The California State Teachers Retirement System has released the results of audit findings for the 2007-08 fiscal year, as well as for the first two months of 2008-09.
School district audit updates are presented to the Audits and Risk Management Committee in September and April of each year.
For the 2007-08 year, 23 out of 44 school districts incorrectly reported creditable earnings to the Defined Benefit program instead of the Defined Benefit Supplemental program, causing CalSTRS to overpay retirement allowances totaling approximately $527,704 to 38 affected retired members. The average is $37,693 per school district or $13,887 per each affected retired member. The 44 audits affected 493 members with a recovery of $2.4 million.
As for the first two months of 2008-09 (July and August), four school districts incorrectly reported creditable earnings to the DB program instead of the DBS program, causing CalSTRS to overpay retirement allowances totaling approximately $264,962 to 16 affected retired members. The average is $66,240 per school district or $16,560 per affected retired member. The 10 audits completed affected 265 members, with a projected recovery of $1.3 million.
Summary of common audit findings 2007-08:
• The school district program issued 44 final audit reports, which resulted in a total savings to the Teachers’ Retirement Fund of $2,385,773 and affected 493 members.
• Approximately 52 percent of districts audited incorrectly reported creditable earnings to the DB program rather than to the DBS program (23 out of 44 districts).
• Approximately 57 percent of districts audited incorrectly reported member earnings as non-member earnings without paying CalSTRS the required 16.25 percent contributions (25 out of 44 districts).
• One district incorrectly reported or failed to report excess sick days without paying CalSTRS the excess sick days’ present value (six members).
Summary of common audit findings July-Aug. 2008:
• The school district program issued four final audit reports, six draft reports and has 24 audits in progress. The 10 audit reports issued have resulted in a total savings to the CalSTRS fund of approximately $1,342,735 and affected 313 members.
• Half of districts audited incorrectly reported creditable earnings to the DB program rather than to the DBS program (five out of 10 districts).
• Eighty percent audited incorrectly reported members’ earnings as non-member earnings without paying CalSTRS the required 16.25 percent contributions (eight out of 10 districts).
• Two districts incorrectly reported or failed to report excess sick days without paying CalSTRS the excess sick days’ present value (52 retired members).
Also of note is the audit appeal rate dropped from 22 percent in 2003-04 to only 9 percent in 2007-08. The average number of appeals since that time is 14.4 percent – or 16 of 111 audits.
To access the audit findings in their entirety, visit www.calstrs.com. Under “Learn About” select “CalSTRS,” then “Public Meeting Notices and Agendas” and select “September 2008 Board Agenda.”