Audit Finds Problems At State Treasurer's Office

oversees $231 million in pension checks paid each month to 177,000 retirees. A

state audit

released Tuesday found serious weaknesses in the system with hundreds of uncashed and unreconciled checks floating around. Some of that state money was even paid to dead people.

State auditors found significant deficiencies in the oversight of state pension payouts. Of the hundreds of outstanding checks, they identified 22 percent were older than 90 days. One check dated back to 1990. After singling out 50 of those checks, auditors discovered half of the checks went to people reported as deceased.

"That's where the failure was. No one was following up when there was evidence available that there may be a situation that someone was dead," deputy state auditor Wesley Ray said. "I think it's an unacceptable risk."

Ray said the failure in oversight not only took thousands of dollars off the books, but it also opened the door for fraud.

"Someone could have received a check and endorsed it improperly, fraudulently and cashed it -- a check written to someone who is dead," he said.

Deputy State Treasurer Michael Williamson said his office immediately responded to fill the gaps, even hiring an outside firm to cross check death records.

"When you run a system with this many participants, there's always opportunities for continuous improvement," he said. "This is the retirees' funds and any particular case is significant to us, even if it's relatively insignificant as a percentage. We're getting better and better on checking on those cases."

Auditors credit the treasurer's office for reacting quickly to improve the system, but it is far from resolved. The pension fund still relies on families to inform the state when retirees die. Even with cross-checking of records, officials said some cases slip through, increasing the chances of fraud.