Audits of public entities recently issued by New York State's Comptroller Thomas P. DiNapoli

Audits of public entities recently issued by New York State's Comptroller Thomas P. DiNapoli

The State Comptroller audits local governments to assist them in improving their financial management practices. [Click on text highlighted in bold to access the full report.] 

Town of Alexandria – Non-Payroll Cash Disbursements and Fuel Inventory (Jefferson County)
The town’s non-payroll cash disbursements were not always properly authorized, adequately supported or in compliance with statutory requirements. The former supervisor improperly paid 20 claims totaling $19,919 without the audit and approval of the board. Auditors also found internal controls over fuel inventories need to be improved. Records show from June 2011 through December 2011 nearly 4,500 gallons of fuel valued at about $14,600 were not accounted for.

Village of Bolivar – Financial Condition of Water and Sewer Funds (Allegany County)
The village board has not adequately monitored the financial condition of the water and sewer funds. The water and sewer funds do not presently have sufficient resources to repay interfund loans owed to the village general fund without affecting their operations. This lack of available funds resulted from village officials not monitoring and adjusting water and sewer rates to ensure resources were adequate to repay the loans.

Town of Coldspring – Town Clerk Operations (Cattaraugus County)
The town clerk did not issue press-numbered duplicate receipts for cash collected, accurately record all transactions, remit moneys due to the town supervisor and other entities in a timely manner, or deposit cash receipts intact or in a timely manner. Auditors found a shortage in the clerk’s account totaling $1,400 which is primarily due to money owed to the town supervisor, unrecorded checks, and unpaid liabilities.

City of Glens Falls – Financial Condition (Warren County)
The city council adopts realistic budgets, and along with the mayor and city controller, continually monitors the budgets throughout the year and will initiate and approve any necessary budget amendments.  Although the city is not considered to be in fiscal stress at this time, low levels of unexpended surplus funds in the general fund and declining balances in the water and sewer funds are concerning. City officials indicate they are carefully monitoring the funds.

Grahamsville Fire District – Internal Controls Over Financial Operations (Sullivan County)
The district board has not properly developed annual budgets. From 2009 through 2011, actual expenditures exceeded budget estimates each year by an average of 22 percent. In addition, the district has not formally established reserve funds and has not adopted formal policies on how they are to be funded and how they will be used.

Town of Kendall – Justice Court (Orleans County)
Auditors found significant control deficiencies with the justice court’s operations. Justices did not ensure that all court fines, fees, and surcharges were properly accounted for. Although monthly reports were submitted to the justice court fund in a timely manner, they were not always complete and accurate. Further, the justices did not ensure that cases were properly reported to the state Department of Motor Vehicles.

Mastic-Moriches-Shirley Community Library – Claims Processing (Suffolk County)
Library officials have established adequate controls over the claims processing function that allow claims to be audited in a timely manner and ensure the claims are properly supported. The account clerk and/or director reviews invoices for department head approvals before printing checks and a schedule of claims to present to the board, which then audits the claims before signing the checks. Finally, the claims auditor performs a post-audit of the claims paid.

Roosevelt Fire District – Financial Operations and Information Technology (Nassau County)
The district board needs to improve its oversight of financial operations. Auditors found the treasurer submits monthly financial reports to the board that contain incomplete information, and the district’s financial records have not been audited by an independent public accountant since the 2010 fiscal year. In addition, internal controls over information technology are not appropriately designed or operating effectively.

Schuyler County Sheriff’s Department – Payroll, Civil Fees and Bail (2013M-120)
The county entered into an improper contract for security services with Watkins Glen International (WGI), a private entity. Over the last two years, the county has paid 351 individuals $233,840 for providing law enforcement services to WGI in connection with events at the Watkins Glen racetrack.  In these cases, the county improperly pays these individuals as if they were independent contractors by check based on completed vouchers and issues them an IRS 1099 form at the end of the year.  As a result, no taxes are reported or withheld, and no information is reported to the state retirement systems.

Steuben County Soil and Water Conservation District – Internal Controls Over Cash Receipts and Disbursements (2013M-97)
The conservation district board has not adopted policies and procedures for cash receipts and disbursements to ensure that cash is properly safeguarded. Auditors found 116 receipts totaling $47,443 were not deposited on a timely basis, 14 disbursements totaling $23,943 never appeared on a warrant for board approval, and 151 disbursements totaling $532,322 cleared the bank prior to the board’s audit and approval for payment.

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Authority to designate a hearing officer to conduct a Civil Service Law §75 disciplinary hearing

Authority to designate a hearing officer to conduct a Civil Service Law §75 disciplinary hearing 

34 AD3d 814

An individual [Employee] was served with disciplinary charges pursuant to §75 of the Civil Service Law. He was dismissed from his employment after being found guilty of charges of misconduct and insubordination.

Employee sued, contending that the designation of the §75 hearing officer was not made by an officer or body having the power to remove him from his position as required by Civil Service Law §75(2). Consequently, he contended, the report of the hearing officer was a nullity and the determination based upon it was arbitrary. The Appellate Division agreed. It granted Employee's petition and annulled his dismissal.

The court pointed out that in the absence of a specific designation of the body or individual vested with the power to remove an individual from his or her position," the power to remove is a function of the power to appoint."

Employee argued that here the body with the power to remove him, i.e., the appointing authority, was the Board of Education and not the school superintendent. In this instance the hearing officer had been designated by the superintendent rather than the board as mandated by §75(2).

The Appellate Division concluded that on the basis of the record before it, “the designation of the hearing officer was not by an officer or body having the power to remove [Employee] as required by Civil Service Law §75(2).” Accordingly, the report of the hearing officer was a nullity and the determination based upon it arbitrary.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2006/2006_08989.htm
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Probationer has the burden of proving his or her termination resulted from his or her engaging in a protected union activity

Probationer has the burden of proving his or her termination resulted from his or her engaging in a protected union activity

34 AD3d 484

It is well settled that as a probationary employee, an individual could be terminated for any reason, as long as the termination was not made in bad faith, was not for a constitutionally impermissible reason, or was not in violation of statutory or decisional law.

The petitioner in this appeal was dismissed from his position with a New York City department before completing his probationary period. He challenged his termination, contending he was dismissed “in retaliation for his filing of a union grievance.” If true, this would constitute an impermissible reason for terminating an individual during his or her probationary period.

However, the individual has the burden of proving (a) that he or she was engaged in protected union activity, (b) that the appointing authority had knowledge of the activity, and (c) that he or she would not have been discharged from employment but for the activity.

The Supreme Court determined that the petitioner in this action established a prima facie case of improper motivation, thereby shifting “the burden of persuasion” to the appointing authority to establish that its actions were motivated by a legitimate business reason. Supreme Court ultimately found that the appointing authority failed to meet this burden.

The Appellate Division agreed with the tests applied by the Supreme Court in making its ruling. It affirmed the Supreme Court’s finding that the appointing authority had failed to meet its “burden of persuasion” and ruled that Supreme Court properly annulled the appointing authority's decision to terminate the petitioner.

In addition, the Appellate Division affirmed Supreme Court’s order directing the reinstatement of the petitioner to his former  position with the agency, with full back pay and benefits.

The decision is posted on the Internet at: 

http://www.nycourts.gov/reporter/3dseries/2006/2006_08135.htm

Appointing authority's reliance on the findings of the disciplinary hearing officer

Appointing authority's reliance on the findings of the disciplinary hearing officer

34 AD3d 1219

The petitioner challenged the decision of the School Board to terminate his employment with the school district, contending that the Board’s action was arbitrary and capricious because it did not set out the factual reasons for its action.

The President of the Board, however, had submitted an affidavit to the court indicating that the Board, after reviewing the findings and recommendations of the hearing officer, had adopted both the hearing officers's findings as to guilty and the penalty recommended by the hearing officer.

The Appellate Division said that since the petitioner failed to produce any evidence that the Board (1) failed to make an independent appraisal of the evidence and (2) failed to reach independent conclusion, it “declined to disturb the Board's determination, ” under the circumstances, the Board was entitled to rely on and adopt the findings of fact and the recommendation of the Hearing Officer who conducted petitioner’s hearing pursuant to §75 of the Civil Service Law.

The court then dismissed the petitioner’s appeal, rejecting his claim that that [1] the Hearing Officer's findings of fact and recommendations were not based on substantial evidence and [2] imposing the penalty of termination was shocking to one's sense of fairness.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2006/2006_08383.htm

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Termination of a police officer while on leave pursuant to General Municipal Law §207-c

Termination of a police officer while on leave pursuant to General Municipal Law §207-c

Olsen v Dormer, 13 Misc 3d 1236(A)

Steven B. Olsen was terminated from his employment as a Suffolk County Police Lieutenant pursuant to §71 of the Civil Service Law [Workers’ Compensation Leave] while receiving the full amount of his salary pursuant to General Municipal Law §207-c after suffering a "line of duty" injury..

General Municipal Law §207-c provides that a police officer who suffers a line of duty injury that precludes him from performing his duties as a police officer shall receive his full salary and medical care “until such time as the disability arising therefrom ceases.”

Olsen argued that he could not be terminated from his position with the police department in view of his §207-c status and that he has an indefinite right to return to work either on a full-duty or limited duty status when able to do so.

Supreme Court disagreed, holding that “Neither this record, GML §207-c , the [relevant Taylor Law] contract, or case law persuade the Court that [Olsen] maintained an indefinite right to return to work in limited duty capacity.” Further, said the court, the provisions in the collective bargaining agreement that allowed Olsen to elect a due process hearing or a medical evaluation after a §207-c dispute had arisen, comports with procedural due process as GML §207-c benefits “are a property [interest] that may not be terminated without procedural due process”

As to Olsen’s termination pursuant to Civil Service Law §71, the Supreme Court noted that Olsen was absent from work for a period of one year, five months and fourteen days because of the disability he incurred while performing his police duties.

Supreme Court cited the ruling in Stewart v County of Albany, 300 AD2d 984, Motion to appeal denied, 100 N.Y.2d 505, in support of its decision. 

Stewart, a correction officer serving with the Albany County Sheriff's Department, was terminated pursuant §71 of the Civil Service Law after being absent from work for more than one year. He was receiving his salary and medical benefits pursuant to GML §207-c benefits as the result of a work related injury at the time of his termination. After reviewing the legislative history of §71, the Stewart court found that it was "clearly within the Sheriff's authority to avail himself of the §71 termination procedures to remove a disabled correction officer, even one receiving GML §207-c benefits via the County payroll, in order to appoint a replacement".*

In a footnote in the decision, Footnote 2, the Appellate Division observed that “It is well settled that a civil service employee is not deprived of due process if the employee is terminated without a pre-termination hearing pursuant to §71 of the Civil Service Law (Allen v Howe, 84 NY2d 665, 621 NYS2d 287 [1994])." The statute gives the employee post termination due process. This includes the right to demand to return to work, and to contest any determination that he or she is not fit to return to work.

Dismissing Olsen’s petition, Supreme Court ruled that the Suffolk County Police Department and Commissioner Richard Dormer acted within their discretion in terminating Olsen pursuant to §71 of the Civil Service Law. Further said the court, Olsen has post termination rights available to him under §71,"the most important of which is the right to reinstatement provided application for such reinstatement is made within one year of the cessation of the disability"

Civil Service Law §71, which is "leave without pay," provides, in pertinent part, "Reinstatement after separation for disability,” provides in pertinent part as follows: Where an employee has been separated from the service by reason of a disability resulting from occupational injury or disease as defined in the workmen's compensation law, he or she shall be entitled to a leave of absence for at least one year.... Such employee may, within one year after termination of such disability, make application to the Civil Service Department or Municipal commission having jurisdiction over the position last held by such employee for a medical examination to be conducted by a medical officer selected for that purpose by such department or commission. If, upon such examination, such medical officer shall certify that such person is physically and mentally fit to perform the duties of his or her former position, he or she shall be reinstated to his or her former position."**

The relevant language of GML §207-c, which provides for the continuation of compensation while a law enforcement employee is incapacitated as the result of a work connected injury, appears to provide a statutory imperative that the individual return to active duty full-time or in “light duty status” once he or she is found medically qualified to do so. Indeed, once his or her disability abates sufficiently to permit this or, in the alternative, he or she is directed to return to perform a "light duty" assignment if found medically qualified to do so, the individual risks having his or her §207-c benefits discontinued by the appointing authority should he or she fail to do so.

§71, in contrast, provides that should the employee be terminated pursuant to this provision of the Civil Service Law and thereafter determined to be qualified to resume the duties of his or her former position and in the event there is no suitable vacancy then available to which the individual could be reinstated, the individual's name is to be placed on a preferred list and his or her name is to be continued on such list for four years unless earlier appointed to a suitable vacancy.

It would appear that the only means available to the appointing authority to lawfully "terminate" an individual's §207-c benefits in the event he or she is found not medically qualified for reinstatement to full or light duty, is, should the employee declines to do so, to [1] file an employer application on behalf of the employee for accidental disability retirement pursuant to GML §207-c.2, which decision by the Employees' Retirement System would control as otherwise provided by law or [2] to determine that the police officer is otherwise disqualified from receiving GML §207-c benefits.*** 

* In its Stewart decision, the Appellate Division states "Consistent with its statutory purpose, the Sheriff's resort to Civil Service Law §71 was presumably “to secure a steady, reliable, and adequate work force,” (Matter of Duncan v New York State Dev. Ctr., 63 NY2d 128, 135; see Matter of Allen v Howe, 84 NY2d 665, 672), i.e., he wanted to hire another correction officer to replace petitioner.” However neither Duncan nor the two individuals in Allen [Cathy Allen and Diane Spiegel] were employees eligible for GML §207-c benefits.

** Significantly, in Stewart, supra, the Appellate Division held that “Termination of employment under Civil Service Law §71 does not necessarily involve a termination of benefits being received pursuant to GML §207-c as such benefits ‘are a property interest that may not be terminated without procedural due process under the Fourteenth Amendment.’" 

*** For example, the police officer is ineligible for GML §207-c benefits if he or she "ceased to be an inhabitant within the geographical restrictions" set by law as the court explained in O'Connor v Town of Clarkstown, 221 AD2d 444.

The Olsen decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2006/2006_52143.htm

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General Municipal Law§§ 207-a and 207-c - Disability Leave for fire, police and other public sector personnel - a 1098 page e-book focusing on administering General Municipal Law Sections 207-a/207-c and providing benefits thereunder. For more information click on http://booklocker.com/books/3916.html