Auditor General: Northwest might have ‘improperly inflated’ retirement benefit

By Mark Guydish - [email protected]
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The Northwest Area School Board reported “unqualified earnings” for a former administrator that may have “improperly inflated” that person’s retirement benefits, according to a new audit by the state Auditor General’s office.

The performance audit primarily covered the period from July 1, 2013, through June 30, 2017, and found no problems. But it also looked at the district’s reports to the Public School Employees’ Retirement System for fiscal year 2017-18. That review determined the district reported unqualified earnings paid to a former administrator totaling $4,000

The money was part of a “Voluntary Severance and Mutual Release Agreement” with the administrator. Specifically, it was a lump sum payment for unused vacation days. The payment was made via check dated Aug. 11, 2017.

The audit notes the PSERS Employers Reference Manual states only “qualified earnings” be reported to PSERS, a state agency that oversees school staff pensions, and that the manual “clearly excludes payments for unused vacation and sick leave” from the list of qualified earnings.

The audit notes “although the board had the authority to craft the terms of the severance agreement allowing for a lump sum cash payment for unused vacation days, the district was not permitted to supersede the PSERS benefit structure.” The audit also notes PSERS confirmed the inclusion of unused vacation leave as earnings reported for retirement purposes is prohibited.

The audit recommended that Northwest require “personnel responsible for reported compensation data to PSERS to closely review” the Employers Reference Manual, and recommended PSERS review the compensation reported for the former administrator and make adjustments “if any portion of the compensation payments” are determined to be ineligible.

The district agreed with the findings, the audit notes. Director of District Operations Betsy Ellis was not available Thursday.

The audit does not name the former administrator in question, but does say the severance package was approved at a board meeting Aug. 2, 2017. According to Times Leader archives, at that meeting the board accepted the resignation of only one administrator, Special Education Director Jennifer Oiler, who left to take a position in Millville Area School District in Columbia County.

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By Mark Guydish

[email protected]

Reach Mark Guydish at 570-991-6112 or on Twitter @TLMarkGuydish

Reach Mark Guydish at 570-991-6112 or on Twitter @TLMarkGuydish