A-4924, SEPTEMBER 19, 1924, 4 COMP. GEN. 312

A-4924: Sep 19, 1924

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NO REFUND OF AMOUNTS DEDUCTED FROM THE SALARY OF AN OFFICER SEPARATED FROM THE SERVICE SHOULD BE MADE UNTIL THE OFFICER'S ACCOUNTS HAVE BEEN FINALLY SETTLED AND THE AMOUNT TO HIS CREDIT HAS BEEN APPLIED IN SATISFACTION OF ANY DISALLOWANCE. 1924: I HAVE YOUR LETTER OF AUGUST 27. AMONG THOSE PRINCIPLES IS THAT EMBODIED IN PARAGRAPH (H): "NONE OF THE MONEYS MENTIONED IN THIS SECTION SHALL BE ASSIGNABLE. A NUMBER OF FOREIGN SERVICE OFFICERS HAVE ALREADY. THE DEPARTMENT IS ENDEAVORING TO MAKE MONTHLY PAYMENTS OF THE PENSIONS DUE THESE OFFICERS. MANY OF THE FOREIGN SERVICE OFFICERS HAVE SUSPENSIONS IN THEIR ACCOUNTS WHICH AROSE DURING THE ADMINISTRATION OF THE OFFICES FROM WHICH THEY HAVE BEEN RETIRED.

A-4924, SEPTEMBER 19, 1924, 4 COMP. GEN. 312

ACCOUNTING, SET-OFF--- FOREIGN SERVICE RETIREMENT AND DISABILITY FUND UNDER THE PROVISIONS OF SECTION 18 OF THE ACT OF MAY 24, 1924, 43 STAT. 144, AUTHORIZING THE ESTABLISHMENT OF A FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM AND PROVIDING THAT NONE OF THE MONEYS PERTAINING TO THE RETIREMENT AND DISABILITY FUND SHALL BE ASSIGNABLE, EITHER IN LAW OR EQUITY, OR BE SUBJECT TO EXECUTION, LEVY, OR ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS, NO REFUND OF AMOUNTS DEDUCTED FROM THE SALARY OF AN OFFICER SEPARATED FROM THE SERVICE SHOULD BE MADE UNTIL THE OFFICER'S ACCOUNTS HAVE BEEN FINALLY SETTLED AND THE AMOUNT TO HIS CREDIT HAS BEEN APPLIED IN SATISFACTION OF ANY DISALLOWANCE. WHILE THE ANNUITY DUE A RETIRED OFFICER OF THE FOREIGN SERVICE MAY BE WITHHELD TO SATISFY ANY INDEBTEDNESS OF THE OFFICER TO THE UNITED STATES, NO ANNUITY PAYMENTS SHOULD BE WITHHELD PENDING THE FINAL SETTLEMENT OF THE FISCAL ACCOUNTS OF THE OFFICER.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF STATE, SEPTEMBER 19, 1924:

I HAVE YOUR LETTER OF AUGUST 27, 1924, REQUESTING DECISION OF THE QUESTION THEREIN PRESENTED, AS FOLLOWS:

THE ACT OF CONGRESS OF MAY 24, 1924, FOR THE REORGANIZATION AND IMPROVEMENT OF THE FOREIGN SERVICE OF THE UNITED STATES, AND FOR OTHER PURPOSES, PROVIDES IN SECTION 18 THEREOF, FOR THE ESTABLISHMENT OF A FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM TO BE ADMINISTERED UNDER THE DIRECTION OF THE SECRETARY OF STATE AND IN ACCORDANCE WITH CERTAIN PRINCIPLES LAID DOWN IN THE SAID SECTION 18.

AMONG THOSE PRINCIPLES IS THAT EMBODIED IN PARAGRAPH (H): "NONE OF THE MONEYS MENTIONED IN THIS SECTION SHALL BE ASSIGNABLE, EITHER IN LAW OR EQUITY, OR BE SUBJECT TO EXECUTION, LEVY, OR ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS.'

A NUMBER OF FOREIGN SERVICE OFFICERS HAVE ALREADY, UNDER THE PROVISIONS OF THIS ACT, BEEN PLACED UPON THE RETIRED LIST, AND THE DEPARTMENT IS ENDEAVORING TO MAKE MONTHLY PAYMENTS OF THE PENSIONS DUE THESE OFFICERS. MANY OF THE FOREIGN SERVICE OFFICERS HAVE SUSPENSIONS IN THEIR ACCOUNTS WHICH AROSE DURING THE ADMINISTRATION OF THE OFFICES FROM WHICH THEY HAVE BEEN RETIRED, AND THE DEPARTMENT REQUESTS YOUR DECISION AS TO WHETHER, UNDER THE PROVISIONS OF THE PARAGRAPH (H) OF SECTION 18 JUST QUOTED, SUCH PENSIONS ARE PAYABLE TO THE OFFICERS OR WHETHER THEY SHOULD BE RETAINED IN THE HANDS OF THE GOVERNMENT UNTIL ALL SUSPENSIONS IN THE OFFICERS' ACCOUNTS HAVE BEEN SETTLED.

YOUR EARLY OPINION IN THIS CONNECTION WILL BE GREATLY APPRECIATED.

SO MUCH OF SECTION 18 OF THE ACT OF MAY 24, 1924, 43 STAT. 144, REFERRED TO, AS IS HERE MATERIAL, READS:

SEC. 18. THE PRESIDENT IS AUTHORIZED TO PRESCRIBE RULES AND REGULATIONS FOR THE ESTABLISHMENT OF A FOREIGN SERVICE RETIREMENT AND DISABILITY SYSTEM TO BE ADMINISTERED UNDER THE DIRECTION OF THE SECRETARY OF STATE AND IN ACCORDANCE WITH THE FOLLOWING PRINCIPLES, TO WIT:

(A) THE SECRETARY OF STATE SHALL SUBMIT ANNUALLY A COMPARATIVE REPORT SHOWING ALL RECEIPTS AND DISBURSEMENTS ON ACCOUNT OF REFUNDS, ALLOWANCES, AND ANNUITIES, TOGETHER WITH THE TOTAL NUMBER OF PERSONS RECEIVING ANNUITIES AND THE AMOUNTS PAID THEM, AND SHALL SUBMIT ANNUALLY ESTIMATES OF APPROPRIATIONS NECESSARY TO CONTINUE THIS SECTION IN FULL FORCE AND SUCH APPROPRIATIONS ARE HEREBY AUTHORIZED: PROVIDED, THAT IN NO EVENT SHALL THE AGGREGATE TOTAL APPROPRIATIONS EXCEED THE AGGREGATE TOTAL OF THE CONTRIBUTIONS OF THE FOREIGN SERVICE OFFICERS THERETOFORE MADE, AND ACCUMULATED INTEREST THEREON.

(B) THERE IS HEREBY CREATED A SPECIAL FUND TO BE KNOWN AS THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND.

(C) FIVE PERCENTUM OF THE BASIC SALARY OF ALL FOREIGN SERVICE OFFICERS ELIGIBLE TO RETIREMENT SHALL BE CONTRIBUTED TO THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND AND THE SECRETARY OF THE TREASURY IS DIRECTED ON THE DATE ON WHICH THIS ACT TAKES EFFECT TO CAUSE SUCH DEDUCTIONS TO BE MADE AND THE SUMS TRANSFERRED ON THE BOOKS OF THE TREASURY DEPARTMENT TO THE CREDIT OF THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND FOR THE PAYMENT OF ANNUITIES, REFUNDS, AND ALLOWANCES: PROVIDED, THAT ALL BASIC SALARIES IN EXCESS OF $9,000 PER ANNUM SHALL BE TREATED AS $9,000.

(D) WHEN ANY FOREIGN SERVICE OFFICER HAS REACHED THE AGE OF SIXTY FIVE YEARS AND RENDERED AT LEAST FIFTEEN YEARS OF SERVICE HE SHALL BE RETIRED: PROVIDED, THAT THE PRESIDENT MAY IN HIS DISCRETION RETAIN ANY SUCH OFFICER ON ACTIVE DUTY FOR SUCH PERIOD NOT EXCEEDING FIVE YEARS AS HE MAY DEEM FOR THE INTEREST OF THE UNITED STATES.

(E) ANNUITIES SHALL BE PAID TO RETIRED FOREIGN SERVICE OFFICERS UNDER THE FOLLOWING CLASSIFICATION, BASED UPON LENGTH OF SERVICE AND AT THE FOLLOWING PERCENTAGES OF THE AVERAGE ANNUAL BASIC SALARY FOR THE TEN YEARS NEXT PRECEDING THE DATE OF RETIREMENT: CLASS A, THIRTY YEARS OR MORE, 60 PERCENTUM; CLASS B, FROM TWENTY-SEVEN TO THIRTY YEARS, 54 PERCENTUM; CLASS C, FROM TWENTY-FOUR TO TWENTY-SEVEN YEARS, 48 PERCENTUM; CLASS D, FROM TWENTY-ONE TO TWENTY-FOUR YEARS, 42 PERCENTUM; CLASS E, FROM EIGHTEEN TO TWENTY-ONE YEARS, 36 PERCENTUM; CLASS F, FROM FIFTEEN TO EIGHTEEN YEARS, 30 PERCENTUM.

(F) THOSE OFFICERS WHO RETIRE BEFORE HAVING CONTRIBUTED FOR EACH YEAR OF SERVICE SHALL HAVE WITHHELD FROM THEIR ANNUITIES TO THE CREDIT OF THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND SUCH PROPORTION OF 5 PERCENTUM AS THE NUMBER OF YEARS IN WHICH THEY DID NOT CONTRIBUTE BEARS TO THE TOTAL LENGTH OF SERVICE.

(G) THE SECRETARY OF THE TREASURY IS DIRECTED TO INVEST FROM TIME TO TIME IN INTEREST-BEARING SECURITIES OF THE UNITED STATES SUCH PORTIONS OF THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND AS IN HIS JUDGMENT MAY NOT BE IMMEDIATELY REQUIRED FOR THE PAYMENT OF ANNUITIES, REFUNDS, AND ALLOWANCES, AND THE INCOME DERIVED FROM SUCH INVESTMENTS SHALL CONSTITUTE A PART OF SAID FUND.

(H) NONE OF THE MONEYS MENTIONED IN THIS SECTION SHALL BE ASSIGNABLE, EITHER IN LAW OR EQUITY, OR BE SUBJECT TO EXECUTION, LEVY, OR ATTACHMENT, GARNISHMENT, OR OTHER LEGAL PROCESS.

(I) WHENEVER A FOREIGN SERVICE OFFICER BECOMES SEPARATED FROM THE SERVICE EXCEPT FOR DISABILITY BEFORE REACHING THE AGE OF RETIREMENT, 75 PERCENTUM OF THE TOTAL AMOUNT OF CONTRIBUTION FROM HIS SALARY WITHOUT INTEREST SHALL BE RETURNED TO HIM.

THE QUESTION PRESENTED INVOLVES THE RIGHT OF THE GOVERNMENT TO WITHHOLD MONEYS IN ITS POSSESSION IN THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND, THAT WOULD OTHERWISE BE PAYABLE IN MONTHLY INSTALLMENTS TO RETIRED EMPLOYEES UNTIL SUCH TIME AS SUSPENSIONS OR DISALLOWANCES APPEARING IN THE FISCAL ACCOUNTS OF SUCH EMPLOYEES HAVE BEEN PROPERLY ADJUSTED, AND ALSO THE RIGHT OF THE GOVERNMENT TO USE SUCH FUNDS AS AN OFFSET AGAINST THE AMOUNTS OF UNAUTHORIZED OR ILLEGAL PAYMENTS, MADE BY SUCH EMPLOYEES WHILE DISBURSING PUBLIC FUNDS, THAT MAY FINALLY BE FOUND DUE THE UNITED STATES.

A PROVISION SIMILAR IN ALL RESPECTS TO SECTION 18 (H) ABOVE QUOTED WAS INCORPORATED AS SECTION 14 IN THE ACT PROVIDING FOR THE RETIREMENT OF EMPLOYEES OF THE CLASSIFIED CIVIL SERVICE APPROVED MAY 22, 1920, 41 STAT. 620. UNDER THAT ENACTMENT IT HAS BEEN HELD THAT THE AMOUNT OF THE INDEBTEDNESS OF EMPLOYEES TO THE UNITED STATES, BUT NOT THE PRIVATE DEBTS OF SUCH EMPLOYEES, IS PROPERLY DEDUCTIBLE FROM CREDITS IN THE RETIREMENT FUND DUE THE EMPLOYEES. 3 COMP. GEN. 98; 25 MS. COMP. GEN. 819, SEPTEMBER 26, 1923; 29 ID. 325, JANUARY 14, 1924. IN THE DECISION OF SEPTEMBER 26, 1923, IT WAS SAID THAT THE ONLY EXCEPTION TO THE RESTRICTION PLACED BY CONGRESS ON THE PAYMENT OF THE FUND TO THOSE SPECIFIED IN THE ACT IS THE INHERENT RIGHT OF THE GOVERNMENT TO APPROPRIATE THE AMOUNT IN THE RETIREMENT FUND AS AN OFFSET AGAINST ANY AMOUNT DUE FROM THE FORMER EMPLOYEE.

THE CONSTRUCTION PLACED UPON SECTION 14 OF THE ACT OF MAY 22, 1920, IS APPLICABLE TO THE PROVISIONS OF SECTION 18 (H) OF THE ACT OF MAY 24, 1924, AND REPLYING SPECIFICALLY TO YOUR QUESTION, YOU ARE ADVISED THAT PAYMENT OF ANNUITIES AUTHORIZED UNDER SECTION 18 (E) NEED NOT BE WITHHELD PENDING FINAL SETTLEMENT OF THE FISCAL ACCOUNTS OF AN ANNUITANT, BUT WHEN SUCH ACCOUNTS ARE FINALLY SETTLED A SUFFICIENT AMOUNT OF THE ANNUITY PAYMENTS DUE A RETIRED FOREIGN SERVICE OFFICER SHOULD BE WITHHELD AND APPLIED TO COVER THE AMOUNT OF ANY INDEBTEDNESS TO THE UNITED STATES AS DETERMINED BY DISALLOWANCES MADE IN THE SETTLEMENT OF HIS FISCAL ACCOUNTS.

WITH REFERENCE TO THE AMOUNT CARRIED TO THE CREDIT OF AN OFFICER IN THE ANNUITY FUND WHICH IS AUTHORIZED TO BE REFUNDED UNDER SECTION 18 (L) TO THOSE OFFICERS OF THE FOREIGN SERVICE WHO BECOME SEPARATED FROM THE SERVICE OTHERWISE THAN FOR DISABILITY BEFORE REACHING THE AGE OF RETIREMENT, THE PROVISIONS OF SECTION 1766, REVISED STATUTES, WOULD PRECLUDE THE PAYMENT OF ANY SUCH REFUNDS PENDING FINAL SETTLEMENT OF SUCH OFFICERS' FISCAL ACCOUNTS, AS SUCH REFUNDS REPRESENT COMPENSATION RATHER THAN ANNUITIES.