DoD wants to sharply cut commissary budget as overall defense budget increases

Military Times - By:  Karen Jowers 


The commissary budget will take a 21 percent cut in fiscal 2020, if the Defense Department’s budget request is approved by Congress.


Defense officials are asking for $995 million in taxpayer funding to operate the 236 commissary stores worldwide, down from $1.27 billion in fiscal 2019, according to DoD budget documents released Tuesday.


Part of the reduction is likely due to an 11 percent decrease in the commissary work force. Those work force cuts in the Defense Commissary Agency started in fiscal 2019 and will carry forward into fiscal 2020 — going from 14,000 employees worldwide to 12,500 during fiscal 2020. Information was not immediately available about how those work force cuts affect the stores and customers.


The budget cut comes as the Defense Department is moving toward merging the three military exchange systems and the commissary system into one “defense resale enterprise,” in efforts to save money. But that proposal hasn’t yet been approved — at this writing it was awaiting approval by Acting Deputy Secretary of Defense David Norquist. A report and legislative proposals will then be sent to Congress. In a memo signed March 1, Lisa Hershman, acting DoD chief management officer, approved the business case for the merger.


In order for DoD to fully merge those systems, some laws will have to be changed, such as the current law requiring separate commissary and exchange systems.

For a number of years, some within the Defense Department have floated proposals to reduce the commissary budget. The commissary proposed budget is about 0.13 percent of the overall defense budget request, which has increased this year.


The budget overview states there’s a $400 million net decrease from the fiscal 2019 funding for military family support programs, and that is driven by the commissary’s use of funds left over from the previous year and “military construction phasing of DoD school projects.” In its long-term effort to replace and renovate schools, the Department of Defense Education Activity is proposing to spend about $150 million in 2020 on three schools and an administrative office; about $218 million less than what they spent in fiscal 2019.


Funding for other programs in the “family support” category stayed the same, except for a $100 million increase in warfighter and family support programs, to $1.8 billion.


Funding for child care and youth programs remained level at $1.4 billion; and for MWR programs, level at $1.6 billion.


The budget proposal doesn’t specify how much taxpayer funding was left over in the commissary budget from the previous year, or why there were funds left over. But it doesn’t appear that those funds would offset the $271 million decrease in the budget request, compared to fiscal 2019.


“I find it interesting that the budget briefing doesn’t mention reduced appropriations due to offsetting revenues derived from operational efficiencies, [such as] private label and variable pricing. You would think that would be something to tout,” said Tom Gordy, president of the Armed Forces Marketing Council.


The commissary has introduced a number of private label products, and has gone from a system that sold all products at cost from the vendor, to a system that allows them to mark up or mark down prices.


Disclaimer: The opinions expressed within this article are the views of the writer and do not necessarily reflect the views and opinions of FRA.