Pentagon Halts Effort To Take Back Signing Bonuses Paid To National Guard Members

The Pentagon is suspending its debt collection program to claw back bonuses paid to thousands of California National Guard soldiers who re-enlisted to fight in Iraq and Afghanistan, with Defense Secretary Ash Carter calling the current situation "unacceptable."

Citing a duty to keep promises to service members, Carter said he's ordering the Pentagon's Defense Finance and Accounting Service to "suspend all efforts to collect reimbursement from affected California National Guard members" until he's satisfied that the process has become more efficient and fair.

The Defense chief gave senior officials in his department until the end of 2016 to set up a new and streamlined process that can ensure "the fair and equitable treatment of our service members and the rapid resolution of these cases," with a deadline of July 1, 2017 for all cases to be decided.

Second, I have ordered a team of senior department officials, led by the senior personnel official in the Office of the Secretary of Defense, Peter Levine, to assess the situation and establish no later than Jan. 1, 2017 a streamlined, centralized process that ensures the fair and equitable treatment of our service members and the rapid resolution of these cases. The objective will be to complete the decision-making process on all cases as soon as possible - and no later than July 1, 2017.

Carter's move comes after thousands of guard members were told they needed to repay large re-enlistment signing bonuses and tuition aid — money that was offered as an incentive to stay in a U.S. military that was fighting two wars.

The Pentagon says thousands of soldiers who received re-enlistment money weren't eligible for the program — and years after paying out the money, it wants it back. Some veterans have been sending hundreds of dollars a month to repay their bonuses; others have faced wage garnishment, interest accrual and a long appeals process.

The issue was highlighted by The Los Angeles Times over the weekend, and public outrage followed as NPR and other media outlets reported on the unusual situation of an employer attempting to claw back signing bonuses from veterans who served their full three- or six-year enlistment period as agreed.

As The Two-Way reported over the weekend:

"The problem of improper use of military troop-level incentives isn't limited to California — but the state has emerged as a focal point because of two factors: the large size of its guard force, and a history of overpayments.

A scandal over the California National Guard's use of bonus money was first unearthed in 2010, when the Sacramento Bee reported that its incentive program had misspent as much as $100 million. The program's onetime leader, former Master Sgt. Toni Jaffe, was later sentenced to 30 months in prison, after pleading guilty to making $15 million in false claims.

When it was first discovered, that scandal was deemed "war profiteering" and was said to have benefited guard members who hadn't logged any combat duty; high-ranking officers were mentioned. But in the years since, lower-ranking service members have complained about garnished checks and a prolonged review process, saying they've done nothing wrong."

Between 2000 and 2008, the Defense Department went from spending $891 million for selective re-enlistment bonuses to spending $1.4 billion on them, according to a 2010 research paper by the RAND defense institute.

Amid anger over the repayment program, the California National Guard issued a statement Sunday saying that it has been acting under the Pentagon's orders and that it couldn't "unilaterally waive these debts." The service added that it would welcome an act by Congress forgiving the debts.

It's unclear how the Pentagon's adjusted policy might apply to veterans in states other than California.

"Ultimately, we will provide for a process that puts as little burden as possible on any soldier who received an improper payment through no fault of his or her own," Carter said. "At the same time, it will respect our important obligation to the taxpayer."

Here's Secretary Carter's complete statement on the matter:

"There is no more important responsibility for the Department of Defense than keeping faith with our people. That means treating them fairly and equitably, honoring their service and sacrifice, and keeping our word. Today, in keeping with that obligation, I am ordering a series of steps to ensure fair treatment for thousands of California National Guard soldiers who may have received incentive bonuses and tuition assistance improperly as a result of errors and in some cases criminal behavior by members of the California National Guard.

"While some soldiers knew or should have known they were ineligible for benefits they were claiming, many others did not. About 2,000 have been asked, in keeping with the law, to repay erroneous payments. There is an established process in place by which service members can seek relief from such obligations. Hundreds of affected guard members in California have sought and been granted relief. But that process has simply moved too slowly and in some cases imposed unreasonable burdens on service members. That is unacceptable. So today, on the recommendation of Deputy Secretary Work, I am ordering measures to make sure we provide affected service members the support they need and deserve.

"First, I have ordered the Defense Finance and Accounting Service to suspend all efforts to collect reimbursement from affected California National Guard members, effective as soon as is practical. This suspension will continue until I am satisfied that our process is working effectively. Second, I have ordered a team of senior department officials, led by the senior personnel official in the Office of the Secretary of Defense, Peter Levine, to assess the situation and establish no later than Jan. 1, 2017 a streamlined, centralized process that ensures the fair and equitable treatment of our service members and the rapid resolution of these cases. The objective will be to complete the decision-making process on all cases as soon as possible - and no later than July 1, 2017.

"Ultimately, we will provide for a process that puts as little burden as possible on any soldier who received an improper payment through no fault of his or her own. At the same time, it will respect our important obligation to the taxpayer.

"I want to be clear: this process has dragged on too long, for too many service members. Too many cases have languished without action. That's unfair to service members and to taxpayers. The steps I've outlined are designed to meet our obligations to both, and to do so quickly."