Shreveport leaders respond to audit showing they paid $26,000+ in pensions to dead retirees

Report uncovers payments to dead pensioners
Published: Jul. 19, 2017 at 8:35 PM CDT|Updated: Jul. 20, 2017 at 6:45 PM CDT
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SHREVEPORT, LA (KSLA) - A report from Shreveport's internal auditor details how, for more than a year, the city paid more than $26,000 in pension benefits to dead retirees and beneficiaries.

KSLA News 12  became aware of a draft copy of the report through a public records request.

On Thursday, Shreveport city leaders and several city council members met during an Audit and Finance Committee meeting to discuss the report.

The city's internal auditor, Leanis Steward, who was also present at the meeting, began investigating after receiving a fraud hotline report in December 2016.

That tip alerted auditors that a pension beneficiary who had died the previous year was still receiving pension payments.

Steward reported working with the city's comptroller and IT department to upload a file of all active pensioners into the Social Security Number Verification System.

The results, according to the report, show inappropriate payments were made to eight deceased pensioners between April 30, 2015, and Feb. 28, 2017.

Those include payments made to two pensioners in January and February 2017 even though the internal audit department informed the pension office of its findings in December 2016, the report shows.

"We calculated the financial cost to the city, because of those improper payments, was about $26,800, close to $27,000," Steward said during the meeting.

"Throughout the course of our work, we identified financial costs to the City of Shreveport created by lack of controls and inadequate oversight that led to a failure to timely acquire knowledge of a pensioner's death and remove the pensioner from the active database used to process pension payments," the report reads.

"We also discovered that pension office internal controls over its operations are weak or nonexistent in other areas."

In addition, auditors found 22 names, social security numbers and.or dates of births listed on pension payroll did not match Social Security Administration records.

That many incorrect listings, Steward told committee members, could have led to Shreveport being fined by the IRS.

"That could possibly generate a fine of over $4,000," she said.

The report recommends that the city take four steps to help prevent this from happening again:

  1. Renew the status of active pensioners by using the Social Security Number Verification System
  2. Randomly select retirement fund payments and deposits to test for accuracy, and reconcile treasury fund accounts monthly
  3. Develop a checklist and have human resources verify that what has been submitted has been processed
  4. Train staffers to perform pension manager duties in his absence

The city's response indicates that municipal officials agree with the recommendations and that staffers already have started checking active pension payment files.

In its response, the city also vows to randomly select pension payments to check for accuracy and to notify a city attorney of any overpayments.

The city says it intends to make the adjustments to its procedures in less then six months.

KSLA asked Shreveport Chief Administrative Officer Brian Crawford if any of this money lost came from taxpayers.

"Well, salaries, everything's funded by taxpayers. Everything that the city does is funded by taxpayers," he replied.

Crawford said some of these tens of thousands of dollars incorrectly went to the families of the dead retirees.

"Some of those individuals that were getting paid, it just wasn't a transfer over to the beneficiary which was the spouse. In some cases, it was the wife. That benefit reverted to the widow and we didn't want them doing without funds for 30 days while we did some administrative work," he said.

According to Crawford, the city has now adopted new measures to prevent this from happening again thanks to the audit's findings.

"Using the Social Security Number Verification System is the big one. Again, though, with Social Security themselves paying $48 million to dead people, you're worried about the accuracy of that but that's really all we have to go on other than obituaries, word-of-mouth,and family members calling us," he said.

"It sure identified some problems that had been happening and also, more importantly, I think, made recommendations on how to fix those and make sure that we don't continue to have problems like this going forward," said District B Councilman Jeff Everson.

Crawford told KSLA they are almost finished recovering that lost $26,890.

"The individuals that were overpaid have been cooperative in returning those funds so I expect those to be returned in the next 30 days," he said.

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