Wendy Wilton, the Republican candidate for state treasurer, filed a formal request with state Auditor Thomas Salmon on Monday for an independent audit of alleged mismanagement of overtime expenses associated with a new computer system that has been under development in the Treasurer’s Office since 2005. Wilton has also asked for an investigation into how personnel costs have been applied to the General Fund and Special Funds derived from the state’s three pension funds for municipal, teacher and state retirees.
Wilton alleges that overtime hours increased by 25 percent in the Treasurer’s Office in fiscal years 2011 and 2012. VTDigger has confirmed that, according to figures from a public records request the office incurred about 9,000 hours in overtime and about $265,000 in overtime pay during fiscal years 2010, 2011 and 2012. One employee, the interim director of the retirement division, who was tapped internally (the position was not advertised) logged more than 3,000 hours in overtime during that period.
Deputy State Auditor Joe Juhasz said that his office requested information from the treasurer yesterday, for a preliminary review in light of Wilton’s complaint. Juhasz said it is too early to tell whether Wilton’s complaint was merely political or actually substantive. The request asks for incumbent Treasurer Beth Pearce to provided detailed information about the Retirement System Re-engineering Project and a cost allocation report for the project. The deadline for Pearce to respond is Nov. 9, three days after the General Election.
Wilton laid blame for the overtime anomalies and slow progress on the Retirement System Re-engineering Project squarely on Pearce’s shoulders.
“This is her baby,” Wilton said in an interview. “The overtime goes to the competency of her management.”
Pearce said Wilton’s accusations are unfounded and she chalked it up to election year politics. The IT project is on track and under budget, she says. The expenses associated with the pensions are audited every year, and, she said, there have been no findings, i.e., any irregularities in the reporting.
“I believe this is clearly related to election politics and it’s a waste of taxpayer money,” Pearce said.
Peace says the overtime in the retirement division is partly attributable to the staff time required to test and implement the new system, which is a significant upgrade from the 1970s COBOL (short for Common Business-Oriented Language) mainframe the state had been using. A major part of the project has been converting historic paper records data to digital records.
“This new system is clearly state of the art, and it will improve the efficiency of the office,” Pearce said. “Various manual processes are going to be automated.”
Wilton’s letter to Salmon includes a list of more than 20 questions, most of which revolve around the Retirement Service Re-engineering Project: whether it is over budget, whether overtime expenditures are related to the IT project and whether overtime in the treasurer’s office has been handled adequately. Wilton also asked whether the overtime “spiking” could lead to higher pensions for certain employees.
In an interview, Pearce answered questions without hesitation as she commuted between campaign stops at editorial offices at the Burlington Free Press and the Addison Independent. The Retirement System Re-engineering Project, which was initiated in 2005, is now partially implemented, she said. The program, PeopleSoft, is used to track the 45,900 retirees and vested members in the system. The project, which was estimated to cost $13.5 million, will come in $1.5 million under budget, Pearce says. The state has spent $7 million to date and Pearce hopes to have the project completed next year.
Wilton cites a handful of letters from “whistleblowers,” former employees in the treasurer’s office, including Skip Perkins of Barre, who is a former director of financial operations at the treasurer’s office. Perkins, in a letter cited in the request, accuses Pearce of using “unethical tactics” to bully workers. He also alleges that if the Treasurer’s Office was going over budget, Pearce would charge retirement division overtime to the special pension funds instead of the General Fund to prevent budget overruns.
Wilton’s request comes in the wake of her previous accusation that Pearce allowed several employees in her office to accrue large amounts of overtime on an annual basis. Of the 42 employees who worked for Pearce in 2010, six worked between 180 and 362 hours of overtime that year, and all but one employee was in the retirement division. The head of the division, Laurie Lanphear, worked more than 1,000 hours that year and earned about $27,000 more than her annual salary of $55,000. In 2011 and 2012, Lanphear worked a similar number of overtime hours. Pearce says while overtime in her office has increased because of personnel changes, overall expenditures on staff have declined by $200,000 over the last several years.
In previous interviews, Pearce neglected to mention that her office relies on funding from special pension funds, which covers the costs associated with the retirement division, including overtime expenses, and some investment and IT staff. While General Fund expenditures by the treasurer’s office have declined somewhat (by roughly $100,000 from a five-year peak in fiscal year 2011), Special Fund spending has increased by about $325,000.
Read the related VTDigger story.
Pearce says she is hiring administrative staff for the division, but she has made no plans to replace a retirement planning officer. The ratio of state retirement professionals to retirees is 1 to 3,800, she said. “We have a very small staff serving a very large number of customers,” Pearce said.
Attempts to reach Salmon, a Republican who is stepping down from office in January, were unsuccessful.
Pearce has said that the General Fund portion of the budget had been in a “surplus” position of about $100,000 a year for the last two years. Her office transferred that money to the Survivors Benefit Fund for the families of public sector workers who die on the job.
Read a related story about Pearce’s endorsements.
Editor’s note: This story was updated with more information at 8:45 a.m. Oct. 19.
