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Mistake means $64,000 underpayment for pension aid

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(The Center Square) – Though some cities, boroughs, and townships in Pennsylvania find they have a financial problem after the state auditor visits, others find out they’re owed more money by the state.

Though a happy occurrence, the findings reflect the mistakes of local officials and highlight the work that needs to be done for the future.

In West Chester, a compliance audit found that local officials miscalculated state aid for its pension in recent years, resulting in a $64,000 underpayment. That underpayment followed a similar underpayment error that meant the city was owed $23,000 in 2019.

“The borough again failed to establish adequate internal control procedures, such as having another individual review the data certified, to ensure the accuracy of the reported data prior to submission,” the audit report said.

Likewise in Bucks County’s Northampton Township, a recent audit found that misreporting since 2020 has meant a $31,000 underpayment of state aid. Though the pension’s funding ratio has steadily improved since 2017 (going from a 74.5% ratio to 85.9% in 2021), the township missed out on the investment proceeds from having the payment sooner.

“The failure to certify these eligible employees was an oversight by municipal officials and the township lacked adequate procedures to timely identify the oversight,” the auditor said.

Additionally, the auditor found officials in Northampton Township didn’t use $116,000 in plan forfeitures that should have been used to reduce employer contributions.

“As a result of not properly applying forfeitures in accordance with the governing document, the township was required to contribute additional funds from the general fund to satisfy the plan’s annual pension obligation that could have been better used for other general municipal purposes,” the auditor said.

Using the funds properly would have freed up significant revenue for the general fund. The township’s employer contributions for its pension plan have risen from almost $19,000 in 2017 to $161,000 in 2022.