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Chairman ELLENDER. Do these same pay increases apply to administrative personnel and supervisory personnel?

Dr. BENSON. No, sir; administrators, supervisory personnel, elementary and high school principals are paid in accordance with the salaries included in the general schedule established by the Classification Act.

FRINGE BENEFITS

Chairman ELLENDER. For the record will you please supply a list of all fringe benefits in addition to salaries for which overseas teachers and supervisory personnel are eligible?

Dr. BENSON. Yes, sir; I have that information.

(The information follows:)

(1) Living quarters allowances. This is intended to reimburse an employee for substantially all of his costs for other temporary or residence quarters wherever Government-rented or Government-owned quarters are not provided without charge.

(2) Post allowance. A cost-of-living allowance granted to an employee stationed at a post where the cost of living, exclusive of quarters cost, is substantially higher than in Washington, D.C.

(3) Separate maintenance allowance. An allowance to assist an employee to meet the additional expense of maintaining his dependents other than at his post assignment when he is not permitted by the Government to take them to his post. ance except at posts which are specifically approved by the Assistant Secretary By regulation the Department of Defense does not permit payment of this allowof Defense (Manpower and Reserve Affairs).

(4) Post differential. Additional compensation of 10, 15, 20, or 25 percent of basic compensation granted for services at places in foreign areas where conditions of environment differ substantially from conditions of environment in the United States and warrant additional compensation as a recruitment and retention incentive. It is authorized only when the post involves extraordinarily difficult living conditions, excessive physical hardship, or notably unhealthful conditions. No post differential is payable in Europe, Japan, or Okinawa.

(5) Medical care. Civilian employees in foreign areas are furnished medical care at the rate of one dollar for each out-patient treatment. In-patient treatment is $45 per day. (This amount is usually covered in full by the major medical provisions available to teachers under the Federal Employees Health Benefits Act.)

(6) Commissaries and post exchange. Civilian personnel in foreign areas are authorized use of the post exchange and if in housekeeping facilities are usually authorized use of military service commissaries. No data are available as to potential savings in foreign areas as actual savings are dependent on costs of items on the local market and the extent of utilization.

PANAMA CANAL ZONE SCHOOLS

Chairman ELLENDER. I wish you would supply for the record how schools in the Panama Canal Zone are administered and the reason that these are not administered by you.

Dr. BENSON. Yes, sir.

(The information follows:)

The Canal Zone is a U.S. Government reservation wherein residence is restricted by treaty to persons connected with the operation, maintenance, and defense of the Panama Canal. The residents of the Canal Zone, therefore, are mainly employees of the U.S. Government or members of the Armed Forces and their dependents.

The Canal Zone Government is an independent agency of the United States administered by the Governor of the Canal Zone under supervision of the Secretary of the Army.

Under the general direction of the Civil Affairs Director who is responsible to the Governor, the Superintendent of Schools administers two school systems in the Canal Zone-United States (English-language) schools and Latin American (Spanish-language) schools.

CANAL ZONE LEGISLATION

Section 107 of Public Law 453, 83rd Congress (68 Stat. 335) amended Section 105 of Public Law 153, 83rd Congress which reads as follows:

"Sec. 107. Amounts expended by the Panama Canal Company in maintaining defense facilities in standby condition for the Department of Defense hereafter shall, notwithstanding any other provisions of law, be fully reimbursable to the Panama Canal Company by the Department of Defense. Amounts expended by the Canal Zone Government for furnishing education, and hospital and medical care to employees of agencies of the United States and their dependents, other than the Panama Canal Company and Canal Zone Government, less amounts payable by such employees and their dependents hereafter shall, notwithstanding any other provision of law, be fully reimbursable to the Canal Zone Government by such agencies. The appropriation or fund of any such other agency bearing the cost of the compensation of the employee concerned is hereby made available for such reimbursement."

Based upon this section of law the Department of Defense cannot operate schools in the Canal Zone.

Chairman ELLENDER. What is the estimated cost of the Panama Canal schools to the Department of the Navy for fiscal year 1972? Dr. BENSON. The cost to the Navy for fiscal year 1972 is $10.3 million.

Chairman ELLENDER. On a per pupil basis, how does that compare with the average cost in the overseas dependents schools system?

Dr. BENSON. The per pupil cost in the Canal Zone schools for fiscal year 1972 is $1,512, compared with $875 in DOD schools. This is a difference of $637.

ENROLLMENT AND PERSONNEL

Chairman ELLENDER. For the record please supply a tabulation similar to that found on page 857 of last year's hearings giving pertinent enrollment and personnel information.

Dr. BENSON. Yes, sir; I will be happy to supply that information. (The information follows:)

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IMPACT OF MILITARY REDUCTIONS

Chairman ELLENDER. Do you anticipate any problems as a result of military personnel reductions in various theatres?

Dr. BENSON. No, sir. We do not anticipate any problems at this time. Chairman ELLENDER. Are you able to identify any reductions in cost to the school system as a result of military personnel reductions? Dr. BENSON. The main reduction in enrollment will fall within the Pacific area as a result of force changes. We have reflected savings of $1 million for the anticipated enrollment decrease of 2,900 students in the budget request. This is shown as an offset in item 4 of our listed fiscal year 1972 increase.

OVERSEAS UNIONS

Chairman ELLENDER. You refer in your statement to possible changes in union representation. Do you anticipate any problems in regard to the education of children overseas?

Dr. BENSON. No, sir.

SCHOOL DISTURBANCES

Chairman ELLENDER. What has been the situation in the past year in regard to disturbances at overseas schools?

Dr. BENSON. We have not had any reports from the three area superintendents indicating student unrest or disturbances during the currant school year.

QUESTIONS BY SENATOR THURMOND

Chairman ELLENDER. Senator Thurmond is unable to be here this morning but he has asked that questions be answered for the record. The questions and the answers will appear in the record at this point. (The information follows:)

PER PUPIL COSTS

Senator THURMOND. Doctor Benson, in your role as Director of Overseas Dependents Schools, I note in your statement you gave Fiscal Year 1972 per pupil costs of $875. How does this compare with the U.S. average?

Doctor BENSON. The average per pupil cost in the United States for the 1971-72 school year is estimated to be $927. Our per pupil cost of $875 is $52 below the estimated national average.

OVERSEAS SCHOOL NEEDS

Senator THURMOND. What do you consider to be the chief unmet needs in the Overseas Dependents School program.

Doctor BENSON. I consider the lack of adequate school facilities to be the chief unmet needs.

Chairman ELLENDER. Thank you very much.

Dr. BENSON. Thank you, Mr. Chairman.

RETIRED PAY, DEFENSE

STATEMENT OF LEROY J. SPENCE, OFFICE OF THE DEPUTY ASSISTANT SECRETARY OF DEFENSE (MILITARY PERSONNEL POLICY)

ACCOMPANIED BY:

COL. THOMAS J. MONEY, USAF, OFFICE OF THE DEPUTY ASSIST-
ANT SECRETARY OF DEFENSE (MILITARY PERSONNEL
POLICY)

CARL M. DETWYLER, OFFICE OF THE DEPUTY ASSISTANT SEC-
RETARY OF DEFENSE (COMPTROLLER) (MILITARY PER-
SONNEL DIRECTORATE)

BUDGET REQUEST

Chairman ELLENDER. The next item to be considered is "Retired pay, Defense" for which the fiscal year 1972 request is $3,777,134,000. This includes $33,134,000 contained in House Document 92-93 for increased pay costs.

The information on pages 2, 3, and 4 of the justifications will be included in the record.

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DEPARTMENT OF DEFENSE JUSTIFICATION OF ESTIMATES, FISCAL YEAR 1972

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Note: This appropriation provides for the pay, as authorized and at rates prescribed by law, of military personnel on the retired lists of Army, Navy, Marine Corps, and Air Force and provides for payments to survivors pursuant to the retired serviceman's family protection plan. These expenses include the pay of retired officers, warrant officers, enlisted personnel, female nurses, and members of the women's medical specialist corps, Philippine scouts, and authorized personnel of the Reserve components, including retainer pay of the Inactive Fleet Reserve.

The estimate excludes payments to individuals who elect to receive compensation for physical disability from the Veterans' Administration. The amount requested is also exclusive of any administrative expense. The estimate provides for the military pay increases of 8.1 percent on Jan. 1, 1970, of $26,600 for fiscal year 1971 and 7.9 percent on Jan. 1, 1971, of $4,032 for fiscal year 1971 and $33,134 for fiscal year 1972 under the provisions of Public Law 90-207, and increased retired pay costs of 5.6 percent of Aug. 1, 1970, related to increases in the Consumer Price Index.

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Chairman ELLENDER. The principal witness will be Mr. LeRoy J. Spence.

You may proceed.

PROGRAM RECIPIENTS

Mr. SPENCE. Mr. Chairman and members of the committee, I appreciate the opportunity of appearing before this committee in behalf of the Department of Defense to discuss the appropriation for retired pay for fiscal year 1972.

The appropriation requested is a consolidation of the estimates of the military departments for: retired pay of military personnel on the retired lists of the Army, Navy, Marine Corps, and Air Force; retainer pay for members of the Fleet Reserve of the Navy and Marine Corps; and payments to survivors of retired military personnel under the retired serviceman's family protection plan.

INCREASE OVER 1971

The appropriation request for fiscal year 1972 is $3,777 million compared with $3,194 million appropriated for fiscal year 1971 plus initial supplemental funds of $197 million, for a total of $3,391 million. The amount requested for fiscal year 1972 will provide for payments to an average of 870,282, an increase of 62,876 over our current estimate for fiscal year 1971.

1971

SUPPLEMENTAL: COST-OF-LIVING INCREASE AND MILITARY

PAY INCREASES

The initial supplemental funds for fiscal year 1971 are required to provide for the additional retirement costs resulting from a cost-ofliving increase and two increases in the military pay of military personnel retired during the year. Under the law, when the Consumer Price Index (CPI) for any month is at least 3 percent higher than the CPI for the month which was the basis for the last adjustment to retired pay and sustains that level for 3-consecutive months, retired pay is adjusted to the highest percent of increase in that 3-month period, plus 1 percent, to be effective on the first day of the third month following that period. Thus far, one increase of 5.6 percent in retired pay, effective August 1, 1970, has occurred since the fiscal year 1971 budget estimate was submitted to the Congress. An 8.1 percent increase

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