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

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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: