average recruiter must interview more than 100 potential candidates to find one

acceptable recruit and the Coast Guard has had to expand the recruiting force

substantially to meet its recruiting needs.

The major point the Association wishes to make to this subcommittee is that the

decision to maintain a credible Coast Guard automatically carries with it a responsibility

to take care of the men and women who comprise that force regardless. This subcommittee has done that in the past. Yet much more must be done to avert a manpower crisis.

NCOA wishes to offer a number of pay, personnel, medical care and quality-of-life improvement recommendations intended to address a number of areas which can significantly improve the overall well-being of Coast Guard members, retirees, their families and survivors. As a matter of parity, the same recommendations will be made to those committees and subcommittees maintaining responsibility for the other services.

ANNUAL MILITARY PAY RAISE

NCOA appreciates the support of this subcommittee to pass legislation in 1997 that awarded Coast Guard members a 2.8 percent cost-of-living pay raise effective January 1, 1998. However, it must be noted the increase was one-half percent below inflation as measured by the Employment Cost Index (ECI) which was set at 3.3 percent. NCOA and most enlisted members of the armed forces are well aware that military pay raises

have been capped below private sector pay growth or full inflation in 12 or the last 16 years. The result is that military pay, even with the January 1998 increase, lags a cumulative 13.5 percent behind that enjoyed by the average American worker performing similar work. With the knowledge of these facts and after sustaining weeks and months of family separation and the hardships associated with the missions of the Coast Guard, complicated by increasingly longer workdays due to force reductions and operation tempo, enlisted men and women feel they are being "short-changed" by those in control of their destinies.

In 1997, the House of Representatives recognized the seriousness of this pay situation by including language in their version of the FY 1998 Defense Authorization Bill that directed future military pay raises to be at the full ECI level. Unfortunately, this provision was dropped in conference and the status quo prevailed. Although NCOA supports full ECI pay raises and total elimination of the differential with civilian sector pay, the Association does not expect the Congress to approve a 13.5 percent pay raise in 1999 to correct the situation. NCOA does recommend that Congress adopt a longterm military pay raise plan that would resolve the problem over time. Future military pay raises paid annually at full ECI levels plus an additional percentage amount would put military members (including the Coast Guard) on equal financial ground with their civilian counterparts in future years, while at the same time, gradually eliminating the current estimated pay differential. NCOA recommends a long term plan that would increase pay by the ECI plus 2 percent in 1999, ECI plus 3 percent in 2000, ECI plus 4 percent in 2001 and ECI plus 5 percent in 2002.

COMPENSATION PARITY WITH DOD

The Coast Guard's FY 1999 Budget Request reflects funding increases which correspond to the improvements enacted into law in 1998. Housing Allowance and Basic Allowance for Subsistence (BAS) reform, Hazardous Duty Incentive Pay, Family Separation Allowance (FSA) are all items Congress approved last year and is now being asked to authorizing funding for FY 1999. NCOA believes it to be extremely important that this subcommittee react favorably to the Coast Guard's request. Failure to do so could leave Coast Guard members and their families without the same benefits enjoyed by members of the other military services.

THE UNIFORMED SERVICES THRIFT SAVINGS PLAN (USTSP)

This year NCOA expects a recommendation to come before Congress that would establish a saving plan for members of the uniformed services. This proposal would give those eligible to participate an opportunity to contribute up to 5 percent of their basic pay into a program referred to as the Uniformed Services Thrift Savings Plan with the deduction made from their pay by the servicing Defense Finance and Accounting Services (DFAS). Under normal conditions, such a proposal would appear to have considerable merit; however, NCOA is very concerned that such a proposal sends the wrong message or paints an inaccurate picture of the current financial capabilities of enlisted members of the Coast Guard and other services. NCOA believes it to be highly

unusual that at a time when annual pay raises are being capped below inflation; When a pay gap of 13.5 percent is estimated to exist between military and civilian sector pay; When commissaries are redeeming food stamps in the millions of dollars, the Defense Department would offer a proposal that strongly suggests that military people, particularly enlisted people, can afford to save money.

Since the original proposal made only those who entered military service on or after August 1, 1986, eligible to participate, NCOA believes the main intent was to provide a program to supplement the retirement system for military members who began service on August 1, 1986. The financial impact of that system is itemized on Enclosures 1 and 2. There can be no doubt the 1986 retirement system will impose a wide range of financial penalties on those serving under it. In the interests of military services' ability to recruit and retain military people until retirement, NCOA recommends the retirement system be improved from its current version and a comprehensive review of existing civilian savings and tax deferred programs be undertaken prior to implementing a new savings plan for members of the uniformed services rather than initiate a new

program.

COAST GUARD HOUSING AND FACILITIES

Last year in testimony to this subcommittee, NCOA supported a Defense Department proposal to change the manner in which Basic Allowance for Quarters (BAQ) and

Variable Housing Allowance (VHA) were paid. The one allowance system went into

effect on January 1, 1998, and hopefully will provide Coast Guard families with a sufficient amount of money to cover the cost of adequate housing wherever assigned.

Despite improvements in the housing allowance, there continues to be a need for this committee to authorize the funding necessary to construct or make necessary improvements to government owned family housing and single member living facilities. In addition, NCOA believes that work area construction and improvements are as much quality-of-life improvements as are those related to housing. NCOA strongly recommends this subcommittee consider the need to authorize funding that not only provides Coast Guard people with suitable living quarters but also considers health, welfare and safety in the workplace as an important part of its quality-of-life funding responsibilities.

TUITION ASSISTANCE PARITY

Last year Congress instructed DoD to standardize the Tuition Assistance Program for all services. The Coast Guard has responded to guidance and has attempted to change its program to mirror the other services. However, a shortage of funding resulted in the Coast Guard's fielding of an annual tuition assistance benefit that was far short of what is authorized by the other service. The DoD services provide a maximum annual tuition assistance benefit of $3,500, while the Coast Guard could only fund an annual benefit of $1,000 for all eligible active-duty and civilian employees. This differential is difficult for Coast Guard members to understand especially when education opportunity while in