The state auditor is demanding county supervisors personally repay around $1.6 million to reimburse citizens for four years’ worth of improper insurance payments on behalf of county employees.

Lincoln County Board of Supervisors attorney Bob Allen said Monday the state auditor has given the board until Sept. 29 to submit a proposal for repaying the costs of full insurance coverage for the dependents of county employees in Fiscal Years 2015 through 2018, which appears to violate state law. He said the board has hired the law firm Butler Snow to negotiate with the state in hopes of reaching a deal that would waive personal liability for the five supervisors, which amounts to $320,000 each.

“We’re pointing out there’s been no personal gain, and no misappropriation of funds. The employees got a benefit, similar to a raise,” Allen said. “We’re working with them, hoping we can reach an amicable settlement.”

Allen said Lincoln County supervisors first began paying the cost of dependent coverage for county employees in 2000 as a benefit for workers, who are generally low-paid.

But Mississippi Code 25-15-103 says employees of political subdivisions wishing to secure dependent coverage must request it in writing, and that “the entire cost of such additional coverage for dependents shall be paid by the employee.”

The law does not appear to apply to city governments, which are allowed to pay the total cost of all benefits for city employees. City Clerk Samantha Melancon said the City of Brookhaven pays $300 toward dependent coverage for city employees.

Allen said the board ended the practice earlier this month when the state auditor sent its demands, transferring the costs of dependent coverage back to county employees.

“Most importantly, we’ve had 17 audits since 2000 — six of which were performed by the state auditor — and no one has ever challenged the practice or called it to the county’s attention,” he said.

Kelley Ryan, director of public relations for the Mississippi Office of the State Auditor, said the agency discovered Lincoln County’s insurance payments during a routine compliance audit.

“We are working with county leadership to determine the exact scope of the problem,” she said. “Once the findings are final, we will be releasing the audit to the public.”

It is unclear what the consequences for supervisors will be if the state auditor rejects their proposal — the agency could file a civil suit or a lien against them, Allen said. He is still reading the fine print on county insurance contracts to determine what kind of errors and omissions coverage supervisors have, and what its limits are.

None of the five current supervisors were in office in 2000 when the dependent payments began.

Supervisors declined to comment for this story.

The Daily Leader requested a copy of the correspondence the state auditor’s office sent to Lincoln County, but both Allen and Ryan said the demand letter was not public record.