Personnel and Readiness APEX ORIENTATION PROGRAM March 3, 2008 Dr. David S. C. Chu Under Secretary of Defense (Personnel and Readiness)

2 Assumptions We are engaged in a long, irregular war The All Volunteer Force is our paradigm Cost of manpower will rise more rapidly than budget We will complete transition to an Operational Reserve Civilians can play a larger role Operations will be integrated Geographic focus is on Mideast, South/Southeast Asia, East/Northeast Asia

3 Military Compensation 9 th QRMC: identified significant gap in military member’s regular military compensation Goal: ensure military pay would be equal to the 70 th percentile of earnings for private sector employees with comparable education and experience FY2000/2001/2002: Congress makes annual pay raises equal to ECI + 1/2% / targeted raises are introduced / President adds $1B to mil pay FY : officer pay gap closed and 73% of enlisted gap eliminated (benchmark: 70% percentile) 2006: 97% of enlisted pay gap closed Combination of increase in basic pay (ECI + ½) & substantial increases in BAH 2007 raise eliminated the gap 2.2% across-the-board pay raise Targeted pay raises for mid-grade and senior enlisted as well as warrant officers. Expanded military basic pay table from 30 to 40 years of service 2008: 3.5% basic pay raise equals ECI + 0.5% 2009: 3.4% proposed base pay increase

4 Defense Advisory Committee on Military Compensation Recommendations Change non-disability retirement system (i.e. vesting) Revamp Basic Pay table to better reward performance and to support longer career profiles where desirable Change housing allowances/other allowances (remove discrepancies in pay unrelated to performance) Consolidate and simplify Special and Incentive Pays (approved in NDAA 2008; to be executed over the next 10 years) Revise the health benefits for retirees -- more closely align benefit’s value to retiree with its cost to the Department of Defense Periodically evaluate of quality-of-life programs to ensure they are cost-effective and adequate Review Reserve Component pay/benefits to ensure equality to Active Component members

5 Personnel Costs* vs DoD Topline Active Duty Endstrength DoD Topline MilPers CivPay Military Benefits** *Source: FYDP FY08 Position **Contracts for Service data not available at this time ***Retirement, DHP, Family Housing Then Year $ Billions Active Duty Endstrength (Millions)

6 Transform Department civilian human resources management system Advance DoD’s critical national security mission Respond swiftly and decisively to national security threats and other missions Accelerate DoD’s efforts to create a Total Force Retain and attract talented and motivated employees committed to excellence Compensate and reward employees based on performance and mission contribution Expand DoD’s ability to hire more quickly and offer competitive salaries Making Civilians a Stronger Partner – National Security Personnel System (NSPS)

7 Major Design Elements of NSPS HR System Classification - Simple, flexible pay banding structure Compensation - Performance-based, market- sensitive Performance Management - Linked to agency mission; results oriented; annual pay increase based on performance rating Staffing – more flexible authorities to allow SECDEF to act quickly to respond to mission needs: the right person, in the right place, at the right time

8 FY 1973 – FY 2007 AC: % RC: - 9.9% The Role of the Reserve Components DoD End Strengths ( FY73 – FY07) Reductions from Peaks AC: % (FY 1973 – FY 2006) RC: % (FY 1989 – FY 2006)

9 Reserve Force Mobilization Statistics Current Selected Reserve Members Ever Mobilized for ONE/OEF/OIF Data as of: December 31, 2007 Members Mobilized Once for ONE/OEF/OIF Members Not Mobilized for ONE/OEF/OIF Members Who Served More than Once in ONE/OEF/OIF Notes: 1. This data reflects individuals mobilized and not mobilized, and is not designed to portray units mobilized and not mobilized. 2. Data does not include 3,898 IRR members who are currently mobilized Not Mobilized – 53.0% Mobilized – 47.0%

10 The Reserve components serve in both operational and strategic roles to meet the Nation’s military requirements in peace and war. In their operational roles, Reserve components participate in a full range of missions according to their Services’ force generation plans. Units and individuals participate in missions in an established cyclic or periodic manner that provides predictability for the combatant commands, the Services, Service members, their families, and employers. In their strategic roles, Reserve component units and individuals train or are available for missions in accordance with the national military strategy. In this role, the Reserve components provide strategic depth and are available to transition to the operational force as needed. An Operational Reserve Definition of the Reserve Components as an Operational and Strategic Force

11 A New Readiness Paradigm: Are Forces Ready for Assigned Missions? Notional Data

12 From: Unit status Inputs / resources Deficiencies Service centric Periodic Multiple reports / systems Defense Readiness Reporting System Represents a Real Change… To: Mission assessments Outputs / capabilities Their implications Joint centric Continuous Enterprise views Unclassified Answers Ready for What? Unclassified

13 Issue2004 Status2008 Status Care of the Guard: Support of Guard members and families is the responsibility of federal, state and local agencies. The National Governors Association (NGA) has quantified state support in an annual survey with the following six categories: state employee support; educational benefits; tax and financial benefits; family support programs; licensing, registration and fees; and protections, recognition and employment support. 522 benefits912 benefits Severely injured support: States build support for severely injured coming to their states through programs such as “Heroes to Hometowns (H2H)” 2 local partnerships31 state-level partnerships In-state tuition: Allow where assigned, and allow continuance of in-state rates upon reassignment. 21 states continue support after reassignment 34 states provide support after reassignment School transition of military dependent children: States participate in an Interstate Compact providing a policy platform for resolving the challenges experienced by military children Only district – to – district agreements to support transition Developed Inter State Compact to aid school transition under consideration by states Spouse employment: States accommodate the needs of transferring spouses, through compacts and nationally recognized standards for licensure in desirable careers, such as teaching, nursing and real estate and otherwise remove barriers to the transfer of professional licenses and certifications 4 states with ABCTE, 6 states with STT and 17 states with NLC 7 states with ABCTE, 50 states with STT and 23 states with NLC 8 states providing support through CAAs ABCTE = American Board for Certification of Teacher Excellence STT = Spouses – to – Teachers program NLC = Nurses Licensure Compact CAAs = Career Advancement Accounts Family Support: Ten Key State Issues

14 Issue2004 Status2008 Status Unemployment compensation for military spouses: Granting eligibility to trailing spouses 10 states provided eligibility 21 states provide eligibility Predatory Lending: DoD has established federal statute that limits the terms of payday, vehicle title and tax refund anticipation loans. Payday and vehicle title loans are overseen by state government agencies. 13 states prohibited payday lending 22 states agree in principle to enforce the federal regulation (plus 6 prohibit payday and vehicle title loans) Voting: Coordinated support through electronic means to decrease the time needed to request and submit an absentee ballot. The 9 specific guidelines are: 45-day ballot transit time, elimination of the notary requirement, late registration procedures, special state write-in absentee ballot, reference to the Uniformed and Overseas Citizens Absentee Voting Act in the state election code, electronic transmission of election materials, expanded use of the federal write-in absentee ballot, emergency authority for chief election official, enfranchise citizens who have never resided in the U.S. 9 states comply with 7 – 9 criteria, 34 comply with 4 – 6 criteria, and 12 comply with 1 – 3 criteria 13 states comply with 7 – 9 criteria, 30 comply with 4 – 6 criteria, and 12 comply with 1 – 3 criteria Foreign Language Requirements: Foreign languages are important to national security and economic competitiveness. States join with the DoD to frame a language strategy to develop foreign language skills needed to keep the nation secure and a leader in the global market. No established process to develop state plans 3 prototype planning process to develop state plans Accessible Support for Military Families: States mobilize every resource (military and civilian) through an integrated team to assist all military families with child care; resources for schools, teachers and youth; and to facilitate easy access to information, services and support Service agencies work programs without coordination 47 states have established state- level coordination Family Support: Ten Key State Issues

15 Strategic Scorecard (on eight active criteria) GU 52 AS 55 PR 39 VI VT 53 NH MA 34 RI 49 CT 37 NJ 28 DE 48 MD 9 DC 46 Number in state represents the ranking by size of total force and families residing within the state. 1 States/territories meeting at least 75 percent of criteria States/territories meeting between 50 – 74 percent of criteria States/territories meeting less than 50 percent of criteria

Overall Evaluation of States Based on Original Criteria Number in state/territory represents the ranking by size of total force and families residing within the state. VT 52 NH 50 MA 34 RI 48 CT 37 NJ 28 DE 47 MD 9 GU 51 PR 39 VI 53 AS 54 States/territories meeting at least 75 percent of all criteria States/territories meeting between 50 – 74 percent of all criteria States/territories meeting less than 50 percent of all criteria

Overall Evaluation of States Based on Original Criteria Number in state/territory represents the ranking by size of total force and families residing within the state. VT 52 NH 50 MA 34 RI 48 CT 37 NJ 28 DE 47 MD 9 GU 51 PR 39 VI 53 AS States/territories meeting at least 75 percent of all criteria States/territories meeting between 50 – 74 percent of all criteria States/territories meeting less than 50 percent of all criteria

18 In-State Tuition Number in state/territory represents the ranking by size of total force and families residing within the state. VT 52 NH 50 MA 34 RI 48 CT 37 NJ 28 DE 47 MD 9 Allow where assigned, and allow continuance of in-state rates upon reassignment Allow where assigned Allow only if resident

19 In-State Tuition Number in state/territory represents the ranking by size of total force and families residing within the state. Allow where assigned, and allow continuance of in-state rates upon reassignment Allow where assigned Allow only if resident VT 52 NH 50 MA 34 RI 48 CT 37 NJ 28 DE 47 MD

20 Defense Language & Culture Transformation ‘soft’ power “ In short, based on my experience serving seven presidents, as a former Director of CIA and now as Secretary of Defense, I am here to make the case for strengthening our capacity to use ‘soft’ power’ and for better integrating it with ‘hard’ power. ” Secretary of Defense Landon Lecture addressing ROTC cadets at Kansas State University November 26, 2007 Language and Culture: Soft Skills for the 21 st Century

21 Defense Language & Culture Transformation Service Academies Expanded study abroad, summer immersion and foreign academy exchange opportunities Added instructor staff for strategic languages Service academies now require 4 semesters of foreign language study for non-technical majors Service ROTC Programs Embedded cultural awareness studies in ROTC curricula Developed pilot program to provide select ROTC schools grants to enhance language programs of strategic importance Units are encouraging ROTC cadets to take language electives, when available and feasible Pre-accession focus provides a language and cultural foundation

22 Defense Language & Culture Transformation Using Foreign Language Proficiency Bonus (FLPB) to encourage change Incentivizing personnel to self-report, maintain, and improve their skills Authorized up to $1,000 per month for high-proficiency in strategic languages Launched the National Language Service Corps to meet higher proficiency needs Goal: 1,000 highly-skilled language professionals by 2010 Targeting 8 to 10 critical languages Building processes to track military/civilian retirees and separatees with the right skills Surveying both military and civilian to gauge interest Data base will capture volunteers only Incentivizing personnel to self-report, maintain, and improve skills

23 QUESTIONS?