An open letter to the public about....
After
years of public pension fund scandals and legislated reforms, there is
still more to be done to protect public employee pensions and taxpayer’s
money.
A case in point is the recent fraud and waste uncovered at the Hampden County Regional Retirement Board. An audit covering 2014-2017,
conducted by the Massachusetts Public Employee Retirement
Administration Commission, identified nearly $800,000 that was lost to
the retirement system through illegal contracts, violations of state
law, mismanagement, payment of fraudulent invoices, and violations of
the state’s ethics laws.
The
audit identified the payment of $235,000 in invoices for which there
are no underlying contracts and no documentation of either the services
provided or the providers’ performance. Also, there was payment of
$87,229 in bank service charges, despite maintaining an account balance
of between $5.6 million to $27.4 million. The audit noted that other
boards, with similar balances did not pay any bank fees.
Massachusetts law
prohibits the hiring of attorneys as regular retirement system
employees. Despite that, the Hampden County board hired two and made
them regular employees of the system. They were paid $179,266 for legal
services during the audit period, although there is no documentation of
hours worked. Moreover, the retirement board illegally paid 90 percent
of the health insurance premiums for the two attorneys, costing the
system $269,144.
No
town in Hampden County pays 90 percent of the health insurance premium
for its employees. This exceedingly generous benefit is extended to all
regular employees of the retirement board office, including members of
the board who only serve part time. Several board members chose to take
health insurance from the retirement board instead of the insurance
offered by their municipal employer. The retirement board plan is far
more generous than that offered by member municipalities.
The
generosity of the Hampden County board seems boundless. The audit
discovered that the board unlawfully paid the employer share of Social
Security, in the amount of $4,842, for those serving on the
board. Public employees in Massachusetts are not and have never been
part of the Social Security System.
The
long-time chair of the retirement board, Richard Theroux of Agawam, was
personally cited in the audit. The audit found that a payment of
$1,825 was made to the chair for hotel expenses for a conference on Cape
Cod. In fact, Theroux stayed in his own condominium and submitted a
false receipt citing an address in his own Cape Cod condominium complex
that did not exist.
When the audit became public, the chairman
acknowledged his “mistake” and repaid the $1,825. Theroux later
reimbursed the retirement board an additional $3,825 for payments
received before and after the audit period, for a total of
$5,650. Theroux, as chair, also received a $1,843 annual salary
increase during the audit period, although there was no recorded vote
authorizing it.
The
Public Employee Retirement Administration Commission audit uncovered
numerous other irregularities, including lack of standard and proper
procedures for procurement; failure to exercise due diligence;
deficiencies in monitoring vendors and scrutinizing expenses; inadequate
policies and procedures regarding travel approval and reimbursement and
overtime approval and documentation; failure to file certain required
federal tax forms; questionable overtime payments; budget and accounting
system inconsistencies and deficiencies; and cash accounting issues.
As
a result, Public Employee Retirement Administration Commission referred
certain findings contained in the audit to the offices of the attorney
general, the inspector general, and the State Ethics Commission. In
addition, the commission issued a temporary order to the Hampden County
board, including weekly staff meetings of the commission and retirement
board, thorough review by the commission of the retirement board's
monthly financial activities, restrictions on retirement board travel,
and the development of an internal control plan.
The
commission has been working with the Hampden County Retirement System
to implement reforms, but thus far, there has been no accountability for
board members who acted illegally and unethically, squandering
retirement funds contributed by Hampden County towns and their
employees. Four of the five board members are still in place.
Following
a series of articles in the local press, Theroux announced in May that
he would resign. He has now changed his mind stating, ironically, that
he is needed to oversee important changes and reforms.
The
Hampden County Retirement Board has been operating against the
interests of Hampden County towns which contribute taxpayer dollars and
Hampden County employees who contribute up to 11 percent of every
paycheck to the retirement system.
The
commission and local Hampden County officials have appealed to the
attorney general, the inspector general, and the Massachusetts Ethics
Commission to intervene and enforce the law and ethical norms. Without
those agencies taking swift and decisive action, there is no reason to
believe that the current board will implement necessary reforms and act
in the interests of Hampden County towns and their employees.
The
Hampden County Regional Retirement System should be placed in
receivership until probity and effective governance can be restored.
signed,
 |
| Robert T. Markel |
Robert T. Markel
is the town administrator in Hampden and a former Mayor of Springfield; Donald Davenport is chair of the Hampden Board of Selectment; Mark Gold is a member of the
Longmeadow Select Board; Lyn Simmons is town manager in Longmeadow;
William Sapelli is the mayor of Agawam; Joshua Garcia is the Blanford
town administrator; Katherine Warden is the Chester town administrator;
Jennifer Wolowitz is the Monson town administrator; Patricia A. Oney,
Dr. Richard M. Smith, and Mary K. Hull are members of the Monson Board
of Selectmen; and John Baldasaro, Richard Holzman, and Jason Forgue are
members of the Chester Select Board.
 |
| photo by Dave Sears |
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