Pay raise of 3.5% in 2008 fiscal bill

The Senate Armed Services Committee practically assured military personnel a 3.5 percent pay raise next January by including that figure in the fiscal 2008 defense authorization bill it approved in late May.

The House of Representatives already had voted to give the military a 3.5 pay raise next year, which is a half percentage point higher than proposed by the Bush administration.

After the House vote, the White House’s Office of Management and Budget said the bigger pay raise was “unnecessary” and urged congressional leaders to instead back a 3 percent increase, which would match recent wage growth in the private sector.

Senate Republicans ignored the White House pleading and joined with Democrats in supporting the bigger raise. It now appears likely that 2008 will be the ninth consecutive year of military raises set at least 0.5 percent above private sector wage growth as measured by the government’s Employment Cost Index.

The House voted to sustain this string of cost plus-a-half-percent military raises through 2012, long enough nearly to wipe out a perceived pay gap with the private sector. At one time, the gap exceeded 13 percent. The Senate committee’s bill deals only with the 2008 raise. Any differences in the bills will be ironed out by a House-Senate conference later this summer.

Here are more details from the Senate committee bill:

TRICARE fees: The Senate committee did vote like the House in rejecting for a second year the Bush administration’s call to raise TRICARE fees and deductibles as well as TRICARE retail drug co-payments. Senators want to delay action on any such changes for at least another year. Lawmakers and their staffs want to study the final report of the Task Force on the Future of Military Healthcare, which is due in December.

Chapter 61 retirees: The Senate committee bill would take a more dramatic step than does the House to expand eligibility for Combat-Related Special Compensation to Chapter 61 retirees – members forced by service-related disabilities to leave service short of 20 years. The Senate language would allow any Chapter 61 retiree with combat-related disabilities to receive both disability compensation and combat money. Their combat payment would be the equivalent of retired pay based on years served.

The House voted to expand combat eligibility only to Chapter 61 retirees who served at least 15 years and have combat-related disabilities rated 60 percent or higher.

Reserve retirement: One item that will spark negotiation is the Senate committee’s language to lower the start of reserve retirement below age 60 by three months for every 90 days a reservist or National Guard members is recalled to active duty.

This change, at first glance, looks like a boon to career reservists mobilized for Iraq and Afghanistan. But the committee could find no money to apply this change retroactively to deployments since the attacks of Sept. 11, 2001. This change, therefore, only would lower retirement age for reserve and National Guard personnel mobilized after the date the bill is signed.

SBP-DIC Offset: The Senate bill is silent about ending or phasing out the so-called SBP-DIC offset that affects 61,000 surviving spouses. Current law requires that payments under the military’s Survivor Benefit Plan be reduced by amounts surviving spouses receive in Disability and Indemnity Compensation from the Department of Veterans Affairs. The House bill would take a first step toward elimination of the offset by paying up to a $40 a month survivor indemnity allowance starting in October 2008.

Though the Senate committee ignored the SBP-DIC offset issue, an initiative still might be added when amendments voted on during floor debate on the authorization bill later in June.

Survivor benefits: Meanwhile, the committee did adopt two smaller changes to survivor benefits. One provision would allow guardians and caretakers of dependent children to receive SBP benefits, closing a coverage gap brought to light with U.S. deaths in Iraq and Afghanistan. Grandparents or other guardians have been left to care for surviving children but they are ineligible for SBP to help raise them.

The Senate bill also would allow service members to designate in writing anyone as beneficiary of their death gratuity. This change would treat the death payments more like an insurance policy.

Drug discounts: Both the House bill and Senate-committee bill would squeeze pharmaceutical manufacturers to provide federal pricing discounts to medicines dispensed through TRICARE retail pharmacy network. Such discounts already are given on medicines dispensed on base, through the military’s mail order program and through VA clinics and hospitals. The Senate language orders the discounts for TRICARE retail outlets. The House language isn’t as rigid. It would allow the department to exclude drugs from the TRICARE retail formulary if drug makers do not provide the discounts. The Senate committee decided the House approach could hurt patients.

Accumulated leave: The Senate committee voted to allow any service member to carry up to 90 days of unused leave into the fiscal year. The current ceiling is 60 days for members not in a war zone. Senators said that is too limiting given the pace of current operations.

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