The Manpower-Money Mismatch

May 1, 1987

No single resource has a greater impact on Air Force readiness and the capability to support nation­al security objectives than our peo­ple.

Secretary of the Air Force Ed­ward C. Aldridge, Jr., and Chief of Staff Gen. Larry D. Welch have both noted this fact in many public statements. They have also said that despite a recent history of success in recruiting and retention, the Air Force faces a considerable chal­lenge in the future because of demo­graphic trends in the recruiting pop­ulation, attractions of employment opportunities outside the service, and dynamic changes in the number and types of Air Force missions.

In 1987, however, there is a more immediate concern—a problem with the potential to diminish our near-term capabilities. It will have an effect on recruiting patterns and retention. It has implications for the morale of our force. And it consti­tutes one of the most significant challenges to face Air Force leaders since the poor retention period of the late 1970s and early 1980s.

The current difficulty hinges on funding issues. For FY ’87, Con­gress funded the Military Personnel Appropriation (MPA) below pro­grammed requirements and also re­duced appropriated funding support for morale, welfare, and recreation (MWR) programs. These actions and their implications will have long-term impact.

The MPA provides funding for of­ficer and enlisted pay and allow­ances, which, in addition to the basic pay and allowances, includes subsistence, clothing, incentive pays, and bonuses. It also includes funding for PCS-related costs. Al­though Congress appropriated near­ly $19.6 billion, that amount was some $478 million short of Air Force requirements. The impact of these cuts, driven by concern over the growing federal deficit, has been compounded by better-than-antici­pated retention (which produced an end-of-the-year “overstrength”) and the decline of the US dollar overseas, which has raised the cost of overseas station allowances.

In response, the Air Force has had to implement a variety of bud­get-cutting actions that, taken to­gether, should help reduce the MPA requirement. These steps include reducing accessions and accelerat­ing separations across both the of­ficer and enlisted force. At the same time, we are aggressively seeking alternatives to preserve the quality­-of-life programs in MWR without dramatically increasing individual costs to participate in those pro­grams.

Three Factors

To appreciate fully the need and effect of each of these actions, it is important to begin with an under­standing of the fiscal context cre­ated by the FY ’87 appropriation. The deficit of more than $478 mil­lion in the Air Force’s MPA for FY ’87 is the result of three major influ­ences: increasing overseas station allowance requirements, declining congressional funding of the Presi­dent’s budget, and the FY ’86 over-strength carried into 1987.

As the dollar has declined, pri­marily against the German mark and the Japanese yen, overseas en­titlements—cost of living allow­ances, overseas housing allowances, and temporary lodging al­lowances—have increased. In Feb­ruary, our estimate was that over­seas stations allowances would cost nearly $158 million more than pro­grammed for this fiscal year.

The second part of the equation involves congressional decisions that reduced or denied funding for various programs. For example:

• Congress directed the services to absorb approximately seven per­cent of the cost of the three percent pay raise that went into effect this past January. The Air Force share is $26.6 million. With pay and allow­ances based on legislated entitle­ments that constitute more than ninety-five percent of the MPA, we have little flexibility in absorbing the cost. We must pay our people.

• Transferring funds from the permanent change of station ac­count (approximately four percent of the MPA) offers no relief. Con­gressional cuts and Gramm-Rud­man-Hollings reductions carried over into this year created a $95 mil­lion deficit that we’ve been working hard to resolve.

• Funds requested to support new programs or increase program levels, such as an increase of 398 in officer end strength, were denied.

The final contributing factor over which USAF has limited control is force attrition. In FY ’86, officer and noncommissioned officer re­tirements and first-term airmen sep­arations fell short of what historical trends and force-projection models had predicted. Consequently, even with an early separation program, the Air Force finished FY ’86 above authorization by 459 officers and 1,202 enlisted personnel. Concur­rently, Congress held the FY ’87 end strength levels essentially at last year’s levels. This overstrength must be reduced in order to stay within the budget appropriated.

Minimizing Impact on People

The actions we’ve initiated are designed to have the least possible impact on active-duty people. To this end, we concentrated our force-management efforts on reducing both officer and enlisted accessions.

For officers, we have reduced the number of OTS and Air Force ROTC accessions for this year. OTS is our most flexible commissioning source, and we can increase or de­crease the number of officer candi­dates we put into the school, de­pending on our needs. This year, we will commission approximately 1,700, or about 800 fewer than last year.

To reduce Air Force ROTC pro­duction, we have offered cadets scheduled to graduate this year the opportunity to leave the program voluntarily. Specifically:

• Nonscholarship cadets were al­lowed to disenroll voluntarily, with no further obligation.

• Scholarship cadets were also allowed to disenroll, but only after agreeing to repay any scholarship money received for tuition, books, and fees.

• Cadets were allowed to apply for active Reserve or National Guard slots in any military service.

• Even with reduced production, graduating ROTC cadets can expect delays of up to a year before enter­ing active duty.

We are currently developing leg­islation that would allow the Air Force (and other services) to absorb its ROTC graduate surplus in the civilian work force. This would pro­vide a welcome source of talent for hard-to-fill civilian positions in en­gineering and the sciences as well as in some business occupations. While we can and do offer jobs now to surplus cadets, the legislation would allow Secretaries of the mili­tary departments to employ these cadets, who would then fulfill their service obligation through federal civilian service.

On the enlisted side, Air Force Recruiting Service is reducing FY ’87 prior-service accessions from 1,500 to 1,000 and nonprior-service accessions from 62,000 to 57,000. Unfortunately, our force-manage­ment actions cannot be limited to accessions. Early separation of offi­cers and enlisted members is also required.

Officer reduction is a difficult problem. The FY ’87 National De­fense Authorization Act requires the Defense Department to reduce its commissioned officer strength by one percent this year, an addi­tional two percent in FY ’88, and finally another three percent in FY ’89, for a total of six percent. This congressionally directed reduction requires the Secretary of Defense to apportion the reduction among the services from the officer strength levels at the end of FY ’86.

Early Outs Encouraged

This year’s reduction requires the Air Force to cut its programmed commissioned officer strength by 1,698—in effect, no officer growth for FY ’87, plus a reduction of 1,300 officers. This is the equivalent of deactivating a bomber/tanker wing, an airlift wing, a fighter wing, and two GLCM sites. While we will not take any action as severe as deac­tivation, we must recognize that re­ducing the number of officers af­fects our ability to perform such tasks as intelligence, security, main­tenance, and space operations.

To meet this reduction target, we modified the voluntary release pro­gram. Based on historical data and the current level of disapprovals of voluntary separation requests, we believe an extra 500 voluntary losses will result from easing re­strictions on applications. For ex­ample:

• The six-month lead time re­quired to establish a date of separa­tion for officers who have completed their active-duty service commitments or who apply under the miscellaneous rule will be waived in most cases.

• Officers with an active-duty service commitment based on tui­tion assistance for off-duty educa­tion or acceptance of an engineer bonus may separate on repayment of the unamortized portion of the costs.

• Officers can be released from as much as twelve months of the ac­tive-duty service commitment in­curred by permanent change of sta­tion, training, or formal education.

It is crucial to realize, however, that if Congress holds to the FY ’88-89 reductions and if the meth­odology used is the same as this year’s, the Air Force’s share would be approximately 2,700 in FY ’88 and about 4,500 in FY ’89. Such drastic reductions could jeopardize our ability to meet projected threats and to support the basic national objectives of deterring nuclear and conventional war. By FY ’89, the total effect would be equivalent to deactivating three bomber/tanker wings, three airlift wings, two fight­er wings, and three missile wings.

To minimize the operational impact, we will have to reduce support forces, and that will have a direct impact on readiness. The Air Force will be required to reduce ROTC and OTS accessions further and en­courage more voluntary separa­tions. We will also have to imple­ment an involuntary release pro­gram for reserve officers and selec­tive early retirement of twice-de­ferred lieutenant colonels or colo­nels with at least four years in grade.

We implemented an early-out and early-reenlistment program to re­duce the enlisted force. The early-out and early-reenlistment pro­grams were for first-term airmen as­signed within the CONUS and over­seas. Those airmen eligible to re­enlist who had a date of separation between April (May if overseas) and September 1987 were required to re­enlist or separate in April and May. Also required to separate early were first-term and career airmen with fewer than sixteen years of service who were ineligible to reenlist.

Setting Priorities in MWR

These actions have had a marked impact on our FY ’87 force-struc­ture planning and personnel man­agement. There could be continued substantial impact in FY ’88-89. If we are to keep a ready force, it is essential to maintain the quality of life for the active-duty force. Unfor­tunately, while we were making de­cisions that affected the size and shape of the force, we were also wrestling with a reduction in MWR funding.

Congress reduced the FY ’87 ap­propriated funding for the MWR programs by $21.5 million. Con­gress further eliminated appropri­ated fund support beginning in FY ’88 for such revenue-generating ac­tivities as golf courses, bowling al­leys, and clubs in major metropoli­tan areas in the fifty states. The Chief of Staff directed a task force to review our complete MWR fund­ing profile and determine how we can provide those essential pro­grams within this framework. We believe the task force’s recommen­dations will increase the efficiency of the MWR activities, increase the local commanders’ flexibility, and ensure that these traditional pro­grams continue to support the Air Force way of life.

The task force recommended a new sliding-scale funding policy to ensure clear support of appropriate programs. To do this, we organized base MWR activities into four cate­gories, prioritized by value to the Air Force.

Certain mission-sustaining activi­ties, such as gyms, parks, libraries, and motion pictures for isolated or deployed people, should have total appropriated fund support. Some basic community activities, such as swimming pools, recreation cen­ters, youth activities, and child-de­velopment centers, require heavy support. Such desirable community activities as officer’s, noncommis­sioned officer’s, and airmen clubs, bowling alleys with fewer than twelve lanes, and base restaurants require a lower level of support. However, such business activities as Class VI stores, pay phones, slot machines, rod and gun clubs, aero clubs, snack bars, golf courses, bowling alleys, and marinas should receive only indirect operating ap­propriated fund support.

Eliminating appropriated fund support to the business activities means increasing fees, dues, and some prices. For example, officer’s and enlisted clubs will increase dues. Golf courses will raise fees to within seventy-five percent of off-base fees. Additionally, the task force suggested a comprehensive business approach to MWR, with emphasis on marketing, training, and incentive programs for the em­ployees.

Additional management actions are recommended: using Air Force central procurement offices if they are less expensive to operate than local sources; using central con­tracts for liquor, food, furniture, and equipment procurement; develop­ing generic liquor brands for Class VI stores and clubs; and consolidat­ing financial services from the 126 nonappropriated funds financial management functions into fifteen regional ones. These actions are ex­pected to save our scarce nonap­propriated funds resources and per­mit us to make the adjustments sought by Congress without a wholesale disruption of the MWR program.

A lot of hard work remains. We have requested $140 million as a supplement to the FY ’87 MPA. That amount, plus an estimated sav­ings of $275 million achieved by changes to PCS policies, reduced accessions, enlisted early outs, and voluntary officer separations, will help offset the MPA shortfalls.

However, even if all the actions taken were to achieve anticipated savings and assuming approval of the supplemental appropriation, the Air Force still faces a shortfall of $63 million. Reprogramming of other Air Force dollars into the MPA will be required to avoid ac­tions with drastic mission and per­sonnel implications. We have a sig­nificant funding problem that poses a challenge to Air Force leadership at every level.

Shaping Up to Ship Them Out

The Pentagon is still struggling with the PCS funding problem.

Last year, the Air Force had to delay the return from overseas of 27,000 people completing long tours, putting them into their new Stateside locations well after school had begun. Other permanent change of station (PCS) moves were also held up until the start of the new fiscal year in October. The main reason was budget cuts, driven by a need to reduce the federal deficit. A compounding factor, however, was the cost of increased travel and per diem benefits that Congress had authorized, but that it had not funded.

Despite its best efforts to juggle the budget and the reassign­ment of people from place to place, the Air Force went into this year facing a $95.8 million shortfall in PCS funds. It has taken numerous actions to reduce PCS moves. For example, it re-implemented the ‘career bachelor” program, which requires single career people to serve the same length of long tour overseas that people accompanied by dependents do. The base-of-preference program has been cut back, and Stateside PCS moves are being subjected to greater scrutiny. There is a limited benefit to Stateside cutbacks, though, because it is the overseas moves that tap the budget most heavily.

“We approved new assignment policies that made overseas duty more attractive,” says Lt. Gen. Thomas J. Hickey, DCSI Personnel. “The changes involve overseas rotation dates and were implemented this year. By changing the method used to rotate people from overseas, we provided people with greater flexibility for their next assignment.”

Air Force members had the following options: return to the CONUS after completing the current prescribed tour: request another full tour at the same location; request a tour extension of less than a full tour, but at least twelve months; enter a contract (nonspecific or to be determined) return date with the understanding that a fixed date can be obtained upon request; or request a contract return date and at the same time be considered for a consecutive overseas tour to a specific base, country of preference, or overseas theater.

“These changes to longstanding overseas tenure policies did not force anyone to remain overseas beyond the normal tour length,” General Hickey says. “Commanders retained the option to return certain members who have finished their pre­scribed tour and who should not remain overseas. In addition to changing overseas tour rotations, we also looked at maxi­mum and two-year tour requirements within the CONUS. We felt a two-year tour should be preceded or followed by an assignment at the same location when possible. We can no longer view any assignment as only a two-year PCS. In many cases, people will also be able to remain longer than the cur­rently prescribed maximum tour length at a Stateside site.”

The Air Force will further try to reduce Stateside moves by assigning “pipeline” people—whose PCS is unavoidable—to any vacancies they can fill. “We look first at filling a CONUS requirement with a training-course graduate or overseas re­turnee and do not normally make a CONUS-to-CONUS move unless manning is below ninety percent,” General Hickey says.

As of this writing, a final decision had not been made on what will be necessary for the remainder of FY ’87. The response to the voluntary actions taken so far has been very positive, al­though it may still be necessary to reduce the number of re­placements sent overseas late in the fiscal year.

Replacing USAF’s Civilians

Losses could be heavy between now and 1990.

In 1984, the Air Force identified potential high losses in civilian professional, scientific, and technical occupations. Twenty-five percent of the civilian workforce is eligible for retirement by 1990. Historical trends predict an eight percent loss per year. but there could be additional losses because of the pay gap and benefits issues. To counter this, USAF has instituted three recruiting and retention pro­grams.

Congress passed a new public law providing military spouses with employment hiring preference. Frequent military moves make it difficult for spouses of members to pursue careers. The new law provides employment preference for military spouses for both nonappropriated funds positions (UA-8 and below) and Civil Service positions (GS-5 and above). The provisions apply to lobs both overseas and in CONUS.

Second, the Air Force recognized a need to replenish the civilian scientific, technical, and managerial work force systematically. Consequently, a centrally funded and managed intern program called “Palace Acquire” began in FY 85 It provides for recruitment of high-quality college graduates, and the Air Force says it regards it as a source of accessions for civilians comparable to the Air Force Academy and ROTC for military people.

Finally, USAF has introduced a program for coordinated officer and civilian procurement, designed to respond with equity to expansion or contraction of the total force. The Coordinated Officer and Civilian Equivalent Procurement program provides an improved assessment of total force needs and a coordinated effort for marketing and advertising Air Force opportunities.

Promotions Are Slowing Down

Congressional actions to hold end strength to FY ’86 levels, reduce the number of officers, and restrict growth in NCO grades—along with unusually high retention—have led to a slowdown in both officer and NCO promotions.

The mandated officer reduction resulted in lower grade ceil­ings for colonels, lieutenant colonels, and majors in 1987. That, combined with fewer retirements than expected, decreased the monthly increments of those promoted from new selection lists. For example, promotions to colonel declined from seven­ty-eight in December 1986 to forty-one in January 1987, when the new list began. Promotions to major dropped from 334 in March 1987 to approximately 200 in April 1987. Lieutenant colonel increments are also projected to decline in June when promotions from the new list begin. This phasing allows the Air Force to exhaust selection lists it is currently promoting from on schedule and to finish the year within Defense Officer Per­sonnel Management Act (DOPMA) grade ceilings. Promotion increments for FY ’88 will be adjusted to reflect any changes in authorized grade levels and projected losses. Despite promo­tion slowdowns, USAF is maintaining the 1987 officer promo­tion schedule that it announced last year.

NCO promotions were also affected by grade ceiling limits and low attrition. The Air Force requested an increase of 6,500 staff, technical, and master sergeants in FY ’87. An earlier increment of 6,000 had been funded in FY ’86. Congress, however, attempted to limit end strength and grades to FY ’86 levels and declined to fund the requested increase. But the Air Force, anticipating approval, had already selected people for promo-lion based on the expected increase.

Held to FY ’86 NCO grade levels and experiencing fewer retirements, USAF is taking longer to exhaust its selection lists. And the grade ceilings, lower than programmed, will mean decreased selection rates in the following promotion cycles: FY ’87B staff sergeant, FY ’88A staff sergeant, FY ’88 technical sergeant, and FY ’88 master sergeant. After that, selection rates should return to a more normal pace. Even with the slowdown, promotion phase points in 1987 should be as good as they were in 1985 for most grades. They will not match 1986, but that was an extraordinarily good year.

Average Years of Service at Promotion

FY ’82

FY ’83

FY ’84

FY 85

FY ’86

E-9

23.0

22.5

22.4

22.0

21.5

E-8

19.6

19.7

19.2

19.2

18.3

E-7

16.4

16.2

16.2

16.5

15.0

E-6

11.8

12.1

11.9

11.4

10.7

E-5

5.2

5.9

5.5

5.9

5.3

Lt. Gen. Thomas J. Hickey became Deputy Chief of Staff for Personnel at Hq. USAF last year He had previously been Commander of Air Training Command’s Keesler Technical Training Center and before that served in various personnel and training assignments. He entered the Air Force in 1957, received his wings in 1958, and flew F-4s in 200 combat missions in Southeast Asia, sixty-three of them over North Vietnam. He is a graduate of the Air Command and Staff College and the Industrial College of the Armed Forces.