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DoD Press Briefing with Jan "Denny" Eakle and Shelia M. Earle from the Pentagon

Presenters: Dir. 10TH Quadrennial Review of Military Compensation Jan "Denny" Eakle, and Principal Dir. Deputy Undersecretary of Defense for Military Personnel Policy Shelia M. Earle
March 12, 2008 12:00 PM EDT
            BRYAN WHITMAN (Pentagon spokesman): Well, good afternoon, and thank you for joining us for what, I think, is a very important report that's come to conclusion. The -- we have two people that are going to talk to us today about the 10th Quadrennial Review of Military Compensation, and we're pleased to have with us today, Dr. Denny Eakle, who is the director of the 10th Quadrennial Review of Military Compensation, and Sheila Earle, who's the principal director and deputy undersecretary of defense for military personnel policy. 
 
            And like I said, they have just completed publishing volume one containing the analysis and principles and concepts guiding our military compensation system. This has recently gone up on to the DefenseLINK website so that it can be downloaded for all who are interested in reading the full text. We have a rather comprehensive briefing that we're prepared to walk you through that will highlight the important elements, and then take some questions from there. 
 
            So with that, let me turn it over to Dr. Eakle. 
 
            Thanks. 
 
            DR. EAKLE: Good afternoon. 
 
            Q     Good afternoon. 
 
            MS. EAKLE: It's my pleasure to be here to talk to you today about the -- volume one of our report on the 10th Quadrennial Review of Military Compensation. I'd like to start out by explaining to you a little bit about why we do QRMCs. 
 
            Under the law, there's a requirement that these be done every four years. The first one was held in 1965. We're up to number 10. They're done under charters by the White House. The White House tells us exactly what topics they would like us to review, we do that and then start our review. The review is quasi-independent, and I want to explain what that means. We do the study. This department certainly knew what we were doing as we went along, but the department only had limited influence over what we were doing; because at the end, we publish our report -- and volume one is what we're releasing publicly today -- and then the department takes the content of the report, studies it and decides how much of it they want to adopt. Anything that requires legislation, the department will make a decision whether or not to send the legislation to the Hill for consideration. 
 
            Our charter, which came from the White House, has five elements in it. Today what we're going to talk about are ones that apply to the first, third and fourth charter items. The other two will be published in the later volume. So today we're going to talk about three items from our White House charter. 
 
            When we began the QRMC one thing, we were interested in was determining how we should operate this QRMC, what kinds of things should underpin our work. 
 
            And we came up essentially with four basic principles.   
 
            The first principle is all-volunteer. We want to ensure that whatever we do supports the volunteer construct both from a perspective of the nation maintaining an all-volunteer force and from the perspective of individuals, so that from an individual's perspective, they would be more apt to volunteer if we had the compensation correct. 
 
            The next one is flexible and responsive. Today we have a system that has some flexibilities for the services to manage their forces, but what we were looking for is opportunities to increase that flexibility.   
 
            We were interested in best value as well. We want to make sure that we get the most bang for our compensation buck, both from the perspective of the individual and from the perspective of the department.   
 
            And last but not least, we want to ensure that whatever we recommend to the department, it would in fact support their HR plan for military personnel. 
 
            Now having decided what these principles should be, we said what are the major themes we want to operate under, and the first was flexibility for the services. What we wanted to do is ensure that everything we did pointed towards increasing flexibility for the services to respond to changing environments: the Iraq war, differences in unemployment rates at home. Anything we did, we wanted to ensure that it made sure that the services had the flexibility to respond as rapidly as possible.   
 
            The second thing is choice for the members. We wanted to ensure that in the -- as far as we could, subject to what the services' needs were, we gave people the opportunity to make their own choices. So we wanted a compensation system that would in fact support members in their choices on what kinds of service they were going to have.   
 
            What we're doing today is, we're going to show you the results that are in the first volume. The first volume of the report is on cash compensation. The second volume will be on deferred compensation and non-cash elements. So today we're just going to talk about the first one. The second volume will be published sometime this summer. 
 
            So here at the topics we're going to discuss with the -- in the volume one: pay comparability, special incentive pays, our pay-for- performance measures, and housing. 
 
            The first one was pay comparability. Whenever a QRMC convenes, one of the first questions on the table is, is pay comparable, is pay adequate for maintaining the force? That essentially is what is in task number one from the White House charter. And so we checked to see is pay comparable. 
 
            The way we did that was by looking at the results of the ninth QRMC and taking their methodology for how one determines pay comparability, and we tested it using their methodology. 
 
            The program that they came up with requires you to look at RMC, regular military compensation, and compare it to age- and education- matched peers in the U.S.  
 
            So that's how we've done this. And I'll show you what the results of those were.   
 
            After we did the basic comparability test, we then went on to say, is this as comprehensive a measure as we could develop, or is there perhaps another way to look at this? And what we've done is developed another measure. 
 
            So first, let's look at enlisted earnings. The ninth QRMC said that in order for pay to be comparable, it had to be at or above the 70th percentile of the age- and education-matched civilian population. And what you can see from this chart is it was very much like the 70th percentile back in 2006. If you looked at 2007 and 2008, with the additional targeted pay raises that took place in 2007, what you would see is that we have in fact met the age -- met the grade in year of service pay comparability for every data point. So we are now exceeding the 70th percentile for civilian -- for enlisted personnel. 
 
            The officers were already at the 80th -- or 70th percentile, excuse me, back in 2006. And they, of course, have maintained that, because we've gotten pay raises that were at or above ECI since then. 
 
            So having looked at comparability and determined that in fact we do have the comparability that the department was seeking, we decided to look to see if there were other things that we should be considering when looking at military compensation. Basically, what we wanted to do is create something which would give members, military members, a better means of assessing how their pay stacked up in comparison to civilians.   
 
            RMC today contains basic pay, subsistence, housing and a measure of savings on federal income tax, but there's a lot more to military compensation. So we asked ourselves, what is available in the private sector that we could fold in so that an individual would be able to look at what their pay is and compare it to someone who's in the private sector, to say, am I making the kind of money that this other individual is?  
 
            Our new measure begins with RMC as the basic building block, but we picked up a couple other things. First and foremost, we said, are we including all the tax advantages that we should? And the answer is simply no. Today, the RMC measure does not take into account state tax advantages, nor does it take into account FICA tax advantages. So we went out and we estimated what those are for all the people in the military. 
 
            The next thing we said was, well, if you were in the military, you clearly don't have out-of-pocket costs for health care premiums, copays. You avoid those kinds of things.  
 
            How much more would a military person have to make on the outside in order to make up for that? And so we've got a measure in there of how much health care out-of-pocket costs would be. 
 
            The third thing we looked at was retirement. In the private sector you're required to vest at five years of service. It's a very different vesting program than we have in the military. And what we've done is created a measure that compares how much money would be deposited into a retirement account in the private sector versus what an individual in the military would expect to earn taking into account both discounting and the probability that they'll even be around for at least 20 years to get it. So we folded all of those in.   
 
            So if you look at the charts on page 13, what you see is this is the picture of enlisted benefits when you add on -- or enlisted compensation when you add in these three additional benefits. One way to think of this is, if you look at the fourth year of service, an individual who is in the military today, were they to leave the military, they'd have to make $43,000 in order to have comparable pay to what they have today, because of all the additional taxes they would pay and their out-of-pocket expenses for health care. 
 
            For the officers, you see a very similar picture. And for an officer who's at the fourth year of service, they would have to make $72,000 in order to be completely comparable to their private sector peers. So having looked at those, one of the things we said was, well, how would we ever use this in terms of checking comparability against the private sector? And what we found is that RMC, if it's at the 70th percentile, then for this new measure, which we call Military Annual Compensation, or MAC, would have to be at the 80th percentile. And so that is the measure that we have adopted for MAC in our recommendations. And what you can see is that enlisted MAC is, in fact, at or above the 80th percentile, and the same is true of the officer MAC. 
 
            Now, what is our recommendation to the department? Our recommendation is that the department begin to use MAC as a more comprehensive measure of the pay comparability, in order to do several things.   
 
            It would enable them to better assess how they are doing in terms of keeping up in a more comprehensive way than RMC will do for them today. In addition, we think that this is -- would be a very useful tool for talking to the troops. As a military member, it's very difficult to tell exactly how much compensation you would have to get to be -- have the same take-home pay that you have today. This measure actually would enable them to do that, and we believe that the department should begin to look at how to better educate the troops so they truly will understand what their pay is and be able to make informed decisions at times of reenlistment, retirement, or other separations.   
 
            Now, turning to special and incentive pays, I'm sure most of you are aware that in the 2008 NDAA, the Congress revamped the special incentive pay categories, going from over 60 categories -- 60 specific pays into eight categories. That, in fact, was a recommendation of this QRMC, and it was enacted before the publication of this document. And so now it's up to the department to begin the process of drafting out the instructions to adopt this.   
 
            So this is an already-completed action from this QRMC, but there is one other thing that we are recommending in addition to the realignment of pays, and that is regarding the S&I budget itself. Today we have an S&I budget that, quite frankly, is rather small in comparison to the size of the other pay accounts. And because of that, it doesn't give the service as much flexibility for arranging pay. Our recommendation to them is that they begin to grow that pay account, that special and incentive pay account, in order to give the services greater flexibility.   
 
            Now, I'd like to turn to pay for performance. Most of you, I'm sure, are familiar with the Defense Advisory Committee on Military Compensation. They preceded us in this study. And the DACMC had a strong recommendation to replace the time-in-grade -- the time-in- service pay table, that the services have operated under for many years, with a time-in-grade pay table. 
 
            We looked very seriously at this recommendation, but we've chosen not to accept it and are not going to endorse the change. And that's for several reasons.   
 
            One of them is that if you have people who are in two different services and the promotion phase points are different, in fact this would exacerbate the pay differential that already exists. Even within a single service, a skill that promotes faster than another one already has a financial advantage to people who are in that faster- promoting skill. Once again, this would exacerbate that, and we don't think that's in keeping with our spirit of being fair and equitable to all members. So we have basically set aside that recommendation in order to ensure that we continue with a system today that the troops already understand.   
 
            However, when we made the recommendation, the DACMC was really focused on two things. They were focused on people who were promoted early, promoted ahead of their peers. These people today receive more pay the year they're promoted early, but as soon as their peers catch up to them, they make exactly the same amount of money despite the fact that the other person, the early promote, has been serving in a higher grade with greater responsibility while the other person has been serving at a lower grade. There is a perception of inequitability there that the person who was promoted early has now got greater responsibility but now his peers are making the same amount of money he is. 
 
            The DACMC's other issue had to do with lateral entrance. In this case, we're talking about, for example, people who come in as physicians. Today when we bring physicians in, we bring them in at frequently the grade of full colonel. And the reason we do that is because we have to bring them in at zero years of service. So we give them a rank that is not necessarily commensurate with the kinds of responsibilities we would like them to hold.   
 
            Becoming a colonel, even a lieutenant colonel, has a lot of command responsibilities associated with it, and these are probably not the kinds of things that we want to assign to a brand-new officer. Today it's doctors. Five years from now, it could be some other skill that we don't even think about today, something that would be widely available -- training would be widely available in the private sector, and perhaps it would be in DOD's best interest to allow people to come in laterally, whether that's the officer ranks or the enlisted ranks. 
 
            So our recommendation here is to allow the Department of Defense to assign constructive credit, for pay purposes only, to these individuals. In other words, they would be able to say, we're going to bring you in as a technical sergeant with 10 years of service in terms of how we will wish to pay them. They would still have zero years of service for calculation of retirement, but it would enable us to pick a pay cell that would actually speak to the experience these individuals have gained in the private sector.   
 
            The last area I'd like to talk about is the work we did in the housing area. The DACMC recommendation, in area of housing, had been to do away with the without-dependent housing rates and immediately go to one set of rates for all personnel. So we were going to evaluate that recommendation anyway, but the Congress also gave us another issue to look at.   
 
            The Congress was very interested in how the rate-setting process was operated. And so we said we were going to do a top-to-bottom look at the process of setting with and without housing, with-and-without- dependent housing rates.   
 
            So we began a study by looking at how the rates were set that were in existence today. Under the law, they were supposed to be set in a way that would enable them to be perfectly comparable in some respect to civilians who were equally situated in terms of income.   
 
            And what we found was that the department had done a wonderful job in setting the with-dependent's rates. The methodology is sound and, in fact, the rates are still valid. However the same is not exactly true with singles. The singles were set using a different methodology. And what we believed was that the methodologies should be identical.   
 
            And so we have duplicated the original methodology for both singles and people with dependents. As a result of that, we have a recommendation to the department to begin to reduce the gap between those housing allowances.   
 
            Our recommendation was to begin with a 75 percent floor. Since today, some singles are making as little as 52 percent of their peers, we said, at a minimum let's start with setting it at no less than 75 percent of what married members would get.   
 
            We also have a recommendation that over time and as the budget would allow, that floor should move from 75 percent gradually up to 95 percent. Whether or not that will be done will obviously remain to be seen, but our recommendation is that the gap should be closed.   
 
            It should not however completely disappear. Unlike the DACMC recommendation, what we have determined is that if it were completely closed, we would in fact then be over-compensating the singles, because of the difference in things like utilities and insurances.   
 
            Another thing that the DACMC had looked at was charging fair market rentals for housing, all on-base housing.  Their concept was quite simply that if you live in a three-bedroom house, we should charge you the rent for a three-bedroom house downtown.   
 
            They believe what that would do would be clear the housing waiting lists, and individuals would be able to rent on base whatever type of housing they wished.   
 
            In theory, that's a good idea. In practice, however, we believe it is not. The QRMC has stayed away from that largely because we think there would be an extremely adverse impact on junior enlisted personnel. Today they're in quarters that are far greater than what their housing allowance would entitle them to rent, and therefore we don't think that that's a good plan. We do not want to see military members harmed by adopting this. So we have elected not to do this. 
 
            However, we do think that there is some merit in the concept, and we think the merit exists on the single side. Today a young man or woman who is living in the barracks, living on a ship forfeits their entire housing allowance for doing that, and we don't think that that's necessarily the most equitable way to operate. 
 
            So we have a proposal that is somewhat different than one might have guessed when we started, and that's to take a different approach to the partial BAH that already exists in law. Today partial BAH exists as an artifact of a reallocation of basic pay into housing that took place in the 1980s. That amount of money has never been increased. So it's lost all of its value, essentially, and bears no relationship to anything else. 
 
            Our recommendation is that the department seek authority to create a new variable partial BAH, just as the BAH itself is variable. 
 
            Our concept is that the BAH would be based on -- the BAH -- partial BAH someone would receive would be based on essentially the value of the quarters they're occupying. So what you would see is, a one-plus-one dormitory is the DOD standard today. What that boils down to is essentially each individual having their own bedroom and a shared cooking facility and a shared bathroom. That's very much like sharing a two-bedroom apartment. And so for those people, we think that the BAH that they are giving up is actually pretty close to what they should be paying for it.   
 
            However, for people who are living with three roommates, we think they're overpaying, and we would recommend that they get a rebate on their BAH. So they would get the amount of money back that would recognize the quality of their housing. 
 
            The range we are talking about is going from zero for people in the one-plus-one dormitories, up to 25 percent rebate for those who are living in ships with hot bunk arrangements. So you'd be able to give people something in recognition of the fact that housing is not at the DOD standard. I would note that it would not apply to people who are in training, since training situations, obviously, are different. 
 
            This basically concludes what's in this volume of the QRMC report. Our next report is going to cover the three topics you see here: quality of life, the health care and, last but not least, the retirement. Those things speak to -- the first two speak to the quality of life bullet sitting in the charter, second item, and the retirement speaks to the last charter item. 
 
            And with that, I would like to take questions, if you'd like some. 
 
            Q     Given that if the Pentagon was able to find the money to close the gap between single and married -- the gap that you found that remains of only 5 percent -- that if you raise their standards of 95 percent, that would pretty well cover their out-of-pocket expenses, and that -- given that, and it probably doesn't apply to that many people, wouldn't it be easier just to go with a single BHA -- BAH and save on administrative costs of handling with or without dependents? Did you consider that? 
 
            DR EAKLE: Yes, and as a matter of fact, there's -- what it does is it actually eliminates one entire pay -- one half of the BAH pay table, and it can be done electronically. It's very simple to check, because if they're single, give them 95 percent of what's in the table. 
 
            Q     So that would be a -- might be a logical final step to -- if you were to -- 
 
            MS. EAKLE: If the department would choose to adopt this, that's how -- that's the mechanics of how you would do it. 
 
            MS. EARLE: Now from a department viewpoint, what we would be concerned about is the statement she made about the potential overpayment or paying somebody more than they actually need. 
 
            And so that would be a consideration that we would take under advisement. 
 
            Q     But if you were going to compare it to the civilian sector, you know that a single employee, an employee with a big family, they both have different housing expenses, but their pay is the same amount, generally, if they have the same skills and job responsibilities. And isn't there a certain logic with just not worrying about that additional 5 percent in BAH? 
 
            MS. EARLE: That 5 percent, though, may be very expensive. So again, it would be something we would consider.   
 
            But your point is very well taken, and it is consistent on the private sector. But the components that comprise military pay are very different, and so it would be something we would carefully consider. 
 
            Q     This would clearly affect the recruiting and retention environment and is aimed at that. There's a difficult environment right now, with the war going on. I wonder if you would talk about the urgency of getting some of these initiatives either into policy or into legislation, given the fact that you're going to have to expend some money to get them done, yet you've got all this expense from the war that's straining the budget as it is.   
 
            MS. EARLE: This, again, is something that we are very carefully considering. And as you -- as was noted in the briefing, some of these have already been adopted by the Hill. Some of them have been adopted by the department. So you can see that we are pressing forward the partial -- or the BAH at the -- without dependents, bringing them to 75 percent.  That was already implemented. The S and I pay consolidation, which was a huge change -- Congress has given that authority, and we are in the process now of building our plan and our programs on how we will be implementing that.   
 
            So your point is absolutely well taken, and the department is pressing all points wherever possible.   
 
            Some of the other items, like constructive credit -- we are definitely taking a deep look and developing a department position on those as we speak. 
 
            Q     So no position yet? And could you talk to the possibility of -- or the likelihood of these things actually getting through, given some of the costs and given the fact that it's a difficult budget environment right now? 
 
            MS. EARLE: These are all the things that have to be considered in establishing a department position. We represent the people part of the business in Personnel and Readiness. But we would have to consult with people across the department to make sure that it's in the best interest of the Department of Defense.   
 
            And so again, we are working these very diligently with our partners, and those kinds of considerations will be taken very seriously by the department before we establish department position, of which, then we would go forward if legislation is needed and ask the Congress for that. 
 
            Q     Could you address the underlying philosophy here about the married versus single and the intent in how you compensate these people? Is the intention here to take care of the families, or is it to compensate both troops equally without worrying about the fact that one individual has chosen to have a family and one hasn't? Do you see what I'm saying? I mean, is there sort of a statement about one person's decision to have a family and the obligation to care for those individuals? 
 
            DR EAKLE: Well, when we talk about housing, what we really were trying to do is is be as fair to all members as possible. That's why we decided to use the same methodology in determining the housing rates -- or our recommendation on the housing rates as was done with the people who have dependents. It's one of the reasons why, in fact, it's not a hundred percent, is that there is still additional expenses associated with having more dependents, and so you end up with larger utility bills, for example. 
 
            This is truly about care and concern for all military members. One is not at the expense of the other. This is about trying to achieve equity for all members. Clearly, if you have a family, you have benefits not directly made in pay that would still continue in any event. There's additional health care, all sorts of family programs. Those programs will continue, and we're not making any comments about whether or not those -- you know, this has nothing to do with those. This has to do with equity in pay for single personnel.   
 
            Q     I have one other one. The variable partial BAH, would that be -- you said that the 25 percent would apply to those aboard ship in a hot-bunk situation. 
 
            Would you really cut it that finely, or would that 25 percent really apply to anyone who is a single member assigned to a ship? 
 
            DR EAKLE: No. Actually, we worked with a working group that had representatives from all three sea services. And the sea services generally believed that there is a quality-of-life difference between being on a carrier and being in a submarine, a fast attack boat. And so it was at their recommendation that we decided to come with a tier -- a system that's as tiered as it is.   
 
            There is really a difference in the quality of life from one to another, and our recommendation to the department was to try to recognize all of those differences in quality. 
 
            Q     Do you know how many tiers you would have in the BAH -- this partial BAH? 
 
            DR EAKLE: Yeah, six. Zero percent for people in a one plus one, five -- remember, this is just our recommendation -- 5 percent in a situation where someone has a private room but has no cooking facilities, 10 percent if they're in a room with more than one roommate, and then 15 to 25 would be the ship arrangements where you've got a rack, and how much of a rack do you have? 
 
            Q     Is that something you'd need congressional approval to do, or could the department do that just without any added -- 
 
            DR EAKLE: It requires legislation. 
 
            Q     How would that work for troops in the field, in Iraq or Afghanistan, who are obviously not --  
 
            DR EAKLE: We haven't -- our recommendation did not discuss deployed situations. This is about people who are permanent party assigned to some real living arrangements. 
 
            Q     I apologize if you addressed this earlier. Have you put in a dollar figure on what this could potentially cost to implement these recommendations? 
 
            DR EAKLE: Yes, and it's in the report. Unfortunately, I don't remember what the number is, but it is actually in the report. If you -- when you pull the report up online, if you look in the very back of the report there's an appendix that has a cost estimate. 
 
            Yes? 
 
            Q     First question is, is there anything different about overseas housing in any of the work that you did? Any recommendations that are specific to overseas? 
 
            DR EAKLE: No. This is a look at how one compensates just for single housing. Overseas, you would -- we would probably suggest that the -- whatever the floor is that's assigned to people in CONUS, you'd use the same type of floor there.   
 
            And for people who are single and are living in quarters or -- I guess it's only in quarters in that case. Our recommendation is that all of these rebates, if you will, that would construct the partial BAH, would be based the average CONUS BAH for people in that grade.   
 
            The reason for that as much as anything is we think about ships. If I'm on a carrier and I'm home-ported out of Norfolk, or I'm on a carrier and I'm home-ported out of San Diego, they've still got the same living arrangements. And where you're home-ported should not influence how much money you should get in your variable BAH, from our perspective. And those same rates would apply overseas.   
 
            MS. EARLE: With respect to the Overseas Housing Allowance, remember that that's a separate housing allowance. And so it's under different rule sets.   
 
            Q     And that was not addressed in this study.   
 
            DR EAKLE: It was not.   
 
            Q     Okay.   
 
            Q     The last QRMC came out in 2002 -- the 9th. And I see on your -- on my handout here that this one began in 2006. Is there any reason why there's a six year sort of gap?   
 
            What's the reason behind having two volumes to this? I don't think the -- the 2002 study came out all on one volume.   
 
            MS. EARLE: The different QRMCs over the years, this being the 10th, have had multiple volumes in some cases. We've had many more volumes in some of them. The 8th QRMC had multiple volumes. It was almost like an encyclopedia set.   
 
            This one would be actually rather lean except for all of the studies. It is underpinned by some tremendous studies that will be made available with the publication later this summer.   
 
            The other issue to think about on the QRMCs, remember there was a reference to the Defense Advisory Commission on Military Compensation. Those happen rarely. The last one was over 20 years ago.   
 
            And so that commission looked at compensation first, and then their recommendations were evaluated specifically by the QRMC. As you can see, she has done an extensive evaluation on some of their recommendations and has given information that will inform the department on where to go next with regard to setting a department position.   
 
            Q     And that bounced it two years.   
 
            MS. EARLE: That would be the rationale, was the time frames that everything came along.   
 
            Yes? 
 
            Q     Well, when you were doing this study, has -- or -- has anyone ever figured out, on average, is a married person more expensive to retain in the department than a single person? Would you figure in -- 
 
            DR EAKLE: We did not do an analysis of how much singles versus personnel with dependents costs the department. 
 
            Q     (Off mike) -- whether it might true that a married person is more expensive? 
 
            DR EAKLE: Well, I think it's clearly true only because you have -- you know, a single member is the only person treated in the military health care facility. If you have a dependent, then there's going to be two people treated. So I figure the simple math tells you that that would be true, but I have no -- I have done nothing to look at how much more expensive a married or a member with a family is. 
 
            Q     And the S and I budget says that it is less than 5 percent of total pay currently. Did you come up with the figure for what you'd like to see that be? 
 
            DR EAKLE: No, as a matter of fact, you really can't do that, and I'll tell you why we decided not to demand a number. The department has never had what I would consider to be a robust S and I budget. Because they have not had, you know, a large budget to work with, we basically have their history to fall back on. You know, right now the S and I budget is larger than it would be in peacetime, but that's associated with pays that are directly driven by the war. What we're talking about here is having -- the department having the flexibility to have more money in order to shape the force, and that has nothing to do with the kind of S and I budget they currently have. This is looking at how one would manage your personnel in terms of shaping skills, shaping years of service, and so since we've never had the opportunity to have a budget that enabled the department really to do that, we're walking down a path that we've never been on before. 
 
            Q     You’d just like to see more? 
 
            DR EAKLE: We think we should see more. The recommendation in the report is to gradually raise that budget until there is -- viewed as having enough money to do this management. 
 
            Yes? 
 
            Q     I wanted to ask you about your RMC methodology here. 
 
            It seems as though a rather generous slice of this is based on the value of military retirement. I'm wondering if that's going to be kind of a hard sell to these individuals, especially if you're talking about someone who's on the more junior side of the scale. It -- 
 
            DR EAKLE: Well, I can answer that really easily.   
 
            Q     Please. 
 
            DR EAKLE: The people who are on the junior end -- in fact, they are at a deficit on that chart. You can't see it, but people who are junior, because they have such a low probability of ever achieving retirement and because of the discounting, they actually are negative to what their civilian peers are in that one area. So -- and I say if you look at it, you'll see that there's not much on that front end. In fact, it is a -- it is actually subtracted from it on that end.   
 
            Q     I see. 
 
            DR EAKLE: So there's -- I don't perceive there's a really hard sell there, because we're basically -- our methodology says you're in that one area not getting what you would get as a civilian. 
 
            Q     (Off mike.) 
 
            Q     I see what you're saying. Thank you.  
 
            Q     Plus, if that's true and a small percent of juniors actually -- junior enlisted is actually good until retirement, is that a fair way -- 
 
            DR EAKLE: Absolutely, because it's a weighted average. It -- when you weight it, on that end, you're looking at 15 percent will get it, 85 percent won't, and it's a weighted average of those. It's not just a straight -- everyone's negative. It takes into account the probability, which is one of the reasons why you see the wedge grow. The further out you get, the higher the probability is that you will actually be able to collect retirement. The other factor that's in there is also the discounting. So, you know, we've put this in constant dollars and discount it back to whatever year of service they are at, at the time. 
 
            MR. WHITMAN: Okay. Thank you all for showing up.   
 
            Q     Thank you.
 
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