Articles by Ryan Guina

It’s no secret our government is having problems balancing the books. The problems go more than skin deep, and Congress is considering a variety of options to increase government revenues while decreasing spending. One of the areas where the government is looking to cut spending is with government benefits, including Social Security benefits, military retirement benefits, VA disability compensation, government retirement benefits, and similar benefits. But here’s the kicker: you won’t hear the government tell you they want to cut these benefits. Instead, they will tout the benefits of Chained CPI.

Chained CPI could be a silent killer

Chained what? Glad you asked. If you are a military retiree, social security recipient, or someone who receive VA disability compensation, then you should at least be aware of CPI and how it functions.

Government benefits are tied to inflation. As the cost of living increases, so do government benefits, at least in theory. There are a variety of ways to index inflation, but the method that matters for anyone receiving government benefits is the Consumer Price Index, or CPI. According to the Bureau of Labor Statistics, the CPI is “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.”

The Consumer Price Index works like this: the government tracks and measures prices of approximately 80,000 products and services on a monthly basis. As these costs rise, so does the measure of inflation. These costs are used to give a cost of living measurement which is then tied to certain government benefits, including the aforementioned Social Security, Social Security Disability Benefits, military retirement benefits, VA disability compensation, and more.

This leads us to Chained CPI.

How Chained CPI Will Slowly Decrease Your Benefits

Here is how it works: when the cost of an item increases, people react several ways: they either pay the higher price, they do without the item, or they replace the item with a lower cost item. For example, when the cost of steak increases, some people pay the higher prices, some people don’t eat it any more, and some people eat less steak and substitute it with chicken or pork.

Here is a brief video which describes how Chained CPI affects seniors who receive Social Security benefits. You can apply this to your own situation if you are receiving benefits that base their annual COLA of CPI.

Robert B. Reich, is the Chancellor’s Professor of Public Policy at the University of California at Berkeley, and was Secretary of Labor in the Clinton administration.

As you can see from the video, Chained CPI results in a lower Cost of Living Adjustment at the end of the year.

Here is the worst part: The decreased COLA increases will compound indefinitely.

Will Chained CPI Decrease Military Retirement or VA Disability Benefits?

If Chained CPI is instituted, the answer is yes, your benefits will decrease accordingly (assuming your benefits are tied to the new system). The difference likely won’t be much. In fact, you may not even notice it the first year. A couple dollars a month makes a difference, but it is a small difference, and one that won’t be noticed by everyone – which is exactly what the government is hoping will happen. The problem is that Chained CPI would be cumulative and would result in a lower cost of living adjustment every year. That $2 or $3 a month difference might be $5 or $6 a month next year, or possibly higher. Within a decade, your monthly benefits may be significantly lower than they otherwise would have under the current Consumer Price Index measurements. Here are some charts which show how you may be affected.

Military Retirees and Veterans Could Get a Triple or Quadruple Whammy

Military retirees and some other government retirees would receive the brunt of this change, as they could be affected, two, three, or even more times by a change to the Chained CPI method of calculating COLA. Here is how: a military retiree currently receiving a pension would receive a lower COLA which compounds over time. The same decrease would apply to Social Security benefits he or she is receiving. A third way this could affect them is if they receive VA Disability compensation benefits. Some military retirees also receive a government pension for their service after they left the military, or they receive a government pension in addition to a pension from their service with the Guard or Reserves. They would be affected as well.

If this might affect you, then take it upon yourself to contact your military lobbying group or your Congressional representative.

Photo credit: racineur

The Department of Defense recently announced they would restore the Tuition Assistance Programs that were cut by most branches of the military as a result of the sequestration spending cuts. The sequestration forced unilateral spending cuts across the DoD, leaving each branch of the military to find places to cut spending. Among the first programs eliminated by most branches of the military were the popular Tuition Assistance Programs.

Tuition Assistance Programs Are Back!

The Air Force, Army, Marines, and Coast Guard all cut their Tuition Assistance Programs as a method for getting under budget. Of the major branches of the military, only the Navy did not cut their TA program, though they were considering a modified program that would only cover a portion of tuition. Thankfully, each branch of the service will restore their Tuition Assistance Programs for their members.

Tuition Assistance Programs Restored by DoD

Cutting Tuition Assistance was an unpopular move that received a lot of backlash from current servicemembers, veterans groups, and even certain members of Congress. However, military leadership was in a bind because the budget cuts were forced upon them.

Restoring Tuition Assistance received enough attention to garner over 100,000 signatures on a petition to the White House. 100,000 signatures is the required minimum to receive a response from the White House. Congress responded by passing legislation that will provide funding to the Department of Defense to enable them to reinstate Tuition Assistance Programs. The bill, General Provisions of the 2013 Appropriations Bill, was signed into law by President Obama in late March.

When will Tuition Assistance be reinstated? As of right now, the Navy is still the only branch of service still operating their Tuition Assistance Program, since they never suspended it. The other branches suspended their Tuition Assistance Programs in Mid March. Military leadership is awaiting the wording of the law and the funding before they can reinstate the programs.

Cuts may still affect Tuition Assistance Programs. The new legislation orders the services to reinstate Tuition Assistance up to their allocated budgets, minus the required 9.4% spending cut initiated by the sequestration. This leaves the potential for some of the services to run out of funds before the end of FY13. It is recommended servicemembers sign up for classes as soon as the Tuition Assistance Programs are reinstated.

There is no word on how the sequestration will affect the future of the Tuition Assistance Programs beyond the current fiscal year.

Photo credit: Official U.S. Navy Imagery

Update: Military Tuition Assistance Programs have been restored by Congress. The dates will be released in the near future.

The US Air Force was the latest branch to suspend tuition assistance, following the cuts made by US Marines and the Army. The tuition assistance cuts were part of a larger set of cuts caused by the sequestration, the result of the Budget Control Act of 2011 which created automatic spending cuts as part of the budget passed by Congress.

USAF suspends Tuition Assistance Program

The original goal of the Budget Control Act was to cut the federal deficit over the next decade. When Congress couldn’t agree on the language of the cuts, they wrote in a set of sweeping budget cuts in order to get the law passed at the last hour to avoid reaching the spending cliff. The goal was to address these cuts before they took effect. Unfortunately, this didn’t happen and virtually every government agency was caught in the cross-fire. This includes the DoD, which is forced to make broad spending cuts across the board.

Here is how the sequestration impacts USAF operations and civilian jobs. In addition to the Air Force cutting flying hours, civilian hours, and training programs, the Air Force has been forced to make other cuts to morale and support programs, including the popular Tuition Assistance Program, effective March 11, 2013. According to the Air Force, this will affect approximately 110,000 members.

USAF Cuts Tuition Assistance

Here is a roundtable discussion with Chief Master Sergeant of the Air Force, CMSAF James Cody. This is a video well worth watching to better understand how the decision to cut Tuition Assistance was made and why.

As you heard from CMSAF James Cody, the Tuition Assistance Program has only been paused, it has not been eliminated forever. The only issue is we don’t know when it will be restored, as that hinges upon the sequestration being lifted and a new budget being passed.

CMSAF Cody also discussed several other aspects of how cutting the Tuition Assistance Program will affect USAF members, including the impact on Enlisted Performance Reports (EPRs), retention and recruiting, and other aspects.

How to pay for classes if you lost Tuition Assistance. There are several ways you can pay for classes if you are no longer able to use Tuition Assistance. First and foremost, you may have access to the Montgomery GI Bill, or the Post-9/11 GI Bill. These benefits are most valuable after you leave the service, so if you plan on saving your benefit, or if you have already transferred your GI Bill benefits, you may have other options. Some of them include grants such as the Pell Grant or other government grants, private military scholarships, state benefits programs for Guard members, or federal student loans.

Visit your base Education and Training Office for more information about your options for paying for classes.

Photo credit: Scott*

Update: Military Tuition Assistance Programs have been restored by Congress. The dates will be released in the near future.

Update: The Marines have released the following information about resuming Tuition Assistance:

• JEC will start processing TA requests 11 April 2013
• Limits for TA remain the same at $250/Sem Hour $4500/FY
• TA will only be allocated quarterly so if it runs out then there is no more TA for the Qtr.
• TA requests will only be processed 2 weeks prior to start date of course (used to be 60 days.)

Defense officials are struggling with the budget cuts forced by the sequestration. While the budget cuts won’t affect military pay, many other areas will be cut, including DoD civilian hours, operations, training, and many popular support programs. One of the first areas to see the chopping block were non-mission essential programs such as the popular Tuition Assistance Program. USMC officials stated Tuition Assistance would be closed to new enrollments until the budget issues are resolved.

USMC suspends Tuition Assistance Program

The sequestration came about after the Budget Control Act of 2011 was passed. This act created automatic spending cuts in virtually every government sector, including the military. As a result, many government programs are slashing spending and placing many employees on involuntary furloughs.

The US Marines need to trim $1.4 billion from their budget this year. This has led to many unfortunate cuts, including base support, morale, welfare and recreation activities, tuition assistance, and other morale related programs.

USMC Suspends Tuition Assistance Program

The USMC Tuition Assistance Program helps Marines pay for accredited training at to achieve vocational certifications, or work toward a degree at the associate, bachelors, masters, or doctoral level. Marines are eligible to receive up to $250 per credit hour toward their degree, up to $4,500 per year.

However, as of March 2, 2013, new enrollments in the Marine Corps Tuition Assistance Program have been temporarily suspended until further notice. Those who are currently enrolled in course will be able to complete their coursework without interruptions. USMC leadership will reevaluate the Tuition Assistance Program after the new budget has been finalized and the sequestration has been lifted.

Tips to pay for school: If you are currently attending courses and your tuition assistance has been cut, you still have options to stay on track and complete your degree. Some examples include using the GI Bill, either the Montgomery GI Bill, or the Post-9/11 GI Bill. If you do not wish to use the GI Bill, or you have already transferred your GI Bill benefits to a family member, then you may find other ways to pay for coursework. Some examples include private military scholarships, government grants, state benefits programs, or student loans. (In general, it is best to avoid student loans if possible).

Cuts are occurring military-wide. Please keep in mind these cuts are not limited to the Marines. The Air Force and Army have cut tuition assistance, and the Navy is likely to follow soon. Operations and support programs have also been cut across the other branches, as have DoD civilian hours and other programs. Let’s hope the government passes a balanced budget soon so we can get past these cuts.

Photo credit: Fort Meade

Update: Military Tuition Assistance Programs have been restored by Congress. Details to be released in the near future.

The sequestration is hitting the military hard, as defense officials are scrambling to make the government-imposed budget cuts. The good news is that military pay remains unaffected. The bad news is that many popular programs are under the chopping block. Included in the cuts are many discretionary spending items, including tuition assistance programs, morale welfare and recreation, base activities, and more. Operational spending and training are also being affected, with defense officials stating they will cut back in many areas across the board.

Army Tuition Assistance Program Suspended

The sequestration is a result of the Budget Control Act of 2011, which placed automatic spending cuts across virtually every branch of the government, including military spending. At the time, Congress had intended to alter the Act to make cuts where they felt it was best. Unfortunately, no spending agreement was reached, and the automatic spending cuts were enforced.

Army Tuition Assistance Program Suspended

Military tuition assistance programs are one of the most popular benefits programs among active duty military members. In fact, education is one of the primary reasons many people join the military. These programs are also popular among military leadership who often encourage their troops to take classes in their off-duty time. A highly educated force is beneficial to operations.

Who will be affected? There are approximately 200,000 members of the Regular Army, Army Reserve, and Army National Guard currently using tuition assistance benefits. The Army Tuition Assistance Program will be shut down to new applications effective March 8, 2013, and will remain closed until the sequestration is lifted and the budget is finalized. The good news is that this will not affect any members of the Army who are currently participating in a Tuition Assistance Program. They will be able to complete courses in which they are currently enrolled. However, they will not be able to enroll in new courses through the Army Tuition Assistance Program until the sequestration has been lifted.

When will the suspension be lifted? Unfortunately, this is above even the Chief of Staff’s pay grade. The suspension will remain in place until the new budget has been passed, the sequestration has been lifted, and all programs have been reevaluated. It is possible the sequestration could be lifted soon (as in a matter of a couple months), or it could last through the remainder of the fiscal year. After that, it is anybody’s guess.

How can I pay for school? If you are attending courses on the Tuition Assistance program, you can continue your current course(s) until complete. After that, you will not be able to enroll in new courses through the Tuition Assistance Program until the budget issues have been resolved. Other ways to pay for college include using your GI Bill (Post-9/11 GI Bill or your MGIB), grants, military scholarships, or state tuition assistance if your state offers these benefits to Guard participants. One of the most popular grants many military members qualify for is the Pell Grant. If you are planning to apply for grants or scholarships, it is recommended to apply as soon as possible.

Stay tuned to www.goarmyed.com for updates.

Image credit: U.S. Army Korea (Historical Image Archive)