For almost a year, many State Department employees, including those serving in some of the world’s most dangerous posts, have been receiving incomplete or inaccurate paychecks because of problems with a new payroll processing system.
“We’ve been so stressed,” said the spouse of one Foreign Service officer who’s missed a total of $4,000 this year. “We have mortgages to pay, we have bills. All these things are adding up.”
Other diplomats around the world are voicing similar concerns.
“I am having to dip into savings in order to pay for daycare and living costs,” another Foreign Service officer said.
“We are posted to one of the most expensive cities in the world with two children. Our allowances are essential,” said a third.
Calculating diplomat salaries can be complicated due to special allowances and region-specific scales that alter base pay rates for many Foreign Service officers. Those complications have hindered the launch of a new, automated payroll processing system, leaving many State Department employees in financial trouble.
While the affected diplomats have been understanding, they are growing frustrated, said Thomas Yazdgerdi, who represents State Department employees at the American Foreign Service Association (AFSA).
“Our members have had a lot of patience. But here we are, seven months later. The patience has really run thin,” he said.
At this time it’s unclear how many total employees are affected, but Yazdgerdi said he’s been fielding dozens of complaints each week from members of the Foreign Service, the main personnel system for American diplomats, many of whom say their paychecks are thousands of dollars away from what they should be receiving.
“I have been raising this issue for months. I have taken out personal loans to pay for expenses that should have been covered by my pay, for the work that I have already performed,” one diplomat said, per one of the complaints AFSA received.
“I have just reported to my new post in Sierra Leone and have the bills from the [move] that I had to put on my credit card as opposed to paying cash as I had planned. Now, the credit card is accruing interest,” another wrote.
Some employees, including two who most recently worked in Iraq and Afghanistan, reported they are missing allowances for working in dangerous conditions, known as hardship differentials. Hardship differentials are calculated as a percentage of base pay. In Iraq and Afghanistan, differentials can be up to 35 percent on top of an employee’s base salary.
“I know I am lucky because I am only missing a small amount of money compared to others; however, I still don’t understand how the Department can take so long to fix these issues. I sent my initial email on July 26 noting I was missing 122 hours of hardship [pay],” another diplomat told AFSA.
Other employees reported missing more mundane allowances, like those for living overseas known as post allowances.
Some had the opposite problem. At least one Foreign Service officer said they are still receiving hardship differentials even though they are now posted somewhere deemed to be safe.
“I’m concerned about tax and other financial implications of receiving nearly $10,000 of money at this point which I am not entitled to and will have to presumably pay back at some point,” the officer said.
State’s Bureau of the Comptroller and Global Financial Services, or CGFS, manages human resources issues like payroll for the department. For decades, its payroll system for 29,000 direct-hire employees, which includes members of the Foreign and Civil services, required manual data entry to track complicated salary formulas — calculations that can change with each posting.
There is a wide variety of payments American State Department employees can qualify for, depending on where they are posted and even how many family members they leave behind in the U.S. The spouse of the Foreign Service officer who is still waiting on $4,000, has one teenage child living with a relative back home, while the rest of the family is overseas. The family receives a small payment called a separate maintenance allowance to support that child, but they stopped receiving those payments temporarily.
“Our eldest is off to college in less than two years. We have to start that planning process now. We are supporting her from here,” the spouse said.
These additional allowances, which can also often change with circumstances, complicate the process of calculating State Department salaries.
In March of this year, CGFS switched to an automated system that was already in place to process paychecks for locally-employed staff, typically citizens of the host nation and people receiving retirement and disability benefits. These salaries are usually simpler to process than those of employees who move around the world frequently.
The State Department has been working to replace outdated IT systems with what are known as commercial, off-the-shelf systems (COTS) which are developed for mass markets, since at least 2008.
Responding to a request for comment, a State Department spokesperson noted that State is the first federal payroll provider to fully transition to a COTS package, and that the previous system for direct hires was running on software developed in the 1980s.
The system underwent extensive testing in the months prior to implementation, the spokesperson said, including regression testing and product simulation, but they acknowledged the system faced problems once it went live. Yazdgerdi said AFSA agreed the system needed updating, but that the push to modernize shouldn’t come at the expense of diplomats in the field.
“ If they did do [testing], they didn’t do it well enough, because you can’t make an argument that after seven months, when something’s still not working, it’s a success,” he said. “They need to fix this.”
The contractor behind the upgrade, SOS International, or SOSi, touted on its website its work with the State Department on “a comprehensive global compensation system for expatriates, foreign nationals, and third-country foreign nationals.”
In an email, SOSi president and CEO Julian Setian said the company was restricted by its contract with the U.S. government from discussing its work “without customer review and approval.” The State Department did not provide a figure when asked how much the payroll project cost.
In a diplomatic cable obtained by the NewsHour, CGFS said it made 1,923 manual retroactive allowances over pay periods spanning from July to mid-September, and that it would continue to do so going forward as people keep missing part of their paychecks.
At first, AFSA received complaints from members who said they stopped receiving their paychecks entirely. But that issue was largely resolved by July, multiple AFSA officials said. The more persistent issue, Yazdgerdi said, is retroactive pay.
“They’ve been able to stop the bleeding and now the patient still has to get better. Of course, that’s small comfort to members who are still not getting what they’re owed,” he said.
Yazdgerdi said AFSA is also concerned about members who might have to pay more taxes on a lump sum of back pay than they would have had to if the money had been distributed incrementally over a series of paychecks. He is also researching whether officers are entitled to interest on money they were owed months ago.
“If the government has not paid you what is owed you for a number of months, shouldn’t you get interest as well? It’s only fair,” he said.
Sen. Ben Cardin, D-Md., who chairs the Senate subcommittee in charge of State Department management, is also looking into the problem. “Queries have been made, but we do not expect a quick response from the State Department,” a Cardin spokesperson said.
The State Department spokesperson did not respond to inquiries about possible tax implications or the potential to pay out interest accrued on missed payments.
“We are committed to making corrections as quickly as possible and regret any hardship caused to impacted employees,” the spokesperson said.