Audits and examination reports issued during the week ending February 16, 2018 by NYS Comptroller Thomas P. DiNapoli
Click on text highlighted in color to access the full report.
Department of Taxation and Finance: Oversight of the Agricultural Assessment Program (2017-S-26)
The New York Agricultural Districts Law allows reduced property tax bills for land in agricultural production by limiting the property tax assessment of the land to its prescribed per-acre Agricultural Assessment Value (AAV). Auditors identified an error in the Tax Department’s calculation in 2006 that caused subsequent years’ AAVs to be incorrect, including those certified and communicated to local assessors during the audit period. This resulted in about $10.4 million in excess agricultural exemptions granted to program property owners during the three-year period 2014 through 2016 for 10,416 properties in the eight counties analyzed. Because of the excess exemptions, an estimated $349,069 in real property taxes were not collected.
New York Racing Association (NYRA): Capital Program Revenue and Expenses (Follow-Up) (2017-F-26)
An initial audit issued in October 2015 found that NYRA lacked a formal long-term capital planning process for Video Lottery Terminal (VLT) revenues. The annual capital plans used by NYRA lacked supporting documentation for the resources and costs associated with the listed projects and NYRA did not have a formal project management system to effectively monitor capital project status. Auditors also found NYRA used VLT revenues for operating expenses, which was not in accordance with prescribed professional standards. In a follow-up, auditors found NYRA made some progress in addressing the issues identified.
New York Racing Association: Financial Condition and Selected Expenses (Follow-Up) (2017-F-27)
An initial audit report issued in June 2016, assessed NYRA’s financial condition. Auditors found that although NYRA’s overall financial condition was sound, its traditional racing-related operations continued to produce multi-million-dollar annual deficits. Also, NYRA had paid certain expenses that were not ordinary or necessary for racing operations, which contributed to NYRA’s racing-related deficits. In a follow-up, auditors found NYRA made some progress in addressing the issues identified.
State Education Department (SED)/Division of State Police (DSP): Compliance With the Enough is Enough Act (2017-S-38)
Auditors found SED has made progress in complying with some of its key responsibilities under the act, however, it has fallen behind meeting or completing others. SED’s implementation time frames resulted in delays in meeting certain requirements, including reporting critical incident data to the Governor and Legislature. SED may not meet the reporting requirement until late 2019 – two years later than the act requires. DSP has met its responsibilities under the act.
Office of Temporary and Disability Assistance (OTDA): New York State Supplemental Payments (SSP) Made to Deceased Individuals (2016-BSE7-01)
OTDA administers the New York SSP, which provides a supplemental benefit to Supplemental Security Income (SSI) recipients and other qualifying state residents. Auditors found OTDA processed 553 SSP payments totaling approximately $42,000 to 78 individuals who died from 1 to more than 16 years prior to their last SSP payment in the examination period. Of the 553 payments, 380 were transacted, meaning the payment was either electronically deposited into the recipient’s bank account or the recipient’s check was negotiated. The remaining 173 payments were either stopped, escheated or remain uncashed.
Office of Temporary and Disability Assistance: SSP Payments Made to State Employees (2016-BSE7-02)
OTDA processed 105 SSP payments totaling $6,870 to 14 state employees who were ineligible to receive benefits because the wages they earned exceeded the SSP income eligibility limits. As a result of the findings, OTDA determined the daily file from the Social Security Administration contained incorrect income eligibility information for an additional 3,000 SSP recipients. Officials planned to correct these 3,000 recipients’ records.
The New York Agricultural Districts Law allows reduced property tax bills for land in agricultural production by limiting the property tax assessment of the land to its prescribed per-acre Agricultural Assessment Value (AAV). Auditors identified an error in the Tax Department’s calculation in 2006 that caused subsequent years’ AAVs to be incorrect, including those certified and communicated to local assessors during the audit period. This resulted in about $10.4 million in excess agricultural exemptions granted to program property owners during the three-year period 2014 through 2016 for 10,416 properties in the eight counties analyzed. Because of the excess exemptions, an estimated $349,069 in real property taxes were not collected.
New York Racing Association (NYRA): Capital Program Revenue and Expenses (Follow-Up) (2017-F-26)
An initial audit issued in October 2015 found that NYRA lacked a formal long-term capital planning process for Video Lottery Terminal (VLT) revenues. The annual capital plans used by NYRA lacked supporting documentation for the resources and costs associated with the listed projects and NYRA did not have a formal project management system to effectively monitor capital project status. Auditors also found NYRA used VLT revenues for operating expenses, which was not in accordance with prescribed professional standards. In a follow-up, auditors found NYRA made some progress in addressing the issues identified.
New York Racing Association: Financial Condition and Selected Expenses (Follow-Up) (2017-F-27)
An initial audit report issued in June 2016, assessed NYRA’s financial condition. Auditors found that although NYRA’s overall financial condition was sound, its traditional racing-related operations continued to produce multi-million-dollar annual deficits. Also, NYRA had paid certain expenses that were not ordinary or necessary for racing operations, which contributed to NYRA’s racing-related deficits. In a follow-up, auditors found NYRA made some progress in addressing the issues identified.
State Education Department (SED)/Division of State Police (DSP): Compliance With the Enough is Enough Act (2017-S-38)
Auditors found SED has made progress in complying with some of its key responsibilities under the act, however, it has fallen behind meeting or completing others. SED’s implementation time frames resulted in delays in meeting certain requirements, including reporting critical incident data to the Governor and Legislature. SED may not meet the reporting requirement until late 2019 – two years later than the act requires. DSP has met its responsibilities under the act.
Office of Temporary and Disability Assistance (OTDA): New York State Supplemental Payments (SSP) Made to Deceased Individuals (2016-BSE7-01)
OTDA administers the New York SSP, which provides a supplemental benefit to Supplemental Security Income (SSI) recipients and other qualifying state residents. Auditors found OTDA processed 553 SSP payments totaling approximately $42,000 to 78 individuals who died from 1 to more than 16 years prior to their last SSP payment in the examination period. Of the 553 payments, 380 were transacted, meaning the payment was either electronically deposited into the recipient’s bank account or the recipient’s check was negotiated. The remaining 173 payments were either stopped, escheated or remain uncashed.
Office of Temporary and Disability Assistance: SSP Payments Made to State Employees (2016-BSE7-02)
OTDA processed 105 SSP payments totaling $6,870 to 14 state employees who were ineligible to receive benefits because the wages they earned exceeded the SSP income eligibility limits. As a result of the findings, OTDA determined the daily file from the Social Security Administration contained incorrect income eligibility information for an additional 3,000 SSP recipients. Officials planned to correct these 3,000 recipients’ records.
SUNY Downstate Medical Center failed to "get its money’s worth" from cost-cutting consultant
The State University of New York (SUNY) Downstate Medical Center paid a consultant $34 million for a plan to help the hospital out of financial trouble, but a report released today by State Comptroller Thomas P. DiNapoli questions whether $74 million in savings even happened.
A prior DiNapoli audit released in August 2016 found questionable travel and excessive lodging expenses for the contractor, Pitts Management Associates (PMA), which it charged to SUNY Downstate while working on this project.
“SUNY Downstate’s fiscal problems were severe and it needed help. But it failed to monitor PMA’s $34 million contracts and did not get what it paid for,” DiNapoli said. “When my office is precluded from reviewing a contract, poor oversight requirements can lead to empty promises by vendors. This is another example of why proper contract oversight is needed to protect public dollars.”
Legislation passed in 2013 authorized SUNY Downstate to obtain services related to its restructuring without following state procurement requirements, including executing contracts without prior approval from DiNapoli’s office. The contract failed to clearly define how PMA would measure savings or delineate its responsibilities, nor did it include “claw back” cost recovery provisions for nonperformance. As a result, DiNapoli’s auditors found that PMA used unsound calculations and questioned more than $74 million of the $85 million in purported savings reviewed.
The flawed methodologies and magnitude of the discrepancies led DiNapoli’s auditors to question the reliability of the remainder of PMA’s total claimed savings of $138 million. They also concluded that SUNY Downstate officials did not properly monitor and assess PMA’s performance under the contract.
DiNapoli recommended that SUNY Downstate management:
● Establish clear agreements and contracts with vendors using measurable deliverables.
● Include cost recovery provisions in future contracts.
● Establish controls to properly administer future contracts, including:
● Effectively monitoring contractor progress; and
● Safeguard against a contractor’s failure to meet contract requirements, including monetary retainage, until the contractor meets the terms and conditions.
SUNY generally agreed with the recommendations but noted that under PMA several improvements were realized. The audit report notes where savings were achieved through the PMA contract. The complete response is included in the audit.
For a copy of the report, go to:
SUNY generally agreed with the recommendations but noted that under PMA several improvements were realized. The audit report notes where savings were achieved through the PMA contract. The complete response is included in the audit.
For a copy of the report, go to: