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Auditor general wants Connellsville to repay pension money

By Steve Ferris sferris@heraldstandard.Com 4 min read

State auditors recommended that Connellsville’s police pension plan repay more than $7,000 in state aid it shouldn’t have received and found that the settlement to lay off the city’s last paid fire fighter included vested pension benefits that don’t comply with the Third Class City Code.

City officials agreed with the findings in the police pension plan audit, which covers 2012 and 2013 and includes a compliance evaluation for 2014, according to the state auditor general’s office.

The audit found that the city incorrectly certified one employee as eligible to receive police pension benefits and overstated the police payroll by $61,839.

The employee in question retired on Feb. 1, 2013 and enrolled in the city’s Deferred Retirement Option Plan (DROP), which made him ineligible to receive pension benefits, according to the audit.

Certification of that retiree resulted in the state overpaying the city $7,746 in aid for distribution to the police pension plan. The audit recommends that the city repay that money with interest

Councilman Brad Geyer, the director of accounts and finance, said the city solicitor is reviewing the repayment.

The city has options such as keeping the money and allowing the state to deduct that amount from next year’s pension aid, Geyer said.

“We want to make sure everyone (on council) understands the issue,” Geyer said.

According to the fire fighter pension audit, which covers the same time period, the December 2014 layoff settlement between the city and its last paid fire fighter grants him a 50 percent pension benefit that would begin vesting on Jan. 1, 2015, his last day on the job, and the payout would occur when he reaches age 55.

The code allows for a vested pension benefit of a portion of the 50 percent benefit payable when the employee reaches age 51 and has 20 years of service.

However, the city fire fighter was age 44 and had 13 years of service on his last day, according to the audit.

“Providing unauthorized pension benefits could increase the plan’s pension cost and reduce the amount of funds available for investment purposes or for the payment of authorized pension benefits or administrative expenses…The increased costs to the pension plan as a result of the excess pension benefits could result in the receipt of excess state aid in the future and increase the municipal contributions necessary to fund the plan in accordance with Act 205 funding standards,” according to the audit.

“We put them on notices,” said Susan Wood, a spokeswoman for the auditor general’s office. “Excessive benefits must be taken into consideration and they must fund the plan properly for these excess benefits. They might owe money to the state in the future because they didn’t follow the Third Class City Code. They don’t owe the state money now, but they might.”

“Our solicitor advised us we were able to do this. It saved our pension fund and obligations we had to pay. In the city’s view we made a good deal,” Geyer said.

In its documented response to the audit finding, the city said it extended the beginning date for payment of the fire fighter’s pension for a additional five years so the pension benefit would come as closely as possible to the anticipated cost provided in the code.

The city also said the settlement was reached to carryout the 2014 referendum to close the fire department and to end an arbitration case with the International Association of Fire Fighters Local 1917, which represents the laid off fire fighters.

In addition, the city said the settlement was based on recommendations of the parties involved in the arbitration that it was legal and warranted under the circumstances.

“The city, though, bound by the settlement, will seek to comply with all other applicable laws with respect to this pension benefit,” according to the audit.

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