Although originally intended to defray a portion of the cost of subsistence for service members not receiving rations in kind, since 1974 the basic allowance for subsistence (BAS) has generally been raised in lockstep with military basic pay. In part as a result, the money that a typical enlisted service member receiving BAS spends on the food he or she consumes at home is probably less than the amount of his or her allowance (which is higher than what officers receive). The U.S. Department of Agriculture regularly estimates the cost of food at home for various families and individuals; the enlisted allowance is greater than the cost for a typical male adult in a family of four under all but the most liberal of the USDA food plans. Thus, in addition to its intended role as compensation for the lack of governmentprovided meals, BAS has served as an income supplement for enlisted members who receive it.

The role of the basic allowance for subsistence in supplementing income is particularly important for very junior married personnel, whose seemingly low pay levels have received special attention in the wake of reports that many military families may be receiving food stamps. For a married person in the lowest enlisted pay grade, BAS averages 13.3 percent of total compensation (including the tax advantage that accrues because subsistence and housing allowances are not subject to federal income tax), compared with only about 8.4 percent for all married enlisted personnel. To some extent, however, the concerns about low pay levels are misplaced: even the most junior married enlisted person receives total compensation that exceeds the total family income of nearly 20 percent of U.S. families and half of all young families (those headed by a person under age 25). The use of food stamps apparently derives less from low total compensation than from the way the military's quar

ters allowance is administered: married personnel living in government quarters are not paid a cash allowance and so, having a lower cash income than their counterparts living off-base, are more likely to qualify for food stamps. According to the Department of Defense, 40 percent of the military families receiving food stamps live on-base, although overall only about 20 percent of the families of members in the three lowest enlisted pay grades live on-base.

The harmful effects of a too-generous subsistence allowance became apparent during Operation Desert Shield/Desert Storm. Many military families were suddenly, and unexpectedly, deprived of the income supplement when their service members were deployed to the Persian Gulf (and lost BAS because they received government rations). Although families' food costs may indeed have fallen, their income fell by even more. Many perceived that as an unfair burden to place on families already hurt by the members' sudden departure. To address that problem in the subsequent deployment of troops to Haiti, the Defense Department adopted a stopgap policy that resulted in the services' paying BAS to all enlisted personnel in Haiti, regardless of whether they had been entitled to it before the deployment, as well as feeding the deployed troops.

This option would reduce BAS for enlisted personnel to a level equivalent to that for officers (currently $149.67 per month), phased in over five years. The most common form of enlisted BAS, which is given to people on leave or authorized to mess separately (for example, single personnel authorized to live off-base and to receive a quarters allowance, and married personnel accompanied by their dependents), would eventually be reduced by 31 percent, to $4.92 per day at 1996 pay rates compared with the current

$7.15. Compared with BAS costs under current law and based on the Administration's 1996 plan for reducing military personnel levels, the option would save about $95 million in 1997 and a total of $2.5 billion over the 1997-2002 period. Additional savings might accrue if the change in BAS rates prompted DoD to abandon the interim policy of paying BAS to all troops in certain deployments. Some of the savings might be offset if a targeted pay raise or some other measure was used to counter specific problems arising from the option (see below).

Linking the BAS rate for enlisted personnel to that for officers reflects an essentially arbitrary choice. Alternatively, the rate could be based on one of the four USDA food plans. Food costs for a male adult age 20 to 50 in a family of four under the lowcost plan (second lowest of the four) are slightly lower than the current allowance for officers, and under the moderate-cost plan are about $31 per month higher. The thrifty plan (lowest cost) is used in determining food stamp payments; costs under the liberal plan (highest cost) are roughly the same as the current enlisted BAS level.

The option would have two major advantages in addition to the obvious one of reducing defense expenditures. First, as suggested above, it would reduce or eliminate the problem of families of deployed service members experiencing a decline in their living standard (albeit at the cost of reducing their disposable income at other times). Because the allowance would no longer include an income supplement, the income lost when the member deployed would be roughly offset by the reduction in the family's total food costs. Second, the option would eliminate an inequity in the current system that favors

married personnel and others who receive a subsistence allowance over people who must eat in government mess halls, many of whom are single junior personnel. The former receive a payment that probably exceeds their actual food costs; the latter apparently incur out-of-pocket costs on the occasions when they do not eat in the mess halls--about 44 percent of all meals. To a small extent, the cut might discourage some married people from entering the military and some single personnel already in the military from marrying. Some observers might see that as an advantage and others as a disadvantage.

The option achieves its savings by cutting the total compensation of a majority of enlisted personnel. That approach might be undesirable for two reasons. First, it would probably reduce personnel retention and could make recruiting more difficult-both traditional areas of concern. Second, the most junior personnel eligible for BAS would suffer the largest percentage reduction in compensation because the dollar amount of the allowance is the same for all enlisted pay grades.

Although the income of junior enlisted personnel may not be as low as is sometimes thought, that group would definitely be hardest hit by this option. The BAS cut would reduce the total compensation of very junior married personnel by about 4 percent-twice as great a percentage as for senior noncommissioned officers. Offsetting the reduction for junior personnel through an increase in basic pay for the three lowest enlisted pay grades would cost about $300 million per year, based on 1996 pay rates. That possible offset is not reflected in the savings shown in the table.

The military services have drawn on several management tools to reduce the size of the officer corps. They have encouraged voluntary separations through specific actions such as tightening criteria for promotion and liberalizing early-out procedures. They have reduced the number of senior officers by selective early retirement, and they can make further cuts through reductions in force if necessary. Finally, the military services have reduced the number of new officers (accessions) who enter the force each year, consistent with the projected smaller force.

This option would restructure officer accession programs beyond the changes the Department of Defense has already made. Overall accession levels would not be cut below the level planned by the department, but more officers would be drawn from lower-cost commissioning programs--Reserve Officer Training Corps (ROTC) and Officers Candidate School/Officer Training School (OCS/OTS)--and fewer from the more costly service academies. In addition, a ceiling would be placed on the per capita amount that could be spent on each recipient of a ROTC scholarship. Further, the option would cut Junior ROTC programs and eliminate the preparatory schools operated by the service academies. Relative to the Administration's 1996 plan, savings would be about $140 million in 1997 and a total of $2 billion through 2002.

Of that total, $1 billion would come from cutting class size at the three service academies. At present, each academy graduates about 1,000 second lieutenants or ensigns a year. This option would reduce that number to 625 by cutting the size of the entering class for the three academies from a total of 3,000 to only 1,875. Estimated savings from that action reflect only the costs that would change in the near

term, such as faculty and cadet pay and operating expenses. Those savings would be offset by the additional costs of about $85 million over the six years that would be needed to procure officers from OCS and ROTC to replace those from the academies. In the longer term, savings also might accrue from changes in the academies' physical plant.

Additional savings under this option would stem from changes in the structure of ROTC programs. In 1995, DoD spent $280 million for ROTC scholarships. (DoD covers other costs of education, but this option deals only with tuition.) About 40 percent of ROTC students now attend private institutions. The average cost per student in 1995 for tuition at fouryear private institutions, based on data from the Department of Education, was $11,500 a year, more than four times the average cost of $2,700 at public universities. The option would cap ROTC scholarships at the $2,700 level consistent with average tuition at public institutions. Under a cap, DoD might choose to reduce the number of programs at highcost institutions, reallocating resources to lower-cost schools in order to maximize the number of officers trained. Alternatively, the department might elect to pay only a fraction of total tuition at high-cost institutions, requiring the student to make up the difference. Students currently enrolled would be allowed to complete their education without financial penalty.

Furthermore, this option would cut Junior ROTC programs by about 25 percent. Junior ROTC provides introductory military training and uniforms to students in secondary school, at an overall cost in 1996 of $160 million. Recent Congressional action significantly expanded Junior ROTC in an effort to place more programs in the inner cities. The reduction called for in this option would restrict that

expansion by 50 percent. DoD could retain programs in urban areas or elsewhere. Savings would be $34 million in 1997 and $221 million over six years.

Finally, the option would close the preparatory schools operated by each service academy. Those schools accept students who cannot meet the stringent admission criteria of the academies and gives them a year of additional training and schooling so that they can gain entry to an academy. Savings in 1997 would be about $20 million and would total about $120 million through 2002.

Supporters of the military academies have contended that those programs are needed to produce future service leaders. That argument has not persuaded the Congress, but past attempts to mandate cuts at the academies have been only partly successful; class size has declined modestly, but academy graduates now account for a larger share of officer accessions than at any time since at least 1980. There is little evidence for the contention that the academies have already reduced their class size to the minimum efficient level, as supporters have claimed in arguing that further cuts would not produce savings.

Opponents of a dollar ceiling on ROTC scholarships might argue that the quality of a graduate from a private institution is higher than that of a graduate from a public institution. Setting a cap--and limiting

the number of accessions from private institutions-thus might reduce the overall quality of the officer corps. However, the national security benefits of paying the higher tuition at private schools are unclear at best. Supporters of the public educational system might claim that the quality of education at public schools equals that provided at private ones.

Proponents of Junior ROTC include many Congressional supporters who contend that it provides discipline and reinforces positive values for teenage youth, particularly in inner-city schools. Nonetheless, the program's contribution to national security is difficult to measure, and if its benefits lie in the behavioral changes it encourages, it arguably should be funded in competition with other social programs targeted toward such populations.

Similarly, supporters of the service academies' preparatory schools claim that those schools are needed to provide an opportunity for students from less fortunate circumstances to enter the military academies. Those schools also provide an avenue for enlisted personnel to enter the academies. Opponents argue that the schools are used to enable the academies to recruit athletes and minorities who cannot otherwise qualify for admission, and that at an average total cost of about $40,000 per student they are more expensive than most other secondary education or than OCS/OTS programs, the primary avenue of commissioning for enlisted personnel.

Since 1989, the Air Force has projected an overall shortage of pilots, in part because of the departure of pilots to the commercial sector. In order to address the shortage, the Air Force has undertaken several initiatives including paying its pilots bonuses. Under the Aviator Continuation Pay (ACP) bonus program, which the Congress authorized in 1989, pilots who qualify can receive up to $12,000 a year for agreeing to remain on active duty through their 14th year of service. At present, the Air Force pays all pilots of fixed-wing aircraft the same bonus regardless of which weapon systems (fighters, bombers, tankers, strategic airlift, theater airlift, or trainers) they fly.

The Air Force has made good use of the ACP program. However, in part because of the military drawdown and the subsequent reduced need for pilots, some major weapon systems (namely, tankers and theater airlift) will probably have a surplus of pilots. Under this option, the bonus would be made available only to pilots of major weapon systems for which shortages are projected. Moreover, bonus payments would vary according to the degree of shortage. Relative to the Administration's 1996 plan, this

option would save $2 million in 1997 and a total of $99 million through 2002.

Precedents exist for targeting bonuses in this manner. For example, the Navy uses this approach in providing bonuses to its pilots. Furthermore, several types of military pay are targeted in accordance with the degree of personnel shortage, including special and incentive pay for physicians and recruiting and reenlistment bonuses for enlisted personnel.

The Air Force historically has opposed targeting bonuses in that way, arguing that doing so would adversely affect morale, possibly exacerbate retention problems, and ultimately increase pilot shortages. Moreover, the Air Force maintains that pilots would object to a bonus system that resulted in internal inequities, since they all endure similar hardships during peacetime and face the same substantial risk in war. However, whether all pilots share that view is arguable. Combat pilots, for instance, face different risks and deployment patterns than transport or tanker pilots.