The Drawdown Drags On

hile the budget battles raging on Capitol Hill left most federal agencies bruised and bloodied, the Pentagon scored a comparative victory.

But Defense officials aren't celebrating, even though the department's 1996 appropriation contained an extra $7 billion above the Administration's budget request, compliments of congressional Republicans who have pledged to restock the Pentagon's larder after years of fiscal dieting.

If Pentagon planners are less than gracious, it should come as no surprise. The funding surge will do little to help the department handle burgeoning missions with a shrinking workforce. By the turn of the century, the Defense Department will have cut more than one million active-duty troops and civilians from its pre-Persian Gulf war rolls. Most of the extra money is earmarked for weapons, including the purchase of additional B-2 "stealth" bombers, which the Air Force does not want and the Defense Department cannot afford in the long run.

When asked what the Republican "revolution" has meant for the Pentagon, one congressional Republican staff member says, "Other than a marginal improvement in weapons funding, frankly, not much." Defense Secretary William Perry is less sanguine. At a meeting of defense writers in January, he said the increased funding commits the military to expensive weapons programs, risking "catastrophe" down the road.

Catastrophic or not, the increase in Defense funding is not the boon it might appear to be. Since 1989, the Defense budget has fallen more than $100 billion in 1996 dollars, to $265 billion. Under the Clinton Administration's defense plan for the next five years, funding is projected to fall nearly 10 percent, according to an analysis by Steven Kosiak at the Washington-based Center for Strategic and Budgetary Assessments.

The drop in funding has been managed largely by eliminating jobs. Between 1990 and 1995, the Defense Department cut more than 100,000 uniformed personnel each year. Over the same period, about 45,000 civilian positions were cut annually. The numbers are remarkable insofar as they have drawn relatively little attention outside the military community. While AT&T drew national headlines in January when it announced plans to lay off 40,000 workers, the Defense Department has for years been cutting three times that number annually.

The lack of attention is due largely to the success of the Pentagon's downsizing plan. Through an elaborate system of incentives, bonuses, early retirement options and career planning assistance, the Defense Department has managed to ease the departure of hundreds of thousands of workers in recent years.

Managing the cuts has not been easy. Since the drawdown began under the Bush Administration in the late 1980s, the military invaded Panama, went to war in the Persian Gulf, deployed troops to Somalia, Rwanda, eastern Zaire, Haiti and now Bosnia, and maintained a peacekeeping force in the Sinai. At the same time, the Defense Department has been executing a plan that will close out the decade with about 1.5 million active troops, down from 2.2 million in the late 1980s. Additionally, only 729,000 civilians of 1.1 million will remain employed.

More Cuts Looming

Most of the civilian and troop cuts were accomplished by the end of 1995, but the 120,000 civilian cuts to be made over the next four years will be some of the most difficult. And despite clear goals for personnel reductions, some planners on Capitol Hill and in the Pentagon predict further declining budgets will force deeper cuts than anticipated. If defense funding falls below Administration targets in the next few years, Perry says he will push for additional troop cuts before sacrificing readiness or modernization.

As a result, 'Doing more with less' has become more than a slogan in the Defense Department. Other than the Marine Corps, which has sustained comparatively smaller cuts, each of the services will cut their forces by about 30 percent. From where the services began in the late 1980s, the Army will have cut eight active combat divisions, the Navy about 200 ships, and the Air Force the equivalent of 11 tactical fighter wings.

Remembering the grim military drawdown after the Vietnam War, uniformed and civilian personnel planners are determined to manage cuts as humanely and strategically as possible. Instead of forcing out thousands of workers with little notice, personnel specialists have tried to preserve military readiness while helping people make the transition to life outside the military. If the military is going to continue to attract qualified people, it must be perceived as a responsible employer, says Diane Disney, deputy assistant secretary of Defense for civilian personnel policy.

"Our mission has not changed. We have to do more with less," Disney says. The budget squeeze and personnel reductions have forced the department to manage more creatively, automate more functions and plan strategically.

"Readiness is our No. 1 requirement. A very close second is quality. We would also like to retain the workforce diversity we have achieved. Meeting those three simultaneously is a challenge," Disney says.

It is a challenge the department has met thus far. The military has maintained its war-fighting capability to an acceptable extent; the quality of new recruits has remained high; and the representation of women and minorities in both the uniformed and civilian workforces has remained relatively steady in the downsizing. By offering early retirement, voluntary early release bonuses and placement services within the department for employees likely to lose their jobs, fewer than 10 percent of civilian workers have been forced from their jobs.

One big surprise for civilian personnel managers has been how well the 30-year-old priority placement program has worked. The program, a worldwide job registry and placement center within DoD, until recently handled a few thousand registrants a year. In 1995 that jumped to about 27,000.

Nonetheless, the program is responsible for placing about 900 employees a month, Disney says. Any Defense civilian who loses a job due to the drawdown can register with the program. Once offered a job, however, the employee is taken off the list, whether he or she takes the job or not.

"It was never designed to deal with the vast numbers it's been dealing with. I can't tell you how proud I am of that staff," Disney says. "The program allows us to retain our investment in human capital and helps us to keep employed highly skilled employees who have lost their jobs through no fault of their own. Why should they lose their jobs? Why should we lose their talent?"

As a result of its success, the DoD's civilian assistance and re-employment (CARE) program, of which the priority placement program is a part, was a finalist in the Innovations in American Government 1995 awards program sponsored by the Ford Foundation and Harvard University. The Defense Department used the $20,000 award to sponsor a conference on downsizing open to other federal agencies.

Key Incentives

"We've been able to do as well as we have because of the shared values in the department and some of the tools we've been able to use," Disney says. By the end of 1995, 79,000 Defense civilians had taken advantage of separation incentives. The separation programs offered at various times to select groups of civilians and uniformed personnel include the following:

• Volunteer separation incentive program (VSIP). A one-time payment up to $25,000 is offered to eligible civilians. It is based on the amount an employee would receive in severance pay.

• Volunteer early retirement authority (VERA). Civilian employees may retire early if they have 25 years of service at any age, or are at least 50 with 20 years of service. Employees under 55 receive a 2 percent deduction in their retirement annuities for every year they are under 55. This incentive is generally offered in conjunction with VSIP.

• Variable separation incentive (VSI). An annuity payment is offered to those servicemen and women who have served at least six years.

• Special separation benefit (SSB). A one-time, taxable payment is given to eligible military members, based on time in service. Members who accept SSB or VSI must agree to serve in the Reserves.

• Temporary early retirement authority (TERA). Service members in eligible fields with 15 years of active-duty service can choose to retire early. They receive full retirement benefits, but for every year under 20 years the have served they would lose 2.5 percent of their retirement pay.

Military and civilian personnel managers across the services agree that early retirement and separation incentives authorized by Congress in 1993 made their jobs much easier.

"The separation incentives were a godsend," says Elia T. Vasilopoulos, chief of civilian personnel at Keesler Air Force Base, Miss. "We are able to pace people leaving and make room for those who want to retire." In 1995, Keesler had to cut 150 civilian positions, and in 1994, 167 positions. "We know cuts are coming and we try to create vacancies. Of the 150 cuts last year nobody went out the gate without something. Fifty-five people took separation incentives. We expect the same sort of steady minor cuts down the road."

Even Vasilopoulos' office isn't spared. Ultimately the personnel office at Keesler will lose about 30 positions, some which will be transferred to the centralized Air Force Personnel Center in San Antonio. She expects to retire after seeing her office through its own personnel cuts, she says.

However difficult the cuts have been to manage at Keesler, they are nothing compared to managing base closures. Before arriving at Keesler, Vasilopoulos was the personnel manager at Chanute Air Force Base, Ill., which was selected for closure by the 1988 Base Realignment and Closure Commission.

"I don't envy anybody going through that process. The most difficult thing was we were the first ones out of the chute and we had to plow new ground," she says. The announcement that Chanute would close was met with disbelief and tears by many of its 1,000 civilian employees, some of whom had never lived anywhere else.

By the time the base closed in September 1993, all but eight employees had been placed elsewhere, retired or left the Air Force. "It was a challenging and stressful experience. The reality for these people is they're losing their jobs and they're scared to death," Vasilopoulos says.

More difficult civilian cuts are yet to come. Among the military services, many of the civilian "cuts" between 1989 and 1995 were achieved simply by transferring employees to newly created Defense Department agencies, such as the Defense Commissary Agency and the Defense Finance and Accounting Service.

"There have been a lot of transfers in place," says Paul G. Hutchins, chief of the Air Force's civilian workforce management division. "It's a drawdown for us because those numbers go off our books, but if you look at DoD, it's a wash." Of the 71,508 civilians cut from the Air Force between 1989 and 1995, 30,000 transferred to Defense agencies, Hutchins says. Many of the other cuts were the result of base closures.

The Defense Department did not authorize the use of separation incentives before 1993. Until then, the services relied on hiring freezes, normal attrition and, in some cases, involuntary reductions in force (RIFs) to meet civilian personnel goals. Because of the military's "up or out" personnel policies, it had a somewhat easier time managing cuts while maintaining the right balance of rank, experience and occupational specialty.

Maintaining the right balance on the civilian side has been tougher, personnel managers say. Between September 1989 and September 1995, the number of Defense civilian employees ages 30 or younger dropped by 59 percent. In addition, the number of employees ages 31 to 40 dropped by 29 percent.

"The worrisome part is the decline in the number of people with 5 to 10 years of experience. Those are people who have begun to make an investment in the department and the department has begun to invest in them as well. To the extent we are losing good people from there we can have problems in the future," Disney says.

A Balancing Act

Dorothy Meletzke, deputy assistant secretary of the Navy for civilian personnel policy and equal employment opportunity, says the Navy's older civilian workforce is also more expensive. The average civilian salary in the Navy jumped from $29,179 in 1989 to $40,134 in 1995.

"That has all kinds of implications for the future," Meletzke says. "The immediate question is are we getting the current technical skills that are coming out of the universities, particularly in engineering and scientific areas. It is also important in finance and procurement. Then, as we look ahead, we're going to have this experience gap." As a result of the gap, future managers may not have the breadth and depth of experience the Navy would like to have, she says.

The Navy has been working to identify potential pockets of obsolete skills. If they exist, the service should consider retraining the workforce in those areas. "If that is not a reasonable option, then we may need to take more severe reductions there so we can get back on the recruiting market so we can get new people coming into our workforce," Meletzke says.

"If we have virtually no hiring from 1990 to 2000, then that's a 10-year period and that would just play itself out for the next 30 years. The major issue for the Department of Defense between 1996 and the year 2000 is to continue to meet our downsizing target but build and remember that we have a future."

In the 1980s, the Navy hired about 2,500 young engineers and scientists annually. Since 1990, new hires have dropped to between 400 and 500 people, one year falling to 156, Meletzke says. "I'm not saying the steady-state requirement is 2,500, because we are a smaller Navy. But we are also maintaining a technical Navy. Most of our research and development in the Navy is done through our civilian laboratories and warfare centers. I think that 500 is not enough. Exactly what that requirement is, I'm not prepared to say, but I would guess it is somewhere in the 1,000 to 1,500 range," she says.

"It's a very difficult institutional issue and I think it's going to [require] a commitment across the Department of Defense to recapitalize its civilian workforce just as it is recapitalizing its hardware. It's easy to talk about in philosophical and theoretical terms, but if I'm the head of a laboratory, and I'm pleased with the quality of my people but I'm concerned about the future, it means I'm going to have to make some incredibly difficult decisions to identify work areas where I simply will have to cut back. [Those decisions] won't go over very well with people and they tear an individual's gut apart."

Smaller Force, Larger Role

While all services have made serious cuts in force structure and size, the Army has taken the largest hit in personnel. It will have lost 36 percent of its uniformed force by the end of this year, and some Army officials expect it will drop below its slated end strength of 495,000. Recent peacekeeping missions, including the deployment of 20,000 troops to Bosnia for at least a year, have heavily taxed the noncommissioned officer force and made it difficult for the service to maintain the mix of skills needed for wartime, Army officials say.

At the same time, the President has pledged to send peacekeeping troops to the Golan Heights if Israel and Syria sign a peace agreement. The Army would likely commit one infantry brigade to the mission, which would tie up the equivalent of one division for rotational purposes.

"I am starting to feel increased operational deployments may cause fraying of the career enlisted force," says Lt. Gen. Theodore Glen Stroup, the Army's deputy chief of staff for personnel. The loss of 137,000 Army civilians over the last six years has only exacerbated the problem, he says, as troops have picked up additional workloads formerly carried by civilians. At some Army installations, for example, soldiers put in extra hours doing such former civilian jobs as running gymnasiums, delivering supplies and performing installation maintenance.

While the Army has the smallest portion of the Defense budget, about 23 percent, it carries the lion's share of peacekeeping and other contemporary missions. In an attempt to relieve the active force of some of the deployment burden, the Army last year deployed National Guard and Army Reserve troops for a six-month peacekeeping rotation in the Sinai. The Army has provided light infantry troops to monitor the peace agreement between Egypt and Israel for the last 15 years-and that has some concerned similar future missions could also prove interminable.

Military leaders believed that if they could turn over such missions to the reserve component they could relieve some of the stress on the active force. By most accounts the experiment was a success. The drawback: It cost the Army $18 million in training and personnel costs. While the Army is short on people, it is also short on money, which made some officials question the experiment.

Whether or not the Army is deployed to the Golan Heights and elsewhere, personnel shortages and high operating tempo will continue to plague the service for the foreseeable future. And even if the Army does not drop below 495,000, its civilian force will drop at least another 38,000, to 242,000. Overtaxed and under-resourced, the Army appears to some officials to be the Defense Department's bill payer.

Some Good News

While personnel cuts are real and painful, all the services have been able to meet recruiting goals with quality recruits, despite a fading interest in military service among Americans. The services just have to work a lot harder at it.

In the late 1980s, the average Army recruiter had to meet with about 100 young people before finding one willing to enlist. Now that recruiter would have to meet with about 160 people before landing one signature, says Stroup.

For some career service members, promotion rates are starting to return to previous levels after slowing during the height of troop cuts. In the Navy, for example, where enlisted promotions slowed three years ago, they are beginning to bounce back. Two years ago a petty officer first class had about an 11 percent chance of promotion to chief petty officer. Now his chances would be about 16 percent.

"It's not going up dramatically but it is going up," says Cmdr. Jim Cudla, a spokesman for the Bureau on Naval Personnel.

Another bit of good news for the military community is that even where future cuts are certain, military personnel remain committed to their jobs.

Before the Philadelphia Naval Shipyard closed its gates for the last time in September 1995, it completed on time the overhaul of the aircraft carrier USS Kennedy. "One would think people wouldn't really care," says Meletzke. "That workforce, while they were dealing with the very real issue that they would be unemployed, got that ship overhauled and it went out actually ahead of schedule."

When the Kennedy pulled out, it gave the shipyard workers military honors, something a naval ship has never done before, she says. "It's a symbolic thing, but we are a traditional organization and symbols are important."

The event was a reflection of the quality of employees-in and out of uniform-the military has attracted and personnel officials hope to continue to attract.