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A welcome separation payment that wasn’t

An Air Force mistake cost Sharon Kibiloski $103,000.

When Kibiloski left the active-duty Air Force as a captain in spring 2007, she walked out with a $103,000 voluntary separation payment approved by the Air Force Personnel Center.

More than a year later, the Defense Department demanded the money back, claiming Kibiloski did not qualify for VSP.

“I understand that mistakes happen, but this was a biggie,” Kibiloski said from her home in Alexandria, Va.

A form letter sent by the Defense Finance and Accounting Service that arrived in mid-July, while Kibiloski was on vacation, said she had 30 days to return the $103,000 or start making monthly payments of $2,200, which included 5 percent interest.

She gave the money back.

However, Kibiloski questions how she could be left in the dark for more than a year about problems involving such a large amount of money, and she wonders how many other airmen who left with VSP got similar letters.

“I was fortunate I didn’t have the money tied up in a home down payment,” she recalled.

Because she had intended to leave active service for personal reasons, whether or not she received the separation payment, the loss of the money didn’t prompt her to ask for reinstatement.

Spokesmen for the Personnel Center and DFAS could not say how many VSP approvals have been rejected after the fact or are under review. And citing privacy issues, the spokesmen would not discuss the specifics of why Kibiloski had been approved for VSP, paid and then told to give back the money.

In summer 2006, the Air Force needed a fast way to cut the ranks of captains and junior majors as part of the now defunct plan to draw down the service to 328,000 airmen by 2008.

One of the incentives offered midcareer officers was VSP. By the end of 2007, about 2,620 officers had taken payments to get out.

To qualify, an officer had to be in a career field overstocked with officers in specific year groups. Once enough officers in a given year group were approved, the offer was rescinded and latecomers could not apply.

Kibiloski thought she qualified as a nine-year officer in the public affairs career field.

Among the hundreds

When the Air Force began accepting applications on July 31, 2006, she was among the hundreds of officers lining up.

Two weeks passed, and other officers learned they would receive VSP, but Kibiloski heard nothing. On the advice of her personnel flight, Kibiloski said, she resubmitted VSP paperwork. This time she got the approval, and her VSP payment was established at $103,000, with about $28,000 taken out for income taxes and $75,000 deposited in her bank account. Her last day in uniform was March 1, 2007.

Kibiloski and her husband used the money to fix up a condominium they had bought as an investment. Meanwhile, she took a civilian job and became a major in Air Force Reserve public affairs.

But that wasn’t the end of the story.

In February, Kibiloski noticed that her Air Force W-2 form didn’t show the figures she had expected, so she contacted DFAS. Kibiloski’s call was referred to DFAS’s debt collection office, which told her the VSP was under review.

On July 10, DFAS mailed Kibiloski a letter stating she needed to pay the money back, said DFAS spokesman Steve Burghardt. The finance agency reached that conclusion after reviewing Kibiloski’s separation documents and deciding she had not been eligible for VSP. Burghardt would not be more specific.

After that, the Air Force told Kibiloski her separation code showed she had been turned down for VSP. No one could explain why she was paid if she didn’t qualify, she said.

Kibiloski suspects personnel offices overwhelmed by hundreds of airmen turning in VSP requests made mistakes as the paperwork moved through the approval process. In her case, the public affairs slots eligible for VSP may have been taken by the time her paperwork was reviewed.

Without consulting an attorney, Kibiloski decided not to appeal DFAS’s decision, in part because she didn’t want the dispute to damage her Air Force Reserve career.

Kibiloski thought that the separation code showing she did not qualify for VSP doomed an appeal, even if that code was countered by the fact she was paid $103,000. The next time she is involved in a signficant personnel decision, Kibiloski said, she’ll pay attention to the paperwork.

The decision was made easier by the fact that the couple had the money to repay DFAS. They had sold the investment condominium and recouped the $75,000.

“I might have felt differently if I didn’t have the money to give back,” she said.