Most of you have by now either read, or heard about, the Jeff Donn's AP article about Army Emergency Relief "hoarding millions". So.. are they?
Donn alleges that between 2003-2007, the AER "packed away $117 million into its own reserves while spending just $64 million on direct aid." He says the fund "allows superiors to squeeze soldiers for contributions" and that the AER "reaches out only to troops and veterans in annual campaigns." The article also says that neither the Army nor Sgt. Major of the Army Kenneth Preston chose to comment on the article.
Sounds pretty bad, doesn't it? The AER was founded by the Army Chief of Staff and the Secretary of War in 1942 to assist soldiers and their families with financial emergencies. This non-profit is supposed to supply our soldiers (active or retired) and their families with a source of emergency funding. Jeff Donn's article, however, suggests that the AER has turned into an Army cash cow, hoarding assets, and refusing to grant money to those who defend our country. To answer the article, Lindy Kyzer organized a Blogger's Round Table with AER's Deputy Director for Finance and Treasurer, Col. Andrew Cohen (R).
The Army Emergency Relief fund helps the Army take care of its own by providing interest-free loans and tax-free grants to active and retired soldiers and their families, and the surviving families of those who died on active duty or after retirement. Grants and loans are available for financial hardships including mortgage and rent payments, vehicle repairs, college scholarships, medical/dental expenses not covered by insurance, utility and food bills, emergency transportation, funeral expenses, replacement income when pay is either delayed or stolen, and other discretionary items. Funding is *not* available for non-essential items including the down payment on a house, vehicle purchase or lease, home improvements, legal fees, vacations, debt consolidation or covering bad checks. So now that we understand what the AER is supposed to cover... let's dig in.
1) During the period in question ( '03-07), the AER distributed $250 MILLION in financial assistance
2) Outstanding loan balances are considered an asset of the trust, even though the money is actually not in their possession. Much like a 401(k) plan, outstanding loan balances are included in the total assets, as if they money was still there, because it's expected to be repaid. Only when a loan is defaulted upon is it reported as an actual expense. Considering the increase in aid given over the past few years, this fact alone explains the increase in "cash" reserves. It's simple accounting that AP doesn't seem to understand.
3) Current investment capital available for grants and loans fluctuates between $190-$200 million, depending on the day and how well the market is doing. Donn says that the fund swelled to $345 million between 2003-2007, and perhaps at one point it was... but it's not now. The trust is not sitting idly. In order to be a good steward of the money, it's invested, awaiting distribution to soldiers and their families.
4) During the period in question, the AER distributed nearly twice as much in aid as they received in donations and loan repayments.
Maybe Donn is applying some new accounting principals I'm unaware of, but the last time I checked, distributing three quarters of a BILLION DOLLARS in aid is a LOT more than the measly $64 million he's reporting.
Donation by Coercion is not tolerated. Period. According to Col. Cohen, this may not have always been the case. There may have been a time when 1SG's and Commanders strong-armed their Soldiers to donate to the AER, much like we on the civilian side have been strong-armed to donate your "Fair Share" to the United Way. However, they have changed, and they recognize this is not the best tactic. They've hired an unnamed 3rd party "watch dog" organization to oversee fund raising techniques employed by commands, and to serve as a safe haven for whistle-blowers.
The AP article closes with a statement about scholarships being reduced in 2009, so I had to ask why. Why, when you have so much money in invested capital, are you cutting back on scholarships? Col. Cohen threw out some surprising numbers in response. In 2003, $3 million was given out in college scholarships. Last year, that number had swelled to $13 million. Due to the current market conditions, they decided to cut back to $8 million for 2009. Even with the decrease, that's still a 265% increase in grants over a six year period. That's astonishing- and a true testament to their dedication to making sure families can afford college.
OK. Let's look at the not-so-great stuff that came out of today's call.
First of all, many people commented about the increase in aid refusals. Col. Cohen said that they have NEVER refused aid to a qualified recipient with a qualified need. Never. That's not to say that EVERY request is granted, but they have never turned down a qualified request. He did say that about 75% of the aid provided is in the form of an interest-free loan, not a grant. It's possible then that the Soldier wanted a grant, but was only approved a loan, and then turned it down out of fears of not being able to repay it. Perhaps requests are coming in for unqualifieded reasons; maybe they're coming from unqualified Soldiers. In order for a Reserve or Guard Soldier to be "qualified", they have to be on active duty for at least 30 days. Under that definition, a drilling Soldier will not qualify for AER assistance. It's hard to say exactly why all requests are not granted, because we can only speculate about the details of each request.
With almost $200 million in invested assets, it would seem that more money could be distributed, right? True... but then the fund wouldn't necessarily be around for the future. A part of being a good steward of trust money is ensuring the future of the trust. That means you invest and spend frugally and wisely. I am not an actuary, so I have no way of knowing if they are under or overspending, but considering that they have never turned down a qualified request, it would appear that they would have to expand the definition of "qualified request" in order to distribute any more than they can now.
Toby Nunn brought up a point that I,myself, wonder about. How many Soldiers are embarrassed or afraid to ask their command for financial assistance? Perhaps it's time to re-evaluate the request process. I agree with that assessment. Personally, if I was in financial trouble, I wouldn't necessarily feel comfortable admitting that to my boss. I'd wonder how my difficulty would affect their opinion of me, and possibly affect my ability to be promoted. Although AER is a non-profit, associated with, but not under the thumb of, the US Army, it is staffed primarily by US Army Soldiers. I question, as did Toby, the decision to let the Army make grant and loan decisions on behalf of the AER. Perhaps it's time to re-evaluate that relationship, and hire unbiased, unrelated, independent employees make the final decision on loans and grants. For those comfortable going to unit leadership for assistance, First Sergeants and Commanders can grant loans for up to $1,000 for any reason. The money can be distributed same-day in most cases, which is a huge bonus.
Another common theme is the AER's decision to provide aid in the form of a loan, rather than a grant, 3/4 of the time. Personally, I think this is a lesson the US Government should learn: AER believes that if you have a job, and you are responsible with your personal finances, you should be able to overcome nearly any financial emergency through the use of an interest-free loan. Handouts do nothing but encourage future difficulties. That's not to say that grants are not given when needed- they are. AER evaluates the situation, and if repaying the loan would cause undue financial difficulty for the Soldier, they issue a grant instead. Should the situation worsen, the Soldier can ask that the remaining balance of the loan become a tax-free grant. In order to help our Soldiers manage their budgets more effectively, the AER has funded a special 8 hour personal finance course which is held during every AIT class now. I believe fiscal responsibility starts at home; and so does Army Emergency Relief.
We did offer up the suggestion that the AER take their message directly to the enlisted soldiers and their families through the Family Readiness Groups and more effective marketing campaigns. It was also suggested that they add spouses of "normal" enlisted soldiers to their board, instead of just senior enlisted spouses. This would give the board a real hands-on account of the difficulties soldiers and their families are facing. Instead of current and retired officers and their spouses guessing about additional services they can provide, they would get direct input from those on the home "frontline", so to speak.
In general, I thought Col. Cohen effectively answered our questions and countered Mr. Donn's report. Oh- and the reason the Army and AER "refused to comment" in the article? Because Donn emailed Col. Cohen about the article, asking for comment just a few hours before he published it. The official AER response was published late today and can be found HERE.
~the above report was written by AFSis, based upon notes taken during today's BRT and the links provided throughout the post.
Finally something that can be answered by someone else than Cohen or Dunn. Most troops and veterans should be able to cover this so then are you personally aware of AER reaching out to you more than once a year or not?
I'm not at all satisfied with the conflict of interest issue and the whistleblower protection. Such schemes rarely work and that being well-known means it's a poor defence. Why has the charity's business been setup with such an inherent risk? It lets people like Dunn make such claims very easily. If it isn't dealt with this will boil up the the surface again later.
I don't understand the disconnect between AER's claims they aren't hoarding any money and at the same time the claim they are investing $190-200M. This is not the money owed by interest free loans. How much of this invested money is needed in reserve for a valid reason?
This is quoted from AER's response. Apart from my doubt in perfect outcomes as suggested by such wording there are the qualifiers 'valid need' and 'lack of funds' Valid need is arguable and they need to clarify what is and is not a valid need. The other qualifier is the one that concerns me. Not rejected via lack of funds is obvious if they are well funded then what is the criteria for these other rejections, the ones not caused by a lack of funds. That qualifier makes their statement a misleading one.
Can any troop or veteran reading here tell us if they have had problems with funding from AER along these lines or also related to embarassment suggested by AFSis' article?
There is also a "arbitrary criteria" argument in the AER response which is an obvious attempt to dismiss an F rating, but chances are the criteria is neither arbitary, nor without basis. Instead of such rubbish they should have made it clear why it is artibrary if they wish to argue such.
The interest free loans versus grants issue is more complex. Interest free loans works well for those with the intelligence, knowledge and will to manage money and the income to reasonably cover repayments. There would be an awful lot of unemployed veterans by now with the economy hiding in the sewers. These are the most likely to need assistance. If the income is too low for the loan repayments an interest free loan is actually a strong negative burden which will cause flow on financial and other problems.
Keep in mind I am aggressive here because this is about protecting the interests of those that most probably badly need help. Overall AER's defence was strong and effective in many areas despite my holepunching. This issue must be cleared up asap. A lot rests on Dunn now who also has to be picked apart. If he messes this up his professional standing will be joining the economy.
I will not speak directly to the AER's situation, as I have no experience with it, being a Navy guy. What i WILL say is that, during the period I served, you were expected to donate to both Navy Relief and United Way each year, and if you didn't, you'd be tap dancing in front of the Command master Chief to explain yourself. Certainly you would not be denied a promotion for refusing to donate. However, come time for the sh!t details, your name would be at the top of the list. Needed a weekend off for something? Sorry about that. Command having a kegger at the beach? Guess who'd get the duty that day, etc. So.. I can certainly believe the "strong-arm" donation comments regardless of the official response about such tactics being unacceptable.
However, having said that, I firmly believe that this article was written from the premise first and the story and facts adjusted to fit the desired narrative. I am convinced that this was a hit piece from the atart, and that it didn't come directly from the author (although i have no doubt he wrote it), but was likely "suggested" by someone in the current administration.
Let's face it, the folks currently in charge in Washington have no love for the military, and would like nothing more than to see them take a few hits here and there in the PR realm. Being seen as "not helping their own" when the entire country is in need, would work for them, and also help those who make the laws and the budgets feel better about "cutting the fat" from the military budget by tossing out examples like this report/story as a means of saying "See? They have money hoarded away", etc.
Now, I and you and everyone here knows that that isn't what's going on with AER, but Joe public doesn't, and it makes great kindling for the leftists stoking the "anti-military" fires. It gets the dogs scrapping over a few tossed bones, and that also helps dostract the media from other things going on. Like new, muli-billion dollar spending bills IN ADDITION to what's already been passed.
Other's mileage may vary, of course, but I am convinced some one in the administration set this article up for publication, and Mr. Dunn is the useful idiot running with it.
Respects,
Thanks!
Argent- to answer a couple of your questions:
Valid need is arguable and they need to clarify what is and is not a valid need.
AER's guidelines on valid needs are listed in the post. They include prevention of forclosure/eviction, car repairs, unreimbursed medical bills, money for utilities and groceries, funeral expenses, emergency travel, scholarships, and coverage for lost, stolen or delayed paychecks. On occassion they will use the "other qualified need" category, but for the most part, they stick to the items above.
If the income is too low for the loan repayments an interest free loan is actually a strong negative burden which will cause flow on financial and other problems.
Which is why most aid is in the form of a loan, but not all- and the Soldier can request to have an outstanding loan balance turned into a grant should their financial situation deteriorate. This morning I found out that the average check is $1075 and is typically paid back over a 1-3 year period, so we're not talking about huge amounts to be paid back. Keep in mind though that there is no limit to the amount the Soldier can request, but the average is just over $1000.
AW1Tim-
I'm afraid your right about both strong-arm techniques and the real motivation behind this story. It would be so easy for the Congress Critters to use this as a way to cut military funding, even though AER aid has nothing to do with the Army's budget. The only thing that the Army does pay for is the salary for the Army-paid civilians who staff AER offices around the world.
Did Mr Dunn (or his editors) time the story with that knowledge?
I will add that, in 12 years as an Army officer, I've seen several soldiers apply for AER aid. It was usually for emergency leave travel due to the death or severe illness of a family member. I don't recall any being turned down.
EXACTLY, Cricket.
Helping hand... not a handout... but in this day and age of entitlement, that's all gone to the wayside.
We have corporations being bailed out by the government who still paid out millions in bonuses and hosted extravagant parties- all because it was "expected of them".
Newsflash!!
The only thing that is "expected" is that you act responsibly, especially with other people's money, and ensure your future existence by following written guidelines and acting as a prudent man would.