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The Honolulu Advertiser
Posted on: Monday, December 31, 2001

Military Update
Transferable GI Bill benefits offered

Military Update focuses on issues affecting pay, benefits and lifestyle of active and retired servicepeople. Its author, Tom Philpott, is a Virginia-based syndicated columnist and freelance writer. He has covered military issues for almost 25 years, including six years as editor of Navy Times. For 17 years he worked as a writer and senior editor for Army Times Publishing Co. Philpott, 49, enlisted in the U.S. Coast Guard in 1973 and served as an information officer from 1974-77.

By Tom Philpott

The military will have two new tools to test in 2002 for retaining service members in high-demand job specialties.

One tool will allow members with critical skills to transfer up to 18 months of unused Montgomery GI Bill education benefits to family members.

A second will offer critical specialists thousands of dollars in U.S. Savings Bonds, which can be redeemed tax free if used for education of the member, spouse or children.

To qualify, members have to agree to extend their service obligations.

Congress has capped spending on the new programs to a combined $50 million in 2002, assuring a modest start. But lead proponents — Sen. Max Cleland (D-Ga.) for MGIB transferability and Rep. John McHugh (R-N.Y.) for the savings bond plan — hope that successful tests this year will lead to far wider use over time.

Cleland and McHugh are chairmen of the military personnel panels of the Senate and House Armed Services Committees respectively. Cleland's emotional stake is greater, however, having fought for an MGIB transferability feature for several years.

Under the 2002 defense authorization bill, awaiting President Bush's signature, the service secretaries will decide whether to use the new retention incentives. But congressional interest is high and the services, under the MGIB transferability program, must send an annual report to Congress on plans to use it.

"You think Senator Cleland is going to sit by and allow [the services] not to use it?" asked a congressional staff member "He's going to turn up the heat like they've never seen. Somebody will do something, even if they have to draw straws."

Cleland would prefer that all MGIB enrollees be able to transfer benefits, but the cost is too high. This year's compromise allows only $30 million to be targeted at those with critical skills who have served at least six years and agree to stay at least an additional four. In return, they can transfer up to 18 months of the 36-month MGIB benefit to a spouse, children or a combination of the same.

Transferred benefits to a spouse can be used immediately. Benefits for children must wait until the member has served 10 years and the child has completed secondary school requirements or is 18. The transfer feature could become so popular, said the congressional staffer, that "the next thing you know it will be a full-blown program."

The services "may be even more interested" in McHugh's Savings Bond plan, he said. To be eligible, members must have certain critical skills, have three to nine years in service and agree to serve at least six more years. In return, they will receive U.S. Savings Bonds with face value of $5,000 to $30,000. "Face value" usually means twice the purchase price. The value at redemption will be sheltered from taxes if the money is used for education of member, spouse or dependent child. Up to $20 million is earmarked to begin the program in 2002.

Special pay

As reported here earlier, Congress declined again this year to lift the ban on career retirees drawing both full military retired pay and disability compensation for service-related injuries or illnesses. But lawmakers did vote to raise the level of special compensation going to the most severely disabled among career retirees.

Here are the details:

• On Feb. 1, 2002, career retirees with a disability rating of 60 percent, if awarded within four years after retirement, will begin receiving $50 a month.

• On Jan. 1, 2003, career retirees with a disability rating of 80 to 100 percent, if awarded within four years after retirement, will see special compensation climb by $25 a month.

Adjusted payments will be $125 for an 80 percent disabled rating, $225 for 90 percent and $325 for retirees rated fully or 100 percent disabled. Special pay for 70 percent disabled career retirees will stay at $100 a month.

• On Oct. 1, 2004, the special pay will rise by another $25 a month for disability ratings of 70 percent or more. The monthly payment for 60 percent disability will stay at its initial rate of $50.

New base closings

The defense bill authorizes another round in 2005. The process will begin in February 2004 with the secretary of defense delivering to Congress a force structure and infrastructure plan, certifying a need to close excess bases. Consulting with Congress, the president by March 2005 will appoint a nine-member Base Realignment and Closure Commission. Two months later, in May, the secretary of defense will give the commission his list of bases to close. The commission will assess and submit its own list to the president by September 2005.

The president will have 15 days to accept or reject the list. If he approves, Congress will have 45 days to approve or reject, but it will not be able to modify the list.

If the president rejects the commission list, the commission will have 30 days to consider his objections, make adjustments and resubmit.

Bonus air miles

Military members who earn bonus travel miles, seat upgrades and other promotions from commercial airlines while on official travel, soon will be able to use them, legally, for personal benefit.

The defense bill, when signed, will repeal Section 6008 of the Federal Acquisition Streamlining Act that bans service members, Foreign Service Officers and their families from using frequent-flier miles and other incentives earned during government travel.

The change will apply to incentives received "before, on or after" the bill becomes law.

Questions, comments and suggestions are welcome. Write to Military Update, P.O. Box 231111, Centreville, VA 20120-1111, or send e-mail to: milupdate@aol.com.