State overpaid employees by more than $2 million

Published: Feb. 6, 2012 at 10:48 PM HST|Updated: Oct. 24, 2013 at 7:04 PM HST
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Dean Seki
Dean Seki
Marion Higa
Marion Higa
State Sen. Donna Kim
State Sen. Donna Kim
State Sen. Sam Slom
State Sen. Sam Slom
Amy Kunz
Amy Kunz

HONOLULU (HawaiiNewsNow) – A Hawaii News Now investigation reveals the state has overpaid its employees more than $1.5 million, with hundreds of thousands more in state tax dollars written off as uncollectable and other incorrect pay amounts recovered months or years later from employees who were accidentally paid too much.

The problem has persisted for so long that many state employees have retired or even died while still owing the state thousands of dollars they were paid by mistake, state officials said.

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In one example, records show an Oahu Community Correctional Center employee was paid $31,200 too much in 1997 because he took much more vacation or sick leave time than he had available. The OCCC employee still works for the public safety department, and while the state has recovered about half that amount from him, the state is seeking the attorney general's permission to write off the balance.

A second example comes from 2008, when a Lihue Airport employee walked off the job and no one notified personnel officials to stop his paycheck for weeks, so he was overpaid about $5,000. Records show the state Transportation Department allowed him to keep the money when he agreed to return to work.

"Some of it may never be collected, but the problem is we've never written it off," said Dean Seki, the acting state comptroller, who oversees the state payroll.  Seki, who has been with the state's Department of Accounting and General Services for 12 years, just took the department's top job on Feb. 1.

Seki said a lot of these overpayments happen because Hawaii's state workers still have to fill out old-fashioned paper forms for vacation or sick leave, and that process is not computerized.

If state employees decide at the last minute to take vacation time at the end of a pay period, often their paychecks have already been cut.

"You can't possibly do the paperwork to reflect that, so we end up paying the staff person for their salary and later on we have to go and collect it," Seki said.

The state said as of Dec. 31, 2011, it overpaid its employees $2 million in outstanding payments, some of them stretching back since 1994. The state recovered nearly $470,000 of that, according to a report filed at the end of last year, so there is still more than $1.5 million employees and former employees owe the state.  About 25 percent of the uncollected overpaid wages came from the last two years, with the balance from more than two years ago, Seki said.

"I think we try our best.  I mean it's not our goal to overpay our employees.  But mistakes happen.  And I think we try as much as possible to make sure that these mistakes don't get made," Seki said.

State law prohibits officials from collecting overpayments of employees more than two years after the fact.  Each department is able to write off some overpayments as un collectable, so hundreds of thousands of dollars never collected were forgiven.

The state's monthly payroll is approximately $80 million.

State Sen. Donna Kim, who is vice president of the State Senate and a longtime member of its money committee said, "It is troubling that this huge amount of money is owed to the state and should they have even been overpaid to begin with."

Kim wants State Auditor Marion Higa needs to investigate.

"I think this is something that the auditor should look into.  And I will be introducing a measure.  Thank you for bringing this to our attention.  But I will be doing a resolution asking the auditor to look into just how massive is this over payments," Kim said.

State Sen. Sam Slom is a small business advocate and the State Senate's lone Republican.

In the private sector, a situation like this "would not be tolerated, could not exist.  And if it did, whoever was in charge would be seeking new employment somewhere else," Slom said.

The education department is the state government's largest employer with 22,000 salaried employees. Not surprisingly, it has the largest overpayment amounts.

As of Dec. 31, public school employees owed $754,649 in salary overpayments  and reported collecting $206,539 recently collected in overpayments, according to a report filed with the Department of Accounting and General Services.

"We're aware this is an issue and that doesn't excuse it, just because we have that volume of employees so we're doing things to try to mitigate those occurrences," said Amy Kunz, the chief financial officer for public schools.

Kunz said the state has asked school clerks and secretaries, who handle payroll paperwork to be more vigilant.  But she said it's difficult for them to keep up because they have so many other things to do.

"They're assisting principals and day-to-day responsibilities for that, teachers and students who come in and need assistance.  They have a lot on their plates," Kunz said.

She said the education department worked with the attorney general's office to pursue more cases and brought in $56,000 from school employees in a one-month period late last year.

The state is working to computerize its time sheet and payroll system which will prevent a lot of overpayments, but that process will take years and cost millions of dollars.

The administration of Gov. Neil Abercrombie has submitted a request to the legislature for $15 million to plan and prepare for the implementation of a statewide financial management system.  Building the actual system will cost millions more.

"This project will identify the business requirements associated with a new integrated system, which includes functions like payroll, central warrant writing, warrant reconciliation, and time and attendance.  Once they are identified, these requirements will be translated into a systems requirements document that will serve as a basis for a request for information/demonstration and ultimately a request for proposal and quotation for a statewide integrated financial management system," said Jan Gouveia, deputy director of the Department of Accounting and General Services.

The project will also identify any risks associated with the current business and legal environment that can be mitigated before implementation to minimize the risk of cost and time overruns, she said.

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The so-called enterprise resource planning system won't begin serving state departments until 2014.

"Upon completion, the State will move off of paper-based, manually intensive, ineffective, and costly processes that currently cause the majority of the salary overpayments," Gouveia said.

Copyright 2012 Hawaii News Now. All rights reserved.