Pay Up or Pay Offset... It's Your Choice.(Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : Originally a paper written during the author's tenure at the Professional Military Comptroller School (Maxwell APB APB See Accounting Principles Board (APB). , Alabama), the following article represents the views of the author and does not necessarily reflect the views or opinions of the Department of Defense, Component Services, Air University or the College for Professional Development. The article has been adapted to a columnar format.) According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Federal Reserve Board (FRB See Federal Reserve Board. ), the unadjusted delinquency rate for consumer credit card debt Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. ranged from 5.33 percent in 1991 to 4.43 percent in 2000 for an average delinquency rate of 4.47 percent. [1] The FRB defines delinquency as 30 days or more past due. As of December 2000, the Air Force's unadjusted delinquency rate for the government travel card was 12.49 percent. [7] The average delinquency rate from January through December 2000 was 11.75 percent. [7] The Air Force defines delinquency as 60 days or more past due. Clearly, the Air Force's delinquency rate is out of control. The mandatory government travel card (GTC GTC See: Good 'til cancelled order GTC See good-till-canceled order (GTC). ) program would achieve greater efficiency and effectiveness as a travel cost reduction measure if the Air Force enacted the salary-offset clause of Public Law 105-264. As a delinquency control measure, salary offset has proven successful for the Army and Air Force Exchange Service The Army and Air Force Exchange Service (or AAFES) is an agency of the United States Department of Defense. Its mission is to provide quality merchandise and services of necessity and convenience to authorized customers at uniformly low prices, and to generate reasonable (AAFES AAFES Army & Air Force Exchange Service ), would reduce the loss to the Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. (the card contractor) due to costly program administration and account write-offs, and would reduce the number of Uniform Code of Military Justice The Uniform Code of Military Justice (UCMJ) was enacted by Congress in 1950 (10 U.S.C.A. § 801 et seq.) to establish a standard set of procedural and substantive criminal laws for all the U.S. military services. (It went into effect the following year. actions initiated as a result of delinquency/abuse. Background A brief review of the public law and governing directives will aid in understanding the premise of salary offset. In October 1998, Public Law 105-264, Travel and Transportation Reform Act of 1998, mandated "that Federal employees use the travel charge card...for all payments of expenses of official Government travel." [6] The Air Force implemented mandatory use of the GTC on May 1, 2000. [7] Salary offset is the most expedient method of enacting the intent of Section 2.(d) of Public Law 105-264, which allows a federal agency to deduct undisputed delinquent amounts from employees' pay on behalf of the contractor. [6] Specific provision for salary offset are outlined in the Department of Defense Financial Management Regulation (DoDFMR). Salary offset is akin to court-ordered garnishment garnishment, in law, means of requiring a third party who holds a debt (including wages) due a defendant to retain the property temporarily. The garnishment consists of a warning, in the form of a judgment, to the third party, called the garnishee, not to deliver the but does not require the creditor to go through the state court to seek relief. According to the DoDFMR, salary offset is used when the debtor refuses to pay the debt in lump sum Lump sum A large one-time payment of money. or agree to a voluntary payment schedule acceptable to the creditor. The DoDFMR allows the maximum permissible amounts to be offset from salaries when the debts are delinquent and their existence and amount are not in dispute. Employees are legally protected from unjust salary offset by provisions for due process and restrictions on the amount of disposable pay that can be collected. Due process requires that employees be notified in writing and given the opportunity to refute the creditors' claims before their pay is offset. As a minimum, employees must be notified 30 days before the offset occurs. Public Law 105264 limits collection to nor more than 15 percent of disposable pay unless the employee agrees to a higher percentages. [6] Effectiveness of Salary Offset As proof of the success of salary offset, one need only to look to the AAFES. The AAFES has a long and successful history of validating the efficiency and effectiveness of salary offset as a tool in managing military members' credit activity and checks returned due to insufficient funds. The undisputed effectiveness of salary offset has been validated by AAFES since 1986. [5] Under the Military Star deferred payment program, a member is notified in writing when his or her account is 30 days past due; at 60 days past due, the member's unit commander is notified. [5] Like the Air Force, the AAFES defines delinquency as 60 days past due. [5] Salary offset is initiated when a member's Military Star account is 90 days delinquent. [5] According to the Chief of the Exchange Credit Program, the AAFES currently averages an acceptable 7 to 8 percent delinquency on its Military Star deferred payment program and writes off a nominal 2 percent of debts as uncollectable. [5] The offset process for nor sufficient funds (NSF NSF - National Science Foundation ) checks moves a little faster. The member's check is presented to the bank once and, if returned NSF, it is turned over to the AAFES contractor for collection action. [4] An initial written notice is sent directly to the member; 30 days later, a second notice is sent to the member's unit commander. [4] Salary offset for NSF checks is initiated after 60 to 70 days. [4] Processing the required documents electronically speeds up the offset process. For both the Military Star program and NSF checks, the AAFES sends a monthly electronic file to Defense Finance and Accounting Service The Defense Finance and Accounting Service (DFAS), an agency of the United States Department of Defense, provides finance and accounting services for the military and other members of defense. In FY 2004, DFAS:
DFAS Decorative and Fine Arts Society (The Hague, Holland) DFAS Dark Field Alignment System DFAS Department of Fisheries and Aquatic Sciences )-Denver Site for collection from Air Force member pay accounts and routinely receives a check within 30 days of the request. [4] This methodology ensures that members are provided due process, and the AAFES quickly collects undisputed outstanding debts. The AAFES relies on salary offset as a primary tool in controlling Military Star delinquency and collecting NSF checks and fees. Using Salary Offset to Manage GTC Based on the AAFES example, the same success can be duplicated if salary offset is implemented as a tool to manage GTC delinquency. Enacting salary offset would reduce the loss to Bank of America (BoA) due to costly program administration and delinquent account wrire-offs and thereby encourage renewal of the contract. Contract administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. are higher than normal credit card accounts because of specific agency requirements, including monthly reports, express mail service for rush applications, processing increased numbers of applications, call maintenance, and maintenance for inactive accounts. [7] Since taking over the GTC contract in 1998, the BoA has written off $11 million in bad debt, averaging $250,000 per month for the Air Force alone? Because of these expenses, the BoA is considering canceling the contract or at the very least attempting to renegotiate re·ne·go·ti·ate tr.v. re·ne·go·ti·at·ed, re·ne·go·ti·at·ing, re·ne·go·ti·ates 1. To negotiate anew. 2. To revise the terms of (a contract) so as to limit or regain excess profits gained by the contractor. to increase fees. [7] The BoA has proposed several contract changes, including imposing a $45 per account maintenance fee, turning over all 90-day past-due accounts to the Department of Defense, eliminating cards for personnel in pay grades E-1 to E-6, eliminating the estimated $1 million Air Force annual rebate, eliminating automated teller machine automated teller machine (ATM), device used by bank customers to process account transactions. Typically, a user inserts into the ATM a special plastic card that is encoded with information on a magnetic strip. (ATM) cash advances or substantially increasing the fee for ATM use, and eliminating cards for infrequent travelers. [7] Obviously, implementing these proposed changes would be cost-prohibitive for the Air Force; therefore, negotiations continue. Enacting the salary-offset clause of Public Law 105-264 would substantially reduce the losses for the BoA by drastically reducing the bad-debt write-offs, reducing the administrative follow-up required for delinquent accounts and proving that the Air Force is willing to take a strong stand to control GTC delinquency. Reducing BoA costs would definitely make contract renewal more appealing. Additionally, enacting the salary-offset clause would reduce the number of Uniform Code of Military Justice (UCMJ An abbreviation for the Uniform Code of Military Justice (10 U.S.C.A. § 801 et seq.). ) actions initiated as a result of GTC delinquency/abuse and in turn reduce the program administration workload for commanders and program coordinators. The Air Force Judge Advocate General judge advocate general (J.A.G.) n. a military officer who advises the government on courts-martial and administers the conduct of courts-martial. The officers who are judge advocates and counsel assigned to the accused come from the office of the judge advocate began specifically tracking UCMJ actions resulting from GTC offenses (improper use and failure to pay) in May 1996. Table 1 depicts annual data for GTC offenses from the USAF Automated Military Justice Analysis and Management System. [8] The monthly rate declined when the BoA assumed the contract in 1998. In 2000, when use of the GTC was mandated for Air Force members, the rate doubled as more and more travelers were legally required to use the card. Unit commanders normally initiate UCMJ actions when lesser disciplinary actions (that is, verbal counseling/reprimand, letter of counseling/reprimand) have been ineffective in correcting undesirable behavior. Before initiating UCMJ action, the unit commander and GTC program coordinator must invest numerous hours to gather data and counsel the offending member. Implementing salary-offset would eliminate the need for many UCMJ actions and therefore reduce the workload associated with administrating the GTC program because the delinquent accounts would be paid in full before judicial action became necessary. Ultimately, salary offset would put "teeth" in the GTC program and discourage cardholders from allowing their accounts to become delinquent, thereby helping to achieve the goal of not more than 5 percent delinquency. The GTC program was instituted as a means of simplifying the Air Force travel process and saving money. The program achieved its intended goals but created other difficulties; salary offset is a viable option to address those difficulties. Conclusion Based on the advantages of the salary offset program as proven by AAFES' long history of success, potential reductions to the substantial losses and administrative costs incurred by the BoA, and potential reductions to UCMJ actions and the substantial losses and administrative costs incurred by the BoA, and potential reductions to UCMJ actions and program administration workload for unit commanders and coordinators, enacting the salary-offset clause of Public Law 105-264 will achieve greater efficiency and effectiveness for the GTC program as a travel cost reduction measure for the Air Force. In the final analysis, every cardholder card·hold·er n. One who holds a card, especially a credit card. card  hold has a choice when using the
travel card: pay up or pay offset.
(Editor's Note: The Department of Defense has directed that procedures to implement salary offset for delinquent accounts due to the contractor be established not later than October 9, 2001.) LTCOL LTCOL Lieutenant Colonel Judy Perry is the Chief of Comptroller War Plans for the Assistant Secretary of the Air Force, Financial Management and Comptroller. She served previously as the Comptroller/Squadron Commander of Andrews AFB AFB abbr. acid-fast bacillus AFB Acid-fast bacillus, also 1. Aflatoxin B 2. Aorto-femoral bypass , MD and Ellsworth AFB, SD. She is a past Chapter Vice President of ASMC ASMC American Suzuki Motor Corporation ASMC American Society of Military Comptrollers ASMC Association of Sales & Marketing Companies ASMC Advanced Semiconductor Manufacturing Conference ASMC Area Support Medical Company ASMC American Small Manufacturers Coalition Block Hills Chapter. She is the recipient of the ASMC Award for Excellence in Research for PMCS PMCS PMC Sierra (stock symbol) PMCS Project Management Control System PMCS partial mission-capable, supply (US DoD) PMCS Preventive Maintenance Checks & Services PMCS Professional Military Comptroller School Class 01-B. Bibliography (1.) Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System The managing body of the Federal Reserve System, which sets policies on bank practices and the money supply. . "Charge-Off and Delinquency Rates on Loans and Leases at Commercial Banks," Federal Reserve Statistical Release The Federal Reserve of the United States gathers and publishes certain economic data and releases them as a Federal Reserve Statistical Release. The main categories include:
(2.) Department of Defense. DoD 7000.14-R, Financial Management Regulation, Volume 5, Chapter 30, Paragraph 3003021, August 1999. (3.) Department of Defense. DoD 7000.14-R, Financial Management Regulation, Volume 9, Chapter 8, Paragraph 0806, September 2000. (4.) Horn, Margie. Telephone interview with Accounting Supervisor. Army and Air Force Exchange Service, Dallas, Texas “Dallas” redirects here. For other uses, see Dallas (disambiguation). The City of Dallas (pronounced [ˈdæl.əs] or [ˈdæl. , 1 February 2001. (5.) Lavender, Harold. Telephone interview with Chief of Exchange Credit Program. Army and Air Force Exchange Service, Dallas, Texas, 6 February 2001. (6.) Public Law 105-264, Travel and Transportation Reform Act of 1998. 19 October 1998. (7.) Weber, Michael. Telephone interviews with USAF Travel Card Program Coordinator Accounting, Banking and Comptroller Support, Office of the Assistant Secretary of the Air Force for Financial Management and Comptroller (SAF/FMPB), Washington D.C., 29 January 2001 and 1 February 2001. (8.) U.S. Air Force Automated Military Justice Analysis and Management System. Maintained by HQ USAF Military Justice Division Washington, D.C. Accessible via local Judge Advocate General Office. TABLE 1. Annual Data for Government Travel Card Offenses Year Total # Actions Rate/Month May-Dec 1996 302 37.75 Jan-Dec 1997 436 36.33 Jan-Dec 1998 153 12.75 Jan-Dec 1999 209 17.42 Jan-Aug 2000 272 34.0 |
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