Audits of Municipalities and School Districts issued during the week ending November 13, 2020

On November 13, 2020, New York State Comptroller Thomas P. DiNapoli announced the following local government audits has been issued.

Click on the text highlighted in color to access the complete audit report

 

MUNICIPAL AUDITS

Town of Decatur – Town Clerk (Otsego County) Auditors determined the town clerk did not issue duplicate receipts for any collections during the audit period which totaled $1,630. The clerk also did not report or remit any fees received to the supervisor or New York State Agriculture and Markets. In addition, the board did not conduct or cause an annual audit of the clerk’s records and reports.

Town of Decatur – Disbursement Oversight and Accounting Records and Reports (Otsego County)The board did not provide adequate oversight of the disbursement process and the supervisor did not maintain complete, accurate and timely accounting records and reports. The board also did not approve all claims. The board did not require adequate supporting documentation for all claims or annually audit, the supervisor’s records and reports. The 2018 general ledger was significantly incomplete and the 2019 general ledger had several accounts misclassified. In addition, the annual financial reports and tax cap forms were not filed, as required. As a result, the board was unaware that the 2019 levy significantly exceeded the cap and did not pass the required local law to override the cap.

Town of East Hampton - Budget Review (Suffolk County) Based on the results of our review, auditors found that the revenue and expenditure projections in the tentative budget are reasonable. The town’s 2021 tentative budget includes a proposed tax levy of $60,177,065.

City of Lockport – Budget Review (Niagara County) Based on the results of auditors’ review, the revenue and expenditure projections in the proposed budget appear reasonable. Auditors cautioned that evolving circumstances caused by the pandemic may require adjustments to the budget throughout the year. The proposed budget includes state aid and sales tax estimated revenues of $2.1 million and $5.5 million, respectively, which may not be attainable.

Town of Patterson – Justice Court Operations (Putnam County) Although the justices accurately collected, recorded and deposited fines and fees, they did not disburse or report all fines and fees in a timely and accurate manner. The justices also did not adequately account for bail, which led to them retaining $14,793 in bail funds that could not be identified by payee. The court clerks did not return unclaimed exonerated bail totaling $16,287 to the known payees or remit them to the town. In addition, 55 of 100 tickets reviewed were not reported or incorrectly reported to the New York State Department of Motor Vehicles (DMV), or were not submitted to the DMV’s Scofflaw Program.

City of Troy – Budget Review (Rensselaer County) The significant revenue and expenditure projections in the proposed budget are reasonable. The proposed budgeted revenues for state aid funding and traffic and parking ticket fines may not be fully realized. City officials project the general fund having an unassigned fund balance of approximately $3 million at the end of 2020 or the same amount as the recorded unassigned fund balance at the end of 2019. However, the 2019 amount of unassigned fund balance has not been verified.

 

SCHOOL DISTRICT AUDITS

Mount Pleasant Cottage Union Free School District – Procurement (Westchester County) District officials did not use a competitive process to procure goods and services. For example, auditors found that district officials paid a vendor $238,465 without documentation and they justified this was a valid exception to competitive bidding. They also did not issue requests for proposals for six of 10 professional services providers that were paid $416,367. In addition, district officials did not obtain quotes for 20 purchases totaling $150,293 out of 30 reviewed.

Newfane Central School District – Financial Management (Niagara County) The board and district officials can better manage fund balance and reserves. Auditors determined surplus fund balance exceeded the limit each year by $8.1 million to $9 million, or 26 to 28 percentage points, which exceeded the 4 percent statutory limit. In addition, $13.4 million was improperly restricted in two reserves: $12.6 million in the employee benefit accrued liability reserve and $800,000 in the debt service reserve.

Southern Cayuga Central School District – Financial Condition (Cayuga County and Tomkins County) The board underestimated revenues by an average of $141,038 and overestimated appropriations by an average of $1.3 million over the three completed years. As a result, the district generated large operating surpluses and did not use about $1.1 million in appropriated fund balance. As of June 30, 2019, recalculated surplus fund balance totaled almost $1.7 million and was 10.7 percent of 2018-19 expenditures. In addition, the board and district officials did not develop adequate multiyear financial and capital plans.

 

A decision denying an employee's application for disability retirement benefits that is supported by credible medical evidence is not arbitrary and capricious

The petitioner [Plaintiff] in this CPLR Article 78 proceeding applied for disability retirement benefits pursuant to §507-c of the Retirement and Social Security Law contending that he was injured while working as a correction officer with the New York City Department of Correction.

The Board of Trustees [Trustees] of the New York City Employees' Retirement System [NYCERS] denied Plaintiff's application for disability retirement benefits in consideration of the recommendation of NYCERS' Medical Board [Board]. Plaintiff challenged the Trustees determination but Supreme Court rejected Plaintiff's Article 78 petition and dismissed the proceeding. Plaintiff appealed the Supreme Court's ruling.

The Appellate Division affirmed the Supreme Court's decision, with costs.

The Appellate Division explained that the Supreme Court denied the petition and dismissed the proceeding based on its finding that the Trustees had adopted the recommendation of the Board, which recommendation was supported by credible medical evidence and thus was not arbitrary and capricious.

Citing Matter of Drummond v New York City Employees' Retirement Sys., 98 AD3d 1116, the court noted that the Board's determination "is conclusive if it is supported by some credible evidence and is not arbitrary or capricious." Here, said the Appellate Division, "the record demonstrates that the [Board] performed physical and psychological examinations of the [Plaintiff] and considered his medical evidence."

Although the medical conclusions of some of the Plaintiff's treating physicians differed from those of the Board, "the resolution of such conflicts is the sole province of the Medical Board." As the determination of the Board was supported by credible evidence, the Appellate Division opined that the Trustees' adoption of the Board's recommendation and denying the Plaintiff's application for disability retirement benefits was not irrational, arbitrary, or capricious.

Accordingly, the Appellate Division said it agreed with the Supreme Court's decision  rejecting Plaintiff''s Article 78 petition and dismissing Plaintiff's appeal.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06272.htm

 

A decision denying an employee's application for disability retirement benefits that is supported by credible medical evidence is not arbitrary and capricious

The petitioner [Plaintiff] in this CPLR Article 78 proceeding applied for disability retirement benefits pursuant to §507-c of the Retirement and Social Security Law contending that he was injured while working as a correction officer with the New York City Department of Correction.

The Board of Trustees [Trustees] of the New York City Employees' Retirement System [NYCERS] denied Plaintiff's application for disability retirement benefits in consideration of the recommendation of NYCERS' Medical Board [Board]. Plaintiff challenged the Trustees determination but Supreme Court rejected Plaintiff's Article 78 petition and dismissed the proceeding. Plaintiff appealed the Supreme Court's ruling.

The Appellate Division affirmed the Supreme Court's decision, with costs.

The Appellate Division explained that the Supreme Court denied the petition and dismissed the proceeding based on its finding that the Trustees had adopted the recommendation of the Board, which recommendation was supported by credible medical evidence and thus was not arbitrary and capricious.

Citing Matter of Drummond v New York City Employees' Retirement Sys., 98 AD3d 1116, the court noted that the Board's determination "is conclusive if it is supported by some credible evidence and is not arbitrary or capricious." Here, said the Appellate Division, "the record demonstrates that the [Board] performed physical and psychological examinations of the [Plaintiff] and considered his medical evidence."

Although the medical conclusions of some of the Plaintiff's treating physicians differed from those of the Board, "the resolution of such conflicts is the sole province of the Medical Board." As the determination of the Board was supported by credible evidence, the Appellate Division opined that the Trustees' adoption of the Board's recommendation and denying the Plaintiff's application for disability retirement benefits was not irrational, arbitrary, or capricious.

Accordingly, the Appellate Division said it agreed with the Supreme Court's decision  rejecting Plaintiff''s Article 78 petition and dismissing Plaintiff's appeal.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06272.htm

 

Discrimination complaint dismissed by court in the absence of facts inferring that the employee's disability was a consideration in terminating her employment

In this CPLR Article 78* action the petitioner [Plaintiff] alleged that the City of New York[Defendants] had discriminated against her on the basis of her disability when it terminated her employment shortly after she told her supervisor that she was being treated for depression.

Plaintiff's complaint, however, also indicated that before she revealed her disability to her supervisor Plaintiff had been investigated for violating certain of the Defendants' policies and procedures and that she was aware of this investigation.

Supreme Court granted the Defendants' motion to dismiss the complaint and Plaintiff appealed. The Appellate Division unanimously affirmed the Supreme Court's ruling, explaining that:

1. "The complaint fails to state a cause of action under the State and City Human Rights Laws because it alleges no facts from which it can be inferred that [Plaintiff's] disability was a factor in the termination of her employment";

2. "The complaint does not allege that anyone other than [Plaintiff's] immediate supervisor was aware of her disability or that the supervisor was consulted about the termination"; and

3. To the extent Plaintiff relies on the "temporal proximity between her revelation to her supervisor of her disability and her termination from employment," her complaint did not recite any allegations suggesting a causal connection between the two events.

* N.B. §297.9 of the Executive Law, in pertinent part, currently provides for an election of remedies whereby "Any person claiming to be aggrieved by an unlawful discriminatory practice shall have a cause of action in any court of appropriate jurisdiction unless such person had filed a complaint ... with any local commission on human rights, or with the superintendent ... or where the division has dismissed such complaint on the grounds of administrative convenience, on the grounds of untimeliness, or on the grounds that the election of remedies is annulled" or "At any time prior to a hearing before a hearing examiner...." An amended Executive Law §297.9 will take effect January 5, 2021 and provides as follows:

9. Any person claiming to be aggrieved by an unlawful discriminatory practice shall have a cause of action in any court of appropriate jurisdiction for damages, including, in cases of employment discrimination related to private employers and housing discrimination only, punitive damages, and such other remedies as may be appropriate, including any civil fines and penalties provided in subdivision four of this section, unless such person had filed a complaint hereunder or with any local commission on human rights, or with the superintendent pursuant to the provisions of section two hundred ninety-six-a of this chapter, provided that, where the division has dismissed such complaint on the grounds of administrative convenience, on the grounds of untimeliness, or on the grounds that the election of remedies is annulled, such person shall maintain all rights to bring suit as if no complaint had been filed with the division. At any time prior to a hearing before a hearing examiner, a person who has a complaint pending at the division may request that the division dismiss the complaint and annul his or her election of remedies so that the human rights law claim may be pursued in court, and the division may, upon such request, dismiss the complaint on the grounds that such person's election of an administrative remedy is annulled. Notwithstanding subdivision (a) of section two hundred four of the civil practice law and rules, if a complaint is so annulled by the division, upon the request of the party bringing such complaint before the division, such party's rights to bring such cause of action before a court of appropriate jurisdiction shall be limited by the statute of limitations in effect in such court at the time the complaint was initially filed with the division. Any party to a housing discrimination complaint shall have the right within twenty days following a determination of probable cause pursuant to subdivision two of this section to elect to have an action commenced in a civil court, and an attorney representing the division of human rights will be appointed to present the complaint in court, or, with the consent of the division, the case may be presented by complainant's attorney. A complaint filed by the equal employment opportunity commission to comply with the requirements of 42 USC 2000e-5(c) and 42 USC 12117(a) and 29 USC 633(b) shall not constitute the filing of a complaint within the meaning of this subdivision. No person who has initiated any action in a court of competent jurisdiction or who has an action pending before any administrative agency under any other law of the state based upon an act which would be an unlawful discriminatory practice under this article, may file a complaint with respect to the same grievance under this section or under section two hundred ninety-six-a of this article. In cases of housing discrimination only, a person whose complaint has been dismissed by the division after investigation for lack of jurisdiction or lack of probable cause may file the same cause of action in a court of appropriate jurisdiction pursuant to this section, unless judicial review of such dismissal has been sought pursuant to section two hundred ninety-eight of this article.

The decision of the Appellate Division is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06383.htm

 

Requesting reconsideration of a final administrative decision does not serve to toll or extend the running of the controlling statute of limitations

The Petitioner [Plaintiff] in this CPLR Article 78 sought judicial review of the determination of the Fire District [District] denying the Plaintiff retiree health insurance benefits. The District opposed the petition, asserting, among other things, the affirmative defense of the statute of limitations.* The Supreme Court denied the petition as time-barred and dismissed the proceeding. Plaintiff appealed the court's ruling.

The Appellate Division affirmed the Supreme Court's ruling, explaining:

1. A proceeding pursuant to CPLR Article 78 must be commenced within four months after the administrative determination sought to be reviewed becomes final and binding upon the petitioner.

2. An administrative determination becomes final and binding when "the agency... reache[s] a definitive position on the issue that inflicts actual, concrete injury and ...  [the]  administrative action [becomes] available to the complaining party."**

3. A request for reconsideration of an administrative determination typically does not extend or toll the running of the statute of limitations or render the otherwise final determination non-final unless the agency's rules mandate reconsideration.***

Here, opined the Appellate Division, the District's determination denying the Plaintiff retiree health insurance became final and binding when Plaintiff's counsel received notice from the District's counsel via email.

Contrary to the Plaintiff's argument, the court ruled that the statute of limitations was not extended or tolled by the subsequent email from the District's counsel to the Plaintiff's counsel as the plain language of the email shows that the District's counsel's response was to Plaintiff's counsel's "request for reconsideration of a prior determination" and as such it did not serve to extend or toll the statute of limitations.

Accordingly, the Appellate Division agreed with the Supreme Court's decision to deny Plaintiff's petition as time-barred and dismiss Plaintiff's petition and affirmed the Supreme Court's judgment, with costs.

* A party seeking to assert the statute of limitations as a defense has the burden of establishing that the petitioner was notified of the determination more than four months before the Article 78 proceeding was commenced.

**See Matter of Zherka v Ramos, 173 AD3d 746.

***See Matter of Lubin v Board of Educ. of City of N.Y., 60 NY2d 974.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06268.htm