A Primer on Military Pay and the National Guard Bonus Debacle

The military pay system is very odd.  Imagine if your employer viewed you as a family bank account or a credit extension.  That is how the military pay system works.  The Defense Finance and Accounting Service (DFAS) is the pay office for all defense employees (namely military).  They are the arbiters over our paychecks.  I don’t know (anecdotal evidence alert) a single soldier who has had a positive interaction with DFAS.  While the customer service aspect will be addressed in another entry, this article focuses on how soldiers are treated within DFAS.

The military forces participants to live paycheck by paycheck.  This may sound misleading, as I am not saying the wages are too low, nor am I saying soldiers live outside of their means.  Instead, we must monitor our monthly pay checks (Leave and Earnings Statements) like hawks.  And we must always maintain 30 day’s worth of savings to cover living expenses.  DFAS frequently overpays Soldiers or fails to terminate incentive pays or fails to extract Federal Taxes.  Other times, DFAS will collaborate with Defense Travel System (DTS) and audit Soldiers without notification.  DTS and the Government Travel Card (GTC) are another corrupt predatory system in their own right, but their collusion with DFAS is nigh criminal.

I know…I’m complaining about overpayment.  Boo Hoo!  But imagine if your business overpaid you by 50 dollars a month for years, then suddenly decided to recoup the overpayment by withholding your paycheck for a few months without any notification?  Or, perhaps paperwork gets lost which justifies an incentive pay (flight pay, doctor’s pay, submariner pay).  DFAS determines that the entirety of the incentive pay you received was inappropriate and they stop paying you to recoup the losses (again, no notification).  What if someone gets out of the military?  Free and clear, right?  Oh no!  Your wages will be garnished depending on how you are employed and if they can’t do that, they will tax you.  Many Soldiers bitten by DFAS actually set up separate bank accounts where they park any overpaid money.  That way, if DFAS comes for it, it is set aside and allocated.  How sad is it that one cannot even trust his paycheck on a month to month basis.

So, the following scenario is a very real possibility for me:  I am a 10 year Aviator.  A month before I exit the military, DFAS can decide that I was not an Aviator for 10 years (loss of paperwork) and demand back payment of my flight pay.  So, I could end up saddled with debt to the Army by way of the IRS and pay garnishments as I try to transition out of the military.  It would be my responsibility to prove to the decision makers that I actually was an Aviator.  How devastating is that for a Soldier? 

Of course, I can go file a ‘pay inquiry’ with DFAS, but per their regulations, they have 20 business days before they have to respond.  Sooo, basically 4 work weeks or a month.  That is 20 days for them to tell you why there is a pay issue, not to fix the issue.  By regulation, the employees are not allowed to tell Soldiers what department and what person caused the pay discrepancy.  So in my fictitious flight pay example, I couldn’t just email a copy of my flight orders to the person who made the mistake so they could reverse it.  Instead, I have to pass it on to a bureaucracy which takes 20 days to look at a computer screen and read one line back to you.  Definitely not customer centric.

While I commanded in Afghanistan, I received notice from my bank that I had overdrawn my checking account.  Immediately thinking I had been a victim of identity theft, I went through my withdrawals with a fine tooth comb but found nothing.  I checked my investment transfers and military 401k allocations to make sure I didn’t somehow select 100% or something ludicrous.   Finally, I looked at deposits and found out that I hadn’t been paid that month.  Naturally, I looked at my earnings statement on the DFAS website and found a cryptic code with a dollar value which amounted to 2 months’ pay.  I waited a week until I was off of mission and walked 3 miles through a minefield and Afghanistan desert to the pay office who was open 4 hours a day and filed a pay inquiry. Apparently some bureaucrat in DFAS decided to audit my travel expenses (the military makes all Soldiers pay for their deployment travel and to training but reimburses them afterwards).  He decided that my entire claim was invalid and demanded I pay back all of my travel claims by stopping my pay for 2 months.  What was my recourse? To find historical emails (thank goodness I’m not Hillary) and send them to the G8 bureaucrats and pray that they didn’t take too long.  While I did eventually get my pay returned to me (60+ days), I had to close some investment accounts and pay off penalties and suffer through credit hits for late payments.  Oh, and I was lucky I wasn’t levied fines from DFAS for not repaying my false debt fast enough.  I know…it was my fault for not structuring my accounts in such a way that I could have 60 days of no payment (I’m being facetious).  I never expected the U.S. Government to be the only organization to ever stiff me on pay in my entire life.  What bothered me most, however, was this also happened to my Soldiers under my command who had family back home they were supporting.  They had to take out loans to float themselves until DFAS would admit wrongdoing and reimburse them.

With the above in mind, one can see how the DoD treats Soldiers like joint bank accounts.  In my example, my higher headquarters (G8) was likely audited/flagged due to massive travel expenses from my company’s flight testing and training.  Since the training was likely not forecast in the budget, it propelled the travel spending into the red (this I know for a fact).  While the following is speculation, I have seen this done in other situations, so I find this to be the most logical answer.  Budgeting reports/investigations are instant snapshots.  Just like a hefty person sucking in their gut, the temporary appearance of fitness is sufficient to pass muster.  There was immense pressure initially to block my claims.  I was accused of fraudulent claims (just words, no legal accusation) and told to re-file my travel claim (a process that would take 30 or more days).  I applied pressure by involving my chain of command heavily.  And the resistance continued until suddenly (after the first of the month), G8 conceded and I was reimbursed.  It seems almost like a credit derivative swap of sorts.  The bureaucrat could use my false debt to the Army (and the false debt of my Soldiers as well) as an asset on his books and thus turn red to black.  Once it wasn’t an issue to have red on his books again, I suddenly got by back back pay. 

Tin foil hat, or not, this level of impropriety is extremely likely, which explains a lot of the aggressive email responses followed by a sudden yielding of DFAS.  Think it through.  Some General asks a civilian employee why the report shows a $100,000 budget shortfall.  That civilian employee panics and cancels several travel vouchers which initiates a DFAS pay freeze.  That civilian employee then shows the General the orders for the wage garnishments or a statement that the money is pulled back into the accounts (depending on the monetary collection mechanism and policy).  Satisfied, the General commends the employee for maintaining a balanced budget, and the employee then approves all of the appeals and reverses the DFAS pay freeze, driving the budget back into the red.  He just bought a quarter to fix the shortfall before the next report.

The California National Guard bonus debacle only furthers my argument that DoD treats Soldiers like joint bank accounts.  We have all read the story about the horrendous liens/garnishments/fines leveled against Soldiers of the California Army National Guard who signed a contract with the Government to enlist/reenlist during a period of need for a bonus of up to 15k.  Just as in my example, an unbudgeted payment occupied a nasty red number on a balance book.  The bureaucratic solution was to claim the red ink as debt Soldiers owed back to the organization, thereby turning the ink black.  Imagine if Ford Motor Company had a dismal quarter and decided to claim it paid its workers too much and then claim that debt was an asset.  FMC could then tell investors it turned a profit that quarter (by effectively monetizing the false debt it levied on its employees).  Sounds crazy, huh!  Having dealt with many of these DoD bureaucrats, I doubt they crafted such an elaborate scheme to make money.  Instead, it was likely a move of desperation as they realized their ineptitude and poor past performance jeopardized their immediate futures and found an instantaneous way to shuffle papers and make debt go away.  The primary problem with the CANG approach was the fact they pursued service members who were no longer in the military. While in the military, service members have a specific pathway and advocacy system for grievances (Commanders, 1st Sergeants, etc.).  Those who have gotten out find media and politicians to be a surrogate advocacy system (far more powerful if properly engaged).  This is where CANG went wrong; they assumed soldiers who are out of the military would keep the grievances within the command structure.  Instead, it exploded and forced the DoD to assume responsibility for the overpayments and the associated debt. 

While the pseudo credit derivative swaps may seem outlandish, the use of Soldiers like a 0% interest credit card is even crazier.  If I receive orders to fly to Saudi Arabia for an assignment, I am expected to use an item called a Government Travel Card.  It is a credit card with an adjustable limit issued by Citi bank.  It is taken out in the Soldier’s name and ties into his or her credit score.  Any late fees, etc are the concern of the Soldier and not the Government.  When I am ordered to fly overseas for a mission, I have to use the GTC by regulation.  When I swipe the card, I do so knowing that I am personally responsible for the amount charged on that card.  I hope that on return the government decides to reimburse me for that official charge, but again it is up to a bureaucrat.  For the duration of the trip, that charge resides on my card.  After 30 days, the payment is late and the card starts generating penalty fees.  If this is known, I can set up partial re-imbursements which alleviate the headache.  If my mission goes past 30 days, I have to try to coordinate with my headquarters to reimburse me for that first charge, or I can pay the minimum payment balance out of my pocket.  The first option is obviously the best, but considering it takes 30 days for voucher approvals, it is effectively impossible.  Therefore, I end up paying the minimum balance out of pocket until I return from my mission and file my voucher.  The voucher gets deposited in the GTC account, and then I have to request Citi to pay me the zero balance.  Of course Citi takes their time with this (up to a week at one instance). 

Let’s say I am en extremis and cannot make that payment for some reason.  Citi levels late fees against my account for a Government mission.  In that circumstance, I have not been paid by the Government, yet I have to pay late fees.  Additionally, my credit is wrecked.  So, the Government does not risk its own credit, can pay late with no fees, does not have to front travel expenses and can dispute with a Soldier after the mission is complete what was a valid travel expense and refuse to pay the Soldier.  On the flip side, the Soldier assumes the financial responsibility for the mission, assumes all late fees, risks his own credit and has to justify each travel expense purchased through a DoD travel agency.  So this is how the Soldier is used as a 0% credit card for the Government on travel.

Remember, at the end of the day, the Soldier only is compensated when he files a travel voucher.  And the filing of the travel voucher is another step in the predatory process.  When filing, you submit your charges, receipts and mission orders.  Often times, the mission changes, requiring additional charges or travel.  Sometimes common sense requirements are forgotten on orders.  For instance rental cars are a repeat issue.  Let’s say a Soldier arrives at his destination and must go to a remote location.  Unfortunately he forgot to put “rental car” or “bus” or “train” in his orders.  If the Soldier rents the car to complete the mission, he must hope that the CoC will amend the orders on his return to authorize the rental car.  Or the Soldier can call back and try to get the CoC to amend the orders right then to authorize the rental car.  Unfortunately for the Soldier, he has to sign the paperwork for the amendment, so without a computer, the Soldier is out of luck with option 2.  It has happened numerous times where Soldiers have to make that tough decision and when they come home, the CoC and bureaucrats won’t stand by the charge.  They tell the Soldier it was an unauthorized expense and the Soldier won’t be reimbursed for it.  The Soldier did what he had to do in order to accomplish the mission, and to do so, he paid out of pocket.  How is that for subsidizing military operations?  I bet not too many people know that we literally pay out of pocket at times to fight for our country! 

So, while the CANG scandal is front page material and definitely involves huge sums of money, it honestly pales in comparison to the everyday scandals Soldiers experience with DFAS and DTS/G8.  Perhaps we can solve the problem by forcing all Senators and Representatives to live under DFAS and use DTS/G8 for their travel expenses. Imagine if Senator Feinstein received notice that the private jet was not an authorized expense and her wages would be garnished.  Or Senator Reid being told that cost benefit analysis shows a Greyhound bus being the cheapest option and that is the only approved way for him to travel.  Or Congressman Cummings unable to get a home loan because his credit was wrecked over a five dollar unpaid balance and years of accumulated late fees on his GTC.  Something tells me things might change quickly……


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