More complicated, a little.
The US Army has "Conditional Promotions" (sometimes, depending on policy at the time). As the name implies you can get promoted, but there are conditions attached, and if you fail to meet those conditions, the promotion is rescinded. Words matter here: The soldier is not "demoted" (reduced from one rank to the lower one), the promotion is "rescinded" (the conditions for promotion were not met, so the promotion is invalid, and never happened.
MSG Walz took a conditional promotion to E9. That promotion was contingent upon him completing the Sergeant Major Acadamy AND completing a 2 year ADSO (Additional Service Obligation). He pinned E9, and was assigned to a Bn CSM position based on that conditional promotion.
Before graduating the SMA, he submitted a retirement packet, and received retirement orders. After retiring the MNG HR system caught up with his failure to meet the conditions of promotion (probably around the time the SMA was supposed to have been completed. The conditions give you X number of months to complete the schooling, but I don't know what MSG Walz's time limit was), and they rescinded his promotion to E9. They updated his retirement paperwork to show his retired rank, correctly, to be E8.
As far as the Army is concerned, he was never a CSM, because he never met the requirements of the promotion to CSM.
Also, there is ZERO chance that he doesn't know ALL of this. the fact that he allows himself to be introduced as CSM and had the CSM rank all over his congressional office and swag is just straight up lying.