CED 7 changes employee borrowing policy

Employees of Circuit Engineering District No. 7 will no longer be permitted to borrow from their retirement contributions, the district’s directors decided at their July board meeting Tuesday morning.
Repayment of loans, or the lack thereof, was one of the things criticized in an internal audit of the district’s funds earlier this year. The loans were supposed to be paid back through payroll deductions, and apparently that wasn’t always happening.
Russ Meacham, whose Clinton accounting firm did an investigation after embezzlement became known a year ago, said that essentially CED7 funds intended as retirement contributions were being misallocated and used to make loan payments for some employees.
Executive Director Monte Goucher, who had by far the largest loan when the audit was done, brought up the proposal for a possible change at Tuesday’s meeting. He said the option of employees borrowing from their retirement funds had been set up in 1999 or 2000, during the early days of CED7, and the board could either allow it to continue or stop it.
“It is the employee’s money,” said Kurt Hamburger, Custer County’s representative, kicking off the discussion. “I don’t know that you can disallow it. It would be strictly between them and that company (which handles the funds). It’s not our business.”
“My understanding is it’s at the discretion of the body that sets up the plan,” replied Goucher. “CED7 set up the plan.”
He said he’d been advised by Lincoln Financial (the company holding the funds) that the district board could continue the procedure or not.
Allison Adams, who apparently now handles that part of the district’s bookkeeping, said payroll deduction is not an authorized method for repaying loans.
Goucher wanted to know if the employees could approach Lincoln themselves if they want to borrow from their accounts. “Right now I have to sign off on it,” he said.
“To my mind it’s bad to borrow against your retirement,” commented Joe Don Dickey, board chairman from Tillman County. “But that’s the individual’s right. We have the right to curtail it and not allow it in the future.” He said the board needed a consensus.
Tim Binghom of Kiowa County didn’t want to tell somebody they couldn’t borrow their own money.
“The problem we had (in the past) was the employee facilitating on behalf of the other employees,” said Dickey. “We’re not going to allow that anymore.”
Someone else repeated that he believed employees should have the option of borrowing from their accounts.
“It’s putting employees at a high risk,” disagreed Hamburger. “It’s putting this board at a high risk.”
“What I’m hearing is that most of you don’t want it,” said Dickey.
Hamburger asked if he was ready for a motion.
“No, no,” replied Dickey, adding that he wanted to hear from everybody on the board. He named Johnny Davis of Beckham County and Steven Fite of Greer County as among those he had not heard from yet.
“It’s their money,” said Davis.
Hamburger, who had said that first, now took the other position. “As elected officials, it’s time to protect this entity,” he said. “Down the road we’ll be protecting the employees too. We should disallow it.”
Goucher said if the board voted that way, existing loans would not be affected. He also said employees could do early withdrawals from their retirements rather than borrow money.
Binghom then followed Hamburger’s lead and reversed himself, making a motion to disallow the practice of letting employees borrow from their retirement funds. Hamburger seconded.
The measure passed by voice vote without any nays being uttered.