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Army Misused Civilian Pay Funds for Other Purposes, IG Says

A watchdog report accuses Army leadership of using compensation funding to pay for other items that had been cut in the budget.

The Defense Department Inspector General has accused Army budget officials of fudging the numbers in the service's budget requests for civilian employee compensation in order to pay for other items that were on the chopping block.

In a partially redacted report released Monday, the inspector general said Army Command officials purposefully did not hire as many civilian employees as they were authorized to bring on so that they could divert the unused appropriations to programs that had been slashed.

“Specifically [Army Headquarters] budget officials knew that Army Command officials intentionally did not hire up to the Army’s authorizations, and thereby created excess [civilian pay] funding that the commands used to pay for non-pay expenses, which the president, [Office of Management and Budget, Defense Department], and the secretary of the Army had directed the Army to cut,” investigators wrote.

On top of that, the IG found discrepancies in how Army budget officials calculated spending on civilian pay in their budget request versus their reports to Congress.

“[Army] budget officials applied adjustments to the basic compensation calculation that were normally not permitted by OMB policy and did not include overtime in the budget request,” the inspector general wrote. “As a result, the [Army] budget officials over estimated the [fiscal] 2017 [civilian pay] request by $356.8 million. In addition, including overtime paid in the execution data submitted to Congress, but not including it in the Army’s budget, caused the Army to appear to over execute its [civilian pay] budget in fiscal years 2015 and 2016, while under executing its [number of full time positions.]”

The Office of the Inspector General issued a number of recommendations to fix these problems, including implementing procedures to ensure the Army properly calculates its civilian compensation needs, including overtime pay in its budget request and holding Army commands accountable for hiring the appropriate number of civilian employees. The report also recommended “appropriate administrative action” against officials who were involved in the alleged end-run around reduced funding authorizations.

But officials with the Army rejected both the findings and recommendations laid out in the report, arguing that the conclusions are not “supported by empirical data.” Although the basis of the service branch’s counterargument on the issue of underutilization of funds is redacted, acting Assistant Army Secretary Michael Powers said the inspector general’s report could not prove intent to subvert budget rules.

“The report also does not include any evidence that any Army officials were involved in a ‘decision to submit inaccurate [president’s] budget information’ in order ‘to pay for non-pay operating expenses,’” Powers wrote. “Army officials did not knowingly submit inaccurate budget information for any requirement. The Army repeatedly requested the names of the individuals the IG referenced, but our requests were ignored.”

Despite agency opposition, the inspector general said its recommendations will remain “unresolved and . . . open.”

“Had the Army budgeted for overtime, the Army’s budget would have been more representative of the true cost of its civilian workforce and the Army could avoid having to fund the $144.9 million spent on overtime with [operation and maintenance] funds that were originally budgeted for other priorities,” the report said. “Until the Army includes overtime in its budget requests, the Army will continue to have a disconnect between its budget request and execution data presented to Congress.”