‘70%’ of Fort Smith employees did not follow procedure with city’s education reimbursement policy 

Fort Smith Internal Auditor Tracey Shockley provided more details on the audit behind proposed changes to the city’s Education Reimbursement and Assistance program detailed during a Sept. 27 Fort Smith Board of Directors study session.

From 2012 to the present, the city has paid out approximately $366,000 through the policy. From 2012-2015, the average is $79,750 per year.

Shockley told Talk Business & Politics that the city does not have a financial impact estimate regarding employees’ failures to follow program procedures over the last several years as the audit was looking only at “controls and the process.”

Shockley, Fort Smith Finance Director Jennifer Walker, City Administrator Carl Geffken and the Human Resources Department initiated the audit because there was one employee who did not follow procedure, and it came to their attention. Upon reviewing a 2 1/2-year span, Shockley said there were about 70% who did not follow procedure. She also said the city has anywhere from 40 to 65 employees per year who participate in the education reimbursement program.

The reason the city did not produce a financial impact report is because to do so would require every student from the studied period to bring in their grades so the city could recalculate differences between the reimbursement amount and the final performance of the employee going back several years.

For example, if the city paid $1,000 for class tuition and the employee made a C, the employee would owe the city $500 as the program only pays full reimbursement of tuition for A’s and B’s, 50% for a C, and nothing beyond that. Since most city employees perform well in their classes, Shockley said, there really wouldn’t be an amount the employee would have to pay back in most cases, thus any financial losses to the city would be minimal. How minimal is hard to determine as Shockley’s department consists only of herself and one intern, she said, thus “I don’t have the manpower and that’s not the best use of my time.”

The audit performed was “strictly personnel,” Shockley said, focusing on the improvement of controls and process around the policy, and it would fall under protection from Arkansas’ Freedom of Information laws. The Arkansas Code for this is Title 25, Chapter 19, Section 105.

Where the breakdown has been in this policy during its 20+ year history comes in the reporting of grades to HR. Describing the process in greater detail, Shockley said if a student wanted to take a course at the University of Arkansas at Fort Smith, he would first have to get his supervisor to sign off on it. The class would then go to HR for approval. UAFS would pool all city employees’ tuition expenses into a bill that it would send to the city. The Finance Department would pay the bill, but it would be up to the employee to return a completion certificate with grades to HR. If the course was passed with an A or a B, then the 100% reimbursement would be justified. If the course was completed with a C, the employee would owe back 50% of the tuition. Beyond a C, the employee would owe the full cost of tuition.

Under the new proposal, which comes before the Fort Smith Board at its Oct. 4 regular meeting Tuesday night, the requirements are one full year of employment before eligibility begins; one year of employment after any reimbursement subject to repayment; tuition-only reimbursement with costs for fees, books, and materials being the responsibility of the employee; a max reimbursement of $4,000 per year – the policy is now $1,287 per semester times three semesters per year; a required degree plan that is related to the current job; and reimbursement to the employee only after the course has been completed and proof of completion has been submitted.

Walker recently told Talk Business & Politics that having the employee pay upfront was the best way of avoiding similar oversight problems for the current policy, which has been in place for more than 20 years. Walker said the normal duties of oversight would fall on HR, but since the department has been operating without a supervisor for over a year — former Director Richard Jones left in September 2015 — much has fallen through the cracks.