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Huge Proposed 2016 Commissary Cuts: What They Mean

A leaked draft cuts proposal from the Defense Commissary Agency (DeCA) to the Defense Department shows one thing very clearly: cuts are likely going to happen, and they are not going to be pretty.

First and foremost, let’s clear up the usual confusion: this is a draft of a proposal. It could change 1,000 times before it’s included in the final proposal to Congress for the 2016 operating budget. And then Congress gets to do their thing changing it even more, or perhaps throwing out all the ideas completely (like they did last time).

According to these draft documents, the Defense Commissary Agency (DeCA) has been tasked with coming up with over $322 million in cuts from their current $1.4 billion budget.

You can read the news story of this whole thing over here on Military.com. 

Just over half of those cuts can be found in changing the way the agency runs it stores – how many employees it has, how long their hours are, etc.

The other cuts are going to require price increases and new fees, the documents say, and that stuff can’t be done unless Congress changes certain laws.

So what’s on the table? Here’s a breakdown.

Price increases and new fees.

 

There are a few ways the commissary may raise prices under these proposals, according to the documents. And all of them would require changes to law.

No longer sell items “at cost.” The biggest one – and the one that will likely be the hardest to pass – changes the way DeCA sets prices. Normal grocers mark-up items so they can make money and pay for the operation of their stores, or drop prices below their cost (known as “loss leaders”) to lure you inside. But not DeCA. By law, right now commissary sells you groceries for whatever price they pay for it from the manufacturer. If bread is $1.79, it’s because that’s how much it cost the commissary to buy it.

Under the proposal DoD would ask Congress to remove that “at cost” rule. That would allow DeCA to set its own prices and require fewer tax payer dollars to run its stores. But it would also mean major price increase on products, and likely eliminate much of the savings most people find by shopping there.

Raise prices to cover some shipping costs. Right now the commissary is given money (about $100 million a year, according to the leaked documents), to pay for “second destination shipping” to rural locations like Fort Polk. La. or Minot, N.D. This proposal calls for ending that funding and instead raising grocery prices to cover that cost. It’s unclear whether they would raise prices across the board to make up for that $100 million, or just raise the prices of goods sold in those stores (which would be, in my view, unfair to the troops ordered to live their against their will … because who wants to live at Fort Irwin on purpose?). But if you live in a rural area, this should worry you.

Charge for paper and plastic bags. When I talked to commissary officials about bags last year, they said they spend about $5.1 million on bags every year – or about $0.006 per bag. In this proposal they ask DoD officials to ask Congress to let them charge users a fee, although no information on the fee is given. Again, this would mean paying more out of pocket -- because if you don't buy bags from them you'd have to bring your own.

Charge for curbside pick-up and online ordering.  Funny they should mention it, because this is another thing we just talked about recently on SpouseBuzz. For more than a year the commissary has been running a pilot program testing curbside pick-up and online grocery ordering. Those services – available at a handful of locations – currently don’t have a use fee. Commissary officials would like lawmakers to let them change that. This would not impact many people right now because so few stores have this service. And it would only impact people who want to use it.

Subcontract produce management. Right now, the document says, six produce contractors supply (what you might think is really sad and quick to spoil) produce to commissaries nationwide. Officials want to test also letting two of those contractors manage the produce sections of the stores they are supplying. That would logically allow some employee cuts in those sections, and eliminate from DeCA’s out-of-pocket costs the price of goods that spoil before someone buys them. (Like all the broccoli on display at the Fort Campbell, Ky. commissary a few weeks ago – no, I’m not buying rotting produce, sorry). One could hope/dream that the impact of this would be better produce. What can I say, I'm an optimist.

Reduce store hours and cut employees.

 

Another set of big savings, officials said in the documents, can be found without changes to existing law. And the majority of them focus on staffing levels and operating hours.

Fire people. A large percentage of the commissary’s current annual operating budget is spent on employees, all of whom are federal workers. The documents suggest dropping employees from an average of 51 per store to an average of 45 per store – 1,480 people, many of whom are military spouses or retirees, across the system. If you're a commissary employee, that could mean you'll be out of a job. If you're just a shopper, that could mean longer wait times and less service.

Reduce open days as well as hours open. Right now, across the system, commissaries are open an average of 6.1 days a week and 58.1 operating hours. These documents suggest dropping that average to 5.2 days and 46.2 hours. For shoppers this means longer lines on days the store is open and less access.

Close the stores on more holidays. There are only a few holidays (New Years Day, Christmas, Thanksgiving, etc.) on which the commissary is actually currently closed – the rest just have reduced hours. Under this proposal the store would go dark those days, too. Again, this means less access and longer lines for shoppers.

End case lot sales. This has already happened off and on. Most recently the sales were funded by the manufacturers themselves. This would likely continue that trend. This likely does not have a major impact on most shoppers.

No longer pay for all food airlift costs to the Pacific. This is another one of those things we’ve already talked about. Right now the commissary system foots the bill for shipping certain produce items, like bagged salad, to stores in the Pacific (Japan, Korea, etc.). They want to renegotiate the contract with the food supplier so that they are paying for shipping, not the commissary. But, like we’ve talked about before, that will probably come with a price increase to people stationed in those areas.

Total cost savings for these ideas (and a few others that get really technical – trust me, you don’t want those details)? $183 million -- $76.2 million of which is just employee and contractor costs.

What all of this means for you.

 

Again, all of this stuff is just a proposal for a proposal. So it may not ever mean anything on a tangible, impact level.

But it DOES mean this: DeCA and the DoD are at least still willing to cut deep on this particular benefit. And, if approved, those cuts will hurt.

Employees will be sacked. Hours will be cut. Prices will go up.

You could argue that those cuts are all well and good for those of us who can leave the gate and find immediate substitute options like WalMart. But that’s going to be really, really painful for people who live at rural locations where the nearest other store is 45 minutes away and for those overseas. REALLY painful.

If you don’t like these cuts, the best thing you can do is let your lawmaker know it. We’ll tell you how to do that soon, especially if these proposal are included in what is sent to Congress early next month.

 

Photo courtesy Army Corps of Engineers.

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