The cost per service member has nearly tripled since 1980, according to a recent report.

A recent Congressional Budget Office (CBO) report shows that the average cost to maintain an active duty soldier is now $158,000 a year, a 50 percent jump since 2001. Military personnel costs per service member are expected to continue to increase by approximately $4,700 a year for the foreseeable future.

The Department of Defense has been scrambling to cut costs, but the report predicts that it’s not going to be enough. In fact, per-person costs are expected to rise as the drawdown continues.

The CBO is predicting $170,000 per person by 2017, up to $215,000 by 2030.

Military Investing Big in Service Members

Pay has been the majority of the problem, according to the report. Military pay raises are tied to the Bureau of Labor Statistics’ employment cost index (ECI), a measurement of the cost of goods and services. The last few years, lawmakers have been granting raises above the ECI in an effort to reduce the pay gap between civilian and military jobs.

Pentagon officials have submitted a plan to reduce military pay raises starting in 2015, but the CBO report predicts that Congress will ignore this and continue to give raises at least equal to the ECI. The cost of military pay and benefits is expected to rise from $201 billion in 2013 to $211 billion by 2017, up to $258 billion by 2030.

The other part of the problem is the cost of health care. An estimated 10 million people qualify for subsidized care through either military treatment facilities or civilian providers under contract with TRICARE. The DOD has budgeted $47 billion for health care in 2013, but the CBO report is projecting a cost of $51 billion. Health care costs are expected to continue to climb from $65 billion by 2017 to $95 billion by 2030.

The DoD intended to increase TRICARE fees to help pay for the rising cost of care, but as of last month, four different subcommittees have rejected the plan. Given the circumstances and with sequestration still looming, the current military budget restrictions look unrealistic and are unlikely to be met.

Photo courtesy of The U.S. Army.

Lawmakers continue to disagree about cuts to the federal budget.

Politicians on both sides of the aisle agree that deep cuts are essential to bring the federal budget under control. But they are still having trouble agreeing on how to implement the necessary reductions before next year.

The Budget Control Act (BCA) of 2011 requires the federal government to reduce spending by more than $1 trillion by 2021. This amounts to cutting about $109 billion from the budget each year. To accomplish this, the BCA created the Joint Select Committee on Deficit Reduction, otherwise known as the Super Committee.

“Sequestration” was the name given to the mandatory, across-the-board spending cuts that would occur automatically should the committee fail to compromise.

Policymakers in Washington are still struggling to find common ground, and now there is a great deal of worry over what will happen — especially to U.S. service members and military families — if sequestration is allowed to occur.

Sequestration Breakdown

Through sequestration, budget cuts are split equally between defense discretionary spending and non-defense mandatory (entitlement) and discretionary (non-entitlement) spending, without any increase in tax revenue. This equals about $55 billion in cuts from both the defense and non-defense budgets every year.

Defense spending cuts will be spread across all the branches. While some particular programs may be spared, other sections of the military could see anywhere from a 7 to 10 percent of their budget eliminated. This does not include funds allocated specifically for war, though it will certainly have an effect on wartime operations.

Non-defense spending cuts are typically program-specific and categorized as either mandatory or discretionary. Most mandatory programs such as Social Security, Medicaid, food stamps, veterans’ compensation and retirement benefits are currently exempt from any reductions. Medicare is the main exception, though cuts are limited to no more than 2 percent a year ($11 billion in 2013) and these are limited to providers and insurers, not beneficiaries.

Similar to the defense spending cuts, non-defense discretionary spending cuts will be accomplished through broad reductions in funding for discretionary programs. The first round of automatic budget cuts is set to occur January 2, 2013.

Political Gridlock

If allowed to continue, sequestration could have drastic consequences for our nation’s Armed Forces.

Last Thursday, the House of Representatives passed the Sequester Reconciliation Act of 2012, but it has little chance of passing the Democrat-controlled Senate.The bill favors cutting social programs such as Medicaid, food stamps and subsidized insurance premiums over military spending or increased taxes.

This refusal to compromise on both sides of the political spectrum is creating a situation where sequestration could actually occur.

If a more balanced political discourse is not discovered soon, the military community could find itself bearing the brunt of its leadership’s indecisiveness.

Photo courtesy of nebulux76.

Policy changes beginning in 2015 could mean thousands of dollars less in pay for the average soldier.

Pentagon officials have submitted a plan that would significantly decrease military pay raises beginning in 2015. Currently, raises are determined according to the Employment Cost Index, a Department of Labor statistic that measures the growth of private sector wages. Instead of using the ECI, officials are proposing a flat 0.5 percent raise in pay, followed by a 1 percent increase in 2016 and a 1.5 percent increase in 2017.

Here’s what these changes could mean to you:

Effectively a Pay Decrease

Over the last 10 years, military service members have consistently received pay increases above the ECI in order to reduce the salary gap between military personnel and their civilian counterparts. These policy changes have the potential to reestablish that separation, meaning a difference of thousands of dollars for military members and their families.

Raises will continue to be determined by the ECI for the next two years.  Service members can expect a 1.7 percent raise in 2013 and a similar increase in 2014.  According to the 2013 defense budget proposal, “Lower raises are delayed to give time for military personnel to accommodate these changes.”

Federal officials say they will not reduce or freeze pay and remain committed to maintaining an organization that attracts and retains quality personnel.

Cutting Costs

The Defense Department has been mandated to reduce spending by $500 billion over the next 10 years.  Personnel costs, which make up about a third of the total budget, have increased 90 percent since 2001. Limiting pay raises would help moderate these costs, saving an estimated $16.5 billion over five years, according to DOD estimates.

Other measures that have been discussed include:

• Increasing out-of-pocket health care costs for military retirees
• Large force reductions in the Army and Marine Corps
• Possible closure of several stateside military bases

Defense officials have emphasized that these plans are years away and still subject to change.

Photo courtesy of stevendepolo

Hostile mines are one qualification for imminent danger pay.

On Feb. 1, a change in the Imminent Danger Pay calculation went into effect, causing some confusion for  service members and families on the receiving end. While a daily rate replaces old monthly calculations, the new policy may have less of an impact than many people think.

Here are some things to know about the new Imminent Danger Pay policy:

What are the Changes

Prior to the change, any military member in a qualified imminent danger area received a month’s allowance, regardless of how long he or she was there. Now IDP will be paid as a daily rate for the length of time spent in an area. The daily rate is $7.50, but if a member serves an entire month, they receive the full $225.00.

Exceptions to Day Rate

Service members will still receive the full monthly rate if they meet any of the following criteria:

• Subject to hostile fire or explosion of hostile mines
• On duty in an area and in imminent danger of being exposed to hostile fire or explosion of hostile mines, in which during that time other members were subject to hostile action
• Killed, injured or wounded by hostile fire, mine explosion or other hostile action
• On duty in a foreign area in which he or she is subject to threat of physical harm or imminent danger on the basis of civil insurrection, civil war, terrorism or wartime conditions.

Only those who travel in or out of a designated area in a given month will have their pay affected.

If Your Pay Changes

While the pay change may not affect every service member, those it touches could see a difference in pay as early as Feb. 15. As with any pay adjustment, budget adjustments typically follow. A service member may need to start budgeting and find a tool to help or perhaps find a few ways to trim the expenses of their military lifestyle.

Photo courtesy of Tracy Hunter