House OKs 1.8 Percent Pay Raise for Troops, Officer Pay Freeze

The House passed legislation Thursday that tacitly approves a 1.8 percent pay raise for military service members next year, and includes a number of other pay, benefits and workforce provisions.

The chamber approved the fiscal 2015 National Defense Authorization Act by a vote of 325-98 before the start of the Memorial Day holiday weekend. The 1.8 percent pay bump for troops is in line with the automatic fiscal 2015 cost-of-living adjustment scheduled for the military; there is not an explicit provision regarding a pay raise in the legislation, but by staying silent, lawmakers are supporting the amount that would automatically take place under the law.

The figure is more than President Obama’s proposed 1 percent pay raise for next year – the same amount that he has recommended for federal civilians.

The formula for determining service members’ annual pay increase is based on the Bureau of Labor Statistics’ Employment Cost Index and the growth in private-sector wages. But under the law (Title 37, Chapter 19, Section 1009) the president has the authority to set an alternate pay raise for military personnel, citing a national emergency or fiscal concerns, if Congress doesn’t pass legislation adjusting the amount or canceling it. The 1990 Federal Employees Pay Comparability Act allows the president through executive order to set a pay raise for federal civilian employees under the same circumstances.

The Defense authorization bill also calls for a pay freeze for general and flag officers in fiscal 2015, as recommended by Obama. That’s pretty much where agreement ends between Obama and the Republican-led House, however. In addition to the administration’s suggested 1 percent pay raise -- the same amount troops received in fiscal 2014 -- Obama has proposed a smaller increase for troops’ basic housing allowance and significant cuts to military commissaries, the heavily-subsidized stores on base where service members and their families buy food and other goods. In his fiscal 2014 budget, Obama pitched a 4.2 percent housing subsidy increase -- and service members ultimately received an average bump of 5 percent from Congress. Lawmakers on Thursday approved an amendment that prohibits Defense from using funds to close commissary stores.

House members on Wednesday and Thursday considered 162 amendments to the massive bill, most of which were adopted by voice vote, including one that extends for another five years agencies’ authority to re-hire federal retirees without a salary offset. That authority, approved in the fiscal 2010 Defense authorization law, was set to expire in October. It allows agencies to bypass a burdensome administrative process to re-employ retirees for a limited time, on a part-time basis, to fulfill critical job needs. Without the waiver, the salary of the re-employed retirees typically is offset by the amount of their annuity.

“Bringing back experienced former employees means there are fewer gaps in the knowledge and skills necessary for agencies to perform well,” said Joseph Beaudoin, president of the National Active and Retired Federal Employees Association, in a letter to members of the House Rules Committee. “Experience with its use over the last five years has shown that the authority has not been abused, and has, in fact, provided agencies with additional, valuable flexibility.”  

Another amendment included in the bill would prohibit non-disciplinary furloughs of Defense Department civilians employed by a working capital fund unless there isn’t enough money to support the workforce, or the secretary “certifies that none of the work that would have been performed by those furloughed would be shifted to other DoD civilian employees, contractors, or members of the Armed Services.” This became an issue last summer when the department furloughed employees because of sequestration. At the time, lawmakers questioned whether the department could legally furlough working capital fund employees since their units do not operate on direct funding from Congress; the Pentagon asserted at the time that it has the authority to furlough those employees. 

Defense has five working capital funds, which are revolving funds financing operations that the department runs like a business, such as weapons production and depot maintenance. Sales revenue from customers sustains the revolving funds rather than direct congressional appropriations. The department’s WCFs are designed to break even over time, not make a profit. About 180,000 civilians work in WCF units nationwide.

The Defense authorization bill rejected the administration’s proposed reductions to TRICARE, the Defense Department’s health care program. Obama’s fiscal 2015 budget would implement annual enrollment fees for the Medicare-eligible retirees in the TRICARE for Life program, phased in over a four-year period. Current participants would be grandfathered in, and not subject to the fees. The White House also wants to increase pharmacy prescription co-payments for all active-duty and military retirees to “incentivize” the use of mail order and generic drugs, which cost less.

The bill also jettisoned the administration’s proposal to execute another round of base closures. “The committee is concerned that efficiencies associated with the BRAC process are offset with the inability to quickly dispose of excess property and the potential lack of overall savings to the federal government,” the committee report said. “For example, there are numerous instances where the Department of Defense conveyed excess properties to other federal agencies and the overall government may not have saved money.” The legislation directs the Defense secretary to submit a report by March 1, 2015, on BRAC’s effectiveness.

Overall, the fiscal 2015 Defense bill in its current form would authorize $521.3 billion in spending for national defense in fiscal 2015, and an additional $79.4 billion for overseas contingency operations, which is $30.8 billion less and $1.3 billion less respectively than enacted for fiscal 2014. Still, the House bill includes $45 billion more in fiscal 2015 than President Obama’s proposal.

The Senate Armed Services Committee began marking up its fiscal 2015 Defense authorization bill on Wednesday and expected to finish on Thursday.