Office of Human Resources - Audit of Tuition Reimbursement Program

Why The Controller's Office Conducted The Audit

Concerned about the risk of poor oversight with respect to employee tuition reimbursements, pursuant to Section 6‐400(d) of the Home Rule Charter, the Office of the Controller (Controller’s Office) conducted a performance audit of the City of Philadelphia’s (City’s) tuition reimbursement program. The objective of this audit was to determine whether the program was being effectively managed to prevent waste and abuse.

What The Controller's Office Found

Between July 1, 2011 and March 31, 2016, eleven City agencies reimbursed their employees $2.3 million in tuition for undergraduate and graduate degree programs. Most, if not all, of the agencies had managed their tuition reimbursement program poorly. These poorly‐run programs contributed to tuition overpayments, questionable degrees, and the failure of agencies to collect from reimbursed individuals who willfully left City employment prior to a two‐year commitment period. Moreover, in some instances, the amounts received by employees should likely have been reported as income on their annual wage statements. We estimate that taxpayers and residents lost as much as $1.0 million as a result of the ill‐managed programs. Additionally, the City’s tuition reimbursement program appeared inequitable. Many City employees lacked the same opportunities to take advantage of obtaining
advanced degrees because their agency did not set aside funding to support such expenditures.

Our assessment of the program suggests many of the problems occurred because (1) there is no centralization over the program, (2) reimbursement policies and procedures are vague, (3) agencies often neglect to pre‐approve the intended curriculum, (4) there is no city‐wide minimum employment period before being able to take advantage of the program, and (5) there are no set limits on the maximum amount of tuition that will be reimbursed.

What The Controller’s Office Recommends

The Controller’s Office has developed a number of recommendations to address the above findings. Some of the more significant include: (1) enforce more stringent requirements for supporting documentation submitted with tuition reimbursement requests; (2) develop a better system of identifying instances requiring the recovery of tuition payments; (3) create a city‐wide policy for tuition reimbursements; and (4) establish an independent and central board responsible for pre‐approving entrance into the City’s tuition reimbursement program.

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