ARE FINANCIAL MANAGEMENT PROBLEMS AT THE DEPARTMENT OF DEFENSE IMPACTING ARMY RESERVE PAY TUESDAY, JULY 20, 2004 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT EFFICIENCY AND FINANCIAL MANAGEMENT, COMMITTEE ON GOVERNMENT REFORM, Washington, DC. The subcommittee met, pursuant to notice, at 3 p.m., in room 2247, Rayburn House Office Building, Hon. Todd Russell Platts (chairman of the subcommittee) presiding. Present: Representatives Platts, Blackburn, and Towns. Staff present: Mike Hettinger, staff director; Larry Brady and Tabetha Mueller, professional staff members; Amy Laudeman, legislative assistant; Adam Bordes, minority professional staff member; and Jean Gosa, minority assistant clerk. Mr. PLATTS. We are going to go ahead and get started. We have a number of Members who are still en route over from the floor. This hearing of the Subcommittee on Government Efficiency and Financial Management will come to order. We appreciate everyone's patience while we wrapped up floor votes. Our hope is that the next series of votes won't be, hopefully, for about 2 hours, and we can get a good part of the hearing underway and completed before the next series of votes. We appreciate everyone's participation today on the continuing oversight effort of this subcommittee regarding the financial management of the Department of Defense. And I cannot imagine a more important issue in financial management than how we pay our courageous men and women in uniform. I think that as we ask our fellow citizens to go into harm's way to protect the safety and security of our Nation and the principles for which it stands, as well as our very own personal safety as fellow Americans, that the least we can do is adequately and appropriately compensate those courageous individuals. Unfortunately, as we learned late last year through a GAO study regarding our Guard units that have been deployed and a more recent study regarding our reservists, we know that we have many challenges to meet when it comes to adequately paying our soldiers. I would tell you that I was quite dismayed when I learned of the examples last year and further disappointed when I learned of the (1) regularity of inappropriate, wrongful levels of pay and compensation, and the impact on our soldiers and their families as well as the impact on their missions and their retention rates. We certainly need to do better, and as we will hear from our second panel I believe we are on the right track and the Defense Department is taking these challenges very seriously. I am going to submit most of my opening statement for the record and, from a time-sensitive standpoint, move forward. We will be hearing from our military and Defense Department leaders on our second panel. We are delighted that we will have Lieutenant General James Helmly, Chief of the Army Reserve; Mr. Ernest Gregory, Acting Assistant Secretary of the Army for Financial Management; and Mr. Patrick Shine, Director of Military and Civilian Pay Services for the Defense Financing Accounting Services. Before we hear from that panel, though, we are again delighted to have Greg Kutz from the newly named Government Accountability Office. Greg is the author of both the 2003 report regarding the Guard units as well as the most recent case studies regarding reservists. We appreciate your work and are delighted to have you with us. And, perhaps most importantly, we are delighted to have with us three courageous Americans who have served our Nation in harm's way and have made a great effort to be here with us today to share their personal experiences. We are delighted to have Lieutenant Colonel Don Campbell come down from Massachusetts; Major George Riggins from Maryland; and Sergeant Melinda DeLain. We appreciate all three of you for your service. As one who is honored and proud to serve our Nation in public office, I know that what I do, and, as I conveyed to you, what I do in a civilian position pales in comparison to what each of you have done in wearing our Nation's uniform and going into harm's way for all of us. So I personally thank you for your service. I also know, Major Riggins, your wife is currently deployed. Your son first was absent his dad as you served overseas, and now his mom. That is a tremendous sacrifice by him. And Sergeant DeLain, your service as well. I was looking for-your 8-year-old daughter Katelyn. She's out seeing the sights of D.C., right? Well, we appreciate your service and your family's service. And, again, thank you for being here. Before I yield to our ranking member, Mr. Towns, the gentleman from New York, I would like to take the chairman's privilege of wishing an early happy birthday. Mr. Towns will be 29 for the umpteenth time tomorrow, right? Happy Birthday. I now turn to the gentleman from New York, Mr. Towns, for the purposes of an opening statement. [The prepared statement of Hon. Todd Russell Platts follows:] COMMITTEE ON GOVERNMENT REFORM TODD R. PLATTS, CHAIRMAN HOUSE Opening Statement Chairman Todd Russell Platts Reservists and National Guardsmen are the backbone of our military. Currently, more than 156,000 Reserve troops are on active duty with the vast majority - more than 130,000 - from the Army National Guard and Army Reserves. In my home state of Pennsylvania alone, 5,200 of these soldiers have been mobilized to active duty. Guard and Reserve members make up nearly 40% of the American forces committed in Iraq and Afghanistan, and this is likely to increase to nearly 50% in future deployments. Today we will take a look at problems these soldiers have experienced in receiving their pay. This hearing is an important part of ongoing oversight by the Government Reform Committee that began after a November 2003 GAO report highlighted significant pay problems in National Guard units. As Chairman of the Subcommittee on Efficiency and Financial Management, I was one of several Members of the Government Reform Committee to request a GAO review of pay problems for Army Reserve soldiers. As was the case with the Guardsmen, the Reservists in the case study had serious and widespread problems receiving their pay and allowances - problems that distracted soldiers from their missions, imposed financial hardships on their families, and had a negative impact on retention. Most troubling is the fact that the vast majority of Guardsmen and Reservists studied experienced problems while they were deployed, often in remote, hostile environments. When our soldiers are risking their lives, the last thing they should worry about is the accuracy of their paychecks. Paying soldiers is just one of many financial management functions performed at the Department of Defense. This Subcommittee has looked at flawed financial management systems at DoD from a broad perspective over the past two years. Often, it is difficult to impart a sense of urgency when discussing business functions. This hearing is important in that it will shed light on the operational impact of poor financial management. If fact, it is precisely this type of issue that the Subcommittee hopes to mitigate - even prevent - when we encourage Federal agencies to improve financial management. In light of the heavy burden placed on our Reservists and the plan to activate more than 5,000 Individual Ready Reserves, it is imperative that any pay issues be resolved as quickly as possible. The effect these problems have on morale is devastating. I want our soldiers to know that Congress is looking at this. We want it fixed - both in the near term and over the long haul as DoD re-engineers its I appreciate the fact that the Army has placed a high priority on fixing these problems, and I applaud the work that has been done so far. Since GAO identified pay problems for Guardsmen back in November, officials from the Defense Finance and Accounting Service and the Army Finance Command have worked closely with the Government Reform Committee to communicate the many actions they have taken. This hearing will provide a public forum to highlight those efforts, and we are honored to have Lieutenant General James R. Helmly, Chief of the Army Reserve, Mr. Ernest Gregory, Acting Assistant Secretary of the Army for Financial Management, and Mr. Patrick Shine, Director of Military and Civilian Pay Services for the Defense Finance and Accounting Service, who will testify. Before we hear from these witnesses representing the Department of Defense, we have the author of both the Guard and the Reserve case studies, Mr. Greg Kutz of the newly renamed Government Accountability Office. Most important, we are honored and grateful to hear from Reserve soldiers who made the time to travel to Washington to testify and share their experience and insight. Lt. Col. Don Campbell, Major George Riggins, and Sergeant Melinda Delain, thank you for being here today and for serving in the Reserves. We appreciate the sacrifice you and your families make for our country. Your presence at this hearing today will help make the process better for all soldiers who serve. ### Mr. TOWNS. Thank you, Mr. Chairman. First of all, thanking you for recognizing my birthday, I do appreciate that. And I thank you for holding this hearing on what is quickly becoming a crisis for our Armed Services and reservists. And that is maintaining an adequate financial system in order to honor our commitment to our Nation's troops. Let me also thank our witnesses before us today, especially those of you who have ably served our Nation with pride and distinction. As you know, Mr. Chairman, the issue of adequate financial management at the Department of Defense is not foreign to our committee as we have collaborated on improving the internal control structure and chronic accounting problems demonstrated by the agency over the year. Today, however, we are dealing with the pressing issue of maintaining a reliable and efficient payroll system for our reservists, many of whom are now in immediate danger while serving our Nation's interests abroad. Since 2001 our reservists have been asked to do more for us than at any other time in recent memory. To date, there are more than 150,000 Reserve troops on Active Duty, with 130,000 of those troops coming from the Army National Guard, and Army Reserves. Recent statistics tell us that 40 percent of our troops currently based in Afghanistan and Iraq are reservists, and DOD contends that their contribution to our overseas operation may escalate to 50 percent in future deployments. In my home State of New York alone, nearly 6,000 Army reservists have been mobilized among 171 separate units. According to the analysis provided to us today by GAO, approximately 95 percent of the Reserve soldiers reviewed experience some type of payroll-related problem. Of these, nearly 300 soldiers received a total of $50,000 in underpayments, in addition to DOD being delinquent in paying 245 soldiers $77,000 for Active-Duty pay and allowances. Furthermore, over 300 reservists who were deployed to designated combat zones did not receive their entitled tax preferential treatment in a timely manner. Simply stated, Mr. Chairman, this is unacceptable. I am not here to debate the merits of our efforts overseas or our Nation's foreign policy. There will be time enough for us to do that in other venues. I will, however, state that it is disingenuous for us to tell the American people that our armed services are well prepared when we cannot even guarantee our soldiers that they will receive their pay and benefits in a timely fashion. The spouses, the children, and families of those deployed overseas, are often dependent on such resources until their loved ones return. Hopefully, our efforts today will be productive in finding solutions to such problems. Mr. Chairman, we have heard too many times coming from too many family members the saying: We cannot continue to live, because we do not have resources. Let me thank you, Mr. Chairman, and let me thank the witnesses for joining us today. And, on that note, I yield back. Mr. PLATTS. Thank you, Mr. Towns. [The prepared statement of Hon. Edolphus Towns follows:] |