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STUTTGART, Germany — More than 500 Defense Department employees in Europe and the Pacific were notified this week that they were erroneously given housing benefits and must now apply for a special waiver to avoid being indebted to the government for all past allowances received, according to military officials.

Effective immediately, those workers will no longer be eligible for Living Quarters Allowances—a benefit that subsidizes rental and utility costs and can add up to $50,000 per-year in some cases. Defense officials on Thursday were unable to provide a complete tally of how many overseas employees were affected by a DOD-wide audit that was prompted by a widespread misinterpretation of rules governing who is eligible for the housing allowance.

However, 481 Army civilians—302 in Europe and 179 in the Pacific —are affected, according to Clifford M. Dickman, deputy director of the Civilian Human Resource Agency Army.

“This is something we’ve never encountered before,” said Dickman.

To alleviate the pain, DOD determined that some workers could be granted one-year special extensions in which they will continue to receive the benefit, buying time to seek out other employment or living arrangements. Others, however, learned they were ineligible for the one-year exception and that housing benefits would cease immediately.

“What we need to do is look at this both legally and morally and see if this is what we should be doing. Are we willing to tolerate veterans being treated this way?” asked Mark Seawell, a retired airman and Air Force civilian at Ramstein Air Base who learned on Wednesday that he is no longer eligible for LQA. “Is that in our interest as a country? The government says they goofed and they’re going to turn around and punish us anyway. Why are we as a group having to pay for someone else’s mistake?”

Seawell, along with several other Air Force and Army employees, said they were stunned to learn that housing allowances were now being kept out of paychecks. While some workers said they intended to explore legal options, others said they were still trying to figure out their next step.

“My jaw dropped when they told me,” said Michael Parsons, an Air Force civilian and retired airman who was determined ineligible for the one –year LQA extension. “It wasn’t just losing half my paycheck. It’s also losing the transportation agreement to send our stuff back to the U.S. It’s almost like we’re hostages in Germany.”

In all, 175 of the 481 effected Army civilians are ineligible for the extension, according to Dickman, who said the service was working to get all effected civilians included in the extension.

In the case of USAREUR, about 250 workers were found to be receiving LQA in error, 120 of whom haven’t qualified for the one-year extension of the benefit. Of the 68 civilian employees in United States Air Forces in Europe and Air Forces Africa who erroneously received LQA, 17 are ineligible for the exceptions.

Workers say the extension is crucial to minimizing the financial hardship caused by errors made by the military itself.

In letters issued to affected workers on Thursday, personnel officials said DOD would likely grant waiver requests.

“Although the Department of Defense is not able to provide a blanket waiver for all affected employees, they have determined it is in the best interests of the Department to support employee’s request for a waiver of indebtedness in these unique circumstances,” stated one letter issued on Thursday to an Army employee in Europe.

All affected workers overseas will soon receive notices from the Defense Finance and Accounting Service, detailing the amount of money owed. At that time, workers should request a waiver of the indebtedness from DFAS, USAREUR said.

Human resources specialists are on standby to assist in the effort.

Military officials in Europe say they are working to get one-year extensions for all workers.

“USAREUR leaders have been working since the determination of erroneous payments first came to light to get a waiver or exception for all of our affected employees, and will continue to work to get favorable resolution for them,” said Bruce Anderson, USAREUR spokesman, in a statement.

The LQA one-year extension mainly covers former servicemembers who separated while stationed overseas and went to work for contractors before obtaining an appropriated fund position, according to USAREUR. The exception does not apply to workers who took a non-appropriated fund or AAFES positions before obtaining an appropriated fund government service position, USAREUR stated.

In the vast majority of cases, workers who received LQA in error did so through no fault of their own, according to USAREUR.

“This situation is extremely difficult and I know there are good, hard-working, professional people who are justifiably upset about what this may mean to their Families and financial well-being,” said USAREUR chief Lt. Gen. Donald M. Campbell Jr, in a statement. “I’d tell them that the Army Chief of Staff (Gen. Raymond Odierno) himself and I are personally engaged in this issue. They should seek out personnel experts for counseling and appropriate actions and take this thing one day at a time. I can assure them that leaders throughout Europe are here to support them through this process.”

Added Lt. Gen. Tom Jones, USAFE-AFAFRICA vice commander: “While this news will create an unfortunate challenge for some of our employees, our personnel specialists are diligently working to provide them with step-by-step procedures to prevent future debt and help set them up for a stable future. This transition will not be easy, but we will ensure it goes smoothly.”

In late 2011, U.S. European Command officials learned that personnel offices had been widely misinterpreting housing allowance rules, opening up the possibility that some workers could have their allowance abruptly cut off while also being forced to repay the government thousands of dollars in past allowances received in error. Those rules dictate that locally hired employees are eligible for LQA only if they worked for no more than one nongovernment employer overseas before joining government service. That prompted U.S. European Command to seek a special blanket debt relief waiver for those workers and a one-year extension of the benefit.

In January, DOD determined that it could only grant waivers on an individual basis.

DFAS will begin collecting on the debt within 45 days of the employee being notified of the amount owed. Collection will continue during the waiver request process, USAREUR said. When the waiver is granted, the employee will be reimbursed the money collected prior to the granting of the waiver, military officials stated.

Some civilians have expressed concern that outstanding indebtedness could negatively effect their credit ratings, however, DFAS states on its Web site that it reports to credit bureaus only when payments aren’t made on debt.

“We understand that people have made life choices based on their continued payment of LQA,” said Monique Botting, USAFE-AFAFRICA Personnel Division chief. “The USAFE-AFAFRICA personnel division, as well as the wing civilian personnel offices, are committed to helping each affected employee receive and understand all information necessary for this process.”

Seawell, the Air Force civilian, said he’s holding out hope that DoD officials will at least give all affected workers the benefit of a one year extension to get their affairs in order.

“I’ve found the military community very sympathetic,” he said. “No one is taking pleasure in this. I really think people in positions of authority are going to do the right thing.”

author picture
John covers U.S. military activities across Europe and Africa. Based in Stuttgart, Germany, he previously worked for newspapers in New Jersey, North Carolina and Maryland. He is a graduate of the University of Delaware.
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