started tomorrow? Mr. KELLEY. Well, the immediate answer to the question is by augmenting the forces in Europe with strategic reserve forces from the States and by augmenting the active forces by the use of Army Reserve and Army National Guard units. If further information is appropriate, we will furnish it for the record. Senator THURMOND. Do you not believe that, in looking at the 22 NATO headquarters, the vast number of senior officers and personnel at the European Command Headquarters, plus the array of senior officers and total people at the U.S. headquarters, U.S. Air Force headquarters, and U.S. Navy headquarters, that reasonable people could properly conclude that there are, first, too many headquarters, and second, too many military personnel, particularly senior officers, involved in staff work? Mr. KELLEY. I think I should respond in the record to that question, Senator. (The information follows:) We do not believe that the number of headquarters or the number of senior officers exceeds the need, considering the functions that must be performed. The headquarters and their manning are discussed in detail below. |