Compare reserve and active-duty military personnel costs fairly, reserve group says

Reserve military forces are a budgeting bargain compared with their active-duty counterparts, the Reserve Forces Policy Board contends in a new report analyzing "fully burdened and life-cycle" costs of active and reserve military personnel.
When not on full-time activated status, personnel-related costs for a reservist are 22 percent to 32 percent those of a regular active-duty military member, the board says in its report (.pdf). Reserve Component forces represent 39 percent of total military manpower but account for 16 percent of the DoD budget.
Growing manpower costs – what the report calls "taking care of people" – now eat up more than 50 percent of the Defense Department's budget, a level the report calls unsustainable. As pressure mounts to curb spending, the Reserve Forces Policy Board is trying to counter what it calls perceptions that reserve forces cost comparatively more than active-duty forces.
Arguing that DoD lacks a consistent methodology for determining personnel costs, the board developed its own cost methodology last year in consultation with organizations including the Government Accountability Office, the Congressional Budget Office and the Center for Strategic and Budgetary Assessment.
Conducting its own analysis, the board determined DoD "is neither complete nor consistent in its consideration of some of the most important cost factors when weighing the relative costs of Active and Reserve Component forces," omitting as much as $600 billion paid from other accounts, including from other federal agencies.
Other comparative cost metrics highlighted by the report include:
  • Reservists and members of the National Guard receive less retirement pay than active-duty retirees, accounting for 17 percent of all DoD retiree pay.
  • Since Reserve Component members serve in their home towns, the military doesn't have to pay moving costs that average $3,260 for active-duty troops.
  • DoD doesn't have to pay federal impact aid to local schools for reservists' children, or maintain housing for their families.
  • Only 29 percent of the $6.44 billion the U.S. Treasury contributed to the Medicare-Eligible Retiree Health Care Fund (MERHCF) in fiscal 2013 was for Reserve Component members.
The board recommends any future cost-comparison studies include specific cost factors "in order to accurately capture the fully-burdened and life-cycle costs of military manpower.
Specifically, the board recommends:
  • Establishing policy and guidance for computing fully burdened military personnel costs.
  • Specifying all cost elements to be included in the studies, including mission support, U.S. Treasury contributions and external costs.
  • Calculating and reporting costs annually.
  • Clarifying the use of composite rates in studies.
  • Developing a model to calculate and compare life-cycle costs.
"The board believes that the establishment of a standard costing method for determining individual component costs is essential when exploring (active-duty/Reserve) component mix and mission alternatives in a budget constrained environment," the report says. The director of Cost Assessment and Program Evaluation "must take the lead for the Secretary of Defense in determining the cost methodology ground rules for the military departments and other DoD entities."
For more:
- download the report (.pdf)
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