This report is the first step in a comprehensive reevaluation of the reserve components of the U.S. military in which the legislature and general public soon should join. In reviewing the past several decades of heavy use of the reserve components, most notably as an integral part of recent operations in Iraq, in Afghanistan, and in the homeland, the Commission has found indisputable and overwhelming evidence of the need for change. Policymakers and the military must break with outdated policies and processes and implement fundamental, thorough reforms. Many of today's profound challenges to the National Guard and Reserves will persist, notwithstanding force reductions in Iraq and Afghanistan. The need for major reforms is urgent regardless of the outcome of current conflicts or the political turmoil surrounding them. The Commission believes the nation must look past the immediate and compelling challenges raised by these conflicts and focus on the long-term future of the National Guard and Reserves and on the United States' enduring national security interests. In our final report, the Commission first assesses the necessity, feasibility, and sustainability of the so-called operational reserve, which is significantly different from the strategic reserve of the Cold War. We assess the unplanned evolution to an operational reserve. We then evaluate the factors that should influence the decision whether to create a truly operational reserve force, including the threats to our nation in the current and emerging security environment; the military capabilities, both operational and strategic, necessary to keep America secure in this environment; the urgent fiscal challenges caused by the spiraling costs of mandatory entitlement programs and ever-increasing cost of military personnel; and the cost and value to the nation of the National Guard and Reserves. And we consider the challenges the nation faces in funding, personnel policy, recruiting, equipment shortages, and other obstacles to creating a sustainable operational reserve force. Second, we assess the Department of Defense's role in the homeland and whether it is clearly defined and sufficient to protect the nation; the role that the reserve components, as part of DOD, and other interagency partners should play in preparing for and responding to domestic emergencies; the role and direction of U.S. Northern Command, the joint command in charge of federal homeland defense and civil support activities; the role that states and their governors should play in homeland response; the need to rebalance forces to better address homeland response needs; and the implications of these assessments for the readiness of the reserve components. Third, we examine what changes need to occur to enable DOD to better manage its most precious resource-its people. We consider what attributes of a modern personnel management strategy would create a true continuum of service; how reserve component personnel should be evaluated, promoted, and compensated; what educational and work opportunities they should be given to maximize the return to the nation from their service; how DOD should track the civilian skills of reserve component members; whether the active and reserve personnel management systems should be integrated; why the prompt establishment of an integrated pay and personnel system is urgent; how many duty statuses there should be; and what changes need to be made to the active and reserve retirement systems to ensure that both serve force management objectives and are sustainable. Fourth, we explore what changes need to be made to develop an operational reserve that is ready for its array of overseas and homeland missions.