The Defense Department and former Armed Forces Retirement Home officials failed to conduct financial oversight of the home, contributing to the sharp decline in its finances, a DoD Inspector General report has confirmed.

The report, issued in February, echoes concerns of defense officials, who have taken steps over the last year to shore up the oversight and viability of the agency’s two homes ― including firing the previous boss. With campuses in Washington and Gulfport, Mississippi, the homes care for about 1,000 former enlisted members.

Auditors found that DoD and AFRH officials allowed the AFRH trust fund to decline from $186.5 million in fiscal 2010 to $55 million in fiscal 2016. It would have declined even more in 2016 if $20 million in taxpayer dollars hadn’t been transferred into the fund. For at least the near future, the agency will need an annual infusion of at least $20 million in taxpayer dollars to meet its operating expenses.

Part of the revenue comes from the residents’ fees and from a 50-cents-a-month mandatory deduction from the paycheck of active-duty enlisted, warrant officers and limited duty officers. Among the IG’s recommendations was to increase that monthly active-duty paycheck deduction to $1.

That move, apparently, would come as a last resort: In response to the IG’s recommendation, DoD’s deputy chief management officer stated that the deduction will stay the same unless a long-term fix using other revenue methods can’t be found.

Students from Creative Minds International Public Charter School visit their new home on the campus of the Armed Forces Retirement Home in Washington in 2015. The U.S. Army Corps of Engineers signed a 10-year grant with CMI. (Photo Credit: David Gray)
Students from Creative Minds International Public Charter School visit their new home on the campus of the Armed Forces Retirement Home in Washington in 2015. The U.S. Army Corps of Engineers signed a 10-year grant with CMI. (Photo Credit: David Gray)

The AFRH is working on a new strategic plan, expected to be completed by July 1, according to the report.

The IG report disputed the DoD statement from Stephanie Barna, acting secretary of defense for manpower and reserve affairs, that the AFRH didn’t bring the funding crisis to the attention of DoD officials until late 2014. Defense Department personnel and readiness officials “should have monitored the AFRH Trust Fund balance” in accordance with DoD requirements and should have identified concerns before fiscal 2014, auditors stated. Auditors also noted that the concerns were raised by AFRH officials in a fiscal 2013 performance accountability report.

Barna hired the previous AFRH chief operating officer as part of her personnel and readiness oversight duties. That COO was fired in September by David Tillotson III, assistant deputy chief management officer, who cited the COO’s unwillingness to shore up the finances of the agency’s two homes.

In November, officials named retired Army Maj. Gen. Stephen T. Rippe as the AFRH’s new chief executive officer; in January, retired Army Lt. Col. James M. Branham was named as the new COO.

Earlier in 2017, DoD officials moved oversight of AFRH from personnel and readiness officials to the deputy chief management officer. Officials have been looking at alternate revenue sources, including changes in the operation of the golf course on the Washington property.

Armed Forces Retirement Home

With locations in Washington and Gulfport, Miss., the Armed Forces Retirement Home houses about 1,000 former enlisted service members.

Some of the recommendations made by the IG involve changing contracting procedures, and identifying the impact that any major capital project has on the AFRH trust fund. A significant reason for the depleting of the trust fund was an $88 million construction project on the D.C. campus that was completed in fiscal 2013.

IG auditors stated the trust fund would still have faced uncertainty and become insolvent in later years because of the steady decline in revenues and the increase in expenses, even with the construction of the new $88 million building.