by Anthony Hennen
Recent audits show that poor accounting practices can cause Pennsylvania townships to lose out on thousands of dollars, either in interest from a pension fund or from state aid.
A September audit of Dunkard Township in Greene County, for example, found that administrative mistakes caused an overpayment from state aid, among other issues, and required the township to repay nearly $5,000.
While a similar issue in 2016 led to a $580 overpayment to the township from the state, it also understated its payroll in 2020, missing out on a $2,576 payment from the state aid.
However, while those payments were tied to the township’s payroll funds, it wasn’t the only issue discovered in the audit. The township’s pension plan received state aid that was greater than the township’s actual pension costs, causing an overpayment from the state. The township was required to repay $4,439 overall to the commonwealth.
Staffing changes led to oversight falling short.
“Due to turnover in municipal officials, plan officials did not have adequate internal control procedures in place to reconcile state aid allocations and employee forfeitures available to reduce municipal contributions with the plan’s actual defined contribution pension costs,” the audit report noted.
The township also lacked a chief administrative officer for the pension plan, and auditors recommended one be appointed.
“The failure to formally appoint a CAO could result in important filing deadlines being overlooked, state aid being adversely affected and/or delayed and investment opportunities being lost,” the report noted.
Similarly, the Avalon Borough Police Pension Plan in Allegheny County overstated payroll data that led to a $10,000 overpayment from the commonwealth, which must now be repaid with interest.
Also in western Pennsylvania, Springhill Township in Fayette County was criticized for incorrect data that led to an underpayment from the state, along with delays in paying its obligation to the pension plan and depositing state aid into the pension plan.
The township’s understating of its payroll in 2019 and 2021 meant that it missed $29,000 in state aid until the auditor’s report noted the discrepancy.
The problem, like in Dunkard Township, was related to staff turnover.
“Due to a turnover in personnel responsible for administration of the plan, township officials did not have a thorough understanding of the Certification Form AG 385 instructions,” the report noted. “Additionally, the township failed to establish adequate internal control procedures, such as having at least two people review the data certified, to ensure the accuracy of the data certified.”
A failure to pay the township’s minimum municipal obligations by the end of the year in 2020 and 2021 also meant the pension plan missed out on accumulating interest. The township is required by law to pay interest into the fund to make it up.
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Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
Photo “Pennsylvania State Capitol” by Governor Tom Wolf. CC BY 2.0.