Defense Finance and Accounting Service Integrity - Service - Innovation Mr. Bill Hawbecker Director, DoD Banking and Credit Union Programs February 2016 DoD Banking and Credit Union Programs

3/10/2016 Integrity - Service - Innovation 2 This presentation is being made by a Defense Finance and Accounting Service (DFAS) employee. It does not constitute legal interpretation, guidance, or advice of DFAS or the Department of Defense (DoD). Any opinions or views stated by the presenter are the presenter’s own and may not represent the views of DFAS or DoD.

DoD Banking and Credit Union Office Defense Finance and Accounting Service Columbus, Ohio Department of Defense OSD(C), OSD(P&R) DoD Banking and Credit Union Programs Overview Overseas Credit Unions (Operate under Geographic Franchise) Military Service LOs Installation LOs Installation FIs 66 offices in 10 foreign locations Approx 300 no-fee ATMs Supports DoD funding mission (U.S. dollar and foreign currency) Trade Associations 3/10/2016 Integrity - Service - Innovation 3

Financial Institution Topics of Interest  2017 Budget Request and BRAC  DoD Financial Management Regulation Update  Operating Agreements  DoDI and Sponsorships  Nonprofit Non-Federal Entities  Discretionary Allotments  Credit Union Change of Control  Treasury General Accounts  Financial Education  Overseas Military Banking Program 3/10/2016 Integrity - Service - Innovation 4

2017 Budget Request  President's Budget 2017 Base budget $523.9 billion ($2.2 billion higher than enacted for FY2016) Overseas Contingency Operations (OCO) budget $58.8 billion FY2016 budget request seeks BRAC authority to reduce unneeded facilities and repurpose scarce defense resources  2016 NDAA required the Department to produce a new analysis to demonstrate excess capacity  2017 Budget Request seeks Congress to authorize a new BRAC round in 2019, using the established statutory process  The FY 2017 budget request includes $4.0 million in FY 2017 for planning and oversight  In the absence of authorization of a new round of BRAC, the Department will explore any and all authorities that Congress has provided to eliminate wasteful infrastructure Source: Office of the Under Secretary of Defense (Comptroller) Chief Financial Officer “Defense Budget Overview, United States Department of Defense Fiscal Year 2017 Budget Request” 3/10/2016 Integrity - Service - Innovation 5

DoD Financial Management Regulation (FMR) Update  Move and Renaming of FMR Volume 5, Chapter 34 Effective August 2015, know known as Volume 12, Chapter 33 Volume 12: “Special Accounts, Funds, and Programs” Reorganized paragraphs 3301 and 3302 to conform to requirements of subsection A of the June 2015 DoD FMR revised Standard Operating Procedures Reorganization impacted the numbering sequence of subsequent paragraphs and sections  Administrative Update Published August 2015 Every 2 years (next one around August 2017) Updated references and related hyperlinks Removed restatement of discretionary allotment policy 3/10/2016 Integrity - Service - Innovation 6

Operating Agreements (FMR V12, CH )  Operating agreement defines the relationship between the FI and installation and must be in place prior to commencing operations Should be reviewed yearly Must be JOINTLY reviewed at least once every 5 years A copy of the agreement shall be maintained by the installation commander AND the banking office or on-base credit union  Should include the hours of operation, agreement to comply with DoD policies and procedures, security requirements for cash shipments, and an agreement to reimburse the government for logistical support (as applicable)  Any change in services and fees must be added/amended in the operating agreement 3/10/2016 Integrity - Service - Innovation 7

DoDI  Personal Commercial Solicitations on DoD Installations  Issued 3/2006  Internal Coordination Continues  Sponsorships are allowed; however, a company cannot advertise or distribute literature that promotes competitive financial services/products offered by the on-base FI  Cannot be used to gain access to collect information for solicitation through raffles, drawings, or surveys without individual written consent to be solicited beyond the event 3/10/2016 Integrity - Service - Innovation 8

Nonprofit Non-Federal Entities  Letter Signed by Secretary of Defense Dec 2014 Reemphasizes authorities and flexibilities Implements additional measures to help with consistency Provides clarity for adjudicating requests  Letter States “Within the bounds of law and regulation…”  Existing Policy to be Updated to Incorporate Provisions of Letter DoDD DoDI DoDD E DoDI /10/2016 Integrity - Service - Innovation 9

Discretionary Allotments  November 28, 2014, Federal Register Notice “Allotments remain authorized for service member payments to... savings or other deposit accounts (for other than the prohibited purposes described above),...“--- means that an allotment to a savings account cannot be set up to purchase or finance the purchase, lease, or rental of personal property.  Change Went into Effect 1 Jan, 2015  Financial Management Regulation Updates Expected to Be Completed Soon…..  Policy Will Not Contain Language That Requires Businesses to Report Policy Violations to the Military Departments or to DFAS 3/10/2016 Integrity - Service - Innovation 10

Credit Union Change of Control  Merger, Acquisition, or Other Action  Vol 12, CH A, “Voluntary Credit Union Terminations” If change effects violation of the terms and conditions of the existing operating agreement, after appropriate coordination, operating agreement is terminated If change does not effect violation of the terms and conditions of the existing operating agreement, appropriate Secretary of the Military Department (or designee) initiates a novation action to the operating agreement identifying the change in control 3/10/2016 Integrity - Service - Innovation 11

Treasury General Accounts  Accepting Deposits for Credit to US Treasury  Is it Required?  Process to Establish 3/10/2016 Integrity - Service - Innovation 12

13  Provide no cost financial education, training, and counseling (FMR V12, CH G) Basic personal and family finance items Budgeting Checkbook balancing and account reconciliation How to start a savings program and benefits of doing so Prudent use of credit How to shop and apply for credit Consequences of excessive credit  DoD personnel in junior enlisted or civilian grades, or newly married couples who apply for loans, shall be given special attention and counseling Financial Education: Key Points From Policy Integrity - Service - Innovation 3/10/2016

14  Financial Education (FMR V12, CH A) On-base financial institutions shall be invited to take part in seminars to educate personnel on personal financial management and financial services Financial institutions shall be encouraged to provide financial education and counseling services as an integral part of their financial service offerings Officials of on-base financial institutions shall submit advance briefing texts for approval by the installation commander to ensure that the program is not used to promote services of a specific financial institution Financial Education: Key Points From Policy Integrity - Service - Innovation 3/10/2016

Overseas Military Banking Program  Current Contract Performance Began April 2013  Runs Through March 2018, Potentially March year base contract Five, 1-year options  Market Research Meet with industry Overview of program  Those Interested in Meeting Should Contact Director, DoD Banking and Credit Union Programs (****New Address****)  May Issue Request for Information 3/10/2016 Integrity - Service - Innovation 15

THANK YOU for your continued support of Service members, civilians, and their families and for support of the official mission! 16