A small pension fund for Prince William County volunteer fire and rescue personnel suffers from poor management, a lack of oversight and inadequate record-keeping, according to a recent internal audit.
The report, obtained after an open-records request from The Washington Post, echoes many of the concerns outlined by the county audit department last year over a pension benefit for longtime volunteer company personnel, called the Length of Service Award Program. The $10.8 million fund pays an average of $241 a month to longtime county fire and rescue volunteers, according to county finance officials.
Last year, a different audit on the pension fund drew attention when, in the wake of the report, the county’s audit department was disbanded and the work outsourced to the consulting firm McGladrey. Board of County Supervisors Chairman Corey A. Stewart (R-At Large) said the department had failed to deliver high-quality work.
At the time, a memo outlining the audit department’s concerns said that the board’s move was meant to stifle the auditors’ report on the volunteer fire pension fund. County officials denied those allegations, saying the report was not released because it was incomplete.
After inquiries from The Post and others, the county released that report.
The new report, completed by McGladrey, examines the former internal audit department’s work and independently reviews the pension fund. It finds many of the same problems and recommends various changes for the program and its governance, including eight “high” risk issues.
The county’s former audit department had found that the pension fund did not have a good rate of return from its Hartford investments, meaning that officials spent more on the program than they should have. The “effective use of taxpayer dollars . . . have been consumed at a rate five times greater than anticipated,” according to the 2012 audit. That amount translated to $1.3 million of unanticipated fire department funds going to the program during the past nine years, according to the audit.
The recent McGladrey report doesn’t say whether the department had spent more on the program than necessary. But auditors said that trustees responsible for the pension program should more carefully consider investment options.
Before “2013 the investment options of the plan had not been formally reviewed or discussed,” the McGladrey audit says. The report recommends that trustees vote on investment options and present them to supervisors for final approval.
The McGladrey audit says the 13-member board of trustees is too large and needs more independent members. All but two trustees are eligible to participate in the pension program, the audit says. “An independent board will allow it to provide a higher level of governance,” the report says.
Some issues cited in the report have been rectified. A $30,215 overpayment from the pension fund to the now-defunct Gainesville volunteer fire department and a failure of the Dale City Volunteer Fire Department to pay $172,617 in expected contributions to the fund have been addressed.
Stewart, head of the board’s audit committee, could not be reached for comment. Supervisor W.S. Covington III (R-Brentsville), an alternate on that committee, said the issues in the report speak to the county’s failure to properly oversee and bolster its volunteer units.
“If we’re going to have a financial program of this nature, we should treat it with respect, and it should be administered properly,” Covington said.
Based on the report, Covington said, he expects county staff members to recommend changes that would be approved by the board this fall.
In a lengthy response to Stewart, the plan’s administrator said that trustees were working on the issues identified. “Some issues can be addressed more promptly, while others will take additional time,” plan administrator Richard D. Rubino wrote to Stewart.
In a separate audit, McGladrey outlined several recommendations to the county budget process after a keystroke error resulted in a $5 million mistake this year. Auditors did not find any “fraud, waste or abuse,” the report says.
On Aug. 6, the board is to vote on a solution proposed by Stewart in conjunction with county officials to address what would be a $5 million shortfall.
Auditors recommended several changes to the county budget process, including additional oversight to prevent such mistakes in the future. The changes include ensuring that IT systems and accounting are better integrated.
Covington, one of three board members who voted against the budget this year, said that he and others were upset with facets of this year’s budget process. County staff members, he said, did not provide enough detailed information in some cases. Covington has said that such information could have helped staff members and supervisors catch the $5 million mistake.
He said he expects numerous changes, including those outlined by McGladrey, in next year’s budget process.
“We’re in the top tier in terms of budgets,” Covington said. “We’re arguing over the margins right now, and we should be.”