Commissaries Feel Hiring Freeze, Fear Budget Cuts
Base commissaries face turbulent times as staff vacancies swell under a federal hiring freeze, employee furloughs remain a worry and the Defense Commissary Agency (DeCA) digests budget guidance for fiscal 2015 that will force new efficiencies on stores and possibly deeper cuts to store operations.
The guidance directs at least a five percent ($70 million) cut to the $1.4 billion annual taxpayer subsidy needed to run 252 base grocery stores. It also directs DeCA to develop options to accommodate deeper cuts, as much as one third of the subsidy, without impacting commissaries overseas.
The commissary benefit has been targeted often over recent decades, usually when budget officials are told to identify quick savings or a new study concludes military shopping discounts are a costly anachronism for a modern force in an age when most patrons reside off base.
In the gloomy fiscal time of budget sequestration, there are some real, near-term factors threatening commissary services and patron access. There also is the more distant rumble that subsidies for stores might be slashed, which could deeply impact stateside shopping and, critics charge, even fumble a commitment to leave commissary operations overseas unchanged.
Watching these events closely is Patrick B. Nixon, a former DeCA director who now is president of the American Logistics Association. ALA represents manufacturers and vendors doing business with base stores.
Nixon said the most immediate threat to commissaries, where shoppers realize savings of more than 30 percent over commercial prices, is a federal hiring freeze, which took effect for stateside commissaries Feb. 4.
A hiring freeze hits commissaries harder than most other federal workplaces because 40 percent of store workers are military spouses or teenagers. That means high turnover and deeper job vacancy rates as families move to new assignments, leaving jobs that can't be filled and relocating near commissaries that can't rehire them.
"There are some stores whose staffing level is down below 70 percent because they can't hire replacements," Nixon said. He worries that the hiring freeze alone could force stores to reduce operating hours.
"We cannot speak to percentages of staffing levels right now," said DeCA spokesman Kevin L. Robinson from headquarters at Fort Lee, Va. "However, the hiring freeze has affected us," he said, noting staff turnover.
"The most significant effect has been our inability to hire store-level positions…to ensure that product is on the shelf and that cashiers are in place to check out customers," Robinson said. "So we are working hard to maximize flexibility of our workforce by rescheduling employees and shifting them around…to serve our customers during peak shopping periods."
Commissaries also would be impacted by any Defense-wide civilian employee furloughs. In March, after Congress finally passed a defense appropriations bill for this fiscal year, a tentative plan to furlough most Defense employees for 21 days was cut to 14 through September. Since then, Defense Secretary Chuck Hagel has said plans are being reconsidered.
There is hope Congress will grant enough relief from the across-the-board cut formula of sequestration that Defense employee furloughs can be avoided through a mid-year budget reprogramming request, now working.
If that doesn't happen, commissaries will be closed an extra day per week during the furlough period. So if employees are to be furloughed 14 days, stateside commissaries would be closed an added day for 14 weeks.
"We are cautiously optimistic that they will find a solution to the furlough issue and that won't happen," said Nixon. "But that's our major concern right now -- furloughs and the hiring freeze."
For fiscal 2014, the Obama administration has proposed full funding for commissaries, which signals strong support for the benefit, Nixon said. But the defense budget request doesn't reflect $52 billion in cuts from sequestration which will take effect in 2014 if, as expected, Republicans and Democrats continue to refuse to negotiate a significant debt–reduction deal.
For fiscal 2015, budget clouds over commissaries darken more. Various internal studies are eyeing the commissary subsidy for budget savings. More significantly, DeCA must follow a new "resource management directive" in shaping its 2015 budget that assumes a five percent cut to its annual appropriation. Nixon said commissaries likely could absorb a $70 million hit with help from industry partners and by executing new efficiencies.
Part two of the directive, however, is worrisome, Nixon said. DeCA is to prepare a series of options for reducing the taxpayer subsidy, by up to a third while fully protecting store operations overseas. That presents a challenge if the intent is to keep stores' current business model, he said.
The business model, set in law, is to sell goods at cost; collect a five percent surcharge from patrons to cover new store construction and capital improvements; and use appropriated dollars too, mostly for staff salaries and overseas transportation costs.
The model can still work if the appropriation is cut five percent, Nixon said. But cut more and a system widely recognized as efficiently run will have to cut into the bone by reducing operating hours and closing some stores, starting in about 15 areas with multiple commissaries such Seattle-Tacoma, San Antonio, Washington D.C., Hawaii, Fayetteville, N.C. and Hampton Roads, Va.
"They didn't build those commissaries on a whim. The need was there," said Kathy Moakler, director of government relations for National Military Family Association. "But if they don't have the staff to run them, people will get frustrated. Lord knows we wait in long lines at the commissary already."
If shopper experiences deteriorate with longer checkout lines and crowded parking lots, stateside commissary patrons could shop off base, ignoring commissary discounts. Falling sales stateside would ultimately affect overseas stores, which are more costly to operate, Nixon said. Advocates fear a kind of death spiral to a prized military benefit.
Factors in favor of commissaries weathering another budget storm, Nixon said, include strong support from Congress, and commitments from the President and First Lady Michelle Obama to expand job opportunities and healthy lifestyles for veterans and military families, which base grocers do.
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