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Commissary Closure Plan: Everything You Need to Know

You've heard that there is a plan in the works to close stateside commissaries -- but what is the real story? Is this just a scare tactic from the Defense Department or are stateside commissaries really going to close?

While this is the first time the DoD has targeted the program itself, the commissary system has long been a topic of funding debate on Capitol Hill. Although there is plenty of skepticism that all commissaries stateside are really going to close, which no story about the plan ever claimed, we have no doubt that a plan truly is in the works.

But why do lawmakers and now DoD see the stateside commissaries as expendable? While some SpouseBuzz readers tell us that they find the commissary to be a complete waste and don’t use it at all, most report that they rely on it as one of their top military benefits.

They tell us it saves them so much money that without they’d have to get a bigger paycheck to offset the cost of groceries off base. So why is it on the chopping block?

Here are some facts about the commissary and the plan in the works to cut it from experts who know it best:

Everything you need to know about the plan to close the commissaries

 

Is there REALLY a plan to close the commissaries? What's the real story?

Members of the Defense Department's Joint Staff recently asked officials at the Defense Commissary Agency to come up with a plan to close all stateside stores, military benefits columnist Tom Philpott and the Army Times reported last week.

With the Pentagon required to find $50 billion in cuts for their 2015 budget proposal nothing is safe from examination, Pentagon officials told us in a statement.

While numerous sources have told us and other publications that there is a closure plan in the works, DoD and commissary officials declined to confirm it on the record.

They did not, however, deny it.

"The Secretary of Defense has made it clear on numerous occasions that all cost-cutting efforts need to be on the table in order for the Department of Defense to meet the spending caps associated with the 2011 Budget Control Act," a statement from Defense Secretary Chuck Hagel's office says. "At this time, no final decisions have been made on the Department of Defense's fiscal year 2015 budget submission. Therefore, it would be inappropriate to discuss any specific budget decisions."

DeCA declined to comment.

We probably won't see just what the plan looks like unless it is included in the DoD's budget proposal. That will be released in February.

And implementing such a plan would take even longer. The president would need to include it in his final budget submitted to Congress. Congress would then have to give it the "OK," and then president would need to sign it before it becomes law. Any actual closings would be a long time down the road.

Are commissaries REALLY going to close?

Maybe. Experts we spoke with said they want to believe this plan won't actually be carried out. But some of them also said they didn't actually think sequestration would happen -- and it did.

"My gut is this won't happen but in this day and age who can be certain about anything?" said Joyce Raezer, executive director of the National Military Family Association.

Karen Golden, deputy director of government relations for military family issues at the Military Officers Association of America, agreed.

"We believe that all programs are on the table and are at risk and we’re watching this really closely," she said.

Both Golden and Raezer, whose organizations advocate on the Hill for military families, said they will fight hard against any closure plan.

When officials say "close all stateside stores" do they really mean ALL stateside stores?

Yes and no.

Usually, "stateside" means just what it sounds like. For example, when DoD employees were furloughed and stateside commissary were closed an additional day each week, all US commissaries were included.

But for the purposes of the closure plan in the works "all stateside stores" does not mean exactly that. Why? Because it does not include 24 remote stores, such as the one on Fort Irwin, Calif., , according to Thomas Gordy, president of the Armed Forces Marketing Council, which represents brokers doing business with military stores.

Essentially, Gordy says, the plan will identify how to go about shutting down the half of the commissary's stores that are not rural or considered OCONUS (such as Hawaii, Alaska and stores in foreign c0untries like Korea).

Wait -- doesn't that commissary surcharge NOT tax dollars keep the commissary open?

The commissary is funded two ways. First, $1.4 billion of tax dollars annually pays for things like store employee wages, shipping food to overseas commissaries and keeping the lights on.

The next part of the funding comes from that 5 percent surcharge you see at the end of your commissary bill. That surcharge, applied to your order total before coupons, was mandated by Congress in 1974 and pushed to its current level in 1983. The same law also dictates which operation costs are covered by the surcharge and which aren't.

Surcharge money, by law, funds new construction, maintaining current buildings and upgrading technology systems. For example, if you recently were on the receiving end of a new commissary, that bad boy was funded with your surcharge dollars. And the new program the commissary is launching that requires you scan your military ID every time you checkout relies on a software upgrade also paid for by you.

Why does cutting the commissaries seem to be something that is always up for discussion?

Any DoD program that receives tax payer funding is getting a hard look thanks to sequestration, our experts said.

It's the environment that we're in," Gordy said. "But for sequestration, but for budget cuts we probably would not be having this conversation."

"Whenever they need cash we talk about the commissaries -- and I think we're in a really budget constrained environment so everything's being looked at, including the commissaries," Golden said. "While it's not going to solve the budget crises, they'd like to have the [$1.4 billion appropriation] back."

But Raezer added that in her mind the bigger reason is that, on first glance, cutting the commissaries seems to be such an easy place to find some extra cash.

"There are a lot of people who ask the first question – 'Why do we need commissaries. Here is a $1.4 billion thing sitting here and it's not a tank, it's not an airplane, it's not a ship so if there are other grocery stores why do we need commissaries? Hmm, maybe we don’t so lets cut them.'" she said.

Also, Raezer said, in the great scheme of the complicated federal budget process, the money that funds the commissary is a ready target because it's easy to see. While other programs' budgets are buried as line items here and there, the $1.4 billion that annually funds the commissary is just waiting out there like a sitting duck, she said.

Why is the commissary targeted and not the Exchange system?

Simply put: the commissary receives funding from Congress (and tax payers) and the Exchange system, which runs at a profit, does not, said Gordy.

"To target the exchanges would get you nothing in terms of the budget," he said.

Why do we need stateside commissaries anyway? I save a lot of money off base. So let's just get rid of them.

There's no question that commissaries overseas serve an incredibly important purpose. But back home? Unless you're somewhere like Fort Irwin, Calif. (which is rural and wouldn't be included in the plan anyway) you can probably see other grocery options from the gate. So why didn't the DoD ditch the commissaries long ago?

According to the experts we spoke with, it all comes back to how the commissary system works. Overseas and rural stores rely on surcharge money raised at high volume stores for maintenance and upgrades. And all the sales at the big stores makes it possible for DeCA to negotiate good prices with food distributors.

Here's a break down:

Keeping OCONUS and rural commissaries --the most needed yet most expensive stores for DeCA to operate because of their location and often low volume -- opened and stocked requires the support of high volume stores in places like Fort Belvoir, Va. DeCA is able to deliver that 30 percent annual per military family savings they talk about because manufacturers give them low food prices based on the number of people who shop in stores worldwide.

Will prices at the remaining commissaries be impacted if DeCA shuts down half of its stores? Raezer says probably.

"Because if you’re negotiating with General Mills for Cherrios they can give you a good price because you’re not just selling to people at Fort Irwin you’re also selling to Fort Belvoir," Raezer said. "If you have less volume will those manufacturers pick up the tab to support the transit cost to the rural stores?"

And remember the surcharge we talked about earlier? The surcharge money you spend at your local store helps fund new construction and upgrades system wide, Gordy and Raezer both said. Since, according to Gordy, 70 percent of DeCA's current business and surcharge income comes from stores that would be included for closing in the plan, keeping the remaining 30 percent running will be difficult, Raezer said.

"Commissary costumers build commissary buildings through the surcharge. So if all of us aren’t paying our surcharge at the Fort Belvoirs anymore who is going to pay to build the new commissary at Fort Irwin or for the new IT system?" Raezer said. "That means those stores that are going to remain open are going to have newer infrastructure available, so those stores are going to go down hill."

Closing the non-rural stores still seems like a good idea to me. The commissary doesn't really save me that much money.

Are you SURE the commissary doesn't save you money? According to DeCA figures, the average family of four is keeping an extra $4,500 in their pockets by shopping at the commissary. And have you looked at meat prices at stores outside the gate lately? Even ground beef at the commissary is cheaper than ground beef at Wal-Mart for most shoppers.

Regardless of whether you, personally, rely on the commissary there are plenty of families that do, Raezer and Golden said.

Because of the savings it gives many families, including retirees who often drive hours for monthly stock-up trips, the commissary is considered part of their benefits package, Golden said.

"This factors into our budget, into our planning and for some it even factors into where they choose to live," she said. "This is part of their earned non-compensation benefit. This is part of the deal."

To Raezer and Golden taking away the commissaries from the retiree and active duty communities is like cutting other benefits such as Tricare -- simply not acceptable.

I have a really strong opinion about this issue. How do I share it?

Whether you think this is a great idea or the worst budget cut plan ever, you have the power to make a difference, experts said. Gordy, Raezer and Golden all suggested that you contact your elected officials and let them know what you think.

"They could be writing their member of Congress saying 'I know this is only a request for a plan but let me tell you how much I need my commissary, let me tell you why I drive an hour to get to the commissary, let me tell you what else is going on in my life and why need the commissary,'" Raezer said.

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