ROSELLE, NJ — Numerous attendees took part in the question-and-answer session about the state audit at Roselle’s virtual town hall on Friday, Feb. 5, following a presentation on the topic by acting Borough Administrator Everett Falt.
Falt said the presentation was based on the audit report presented to them by the Office of the State Comptroller’s Audit Division, with the scope of the audit running from Jan. 1, 2015, through June 30, 2017. The audit’s purpose was to bring greater efficiency and transparency to the operations of all levels of government by reviewing borough controls over selected fiscal and operating practices, then assessing the borough’s compliance with state statutes, policies and procedures for various operational areas. The focus and recommendations were on four areas: health benefits, human resources, municipal vehicles and the Roselle First Initiative.
“The state sent a draft report on Dec. 9, 2020,” Everett said on Friday, Feb. 5. “They gave us approximately about a month to come up with an acknowledgement, which was sent to the state on Jan. 8. They published their final report on Jan. 27, 2021. This gave us 90 days to submit a corrective action plan that outlines what we have already done and any further actions we are taking.”
The lack of oversight and failure to monitor employee health insurance benefits resulted in improper payments of approximately $800K in expenses and a missed opportunity to save $1.9 million, said Roselle Chief Financial Officer Anders Hasseler on Friday, Feb. 5.
“This was moving from private health insurance into the state plan,” he said. “We started working toward that in May 2019, and we passed a resolution to move to the state plan on July 30, 2020. The shift took place in November. In last year’s budget, we were able to save $525,000, and, in this year’s budget, we’re projecting to save $2 million. Moving to the state plan forced employees and retirees to recertify their information. So all those documents of marriage certificates, birth certificates, everyone that you’re insuring, you had to prove that you were legally allowed to insure them.
“We also eliminated the duplicated coverage and married opt-out,” he continued. “If two employees are married in the state health care plan, one can get family insurance. The other one is not eligible for an opt-out payment. In private insurance, they were, so this stopped that. The duplicate coverage would be the same scenario if the spouse worked somewhere else but was getting state coverage. For example, if they worked in a school and they were in the state health care plan, the state plan could identify that and know that this family insurance is covering this entire family. Even though the spouse works at another job, that disallows them for the opt-out. That saves the borough money in that regard.
“We’re going to review this every two years to make sure we’re not going years without oversight. The report had cited the problem existed from 2008 to 2017.”
One of the advantages, aside from the massive savings in the state health care plan, is this also serves as a check, Hasseler said. When someone stops cashing pension checks, they likely have died, so they should no longer be eligible for health care. That’s the same system now, so the borough will know that if the pension checks stop, then health coverage doesn’t need to be continued. Before, when it was private insurance, there wasn’t that connection; it was the borough’s responsibility, even if someone lived several states away, to make the connection. This connects those two systems.
“We also will require document resubmission for eligibility. This will be done regularly,” Hasseler continued. “In the next couple of weeks, before we submit our 90-day action plan, we’ll look at what else we can do.”
Human resources is the second thing the state audit cited, said Hasseler. This involved a failure to take prompt disciplinary action, which resulted in continuing to pay a suspended employee for more than six years, from May 2012 to August 2018, adding approximately $611,000 in expenses. In June 2018, the council approved a resolution authorizing the filing of a complaint with the Local Government Services Division, seeking the removal of the municipal clerk. On Aug. 15, 2018, the council passed a resolution accepting the clerk’s resignation.
Hasseler then discussed at length the borough’s failure to implement controls for the assignment and monitoring of permanently assigned vehicles, in addition to its failure to comply with borough policies and procedures and federal tax requirements for monitoring and reporting employees’ personal use of municipal vehicles. He said an attempt was being made to update the fixed-assets ledger for vehicles, as well as adding GPS tracking to all vehicles and enforcing the existing written request policy for employees to use vehicles.
Through the tax portion, which runs through finance, employees are now taxed annually on vehicle use per the IRS guidelines, which he said was started in 2019.
“What still needs to be done is, the fixed-asset ledger needs to be completely updated. The previous time was 2015. This has a few benefits, other than just State Comptroller audit and knowing who’s driving what and where. It also lines up with the vehicle insurance. We want to make sure that we’re not paying insurance on vehicles that we don’t own anymore. This is something that has to be done continually.”
With that kind of reliable data, Hasseler said they can do long-term capital planning, to know when these vehicles will need to be replaced. Based on tracking useful life and usage, they’ll have an approximation, in 2024, of how many vehicles each department needs to have replaced.
“We won’t have to do just one year at a time; we can actually look forward into the future,” he said. “That is my goal for this. This serves multiple purposes. As far as the GPS tracking, we will execute our first quarterly GPS tracking reports at the top of the second quarter, which will be in the next couple of months.”
On Jan. 27, 2020, the council passed a resolution to hire a full-time qualified purchasing agent to improve the procurement process, said Hasseler. On Nov. 4, the requests for quotation were put out for the services delivered by the Roselle First Initiative.
“The council adopted a resolution properly awarding a contract to a vendor for the Roselle First Initiative in January,” he continued. “The annual contract awarded to a vendor has gone from $280,000 a year, which was six years ago in 2015, and is now at $60,000. What we still have to do is implement a process for monthly reports. This will verify that the services that are being rendered will meet the contract obligations.”
Hasseler said the borough will keep working to improve operations by refining internal processes and leveraging every standing committee to exercise oversight on key areas.
“We will implement and leverage reports and trusted data to drive decisions, make tough decisions to drive needed change and give our best to the borough,” he said. “There is more work to be done, but we are moving forward.”