Probe of MCCCD retirement deals nears end

The Arizona Auditor General's Office is wrapping up an investigation into special deals by the Maricopa County Community College District that allowed private lobbyists to improperly enroll in the state retirement system.

State auditors launched their probe following stories published by the Tribune in June detailing how some employees of the private special interest groups used the agreements to qualify for thousands of dollars in state retirement payments for the rest of their lives, said Dennis Mattheisen, financial auditor with the auditor general's office.

The results of the investigation should be published within the next two months, Mattheisen said. Investigators have focused on whether the lobbyists should have been enrolled and what type of corrective actions should be taken, he said. Auditors did not try to determine if the problem is widespread.

The community college district listed lobbyists and other workers with the East Valley Partnership and Arizona Business & Education Coalition as district employees, allowing them to qualify for state pension benefits.

College district officials have acknowledged those deals were "improper," and will be eliminated by the end of the year. A third organization, the Arizona Community College Association, has a similar arrangement, but district officials maintain that deal is appropriate because the association is fully funded by community colleges throughout the state.

All three of the private, nonprofit organizations reimbursed the district for salaries and other costs related to the agreements. However, since employees of those private groups are listed as district employees, they qualify for state retirement benefits that are supposed to be reserved for government workers.

Mattheisen said it is nearly impossible for auditors to determine if similar deals exist throughout Arizona because the state relies on employers to provide accurate information about employees.

"As an outside auditor, we're at a real disadvantage here," he said.

Although the auditor general has no enforcement authority, it's reports are widely read by state lawmakers and give guidance to government agencies throughout Arizona.

The auditor general's office has asked to meet with high-ranking officials of the community college district sometime next week to go over its findings. But until that happens, the district is declining to comment, said Chuck Reinebold, media relations manager for the college district.

Officials with state retirement system said they are waiting for the auditor general's investigation to close before taking any action, which could include kicking the lobbyists out of the system and refunding their money.

The retirement package is one the most appealing benefits offered to government workers because it guarantees lifetime payments unlike some retirement plans offered by private companies that have fixed benefits.

Roc Arnett, president of the East Valley Partnership, is eligible to receive more than $10,000 annually from the state's pension plan despite never having been enrolled prior to the 2003 deal with the college district, according to retirement system records.

On Wednesday, Arnett said his organization's employees are still on the state retirement rolls, but arrangements are being made to provide them with an alternative retirement plan.

"We're going to have to wait and see what the auditor says," Arnett said.

Susan Carlson, executive director of the Arizona Business & Education Coalition, stands to make more than $35,000 a year as a result of the arrangement the organization made with the district in 2002. Without the deal, Carlson would have received $6,600 in annual pension benefits from the state because she previously worked as a teacher, retirement officials say. She did not return phone calls Wednesday.

District Chancellor Rufus Glasper allowed Arnett and Carlson, as well as the employees of their organizations, to continue being listed on the district's payroll even after he learned late last year that the state auditor general had declared a similar arrangement in Santa Cruz County to be "improper" in 2005. That decision by Glasper allowed those workers to continue stockpiling state retirement benefits.

Lawmakers have blasted the deals since they were disclosed by the Tribune.

"You just can't start making your own rules as you go along," Sen. Jay Tibshraeny, R-Chandler, said Wednesday. "Especially when you're dealing with something as important as the state retirement system."