Kane County budget panel looks to limit government employee procurement cards, tuition help

GENEVA – The Kane County Finance and Budget Committee voted Sept. 29 to fast-track changes to the county government’s employee procurement card and tuition reimbursement policies.

Board Chair Corinne Pierog said the new policies should be in place by Nov. 30, the end of the fiscal year.

Purchasing cards – also known as procurement or p-cards – essentially are credit cards the county issues to elected officeholders and government officials to buy things without having to go through a purchase order procedure.

Committee members discussed the proposed changes aimed at reining in spending without mentioning that the county’s Information Technology Executive Director Roger Fahnestock was found to have spent more than $50,000 on his county procurement credit card to pay for one employee’s college tuition.

Pierog and State’s Attorney Jamie Mosser issued a joint statement previously that said, “We have determined there has been no violation of county policy or criminal law.”

Proposed changes include that the number of cards and their transaction limits be reviewed annually and approved by the standing committee to which the department reports and the Finance Committee. Single transactions would be allowed to be increased temporarily upon written authorization.

Executive Finance Director Joe Onzick said the proposed p-card policy changes were first put together in 2016 by him, the former auditor, state’s attorney and purchasing department but eventually stalled.

“Do we pass a policy that is specifically toward department heads and excludes elected officials?” Onzick said. “Or can we just pass a policy that could be pertaining to both? This is where it was left and it died. We never got any further.”

Countywide elected officials have internal control of their budget allotments.

“At that time, they were trying to be very careful and respectful of internal controls and trying to make sure we weren’t overstepping those bounds, which I appreciate and understand,” Onzick said. “Maybe we could go about it a different way.”

Board Vice Chairman Kenneth Shepro, R-Wayne, said he thought there was enough doubt at the time as to the extent that the policy could be applied to elected officials.

So that all the previous work would not be lost, Onzick offered the revisions to the committee as a starting point. Shepro said new County Auditor Penny Wegman also had suggestions to be incorporated into it.

Board member John Martin, R-Geneva, said changes to the p-card policy should be consistent.

“Without any intention of ever stepping on anybody’s toes, I think having a consistent policy across the board would certainly enable this body to more properly administer the propriety of people’s expenditures and it would help the auditor,” Martin said. “So I would think having the elected officials included in this would be a plus. And I’d have to understand why an otherwise acceptable policy wouldn’t be included as part of somebody’s standard operating procedure.”

Shepro agreed.

“We have a new auditor, a new board chairman, we have a new state’s attorney,” Shepro said. “To Mr. Onzick’s point, an awful lot of work was already done and it would be appropriate to just have the new team take a look at it and then bring something back for this committee or any appropriate committee to implement.”

Pierog agreed that one policy should apply.

“I agree it should be one policy for the entire county, all employees within the county,” Pierog said. “I would respect internal control. But with that going forward, if we are all in agreement on the basis of what a procurement card can or cannot be used for, I think that would make good policy for all of us. ... Also, going forward, I think once we have a concept and plan that we bring together all elected officials – countywide elected officials – for their own review. And have them take it back so there is a buy-in consensus from all parties involved.”

Pierog said with the combination of longtime employees and “new fresh faces … that are looking at things with clean eyes, with no past history, so I think … that team will be able to develop a very solid and respected procurement policy.”

While changes to the p-card policy go back a few years, Onzick said what is new is proposed language to add to the county’s other financial policies regarding educational assistance.

“That is the one thing I tried to do to address the issue that just arose,” Onzick said, referring to the county paying $58,211 in tuition over three years for one employee to get a degree at DeVry. The payments were revealed in a p-card audit.

Alisa Kaplan, executive director of Reform for Illinois, a nonpartisan research and advocacy organization, previously questioned how the tuition payments were being justified.

“This definitely seems like an unusual example of spending,” Kaplan said.

“A lot of county taxpayers would be very surprised to hear that their money was being spent this way,” Kaplan said. “Whether it was actually within county guidelines or not, it seems like the county should have a serious open discussion about whether expenditures like this should be made in the future.”

Kenneth Kriz, a professor at the University of Illinois at Springfield who has taught public and nonprofit financial management for 20 years, said previously that it is rare for an employee to get fully paid tuition as a benefit.

“It’s typically some percentage of the tuition – 50%, maybe as much as 75%. Rarely is it the case that employees receive full tuition,” Kriz said.

“Organizations should abide by policies that are written guidelines. If they want to have a very large training budget and everyone is afforded an opportunity to complete their four-year degree while employed there, then it would be a very attractive place to work,” Kriz said.

The county’s existing tuition reimbursement policy has several requirements, none of which was followed for DeVry tuition payments.

The county’s current policy sets a maximum of 50% tuition reimbursement, limits the amount to $2,400 in any fiscal year and sets the lifetime maximum reimbursement for an employee at $9,600.

The policy’s requirements include:

• The employee has to make the request for reimbursement before starting the course.

• The employee has to pay for the course before seeking reimbursement.

• The request must be filed to the department head or the appointed or elected official for approval.

• If approved, it goes to the Human Resources Department for review.

• If approved by Human Resources, it is submitted to the county board chairman for review and final approval.

The county had three unrelated applications for tuition reimbursement from 2016 to 2020 in different departments and all three were approved.

One was $652 in 2017 for a business math course, and another was for $379 in 2016 for a class in fundamentals of speech communication. Both of those were at Waubonsee Community College. A third was for $436 in 2017 for a class in basic web design at Elgin Community College, according to the records released.

None of the records the county released in connection with the DeVry tuition payments shows official approval for the county to pay for an employee’s four-year degree – except on the Nov. 1, 2017, invoice for $1,449 where a handwritten note states: “Approved by RF training.”

The county will have to correct the W-2 forms for the employee, who will now have to pay income tax on nearly $41,000 for the tuition benefit the county paid for her, records show.

The proposed new policy before the county board states that educational assistance should not be provided to an employee outside of the county’s Tuition Reimbursement Policy “unless it meets the criteria of a working condition benefit as determined by the IRS.”

“Educational assistance meets the criteria of a working condition benefit if such education is required by the county or by law for the employee to keep his or her present salary, status or job, and serves a bona fide business purpose of the county; or if the education maintains or improves skills needed in the present job,” the proposed new policy states.

“Educational assistance that does not meet the criteria of a working condition benefit, or is in excess of the non-taxable annual limit set by the IRS for educational assistance provided through the county’s educational assistance program must be reported to the payroll department so as to allow the appropriate payroll taxes to be processed,” the proposed new policy states.