The Senate overwhelmingly approved a $619-billion defense authorization bill Thursday that includes direct help for thousands of California National Guard soldiers and veterans facing repayment demands for long-ago enlistment bonuses.
The bill sets strict limits on the government's ability to recoup money from any California Guard soldier or veteran who unknowingly received an improper bonus payment from the start of 2004 to the end of 2015.
It also requires the California Guard to reimburse any soldier who already has repaid the government and to notify credit agencies that any debt previously reported was invalid.
The compromise legislation passed the Senate, 92 to 7, days after it won House approval by a similarly lopsided margin. The bill sets military spending levels higher than the administration sought, but President Obama is expected to sign it into law.
One provision in the mammoth National Defense Authorization Act directs the Pentagon to set up a board to fast-track case reviews of the estimated 9,700 California Guard soldiers who received enlistment bonuses or other financial incentives in error.
Most of the improper payments ranged from $15,000 to $50,000 each, and some date back more than a decade. The California Guard was scrambling at the time to provide troops for the wars in Iraq and Afghanistan.
Under the bill, the review board will recommend which California Guard soldiers should have their debts fully or partially waived and which should be required to repay some or all of their bonuses. It sets a deadline to complete the work by July.
The bill largely tracks orders that Secretary of Defense Ashton Carter announced on Oct. 26, days after the Los Angeles Times first reported widespread complaints about the repayment program and heavy-handed tactics — including tax liens and wage garnishments — being used to collect the debts from soldiers and veterans.
Peter Levine, the Pentagon official appointed by Carter to head the review, said at a House Armed Services Committee hearing on Wednesday that he expected 90% of the debts to be effectively forgiven at the outset.
The legislation thus will effectively end the bulk of the controversial five-year effort to recoup money from thousands of California Guard soldiers who accepted bonuses and other financial incentives to go to war. Many served in combat, and some were badly injured.
Although the bill gives discretion to the Defense secretary, it says "recoupment is unwarranted" unless the Pentagon review board determines the soldier "knew or reasonably should have known" that he or she was ineligible for the bonus.
By putting the burden on the Pentagon to prove a soldier was ineligible, the law is intended to produce debt waivers for most of the soldiers previously ordered to repay bonuses from 2004 to 2015, according to lawmakers.
The provision applies only to the California Guard because the Pentagon is concerned about the possibility of National Guard soldiers from other states trying to seek relief from their debts.
It's unclear how the Pentagon board will handle soldiers who were ordered to repay bonuses because they left the California Guard before they had completed their enlistment terms or because they changed military occupations during their enlistment period.
Many soldiers awarded $15,000 bonuses signed contracts agreeing to serve for six years, for example. Those who left early were ordered to repay the money, according to California Guard officials.
Other soldiers got bonuses for accepting special military jobs, such as medics and translators. If they changed assignments before their enlistment expired, they also technically voided their bonus, officials said.
Soldiers ordered by superiors to change military jobs should be able to keep their bonuses, while those who did so on their own initiative should have to repay them, Maj. Gen. David Baldwin, the California Guard commander, told the House Armed Services Committee on Wednesday.
"The intent is not to recoup from soldiers that did not know what was going on," said Baldwin, who has led the repayment effort since 2011.
Even some members of Congress who favored forgiving most of the California Guard bonus debts said that soldiers who were absent without leave and failed to finish their required tours should repay the money.
Rep. Jackie Speier (D-Hillsborough) told the House committee on Wednesday that "medical professionals" apparently got as much as $80,000 in enlistment bonuses and other incentives, but that some had left before completing their six-year enlistments.
"We should claw back every single dime" of that money, she said.
Under the bill, if the Pentagon forgives a bonus debt, it must inform national credit agencies to correct any downgrades of credit scores used to consider applications for car loans, home mortgages and other commercial debts.
The bill does not cover California Guard members who engaged in fraud or misrepresentation. A handful were convicted or pleaded guilty to fraudulently accepting a bonus, officials said.
Estimates vary, but wiping out the bonus debts could cost tens of millions of dollars. The bill does not cite a specific figure but said the California Guard must bear the cost from the budget it gets from the Pentagon.
The provision was included in a defense bill that sets policy guidelines for all Pentagon spending programs for fiscal 2017, from base security to troop levels.
It authorizes $618.7 billion, including $67.8 billion in an overseas contingency operations account that pays for wartime operations abroad. The total is about $9 billion more than Obama had sought.
The bill outlines major changes to military procurement systems, boosts authority for the Pentagon's cyberwarfare arm and cuts staffing levels at the White House National Security Council.
It also includes a 2.1% pay raise for troops and increases the number of active duty personnel in the Army, Air Force and Marines.
2:55 p.m.: This article was updated with new details of how the defense authorization bill affects thousands of California Guard soldiers and veterans who have been ordered to repay enlistment bonuses.