Union Decries Pentagon’s Proposed Cuts to Commissary Subsidy

The largest union of Defense Department employees is asking Congress to head off the Obama administration’s fiscal 2016 budget proposal to cut $4.4 billion over five years from appropriated subsidies to the Defense Commissaries Agency.

In a March 18 letter to Armed Services panels, the American Federation of Government Employees warned of “a death spiral” for commissaries if Congress enacts a Pentagon plan to save money by merging the Commissaries Agency and the Army and Air Force Exchange System while cutting fiscal 2016 funding by $300 million, to be followed by further annual cuts to the subsidy averaging $1 billion.  

“Such a cut would force commissaries to reduce their hours and days of operation and increase costs for important goods and services, particularly at more remote locations,” wrote Beth Moten, AFGE’s legislative and political director. Commissaries, which sell products at cost plus a 5 percent surcharge for store improvements, “would no longer be a convenient bargain for military families.”

She protested as “false savings” a plan to merge the Commissary Agency and the Army and Air Force Exchange System and then to convert DeCA employees to non-appropriated fund status, as proposed in January in a plan from the Military Compensation and Retirement Modernization Commission. “The commissaries and the three exchange systems perform similar missions, for similar patrons, with similar staff, using similar processes,” that report said. “Numerous studies commissioned by DoD or other federal entities have recommended some form of consolidation or increased cooperation in pursuit of improved cost effectiveness.”

But the likely result, AFGE said, would mean “paying DeCA employees less, providing them with inferior benefits, and making their jobs disposable” when many of the employees are military spouses. “ ‘Walmartizing’ the DeCA workforce in order to generate fake and punitive economies at the expense of American workers is wrong,” the letter said.

Converting DeCA employees to nonappropriated status would mean pay and benefits cuts for workers such as cashiers, while making many ineligible for insurance benefits or job protections and curtailing revenues to the Army and Air Force Exchange System, the letter said. “Prevailing rates for NAF employees are consistently lower than for appropriated fund employees.”

AFGE argued that “the rest of the savings from the commission's consolidation proposal are illusory at best….The modest cost of providing military families with inexpensive but essential goods and services is almost invisible in DoD's overall budget, amounting to less than 0.3 percent….No programs provide more bang for the buck.”

In President Obama’s budget released Feb. 2, planners noted that “the defense strategy depends on investing every dollar where it will have the greatest effect” and that “the military must shed unnecessary force structure and infrastructure to prepare the department for the future.”

The Pentagon comptroller wrote that “the department cannot afford to sustain the rate of growth in military compensation experienced over the last decade…The department is proposing changes that will ensure we can continue to offer a competitive compensation package to recruit and retain the Joint Force of the future. These reforms include modest annual military pay raises over the next five years, slowing the rate of growth in basic housing allowances, creating a single fee-for-service TRICARE plan, and decreasing commissary subsidies. If implemented fully, these proposals would save approximately $25 billion over the next five years.”

The budget distinguished between steps the department can take to save money at commissaries without legislation and changes in the appropriation that subsidizes employee overhead, which would require Congress to act. “The most visible impact to commissary patrons,” the budget said, “will be a reduction in operating days and hours with most stores remaining open five or more days a week.”

Cuts to commissary subsidies were also proposed last year, but in May 2014, the House Appropriations panel restored $100 million to the Defense Commissary Agency.