The Economic Impact of BRAC
On May 13, 2005, the Department of Defense (DoD) forwarded its recommendations for military installation closures and significant changes to the Base Realignment and Closure (BRAC) Commission. The Commission will forward its report on the recommendations to the President by September 8, 2005, and the President will have until September 23, 2005, to accept or reject the recommendations in their entirety. If he accepts them, Congress will have 45 legislative days to reject the recommendations in their entirety or they become binding on the DoD. It is unlikely that the Commission will make many changes to the recommendations put forward by the DoD.
The recommendations include 33 major base closures, 29 major base realignments, and 775 minor closures and realignments. BRAC 2005 contains the most sweeping changes of any of the previous base closures, as the following table illustrates.
|
BRAC Closures and Realignments, By Year |
|
|
Major Base Closures |
Major Base Realignments |
Minor Closures & Realignments |
Costs (TY $B) |
Annual Recurring Savings (FY05 $B) |
|
BRAC 88 |
16 |
4 |
23 |
2.7 |
0.9 |
|
BRAC 91 |
26 |
17 |
32 |
5.2 |
2.0 |
|
BRAC 93 |
28 |
12 |
123 |
7.6 |
2.6 |
|
BRAC 95 |
27 |
22 |
57 |
6.5 |
1.7 |
|
Pre-2005 TOTAL |
97 |
55 |
235 |
22.0 |
7.3 |
|
BRAC 05 |
33 |
29 |
775 |
24.4 |
5.5 |
Major closures are defined as those installations with a plant replacement value exceeding $100 million. Of the 33 total major base closures on the proposed BRAC list, 14 are Army installations, 9 are Navy installations, and 10 are Air Force installations
Major realignments are defined as installations losing 400 or more net total military and civilian personnel. These 29 proposed realignments include 5 Army, 11 Navy, 10 Air Force, and 3 Defense Agencies/Multiple Service installations.
DoD end strength at the time the BRAC 2005 recommendations is outlined below.
|
DoD End Strength Prior to BRAC 2005 Recommendations1 |
|
FY2005 |
Active |
Mobilized* |
Guard |
Reserve |
Civillian |
TOTAL |
|
DOD |
|
|
|
|
106,000 |
106,000 |
|
Army |
512,400 |
148,442 |
350,000 |
205,000 |
218,000 |
1,285,400 |
|
Navy |
365,900 |
6,508 |
|
83,400 |
193,466 |
642,766 |
|
Marines |
178,000 |
9,717 |
|
39,600 |
|
217,600 |
|
Air Force |
359,300 |
45,585 |
106,800 |
76,100 |
163,000 |
705,200 |
|
TOTAL |
1,415,600 |
210,252 |
456,800 |
404,100 |
680,466 |
2,923,966 |
* FY2004 Supplemental for Guard & Reserve called to active duty, Non-Add.
However, the economic impact of BRAC 2005 at the state level is calculated using only active duty military personnel and DoD civilians residing in the US, its territories and the District of Columbia. The following table shows the distribution when considering only those individuals residing in the US.
|
Impact of BRAC 2005 on US States, Territories and District of Columbia* |
|
|
Army |
Navy |
Marines |
Air Force |
DOD |
TOTAL |
|
Military |
398,882 |
304,688 |
135,749 |
291,516 |
|
1,130,835 |
|
Civilian |
216,642 |
177,008 |
|
153,107 |
83,810 |
630,567 |
|
TOTAL |
615,524 |
481,696 |
135,749 |
444,623 |
83,810 |
1,761,402 |
The overall net effect of BRAC 2005 on military and civilian positions is presented below.
|
Impact of BRAC 2005 on US States, Territories and District of Columbia* |
|
|
Out |
In |
Net Gain (Loss) |
Total Direct |
|
&nspb; |
Mil |
Civ |
Mil |
Civ |
Mil |
Civ |
|
|
TOTAL |
(133,769) |
(84,801) |
122,987 |
66,578 |
(10,782) |
(18,223) |
(26,187) |
However, when excluding those positions in Germany, Korea, and Undistributed, the net effect changes, as illustrated below.
|
Net Effect of BRAC 2005 on Military and Civilian Positions, Excluding Germany, Korea, and Undistributed* |
|
|
Out |
In |
Net Gain (Loss) |
Total Direct |
|
&nspb; |
Mil |
Civ |
Mil |
Civ |
Mil |
Civ |
|
|
TOTAL |
(118,880) |
(84,799) |
122,269 |
65,908 |
3389 |
(18,891) |
(15,502) |
At the National level there is only a modest net effect on the total number of military and civilian personnel. Many individuals will be affected because of relocations, but overall, BRAC 2005 has a net effect of less than 00.3 percent on military personnel and approximately 3 percent on DoD civilians. The BRAC 2005 numbers include active duty military, DoD civilians, as well as mission support contractors of which there is a net increase of 2,818.
However, there are dramatic economic ramifications at the state and local level. The tables below outline the five states most negatively and positively affected based on total personnel changes as a percentage of total DoD workforce in that state.
Top 5 Negatively Impacted States:
Total Personnel Changes as a Percentage of Total DoD Workforce |
|
Rank |
State |
Pre-BRAC Personnel Totals |
BRAC Personnel Changes |
New Total |
% Change |
Unemployment Rate |
Unemployment Rank |
|
1 |
Connecticut |
6,749 |
-8,586 |
-1,837 |
-127.2% |
5.3% |
16 |
|
2 |
South Dakota |
4,824 |
-3,797 |
1,027 |
-78.7% |
4.0% |
44 |
|
3 |
Maine |
9,031 |
-6,938 |
2,093 |
-76.8% |
5.0% |
22 |
|
4 |
North Dakota |
9,487 |
-2,645 |
6,842 |
-27.9% |
3.5% |
49 |
|
5 |
Oregon |
3,993 |
-1,083 |
2,910 |
-27.1% |
6.5% |
4 |
Top 5 Positively Impacted States:
Total Personnel Changes as a Percentage of Total DoD Workforce |
|
Rank |
State |
Pre-BRAC Personnel Totals |
BRAC Personnel Changes |
New Total |
% Change |
Unemployment Rate |
Unemployment Rank |
|
1 |
Arkansas |
9,220 |
3,585 |
12,805 |
38.9% |
5.0% |
23 |
|
2 |
Indiana |
10,136 |
2,197 |
12,333 |
21.7% |
4.8% |
30 |
|
3 |
Kansas |
22,472 |
3,532 |
26,054 |
15.9% |
5.3% |
18 |
|
4 |
Maryland |
62,562 |
9,293 |
71,855 |
14.9% |
4.2% |
38 |
|
5 |
Oklahoma |
45,469 |
3,919 |
49,388 |
8.6% |
4.5% |
33 |
The largest single closure is the submarine base in New London, Connecticut. Over 8,500 military, civilian, and contractor changes are planned. The closure of the submarine base will virtually eliminate the DoD's presence in the state and will have a significant impact on the local community. Although the change will eliminate more military than civilian positions (approximately 4,200 and 2,500 respectively), the ripple effect of the closure could raise the state's unemployment from its May 2005 rate of 5.3 percent (already up .3 percent from May 2004).
Also dramatically affected by BRAC 2005 is the state of Maine. The closure of Portsmouth Naval Shipyard and Naval Air Station Brunswick will result in the loss of a total of nearly 7,000 jobs (military, civilian, and contractor). Especially hard for Maine is that nearly 65 percent of the lost jobs are civilian positions, which is a critical component of the state's tax base. Like the New London closure, this closure will have a major impact, as well, on the local community as many civilian jobs, such as crane operators, machinists, and welders, directly support the mission and depend on the shipyard for their livelihood.
The shipyard closure also will impact New Hampshire, as the shipyard borders that state; nearly 40 percent of the shipyard's total civilian payroll is paid to New Hampshire residents.
Big winners in BRAC 2005 are Maryland, Georgia, Texas, Colorado, and Oklahoma. Maryland will receive the most new jobs, 9,303; however, the economic impact will be moderate because most of the positions are coming from neighboring Washington, DC, and many of the personnel already reside in Maryland. Aberdeen Proving Ground will have a fairly sizable boom as 5,371 new civilian jobs will move there. While the installation will lose 3,411 military positions, the state will likely improve its tax base as military personnel often claim states with no income tax as residencies.
Georgia is scheduled for 7,473 new positions mainly from military personnel relocating from overseas to Fort Benning. Texas, likewise, will benefit from the closure of overseas facilities as over 6,000 new billets will be created primarily due to military personnel moving to Fort Bliss and Fort Sam Houston. Colorado will gain nearly 5,000 new positions, over 4,500 of which are military personnel moving to Fort Carson.
For access to pre- and post-BRAC military, civilian and contractor statistics, as well as state civilian labor force and unemployment data, click here.
1 The analyses in this article use data drawn from various sources collected after December 2003. Due to the dynamic nature of the US population and the DoD end strength, and the fact that information comes from different time frames, some minor discrepancies will occur.
For more information on strategic and change management, visit us at www.pivotal-insigiht.com.
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