Military Pay
Military Debts Present Significant Hardships to Hundreds of Sick and Injured GWOT Soldiers Gao ID: GAO-06-657T April 27, 2006In light of GAO's past four reports and testimonies on Army military pay and travel pay for soldiers who have served in the Global War on Terrorism (GWOT), GAO was asked to determine if weaknesses in Army processes for initiating and terminating active duty pay might result in erroneous payments and debt, including (1) overpayments to soldiers in the Fort Brag Medical Retention Processing Unit (MRPU)--1 of 23 MRPUs--and (2) overpayments and other errors that resulted in debt collection action against battle-injured soldiers who were released from active duty. GAO also was asked to develop case studies to illustrate the effects of these problems on soldiers and their families and to determine ways that Congress could make the debt collection process more soldier friendly.
Continuing pay problems resulted in overpayments and debt for sick and injured Army soldiers serving in GWOT. As with GAO's prior work, these pay problems resulted in significant frustration and financial problems for the soldiers and their families. Our audit of separated Army GWOT soldier debt identified nearly 1,300 separated battle-injured soldiers and soldiers who were killed in combat during the first 4 years of GWOT deployment who had incurred a total of $1.5 million in debt as of September 30, 2005. DOD has authority to write off debts of deceased soldiers and generally does not pursue collection action on the debts of soldiers who were killed in action. However, we found that hundreds of battle-injured soldiers were pursued for repayment of military debts through no fault of their own, including at least 74 soldiers whose debts had been reported to credit bureaus and private collection agencies at the time we initiated our audit in June 2005. Although the Debt Collection Act gives DOD authority to use these debt collection tools, in response to our audit, the Army temporarily suspended collection action on debts of battle-injured soldiers until a determination could be made about whether these soldiers' debts were eligible for relief. In addition our investigation of pay problems related to Army National Guard and Reserve soldiers assigned to the Fort Bragg MRPU identified overpayments of approximately $218,000 related to 232 sick and injured soldiers. Many sick and injured Fort Bragg soldiers faced garnishment of wages and other debt collection action resulting from their pay errors. Congress recently gave the Department of Defense (DOD) authority to cancel some GWOT soldier debts. Because of restrictions in the law, debts of injured soldiers who separated at different times can be treated differently, and soldiers who paid their debts are not eligible for refunds. Also, because this authority expires in December 2007, soldiers and their families could face bad credit reports and visits from collection agencies in the future.
GAO-06-657T, Military Pay: Military Debts Present Significant Hardships to Hundreds of Sick and Injured GWOT Soldiers
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United States Government Accountability Office:
GAO:
Testimony:
Before the Committee on Government Reform, House of Representatives:
Military Pay:
Military Debts Present Significant Hardships to Hundreds of Sick and
Injured GWOT Soldiers:
Statement of Gregory D. Kutz:
Managing Director:
Forensic Audits and Special Investigations:
GAO-06-657T:
GAO Highlights:
Highlights of GAO-06-657T, a report to Committee on Government Reform,
U.S. House of Representatives.
Why GAO Did This Study:
In light of GAO‘s past four reports and testimonies on Army military
pay and travel pay for soldiers who have served in the Global War on
Terrorism (GWOT), GAO was asked to determine if weaknesses in Army
processes for initiating and terminating active duty pay might result
in erroneous payments and debt, including (1) overpayments to soldiers
in the Fort Bragg Medical Retention Processing Unit (MRPU)”1 of 23
MRPUs”and (2) overpayments and other errors that resulted in debt
collection action against battle-injured soldiers who were released
from active duty. GAO also was asked to develop case studies to
illustrate the effects of these problems on soldiers and their families
and to determine ways that Congress could make the debt collection
process more soldier friendly.
What GAO Found:
Continuing pay problems resulted in overpayments and debt for sick and
injured Army soldiers serving in GWOT. As with GAO‘s prior work, these
pay problems resulted in significant frustration and financial problems
for the soldiers and their families. Our audit of separated Army GWOT
soldier debt identified nearly 1,300 separated battle-injured soldiers
and soldiers who were killed in combat during the first 4 years of GWOT
deployment who had incurred a total of $1.5 million in debt as of
September 30, 2005. DOD has authority to write off debts of deceased
soldiers and generally does not pursue collection action on the debts
of soldiers who were killed in action. However, we found that hundreds
of battle-injured soldiers were pursued for repayment of military debts
through no fault of their own, including at least 74 soldiers whose
debts had been reported to credit bureaus and private collection
agencies at the time we initiated our audit in June 2005. Although the
Debt Collection Act gives DOD authority to use these debt collection
tools, in response to our audit, the Army temporarily suspended
collection action on debts of battle-injured soldiers until a
determination could be made about whether these soldiers‘ debts were
eligible for relief. In addition our investigation of pay problems
related to Army National Guard and Reserve soldiers assigned to the
Fort Bragg MRPU identified overpayments of approximately $218,000
related to 232 sick and injured soldiers. Many sick and injured Fort
Bragg soldiers faced garnishment of wages and other debt collection
action resulting from their pay errors. The table below illustrates
experiences of 3 case study soldiers.
Table: Case Study Examples on Impact of Injured Soldier Pay Problems
Resulting in Debt:
Soldier: Army Reserve Staff Sergeant;
Injury: Lost right leg below the knee;
Debt: $2,231;
Impact of debt on soldier and family: This separated soldier spent 1-
1/2 years on disputes and appeals before multiple debts and errors were
resolved. Army debt, the only blot on the soldier‘s credit report,
prevented him from obtaining a loan to purchase a house.
Soldier: National Guard Staff Sergeant;
Injury: Brain damage and post traumatic stress;
Debt: $12,662;
Impact of debt on soldier and family: Failure to record this soldier‘s
separation in the pay system resulted in forfeiture of 3 month‘s pay
while the Army attempted to recover his debt. As a result, the
soldier‘s utilities were turned off and his family was separated.
Soldier: National Guard Sergeant;
Injury: Vehicle injury involving IED crater;
Debt: $2,050;
Impact of debt on soldier and family: This Fort Bragg MRPU soldier‘s
hostile fire and hardship duty pay continued for about 6 months after
he was processed into the MRPU. Pay deductions to recover military
debt had a rippling effect on the soldier‘s ability to pay other basic
household expenses.
Source: GAO Analysis.
[End of Table]
Congress recently gave the Department of Defense (DOD) authority to
cancel some GWOT soldier debts. Because of restrictions in the law,
debts of injured soldiers who separated at different times can be
treated differently, and soldiers who paid their debts are not eligible
for refunds. Also, because this authority expires in December 2007,
soldiers and their families could face bad credit reports and visits
from collection agencies in the future.
What GAO Recommends:
GAO‘s report on overpayments at Fort Bragg (GAO-06-384R) recommended
that DOD determine whether the same problems had occurred at the other
22 MRPUs and ensure that appropriate corrective action is taken. GAO‘s
report on separated soldier debt (GAO-06-494) raised several matters
for Congress to consider regarding legislation to provide uniform debt
relief to injured soldiers and exemptions from credit bureau reporting
and private collection agency action. DOD partially concurred on the
Fort Bragg report and concurred on the soldier debt report.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-657T].
To view the full product, including the scope and methodology, click on
the link above.For more information, contact Gregory D. Kutz at (202)
512-7455 or kutzg@gao.gov.
[End of Section]
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to discuss our recent work on Army
military pay. This testimony, which is the fifth in a series of reports
and related testimonies to this committee, is part of a continuing body
of work related to military and travel pay for soldiers who have served
in the Global War on Terrorism (GWOT) since the terrorist attacks of
September 11, 2001. Our previous work[Footnote 1] identified hundreds
of Army National Guard and Reserve soldiers who experienced substantial
pay and travel reimbursement problems caused primarily by ongoing
challenges in the areas of human capital, processes, and automated
systems. Our recent work, which is presented in two reports that the
committee is releasing today,[Footnote 2] presents two more examples of
the overall result of a broken military pay system.
Collection action on military debt has affected GWOT soldiers from all
Army components--Active, National Guard, and Reserve--and involves
soldiers who were injured or killed in combat as well as soldiers who
suffered from sickness and nonbattle injuries. Our Fort Bragg
investigation looked into allegations that there were overpayments made
to sick and injured in-service soldiers who were in Medical Retention
outpatient[Footnote 3] status. The Fort Bragg Medical Retention
Processing Unit (MRPU) is 1 of 23 Army MRPUs. Once overpayments are
identified, they result in debt, which must be repaid to the
government. Our audit of soldier debt focused on GWOT soldiers who were
injured in battle and had separated from the service and soldiers who
were killed in combat and owed military debt related to overpayments
and other errors. We performed our Fort Bragg investigation from August
2005 through March 2006 in accordance with quality standards for
investigations established by the President's Council on Integrity and
Efficiency. We performed our soldier debt audit from June 2005 through
March 2006 in accordance with generally accepted government auditing
standards.
The Debt Collection Act of 1982[Footnote 4] provides a statutory basis
for federal agencies to use appropriate debt collection tools, such as
interest charges, offset, and private collection agencies. Collection
action on military debts consists of pay offset for soldiers who are
still in the service and escalates to collection through debt
notification letters, credit bureau reporting, and private collection
agency action when soldiers have left the service and have not paid
their military debts. Debts of separated soldiers may also be collected
through offsets against federal income tax refunds; retirement pay; and
federally administered benefits payments, such as Social Security
Administration benefits. These offsets are handled by the Department of
the Treasury Offset Program, referred to as TOP.
Today, I will summarize the results of our recent work with respect to
the (1) overpayments made to Army National Guard and Reserve soldiers
at the MRPU at Fort Bragg and the extent and reported causes of debt
for battle-injured Army soldiers who have left the service and (2) the
effects of overpayments and debt-related problems for case study
soldiers and their families. Debt collection action presents the most
serious hardships on injured soldiers who face physical limitations and
continuing medical treatment. I will also discuss the Army's actions to
address pay and debt management problems and how current debt relief
authority can be made more soldier-friendly.
Summary:
Continuing pay problems resulted in overpayments and debt for sick and
injured Army soldiers serving in the GWOT. As shown in our prior work,
these pay problems resulted in significant frustration and financial
problems for the soldiers and their families. Our audit of separated
Army GWOT soldier debt identified nearly 1,300 separated battle-injured
soldiers and soldiers who were killed in combat who had incurred $1.5
million in debt during the first 4 years of the GWOT deployment
(October 2001 through September 2005).[Footnote 5] According to DOD,
the primary cause of this debt related to military pay problems. As a
policy, the Defense Finance and Accounting Service (DFAS) has authority
to write off debts of soldiers who were killed in combat. However,
according to DFAS officials, military debt can be satisfied from the
final pay of these soldiers, [Footnote 6] and DFAS may pursue
collection action on other deceased soldiers' debts.
We found that hundreds of battle-injured soldiers were pursued for
repayment of military debts through no fault of their own, including at
least 74 soldiers whose debts had been reported to credit bureaus and
private collection agencies at the time we initiated our audit in June
2005. In response to our audit, Army and DFAS officials told us that
they had suspended collection action on these soldiers' debts and
recalled their reports to credit bureaus and their referrals to private
collection agencies and TOP until a determination could be made as to
whether these soldiers' debts were eligible for relief.
In addition, our investigation of pay problems related to Army National
Guard and Reserve soldiers assigned to the MRPU at Fort Bragg--1 of 23
MRPUs--identified overpayments of approximately $218,000[Footnote 7] to
232 sick and injured[Footnote 8] Army National Guard and Reserve
soldiers. Many sick and injured Fort Bragg soldiers faced garnishment
of wages and other debt collection actions resulting from these pay
errors.
As illustrated by our case studies, debt collection action resulted in
significant frustration and financial problems for soldiers and their
families. For example, our Fort Bragg investigation found that several
sick and injured soldiers who were still in the service experienced
large, unexpected deductions--as much as $1,172 from a single paycheck-
-for repayment of debt resulting from the Army's failure to stop
hostile fire and hardship duty pay for soldiers who were in Medical
Retention status. The longer it took the Fort Bragg Finance Battalion
to stop the overpayments, the greater the amount of debt that
accumulated for the soldier and the greater the financial impact since
more money eventually would be withheld from the soldier's pay or
sought through debt collection action after the soldier had separated
from the service.
Case studies related to both of our reports showed that sick and
injured soldiers sometimes went months without paychecks[Footnote 9]
because debt caused by overpayments of combat pay and other errors was
offset against their military pay. Similarly, work performed for both
of our reports also showed that when debts were not paid after the
soldiers separated from the service, they were subject to credit bureau
reporting and collection agency actions. Out-of-service debt collection
actions created additional hardships on the soldiers by preventing them
from getting loans to buy houses or automobiles or pay off other debt,
and sending several of the soldiers into financial crisis. Some battle-
injured soldiers forfeited their final separation pay to cover part of
their military debt, and they left the service with no funds to cover
immediate expenses while facing collection action on their remaining
debt. Because of their lack of income, 16 of 19 separated battle-
injured soldiers who contacted us during our audit told us that they
had difficulty paying basic household expenses. Because they were
unable to pay their military debts, 16 of these soldiers' debts were
reported to credit bureaus, 9 soldiers were pursued by collection
agencies, and 8 soldiers had their income tax refunds withheld under
TOP.
Preventing debt from occurring in the first place is the best solution
to this problem. Our past reports included over 80 recommendations for
improvements in human capital, processes, and automated systems to
address pay and travel problems. Although the fundamentally flawed,
error-prone system remains, the Department of Defense (DOD) and the
Army have taken a number of actions to address these problems and help
prevent them from occurring in the future. These actions represent
primarily human efforts and workarounds intended to compensate for the
current system. For example, the Army and DFAS have created a Wounded-
in-Action (WIA) database of personnel, payroll, and medical data on
soldiers who became sick, were injured, or were killed in combat. This
database provides useful information for identifying and resolving
soldier pay and debt problems. The Army and DFAS have also issued
standard operating procedures and initiated training and oversight
activities at several Army field locations.
Our Fort Bragg report recommends that in conjunction with the Army's
proactive efforts to improve Army National Guard and Reserve pay
account management, DOD and the Army follow up with finance offices
supporting the 22 MRPUs that were not part of our investigation to
determine the extent to which overpayments had occurred at these
locations and ensure that appropriate corrective action is taken.
Opportunities also exist to make the debt collection process more
soldier friendly. Our report on debts of battle-injured soldiers raises
a number of matters for congressional consideration with regard to
expanding debt relief authority in current law, including providing
uniform debt relief to injured GWOT soldiers and exempting these
soldiers from credit bureau reporting and private collection agency and
TOP action.
Continuing Pay Problems for Army Soldiers:
Continuing pay problems resulted in overpayments and debt for sick and
injured GWOT Army soldiers. When Army and medical unit commanders fail
to report changes in soldier duty status and location, overpayments of
combat-related pay, such as hostile fire pay, hardship duty pay, and
family separation pay, continue--sometimes for several months past the
time the soldier is eligible to receive this combat-related pay. As
illustrated by our case studies, which are discussed in the next
section of our testimony, changes in duty status and location occur
when soldiers become sick or injured or they do not deploy with their
units and when soldiers are injured after deployment or sustain battle
injuries and are medically evacuated.
Our investigation into allegations of pay problems related to 37
soldiers assigned to the MRPU at Fort Bragg identified actual
overpayments of approximately $218,000 to 232 sick and injured Army
National Guard and Reserve soldiers in outpatient status during the
period April 2003 through June 2005. These overpayments occurred in
part because unit and medical commanders failed to record changes in
duty status and location of sick and injured soldiers. Data available
during our case studies showed that it took from 14 to 203 days to stop
overpayments once a soldier visited the Finance Battalion. As
demonstrated in our past reports, finance offices in theater were often
unable to start or stop hostile fire pay or hardship duty pay as
required because of problems with human capital, processes, and the
lack of integrated pay and personnel systems. When overpayments were
not detected or they were not detected in a timely manner, the dollar
amount of soldier debts continued to increase. Debts that remained
unpaid after these soldiers left the service were subject to collection
through credit bureau reporting, private collection agencies, and TOP
offsets of income tax refunds and other designated federal payments.
Our audit of separated Army GWOT soldier debt identified nearly 1,300
battle-injured soldiers who left the service owing $1.5 million,
including almost 900 battle-injured soldiers whose debts totaled about
$1.2 million and about 400 soldiers who died in battle whose debts
totaled over $300,000. As a policy, DFAS does not pursue collection
action on the debts of fallen soldiers. However, Army and DFAS
officials told us that under certain circumstances,[Footnote 10]
military debt can be satisfied from the final pay of fallen soldiers.
In addition, DFAS may pursue collection of debts of other deceased
soldiers. We found that hundreds of separated battle-injured soldiers
were pursued for repayment of military debts that occurred through no
fault of their own, including 74 soldiers whose debts had been reported
to credit bureaus, private collection agencies, and TOP at the time we
initiated our audit in June 2005. Although the Debt Collection Act
gives DOD authority to use these debt collection tools, in response to
our audit, the Army temporarily suspended collection action on debts of
battle-injured soldiers until a determination could be made about
whether these soldiers' debts were eligible for relief.
As illustrated in figure 1, Army and DFAS data for fiscal years 2002
through 2005 showed that 73 percent of the debts for the nearly 1,300
separated battle-injured soldiers and soldiers killed in combat related
to errors in pay calculations, combat pay errors, and erroneous leave
payments during fiscal years 2002 through 2005. The remaining 27
percent of these soldiers' debts related to repayment of enlistment
bonuses (11 percent) where soldiers did not complete the required term
of service or they improperly received more than one bonus; payments
for tuition and training (6 percent) where soldiers did not complete
their training or they did not fulfill service requirements related to
their training; and other expenses (8 percent) related to unpaid bills
for family medical services, housing and household moves, insurance
premiums, travel advances,[Footnote 11] and loss or damage of
government property. The reasons for the remaining debt (2 percent)
were not recorded in the Defense Debt Management System.
Figure 1: Figure 1. Dollar Amounts of Battle-Injured and Fallen Soldier
Debts by Major Reason.
[See PDF for image]
Source: GAO analysis.
[End of figure]
Other debts relate to provisions in law and DOD business rules in
effect at various times. For example, until mid-2005, soldiers were
required to repay portions of their enlistment bonus, special pay, and
educational benefits and stipends when they failed to fulfill their
required terms of service because of early separation as a result of
their war injuries. According to DFAS officials, although unit
commanders and finance offices are authorized to write off debts for
lost and damaged equipment when soldiers who were injured or killed by
hostile fire are medically evacuated from the theater of operation,
they have not always done so. In addition, unpaid bills for family
medical services, housing and household moves, insurance premiums, and
outstanding travel advances generate debt. Because Army units and
medical facilities have not always prepared or processed changes in
orders when a soldier's duty status or location changed, soldiers do
not have the documentation needed to submit vouchers for travel
reimbursement. The new WIA Support Team's standard operating procedures
for soldier pay account review require identification and processing of
all soldier travel claims.
Overpayments and Debt Collection Action Have Placed Significant
Hardship on Sick and Injured Soldiers and Their Families:
Debt collection actions have caused a variety of problems for injured
and sick Army GWOT soldiers. Case studies related to both of our
reports showed that sick and injured soldiers sometimes went months
without paychecks because debt caused by overpayments of combat pay and
other errors was offset against their military pay.[Footnote 12] Work
performed for both of our reports also showed that when debts were not
paid after the soldiers separated from the service, they were subject
to credit bureau reporting and collection agency actions and offsets.
Out-of-service debt collection actions created additional hardships on
the soldiers by preventing them from paying for basic household
expenses, getting loans to buy houses or automobiles or pay off other
debt, and sending several of the soldiers into financial crisis. Some
battle-injured soldiers forfeited their final separation pay to cover
part of their military debt, and they left the service with no funds to
cover immediate expenses while facing collection action on their
military debt.
Fort Bragg Soldier Case Studies:
Case studies developed as part of our Fort Bragg investigation showed
that some soldiers and their families had to expend significant time
and effort dealing with pay problems and resulting debt while
recovering from sickness and injuries. Several soldiers experienced
large, unexpected deductions--as much as $1,172 from a single paycheck-
-for repayment of debt resulting from the Army's failure to stop
hostile fire and hardship duty pay for soldiers who were in Medical
Retention status.
As illustrated in table 1, for 9 of the 10 MRPU soldiers in our case
studies, it took pay technicians at the Fort Bragg Finance Battalion
from 14 to 203 days to stop the overpayments once the soldiers visited
the Finance Battalion. The resulting overpayments ranged from $553 to
$2,300. The Finance Battalion could not provide documentation for us to
determine the amount of time it took to stop overpayments for one of
our case study soldiers. The soldiers' injuries ranged from those
inflicted by improvised explosive devices (IED) to post-traumatic
stress disorder.
Table 1: Examples of Fort Bragg Soldier Pay Problems:
Soldier: #1 Sergeant, Army National Guard;
Medical condition: Injury from vehicle accident involving an IED
crater;
Arrival date: 6/14/2004;
Finance visit: 6/14/2004;
Stop pay transaction date: 1/ 3/2005;
Days elapsed before appropriate: pay change[a]: 203;
Estimated overpayments (debt)[b]: $2,050.
Soldier: #2 Specialist, Army National Guard;
Medical condition: Knee injury, broken leg--undiagnosed for 6 weeks;
Arrival date: 7/9/ 2004;
Finance visit: 7/15/2004;
Stop pay transaction date: 11/5/ 2004;
Days elapsed before appropriate: pay change[a]: 113;
Estimated overpayments (debt)[b]: $1,075.
Soldier: #3 Sergeant First Class, Army National Guard;
Medical condition: Depression - sent to MRPU at Fort Bragg and
redeployed to Iraq;
Arrival date: 7/1/2004;
Finance visit: 7/18/2004;
Stop pay transaction date: 11/3/2004;
Days elapsed before appropriate: pay change[a]: 108;
Estimated overpayments (debt)[b]: $1,300.
Soldier: #4 Specialist, Army Reserves;
Medical condition: Remained at Fort Bragg when his unit deployed to
Iraq;
Arrival date: 7/12/ 2004;
Finance visit: 7/23/2004;
Stop pay transaction date: 12/14/ 2004;
Days elapsed before appropriate: pay change[a]: 144;
Estimated overpayments (debt)[b]: $848.
Soldier: #5 Sergeant Army National Guard;
Medical condition: IED injuries to arm while in Iraq;
Arrival date: 6/29/2004;
Finance visit: 7/26/2004;
Stop pay transaction date: 12/23/2004;
Days elapsed before appropriate: pay change[a]: 150;
Estimated overpayments (debt)[b]: $2,000.
Soldier: #6 Staff Sergeant, Army National Guard;
Medical condition: Stroke--medically evacuated to Landstuhl and
transferred to Walter Reed and Fort Bragg;
Arrival date: 7/6/2004;
Finance visit: 7/30/2004;
Stop pay transaction date: 11/5/2004;
Days elapsed before appropriate: pay change[a]: 96;
Estimated overpayments (debt)[b]: $1,300.
Soldier: #7 Specialist, Army National Guard;
Medical condition: Kidney disease in Iraq, hospitalized at Landstuhl,
and then sent to Walter Reed and Fort Bragg;
Arrival date: 9/13/2004;
Finance visit: 9/15/2004;
Stop pay transaction date: 12/8/2004;
Days elapsed before appropriate: pay change[a]: 82;
Estimated overpayments (debt)[b]: $1,025.
Soldier: #8 Specialist, Army National Guard;
Medical condition: Depression and anxiety;
never deployed;
Arrival date: 10/5/2004;
Finance visit: 10/13/2004;
Stop pay transaction date: 3/10/2004;
Days elapsed before appropriate: pay change[a]: 148;
Estimated overpayments (debt)[b]: $1,823.
Soldier: # 9 Lt. Colonel, Army Reserves;
Medical condition: Experienced heart trouble in Iraq;
sent to Fort Bragg;
Arrival date: 11/2/1004;
Finance visit: 11/4/2004;
Stop pay transaction date: 11/ 18/2004;
Days elapsed before appropriate: pay change[a]: 14;
Estimated overpayments (debt)[b]: $553.
Soldier: # 10 Lt. Colonel, Army Reserves;
Medical condition: Contracted legionnaire's disease in Africa;
Arrival date: 3/8/2004;
Finance visit: Unknown;
Stop pay transaction date: 9/2/2004;
Days elapsed before appropriate: pay change[a]: Unknown;
Estimated overpayments (debt)b: $2,300.
Source: GAO.
[A] Days elapsed equals the number of days between the date the soldier
visited Finance and date ineligible pay was stopped.
[B] Estimated overpayments equals hostile fire and hardship duty
payments made to a soldier after arrival at Fort Bragg MRPU.
[End of table]
Soldier #6 in the table above, an Army National Guard soldier, suffered
a stroke on June 26, 2004, while serving in Iraq. He was medically
evacuated and arrived at Fort Bragg in early July 2004. Our
investigation revealed that the soldier visited the Fort Bragg Finance
Battalion on July 30, 2004, as part of his MRPU processing. Despite
following MRPU procedures, this soldier's hostile fire and hardship
duty pay continued until November 5, 2004--approximately 4 months after
his initial visit to the Finance Battalion. By this time, the soldier's
overpayments had resulted in debt of $1,300. The Fort Bragg Finance
Battalion eventually collected about $972 of this amount from a single
paycheck, which was about 50 percent of the soldier's disposable pay.
As a result, the soldier's wife told us that she had to defer paying
some of their bills, including the monthly payment on their second
mortgage.
Separated Battle-Injured Soldier Case Studies:
Case studies related to our audit of separated battle-injured soldier
debt showed that several of these soldiers also had gone without a
paycheck for several months while they were in Army medical facilities
undergoing treatment for their war injuries because debt caused by
overpayments of combat pay and other errors was offset against their
military pay. One soldier said he had no money for food while several
soldiers told us they received assistance from family members. When
these soldiers leave the Army, they generally do not have jobs and many
of them face continuing medical treatment for battle injuries, making
it difficult to hold a job. Some soldiers told us that their final
separation pay was offset to cover their debt and they left the service
with no funds to pay immediate expenses.
Because of the lack of income, 16 of the 19 soldiers who contacted us
during our audit told us that they had difficulty paying for basic
household expenses. The Army's failure to record separation paperwork
in the pay system and other payment errors resulted in over $12,000 of
debt for one severely battle-injured soldier who suffered brain damage
when his convoy came under attack. Although the soldier's family
expected that he would receive retirement pay when his active Army pay
stopped upon his separation, the soldier had no income for several
months while the Army attempted to recover his military debt. As a
result the soldier's family was unable to pay household bills, the
utilities were shut off, and the soldier's dependent daughter was sent
out of state to live with relatives.
In addition, three soldiers told us that they were erroneously
identified as absent without leave (AWOL) by their units while they
were actually in the hospital or receiving outpatient care for their
war injuries. The AWOL status for at least two of these soldiers
created debt because it appeared that the soldiers received pay when
they were not in duty status. At the time these soldiers were listed as
AWOL by their Army units, they were actually receiving medical
treatment. One soldier was receiving outpatient therapy for her knee
injury under the care and direction of an Air Force physician based on
an Army medical referral and the other soldier was in a military
hospital at Fort Campbell. Debt-related experiences of 19 separated
battle-injured soldiers who contacted us included the following.
* Sixteen soldiers had their military debts reported to credit bureaus,
9 soldiers had debts turned over to private collection agencies, and 8
soldiers had their income tax refunds withheld under TOP.
* Sixteen could not pay their basic household expenses.
* Four soldiers were unable to obtain loans to purchase homes, meet
other needs, or obtain VA educational benefits because of service-
related debt on their credit reports.
* At least 8 soldiers were owed travel reimbursements at the same time
they were being pursued for collection of their service-related debts.
Table 2 illustrates examples of the effects of debt collection actions
on 10 of our separated Army battle-injured case study soldiers and
their families. Debts imposed the greatest hardship on battle-injured
soldiers who have had to endure financial problems while they cope with
adjusting to physical limitations caused by their injuries.
Table 2: of Battle-Injured Soldier Pay Problems Resulting in Military
Debt after Separation:
Soldier: #1 Staff Sergeant, Army Reserves;
Type of Injury: Lost right leg below the knee;
Debt amount: $2,231;
DOD-reported debt reason(s): Payroll and leave payment errors. Also,
erroneous Servicemen's Group Life Insurance (SGLI) and Survivor Benefit
Program (SBP) premium billings;
Impact on soldiers and family members: Soldier spent 1-1/2 years on
disputes and appeals before multiple debts, errors and unreimbursed
travel expense were resolved. Soldier said he deferred purchase of a
house because of military debt included on his credit report. The Army
debt was the only blot on the soldier's credit report.
Soldier: #2 Staff Sergeant, Army National Guard;
Type of Injury: Brain damage, in a coma for 3 months, and post
traumatic stress disorder (PTSD);
Debt amount: $12,662;
DOD-reported debt reason(s): Combat pay and calculation errors,
including payment for unused leave. Soldier also was erroneously
reported as AWOL while actually receiving treatment in a Department of
Veterans Affairs hospital;
Impact on soldiers and family members: Family had no income while debt
was recouped. According to a family member, the soldier's utilities
were turned off, and his young daughter was sent to live with relatives
out of state.
Soldier: #3 Staff Sergeant, Active Component;
Type of Injury: Paralyzed from waist down;
Debt amount: $14,959;
DOD-reported debt reason(s): Combat pay and calculation errors;
Impact on soldiers and family members: Soldier received reduced pay or
no net pay over a 4- month period while he was at Walter Reed and his
wife and four children were in Germany. The soldier separated from the
Army in January 2005 and his debt was not resolved until February 2006.
The soldier is still pursuing underpayment of hostile fire pay and
combat zone tax exclusion and "unreimbursed" travel expense.
Soldier: #4 Specialist, Army Reserves;
Type of Injury: Inoperable shrapnel in knee;
Debt amount: $1,575;
DOD-reported debt reason(s): Unearned portion of reserve enlistment
bonus because of erroneous AWOL report and overpayment of hardship duty
pay;
Impact on soldiers and family members: After the soldier struggled with
her Army Reserve unit to resolve AWOL errors, she experienced
collection action on other military debt. The soldier told us she was
unable to get a $500 loan because of the past due Army debt of $1,079
on her credit report.
Soldier: #5 Sergeant Active Component;
Type of Injury: Leg injury;
Debt amount: $563;
DOD-reported debt reason(s): Outstanding travel advance error;
Impact on soldiers and family members: Soldier was asked to travel to
Fort Polk to brief Stryker Brigade on Iraq experience. He submitted his
travel voucher several times, but DFAS lost it and reported a travel
advance debt to credit bureaus.
Soldier: #6 Corporal, Active Component;
Type of Injury: Chest injury, damage to lung and left arm, in a coma
for two weeks, and PTSD;
Debt amount: $2,030;
DOD-reported debt reason(s): Combat pay and calculation errors;
Impact on soldiers and family members: Soldier, a single parent with
four young children, was told that DFAS would audit her $2,030 debt.
She said she never heard from DFAS and was unaware she owed a balance
of over $500 until the debt appeared on her credit report.
Soldier: #7 Sergeant, Active Component;
Type of Injury: Limited use of right leg;
Debt amount: $6,472;
DOD-reported debt reason(s): Pay calculation errors;
Impact on soldiers and family members: Soldier was contacted by a
private collection agency and his 2004 income tax refund was withheld
to offset his debt. Soldier said he was unable to obtain a loan to buy
land for his house trailer due to military debt on his credit report,
and he had to pay a higher interest rate on his car loan.
Soldier: #8 Private First Class, Army Reserve;
Type of Injury: Shoulder injury;
Debt amount: $3,716;
DOD-reported debt reason(s): Unearned portion of reserve enlistment
bonus;
Impact on soldiers and family members: Soldier said he was unsuccessful
in gaining assistance from Fort Hood to resolve his debt. He was
contacted by a private collection agency, and the government took his
2004 tax refund to offset the debt.
Soldier: #9 Staff Sergeant, Army National Guard;
Type of Injury: Nerve damage in wrists and head and shoulder injury;
Debt amount: $3,434;
DOD-reported debt reason(s): Erroneous annual leave payment, repayment
of basic training program expense. Also, erroneous SGLI premium
billings;
Impact on soldiers and family members: The soldier separated from the
Army in October 2004 and said he received a check for about $1,800 for
unused leave 10 months later in July 2005. He told us he received his
first debt letter in November 2005 but was unable to pay his debt.
Soldier: #10 Specialist, Active; Component;
Type of Injury: Loss of hearing and PTSD;
Debt amount: $476;
DOD-reported debt reason(s): Pay calculation errors;
Impact on soldiers and family members: Soldier said she was unable to
obtain a loan to purchase a house because of military debt on her
credit report. The soldier would have had to pay a higher interest rate
because of Army debt, and she could not afford the resulting higher
monthly payment on the loan.
Source: GAO.
[End of table]
Five soldiers and family members told us that they had contacted their
unit finance offices multiple times for assistance in resolving their
pay and debt problems. However, the soldiers said that finance
personnel either did not get back to them as promised or the finance
personnel they spoke with said they could not help them with their
problems. DFAS and Army officials we spoke with acknowledged that
finance office personnel at some locations lacked the knowledge needed
to accurately input transactions to soldier pay accounts. DFAS
officials told us they recently initiated actions to train Army finance
office personnel at several locations.
DOD Actions to Address Pay and Travel Reimbursement Problems:
Our past reports included over 80 recommendations for improvements in
human capital, processes, and systems to address pay and travel
problems. Preventing these problems from occurring in the first place
is the best solution. Efforts to fundamentally reengineer the current
system into an integrated pay and personnel system have fallen far
short of expectations. DOD and the Army have taken a number of actions
to improve human capital and correct process weaknesses. For example,
the Army and DFAS have created a WIA database of personnel, payroll,
and medical data on soldiers who were sick, injured, or killed in
combat. This database provides useful information for identifying and
resolving soldier pay and debt problems. The Army and DFAS have also
issued standard operating procedures and initiated training and
oversight activities at several Army field locations. In addition, the
Army established a formal Ombudsman Office in May 2005 to assist Army
Guard and Reserve soldiers in resolving a variety of pay and travel
problems. Over the past few months, DFAS has deployed staff to several
field locations to train the finance staff on the processing of pay
transactions. Although these actions are positive, they primarily
represent workarounds and substantial human efforts to overcome the
error-prone, labor-intensive system that exists today.
Opportunities for a More Soldier-Friendly Debt Collection Process:
Our analysis of debt relief authority in the National Defense
Authorization Act for Fiscal Year 2006 identified additional
opportunities to alleviate the burden that military debt and collection
action places on sick and injured soldiers. For example, the act could
be clarified to make debt relief available to soldiers regardless of
when they separated from active duty. Currently, soldiers who separated
from the Army more than 1 year ago are not eligible to obtain debt
relief, and soldiers who paid debts are not eligible for refunds.
Case studies included in both of our recent reports showed that some
battle-injured soldiers did not receive debt notification letters until
8 to 10 months after they separated from the Army. One battle-injured
soldier who separated in October 2004 told us that he received his debt
notification letter in November 2005--more than 1 year after he
separated from the Army. All but three of our case study battle-injured
soldiers separated from the Army more than 1 year ago, and these
soldiers' eligibility for debt relief under the act has already
expired. Another non-battle-injured soldier included in our Fort Bragg
investigation who separated from the Army National Guard in June 2005,
received his debt notification letter at the end of March 2006--10
months after he separated from the service--stating that his debt would
be reported to credit bureaus, if not paid within 30 days and to
private collection agencies if not paid within 60 days. Further, the
current debt relief authority is not permanent; it will expire on
December 31, 2007.
Our report on debts of battle-injured soldiers raises a number of
matters for congressional consideration with regard to expanding debt
relief authority in current law, including providing uniform debt
relief to injured GWOT soldiers and exempting these soldiers from
credit bureau reporting and private collection agency and TOP action.
Our report on MRPU soldier overpayments recommends that DOD follow up
with the 22 MRPUs that were not part of our investigation to determine
the extent of overpayments at those locations and ensure appropriate
corrective action is taken.
Concluding Comments:
Our most recent work shows that wounded soldiers continue to struggle
with a broken pay system. These pay problems have resulted in
significant frustration for injured soldiers and their families. In
addition, we found instances of soldiers injured fighting the GWOT
being referred to credit reporting agencies and collection agents. This
is especially problematic for injured soldiers who are facing other
difficult challenges. Although DOD has taken action to improve the
military pay system, most of the progress to date represents
workarounds and human efforts to overcome what remains today as a
fundamentally flawed system. Absent a successful reengineering of the
current pay system, problems for soldiers will continue. Consistent
oversight by Congress will be needed to ensure that DOD provides our
soldiers with the world class military pay system that they deserve.
Mr. Chairman and Members of the Committee, this concludes my statement.
I would be pleased to answer any questions that you or other members of
the committee may have at this time.
Contacts and Acknowledgments:
For further information about this testimony, please contact Gregory D.
Kutz at (202) 512-7455 or kutzg@gao.gov. Major contributors to this
testimony include Gary Bianchi, Mary Ellen Chervenic, Dennis Fauber,
Gayle Fischer, Jason Kelly, Renee McElveen, Richard Newbold, and John
Ryan. Contact points for our Offices of Congressional Relations and
Public Affairs may be found on the last page of this testimony.
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FOOTNOTES
[1] GAO, Military Pay: Gaps in Pay and Benefits Create Financial
Hardships for Injured Army National Guard and Reserve Soldiers, GAO-05-
125 and GAO-05-322T (Washington, D.C.: Feb. 17, 2005); Army National
Guard: Inefficient, Error-Prone Process Results in Travel Reimbursement
Problems for Mobilized Soldiers, GAO-05-79 (Washington, D.C.: Jan. 31,
2005) and GAO-05-400T (Washington, D.C.: Mar. 16, 2005); Military Pay:
Army Reserve Soldiers Mobilized to Active Duty Experienced Significant
Pay Problems, GAO-04-990T (Washington, D.C.: July 20, 2004) and GAO-04-
911 (Washington, D.C.: Aug. 20, 2004); and Military Pay: Army National
Guard Personnel Mobilized to Active Duty Experienced Significant Pay
Problems, GAO-04-413T (Washington, D.C.: Jan. 28, 2004) and GAO-04-89
(Washington, D.C.: Nov. 13, 2003).
[2] GAO, Military Pay: Inadequate Controls for Stopping Overpayments of
Hostile Fire and Hardship Duty Pay to Over 200 Sick or Injured Army
National Guard and Army Reserve Soldiers Assigned to Fort Bragg, GAO-06-
384R (Washington, D.C.: Apr. 27, 2006) and Military Pay: Hundreds of
Battle-Injured GWOT Soldiers Have Struggled to Resolve Military Debts,
GAO-06-494 (Washington, D.C.: Apr. 27, 2006).
[3] For the purposes of this testimony, "outpatient" means soldiers who
are being medically evaluated for specialized treatment. This may
include surgery, which would require hospitalization at a later date.
[4] Pub. L. No. 97-365, 96 Stat. 1749 (1982).
[5] We determined that these data were reliable for the purposes of our
audit.
[6] Circumstances in which debt can be offset against a fallen
soldier's final pay include normal adjustments to collect outstanding
advance pay and minimal overpayments within the current month and other
outstanding debt, such as nonsufficient fund checks.
[7] As a result of the lack of supporting documents and data
reliability concerns, we likely did not identify precise overpayment
amounts. We have provided information on the overpayments we identified
to cognizant Fort Bragg officials for further research to determine the
proper amounts that are owed to the government or the soldiers.
[8] The term injured includes battle-injured and non battle-injured
soldiers.
[9] We found that after voluntary allotments and other required
deductions, many times there was no net pay due the soldier.
[10] Circumstances in which debt can be offset against a fallen
soldier's final pay include normal adjustments to collect outstanding
advance pay and minimal overpayments within the current month and other
outstanding debt, such as nonsufficient fund checks.
[11] In accordance with 41 C.F.R. § 301-71.305 federal employees are
required to account for outstanding travel advances when they file
travel claims. Any unused amount of a travel advance is required to be
repaid.
[12] We found that after voluntary allotments and other required
deductions, many times there was no net pay due the soldier.
