Trauger Fire Department adds interest to loan from relief association; audit catches shortage

Trauger Volunteer Fire Department didn’t pay enough interest on two loans from its affiliated relief association, and other procedural requirements for borrowing about $9,700 were missed, according to a state audit.

Once alerted to the problems with the loans, the department corrected them, according to state Auditor General Timothy DeFoor.

According to the compliance audit of the Mt. Pleasant Township Volunteer Fire Department No. 2 Relief Association, for 2018 through 2020, the association loaned the fire department $2,526 on Nov. 14, 2016, and $7,257 on Nov. 19, 2018. The first loan was to be repaid over three years and the second loan was due to be repaid by March 2019.

But state auditors found that the loans weren’t secured by appropriate collateral. They also weren’t set forth in formal written agreements that should have included signatures from two representatives of each organization. Also, the department paid 2% interest on the loans, not the minimum 3% that is required.

Don Hill, fire department president, said the 2% interest rate was based on loans from past years, and he hadn’t realized the minimum rate had been increased.

Once alerted to the problem, he said, “We paid the additional 1%.”

State auditors acknowledged that “the relief association officials received all remaining loan payments and were reimbursed the total interest payments due in the amount of $183 at the 3% rate on June 3, 2021.”

According to Hill, the first loan was applied toward an insurance premium while the second loan helped meet payments on a department truck.