State auditors have found the comptroller’s office has a history of not initially estimating state employees retirement benefits correctly and taking years to do so, causing the state to pay interest penalties on lump-sum payments.
The report said its review revealed that the comptroller’s retirement services division consistently pays retirees estimated benefits that are less than the benefits calculated during the pre-audit process. It said that resulted in higher retroactive payments and higher interest payments owed at the time of finalization. The state is required to pay 5 percent interest on lump sums not paid in six months.
Tara Downes, the comptroller’s spokesperson, said the integration of the retirement system into the state’s payroll system will provide an instant, correct retirement benefit beginning in May. The backlog will also be run through the new system, which should result in it being eliminated by the end of 2016.
The auditors also found the average timeframe for its sample of retirees to receive a finalized benefit from the date of retirement was six years and one month. For its sample of 40 retirees, the finalized retroactive payments totaled $416,000 and the interest payments totaled $41,000. The auditors also questioned why retirees must receive the payments in lump sum instead of installments.
Also among the auditors’ concerns is how non-employee pension fund trustees are spending per diem money. The audit report said the chairman and the actuarial trustees of the Retirement Commission continue to regularly bill the State Employees Retirement Fund for air travel, hotel, meal, and other costs in excess of what is customary and reasonable for travel on state business.
The audit showed 11 reimbursements totaling $480 of non-itemized room service and hotel club lounge expenses. The report said, “Since these amounts are not itemized, it is not possible to determine whether individuals are being reimbursed for the purchase of alcoholic beverages.” The audit also questioned the payment of $300 for a one day and one hour rental of a Hertz ‘Prestige Collection’ rental car.
The comptroller’s office contested the auditors’ statement that the problem was ongoing. It said in response, “The Trustees expenses were reduced by 50 percent over a three-year period while the workload has increased and there is no mention of that in the report.”
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