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An Army and Air Force Exchange Service internal memo about a recent change in the post-allowance rule could be a concern for military communities and nearly 1,000 overseas employees who recently began receiving the allowances.

The exchange’s top human resources executive forecasts a diminished quality of life for military personnel and their families if the exchange has to pay post allowance and six years of allowance back payments, as has been directed by the Department of Defense.

"A decision to pay six years of retroactive post allowance would take $30 million ($5 million a year, prospectively) away from the programs supporting military personnel and their families," the memo reads. "If we are required to make a retroactive payment to 2001, the additional expense would come from scheduled dividends and capital expenditure programs."

To remedy the situation, the memo recommends the DOD change its civilian personnel regulation, effectively stripping post allowances from the 967 AAFES employees who started receiving the benefit in April.

If that doesn’t happen, the impact on military families would be "immediate and severe," yanking cash away from military Morale, Welfare and Recreation programs and from the fund used to build and renovate exchange stores, wrote James E. Moore, the exchange’s senior vice president for human resources.

"In some cases, activities that provide necessary services to our military community may need to be curtailed in order to pay this avoidable bill," he wrote in the memo, a "fact sheet" intended for AAFES leadership. A copy of the memo, issued in March, was recently obtained by Stars and Stripes.

Exchange employees also would be hurt by the post allowance payments because the exchange "would be forced to cut expenses" by "reducing overall staffing levels and services provided, converting full-time employees to part-time, replacing U.S. citizen employees with local nationals, and similar measures."

But Lt. Col. William Thurmond, AAFES’ chief of corporate communications in Dallas, played down Moore’s assertions that military personnel and their families will suffer because of the ruling. "We will not curtail ‘necessary services’ to the military community," he wrote in an e-mail message to Stars and Stripes.

Thurmond noted that the exchange has been paying the allowance for three months, and there "is no ongoing coordination that would delay" six years’ worth of allowance back payments to qualifying personnel.

As for employees, "AAFES has taken no action to downgrade associates to regular part-time position in order to avoid the payment of post allowance," he wrote. He didn’t specifically address other personnel changes mentioned in Moore’s memo.

For more than a decade, AAFES asserted the allowance only had to be paid to U.S. civilians it hired in the U.S. and moved overseas. This interpretation was at odds with the Defense Department regulation, which guarantees post allowance to all of its American employees working regular, full-time jobs overseas.

In 2006 the department reminded AAFES of its obligation to follow DOD rules guaranteeing the allowance to many overseas Americans. At that point, AAFES hadn’t been in compliance for a decade, and still didn’t comply after the reminder.

Nearly a year later Maj. Gen. Paul Essex, then commander of AAFES, requested an exception to exempt AAFES from paying the allowance to overseas hires. His request was denied.

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