Madison - St. Clair Record

Wednesday, November 20, 2019

Audit of Cahokia police pension fund finds less than professional operation

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By The Madison County Record | Oct 14, 2019

Former Cahokia police chief Rick Watson’s pension grows each year and currently stands at $121,110.20. As the current St. Clair County sheriff, he earns approximately $99,000 in annual salary.

SPRINGFIELD – Trustees of Cahokia village and its police pension fund improperly increased benefits for St. Clair County Sheriff Rick Watson by raising his salary as he retired in 2011, Department of Insurance examiners found in July. 

Village trustees hiked Watson’s salary from $95,163.60 to $127,462.40, so his 75 percent pension would yield about 100 percent of his contract salary. 

Examination supervisor Antoaneta Kovacheva wrote in a draft report that pension trustees who approved the greater amount didn’t follow pension code. 

Watson, as a pension trustee in 2011, abstained from voting on his benefits. 

In the draft report, Kovacheva found trustees more recently approved improper salary increases of $18,952 for Lawrence Purnell and $8,174 for James Jones. 

It also states that benefit calculations for Watson, Purnell and Jones incorrectly included cash value of unused vacation, personal days, or sick time. 

“The department has concluded that increasing ‘salary’ to inflate pensions and induce retirement is contrary to the Illinois pension code,” Kovacheva wrote. “Such compensation is not commensurate with salary and contribution history and artificially increases pension fund liabilities in an actuarially unsound manner.” 

Cahokia pension fund trustees were given a chance to disagree. 

“If we receive sufficient documentation and explanation, we will revise the final report,” Kovacheva wrote. 

Pension board counsel Dennis Orsey, in an interview on Oct. 14, said trustees approved a response to the draft in September. 

He said they included three options for responding to alleged overpayments. 

“They have not fully made their determination on how they will proceed with that,” Orsey said. 

He said a beneficiary could request a hearing on any change in benefits. 

Trustees plan to discuss the options in a meeting on Oct. 16, at 11 a.m. 

Kovacheva examined the fund from 2008 to 2018, and found dozens of violations, mistakes, and lapses. 

In fiscal year 2018, she found the trustees lost $407,644 on investments. 

According to Kovacheva’s report, trustees should have liquidated three corporate bonds they acquired in 2016 and 2017, because the bonds were no longer rated as investment grade. 

She did not find documentation and approval of investments, or documentation on many items she should have found it on. 

Her report overall portrayed a less than professional operation. 

She found two members joined the fund with no documentation or approval; 25 received refunds without documentation or approval; trustees accepted ten members without hiring dates; no documents for three of seven factors in Watson’s pension calculation; trustees granted four other pensions without all necessary documents; trustees incorrectly assessed contributions on lump sum payouts of accumulated benefit time; they incorrectly deducted insurance before assessing contributions; they didn’t prorate contributions for employees who didn’t work for an entire pay period and a member received duplicate refunds in violation of code. 

Kovacheva corrected six accounting errors in annual statements, including the reporting of a member as a Tier One participant. 

Legislators created a second tier offering lesser benefits to some new employees in 2014, as part of a package of reforms. 

Kovacheva found that annual reports initially reported five employees as Tier One but later changed them to Tier Two. 

She found corrections of two entry dates in the 2018 annual statement.

She found Watson, Jones, and Heine didn’t complete training on open meetings. 

She found trustee Francella Jackson didn’t complete 16 hours of required training in 2016.       

In minutes of board meetings, she found no signatures of president or secretary. 

She found trustees didn’t approve minutes four times in 2010 and twice in 2013. 

She found no documentation of election results for trustee David Heine and former trustee Gary Brewer. 

She found no mention in the minutes of expiration dates for officers. 

She wrote that trustees should record the clerk’s salary under salaries and wages in the annual report, not under other expenses. 

“On five separate occasions the board used pension fund money to purchase flowers,” Kovacheva wrote.

 “The purchase of flowers is not considered an expense necessary for the operation of the fund.” 

Her criticism extended to village trustees, for holding tax levies they should have forwarded to the pension fund. 

She wrote that state law requires a county to forward taxes to a pension board within 30 days of receipt, but the village held taxes as long as six months.   

As of April 30, 2018, the fund held assets with actuarial value of $15,425,256. 

Its accrued liability stood at $26,626,951. 

Watson’s pension grows each year and currently stands at $121,110.20.

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Cahokia Police Pension Fund

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