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December 16, 2017
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Errors in city payroll/personnel office lead to problems

By Tia Lyons
This article was published October 22, 2017 at 5:00 a.m.

City officials and employees are continuing to work to untangle problems that reportedly had been ongoing for years in the payroll/personnel office and recently led to the ouster of a longtime city employee.

While delivering a report for the city’s 2016 legislative audit last month, Mayor Frank Hash said a finding for which the city had previously been cited had cropped up again.

Hash later explained that there had been repeat findings of outstanding liabilities that dated back 15 years.

“We could never find where those liabilities originated. It’s happened in the years since I’ve been here, and we could not find where it started,” said Hash, who began his first, four-year term in 2011.

“They were relatively minor problems, but they had been consistent,” the mayor said.

The issues were traced back to what was formerly the city clerk’s office.

In 2015, legislative auditors called for a separation of duties between the job of former payroll/personnel clerk Mary Hill and that of the city clerk.

The offices split, with the city clerk moving to a space on the second floor of city hall, and Hill’s title being changed to payroll/personnel clerk.

As Hash walked council members through audit findings on Sept. 22, he reported that the outstanding liabilities issue had arisen once more, without mentioning Hill’s name at the time.

Hash acknowledged that the matter was “sensitive.”

“That won’t happen again, hopefully. We’re not even going to have the same person doing that any longer,” Hash said. “It’s a job the person just couldn’t handle, and after two or three of these times, she can’t do it no more.”

While discussing the matter last week, Hash said that when he presented the audit findings to the city’s Finance Committee, the committee decided to terminate Hill from the position.

Hash said he followed through on the recommendation on Aug. 31. Hill had worked for the city for nearly 38 years.

“I know this, I often talked to Mrs. Hill about these things, and she promised it wouldn’t happen again,” the mayor said.’

Issues

One issue that was pinpointed by city officials affected two uniformed employees in the El Dorado Fire Department.

Several missed payments for health insurance premiums for two firefighters over the years amounted to approximately $170,000.

The payments had erroneously been added to another line item in the city’s general fund.

Fire Chief Chad Mosby said one of the firefighters has worked for the city for about four years and the other, about six to seven years.

He said the health insurance is offered through the EFD’s pension plan for non-civilian employees, the Arkansas Local Police and Fire Retirement System, or LOPFI.

Mosby and Alderman Willie McGhee, who serves on the Finance Committee, said that should the firefighters have needed to use their health insurance benefits, there could have been a question about if they were enrolled in the plan, since the payments had not been made.

Mosby also said the errors affected the city’s eligibility to receive turnback funds from the health insurance premium payments.

If the city pays a certain percentage of its required share of participation into the pension system, then turnback funds are applied toward an old, unfunded liability pension plan.

The city has been working to pay off millions of dollars of debt for a local pension plan that remained after the city was required to move to the LOPFI retirement system in the early 1980s.

A total of 75 retired police officers and firefighters are still drawing from the old plan, which accrued a large debt because more money was paid out of it than into it

“All cities in the state get that insurance premium turnback for police and fire. If there is anything left in that fund at the end of the year, it is rolled back to all cities who paid at least 80 percent of their required share to LOPFI,” Mosby explained.

The revenue does not pass through city coffers, he said, adding that the state makes the payments directly to LOPFI on the city’s behalf.

“It’s designed tho offset some of that debt to the old pension system. That turnback money goes straight to LOPFI,” Mosby said. “It shows up as a credit to our account. That’s the way our bills are paid.”

The amount of turnback funding that was lost to the city for 2018 reportedly amounts to at least $150,000, a number that some city officials said could double.

Hash said Mosby was able to straighten out the situation and catch up on the missed payments after the money was discovered in the other line item.

Mosby and Hash previously rectified instances in which Social Security payments were mistakenly deducted for three firefighters.

“Police and fire, we don’t pay into Social Security because we pay into a pension plan. The mayor got them to reimburse it,” Mosby said.

Housecleaning

Hash noted that immediately after Hill’s dismissal, several city employees, including Mosby, worked to ensure paychecks were issued for that pay period.

“I saw it as an opportunity to serve where it was needed and to help out. Any time you lose someone in a position like that, it leaves a vacuum,” Mosby said.

Hash said employees worked on the phone with the technical support service for the city’s payroll software, Incode.

The mayor and Robert Edmonds, director of public works, said paper checks were issued on payday, Friday.

“They’re usually ready on Wednesday or Thursday, and some employees receive them then, but they’re not good until Friday,” Hash said. “So they got them on the day of, instead of a day early.”

Mosby said there was also a slight delay for paychecks that are directly deposited into the bank.

“We contacted all of the banks and let them know that it was going to happen and to make sure no one got overdrafts,” Mosby said. “We did everything we could on our end.”

Police Chief Billy White said adjustments had to be made to a few paychecks within his department, but no major problems have ensued as a result of the transition in the payroll/personnel clerk’s office.

“There haven’t been any major issues or disturbances for us that I’m aware of,” Edmonds said.

Hash previously addressed issues for health insurance claims and benefits that were being made for employees who no longer worked for the city.

Now, the city has hired a temporary employee, a former City Hall staffer, and a new payroll/personnel clerk who are conducting some “housecleaning” to get the office back on track, Hash said.

“We found quite a bit of problems with files not being properly maintained and not put away properly. We’re bringing records up to date and making them current,” Hash said. “We won’t know what all is there until we go in and see the magnitude of things.”

McGhee agreed that the city needed to continue investigating the situation.

“My thing is this, we as a board or city council, we’ve got make sure that we’re transparent.” McGhee said.

“The people trust us to try to make good decisions … We all need to be held accountable, we need to be transparent and let people know when let things get past us,” McGhee continued. “That’s how you gain the trust of the taxpayers, not only when you do things right, but when you make mistakes also.”

Mosby said the situation was regrettable.

“I don’t think any of it was intentional. They were little mistakes, and when you’re dealing with payrolls and pensions, little mistakes can lead to big things,” the said.

Tia Lyons may be contacted at 870-862-6611 or by email at tlyons@ eldoradonews.com.

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