Schools in Pennsauken, N.J. wasted $ 1.6 million in public funds, audit finds

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TRENTON – One Audit According to the state comptroller, the Pennsauken School District wasted more than $ 1.6 million in public funds, mostly choosing not to participate in the state’s school employee health benefits program.

This is not just a concern for local taxpayers in Camden County Township of 37,000, as more than half of the school district’s operating budget is funded by the state.

The biggest problem reported by auditors was that the district health insurance broker did not compare similar plans when evaluating which one to recommend and did not include the cost of their commission in the cost analysis. The broker predicted that the private plan would save the district $ 750,000 over two years, but auditors say it ended up spending $ 1.6 million than it would have spent on the SEHBP.

“All school districts should exercise due diligence and not rely solely on the advice of brokers who may have a financial interest”

In addition, the broker was entitled to a larger commission or a separate bonus from Pennsauken if the number of employees increased by 25% or more. The contract also allowed the broker to earn “incentives, bonuses, trips and prizes” from the insurance provider, which could have prompted them to recommend more expensive plans to the district.

“State regulations require brokers to fully disclose any commission or other inducement they receive. Full transparency of all hidden costs associated with purchasing insurance is essential to protect the interests of taxpayers, ”said Yvonne Tierney, director of the audit division at the Office of the State Comptroller. “All school districts should exercise due diligence and not rely solely on the advice of brokers who may have a financial interest in recommending an expensive insurance plan. “

Acting State Comptroller Kevin Walsh was recused from tthe Pennsauken audit.

The Pennsauken School District’s operating budget this year is $ 114.4 million.

New Jersey Monitor reported that the insurance broker was Conner Strong & Buckelew, where George Norcross, an influential figure in the Democratic Party, is executive chairman. A company spokesperson called the audit “recklessly inaccurate.”

The audit covered a two-year period from mid-2013 to mid-2015. The audit lasted more than six years.

In his official response, the district said it was working with its health insurance broker to ensure that a proper cost analysis was done. He also said he has decided to continue offering his health benefit withdrawal waiver even though auditors have reported $ 21,300 in inappropriate payments because it saves money overall.

“While many years have passed since this audit was concluded, including changes in district leadership (superintendent and school affairs administrator) and many improvements that have taken place in various areas addressed by this report, we appreciate that we have the opportunity to further improve in certain areas of operation, ”said the response.

The Pennsauken School District’s operating budget this year is $ 114.4 million. It receives $ 41.1 million from local property taxes and $ 60.4 million from the state, and it spends $ 11.7 million of its surplus and other reserves.

Michael Symons is the State House bureau chief for New Jersey 101.5. Contact him at michael.symons@townsquaremedia.com.

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