State auditor general orders audits of Munhall pension plans

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State Auditor General Eugene DePasquale announced plans Thursday for his office to pick up where it left off in auditing Munhall pension funds in the wake of news reports about the borough's troubled finances.

Previous audits performed by his office for 2010, 2011 and 2012 revealed the borough did not make nearly $200,000 in required payments to the police pension fund and that about $10,000 in underpayments of state aid occurred in the non-uniformed employees pension fund. Those audits also found inadequate record keeping and a lack of internal control in managing the plans.

The new audits will check to see if municipal officials took appropriate corrective actions as recommended and to make sure the plans are being administered in compliance with applicable state and local laws.

In a news release, Mr. DePasquale said his concern about the pension plans was heightened by reports that Munhall is being forced to take out a loan from a private lender so it can meet payroll.

On Tuesday, Munhall council announced that it had secured a private tax anticipation loan that would prevent the layoff of 10 police officers and six public works employees. In recent weeks, the borough was turned down for a traditional tax anticipation loan from a bank because it did not have annual independent audits done and filed with the state Department of Community and Economic Development in 2011 and 2012.

The lack of annual audits also cost the borough $360,000 in Regional Asset District funds. The private $500,000 loan is being offered by Joe and Frank Leonello, of Franjo Construction in Homestead, and Christian Stein of Arch Masonry Inc. The interest rate on the loan is 5.25 percent.

Munhall officials have said they were not aware of the unpaid pension contributions and other problems with the pension funds until Mr. DePasquale's audit reports for 2010, 2011 and 2012 were found in June, shortly after the abrupt resignation of former borough manager Matt Galla. Mr. Galla said in an interview last week that he was instructed by council leaders to keep pension contributions in the general fund to cover borough expenses and that was among the reasons he did not have audits performed.

"I am pleased to see that State Auditor General, Eugene DePasquale, is taking a pro-active approach to getting to the truth. His investigation will reveal the facts in this matter," Mr. Galla said an in email Thursday.

Council finance chairman Rick Brennan, who took office in January, said he, too, welcomes the auditor general's additional review.

"I think it's a great idea and I'm glad he's doing that," Mr. Brennan said. "When we have police officers and retired police officers coming to our meetings and asking about our pension and what's going on with it, [the borough needs] to get it right for them."

Mary Niederberger: or 412-263-1590. First Published February 13, 2014 12:52 PM

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