Reports issued during the week ending May 14, 2021 by the New York State Comptroller

New York State Comptroller Thomas P. DiNapoli announced the reports listed below during the week ending May 14, 2021. 

 

Reviews of adopted 2021 budgets

Auditors conducted reviews of 20 adopted budgets of various counties, cities, towns and villages across the state to assess whether local officials adequately considered the impact of the pandemic on their financial operations while developing their 2021 fiscal year budgets. Below are the findings of some of the communities reviewed:

Click on the text highlighted in color to access these reviews.

Adequacy of 2021 Budgets - Town of Bolton (Warren County) Auditors found that officials for the Town of Bolton adequately assessed the impact of the pandemic on financial operations while developing estimates for significant revenues and expenditures in the 2021 adopted budget. Due to uncertainties in available state funding for highway improvements that were planned to be made in 2020, officials delayed highway improvements from 2020 to 2021. The delays carried over their 2020 revenue estimate for state funding to 2021.

Adequacy of 2021 Budgets - Town of Elma (Erie County) Auditors found that officials for the Town of Elma adequately assessed the impact of the pandemic on financial operations while developing estimates for significant revenues and expenditures in the 2021 adopted budget.

Adequacy of 2021 Budgets - Essex County Auditors found that Essex County officials adequately assessed the impact of the pandemic on financial operations while developing estimates for significant revenues and expenditures in the 2021 adopted budget.

Adequacy of 2021 Budgets - City of Jamestown (Chautauqua County) Auditors found that officials for the City of Jamestown adequately assessed the impact of the pandemic on financial operations while developing estimates for significant revenues and expenditures in the 2021 adopted budget.

Adequacy of 2021 Budgets - Town of Niskayuna (Schenectady County) Auditors found that officials for the Town of Niskayuna adequately assessed the impact of the pandemic on financial operations while developing estimates for significant revenues and expenditures in the 2021 adopted budget. However, officials balanced the 2021 adopted budget by including negative appropriations totaling $663,254. Those funds were identified as “2021 budget challenge” across departments in the general fund, highway fund, water district and two sewer districts. When adopting the budget, officials did not identify the specific appropriations in each department from which these budgeted cost savings would be realized nor did they develop a cost savings plan. This is not an appropriate budgeting method. As a result, the board adopted an out of balance budget.

Other audits released:

City of Amsterdam - Budget Review (Montgomery County) Auditors found that certain significant revenue and expenditure projections in the 2021-22 proposed budget are not reasonable and identified other matters that require city officials’ attention. The proposed general fund budget includes estimated revenues of $975,000 for federal aid anticipated to be received by the city through the Federal American Rescue Plan Act of 2021. The timing of the receipt of funds from the Act is uncertain at the time. Once received, the funds will come with restrictions on what they can be used for. The proposed budgets for the general and recreation funds are not structurally balanced because they include subsidies from other funds to finance their operations.

City of Long Beach – Budget Review (Nassau County) The city's financial condition remains in significant fiscal stress. The proposed general fund budget of $93.6 million is structurally imbalanced because the city continues to issue debt to finance recurring operating expenditures. The continued reliance on proceeds of long-term debt to finance recurring operating expenditures will further diminish the city's ability to finance needed services in future budgets. The city's proposed budget includes a tax levy of $50.5 million, which is $3 million above the legal limit, unless the city council overrides the tax levy limit. The proposed budget also includes a 4 percent water rate increase. However, at the time of the review, the city council had not authorized the rate increase. Based on the city's historical overtime cost trends, the city's overtime appropriation appears insufficient. City officials did not include cash flow projections in the proposed budget. Although not required, cash flow projections would provide officials with another gauge of the effectiveness of the proposed budget. City officials developed a "budget timeline," but they never confirmed an actual budget adoption date.

Town of Springfield – Accounting Records and Reports (Otsego County) The current supervisor did not maintain complete, accurate and timely accounting records and reports. As a result, the board was not provided with the necessary financial reports and information to properly oversee town finances. During the audit period, the current supervisor did not prepare bank reconciliations, record receipts in the financial accounting software, or provide the board with detailed monthly budget-to-actual reports. In addition, the annual financial reports required by the State Comptroller’s Office were not filed. The board did not annually audit or provide for an audit of the supervisor’s records and reports, as required.

Town of Springfield – Credit Card Purchases (Otsego County) The town board did not ensure credit card purchases were adequately supported, for legitimate purposes or approved before payment. Credit card statements were mailed to the prior supervisor and not provided to the board. They were also not always reconciled with supporting documentation before approval. The board approved payment of 116 credit card purchases totaling $18,014 without adequate supporting documentation. Auditors were unable to determine the appropriateness of an online shopping membership totaling $420 and they were unable to locate a ladder purchased for $585. Credit card reward points worth at least $1,250 were redeemed during the audit period. Auditors were unable to determine whether these points were redeemed to benefit the town.

 

Identity Theft complaints in New York State

Another Report issued by the Comptroller on May 14, 2021 noted that Identity Theft complaints in New York State in 2020 was 85% greater than in 2019.

Identity thefts in New York surged during the pandemic with more than 67,000 complaints filed statewide in 2020, which was 85 percent more than the previous year and more than four times the annual total from a decade earlier, according to a report released by the Comptroller.

The New York City metropolitan area had the highest rate of identity theft reports to the Federal Trade Commission (FTC) per capita at 403 reports per 100,000 people, followed by Poughkeepsie-Newburgh-Middletown (315) and Rochester (303) metropolitan areas.

The COVID-19 era has been marked by new varieties of financial fraud, including new identity theft scams. Although the full impact of the pandemic on the problem is not yet known, the Comptroller said that "New Yorkers should be aware of potential scams and guard against them."

The FTC has compiled identity theft complaints related to COVID-19 for 2020 through mid-March 2021, reporting 3,617 in New York. Of the state’s identity theft reports, about two-thirds (2,375) were related to information misused to try to get a government document or benefits such as economic relief checks or unemployment insurance.

According to the FTC, imposters are filing claims for unemployment benefits using the names and personal information of people who have not filed claims. People learn about the fraud when they get a notice from the state unemployment benefits office or their employer about their supposed application for benefits. As of late April 2021, the state Department of Labor (DOL) said it had identified over 1.1 million fraudulent unemployment benefit claims during the COVID-19 pandemic, preventing more than $12.3 billion in stolen benefits.

Comptroller DiNapoli’s office began an audit of the DOL in February. His office first conducted an assessment of the risk of potential identity theft fraud since the beginning of the pandemic, which included looking at complaints, large increases in payments, new programs and criteria, and changes to the internet technology. This assessment found numerous red flags that led DiNapoli’s office to launch a full audit.

Identity thieves have also attempted to leverage news of government COVID-related stimulus payments by posing as someone from an official organization and asking for personal or financial information. They have also tried to exploit pandemic fears by asking victims to pay out of pocket to get a COVID-19 vaccine or to put their name on a vaccine waiting list and, in the process, take their Social Security, bank account or credit card information. 

Private businesses that collect and maintain personal information must redouble their efforts to safeguard such data, DiNapoli said. He called on social media companies to promote best practices and proactively educate users about ways to keep private information confidential.

The Comptroller recommends the following actions, among others, to help prevent becoming a victim of identity theft:

1. Carry only the credit and bank cards you need;

2. Use two-factor authentication for online security where possible;

3. Use a password manager or strong passwords, including a mixture of capital letters, numbers, and symbols, and change passwords frequently;

4. Check bank or credit statements regularly; and

5. When online shopping, look for indications that the site is secure, such as a secure URL that begins with “https” (rather than “http”) and a lock icon near your browser’s location field.

Click on The Increasing Threat of Identity Theft to access the Comptroller's report posted on the Internet.

 

Giving effect to the plain meaning of the relevant statutory language is the clearest indicator of legislative intent

A County correction officer [Petitioner] assigned to the core central desk at the county jail, applied for performance of duty disability retirement benefits pursuant to Retirement and Social Security Law §607-c. Petitioner claimed that he was permanently disabled as a result of work-related injuries, which he asserted he had sustained when called to assist another correction officer who had arrested and handcuffed a suspect for trespassing on county property adjacent to the jail.

The New York State and Local Employees' Retirement System [NYSERS] denied Petitioner's application on the ground that, among other things, Petitioner's injuries did not result from the acts of an inmate or person confined in an institution under county jurisdiction within the meaning of §607-c(a) of the Retirement and Social Security Law [RSSL]. 

Petitioner challenged NYSERS' determination. The Hearing Officer, however, found that Petitioner had not established that his injuries were the result of "an act of an inmate or person confined in a county facility," recommended that NYSERS' determination be sustained. The State Comptroller accepted the findings of fact and conclusions of law of the Hearing Officer and denied the Petitioner's application for performance of duty disability retirement. Petitioner subsequently initiated a CPLR Article 78 proceeding challenging the Comptroller's decision.

Citing a number of earlier court rulings including Matter of Martin v New York State Comptroller, 161 AD3d 1418, the Appellate Division affirmed the Comptroller's decision, explaining that to qualify for a RSSL §607-c performance of duty disability retirement the applicant bears the burden of establishing that his alleged incapacity was "the natural and proximate result of any act of any inmate or any person confined in an institution under [county] jurisdiction" [emphases in the court's decision].

Noting that a review of an administrative determination denying performance of duty disability retirement benefits typically is limited to whether substantial evidence exists in the record to support such determination, the Appellate Division said that where, as here, the dispositive issue is one of statutory interpretation, courts will "engage in de novo review of the statutory interpretation" and "need not accord any deference to the agency's determination." Further, said the Appellate Division, "... the clearest indicator of legislative intent is the statutory text must always be the [statutory] language itself, giving effect to the plain meaning thereof", citing Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577.

Finding that neither the term "inmate" nor the phrase "person confined in an institution" are defined for the purposes of RSSL §607-c, the Appellate Division opined that considering the plain meaning of the statutory language and its commonly understood usage, as well as a review of the definitions given to the term "inmate" in relevant Correction Law and Penal Law provisions, in this instance the individual alleged to have caused Petitioner's injuries here does not qualify as an "inmate" or a "person confined in an institution" within the meaning of RSSL §607-c.

The Appellate Division, conceding that under the circumstances granting Petitioner §607-c "would further the legislative purpose of awarding benefits to correction officers injured in the discharge of their duties ... the restrictive language of Retirement and Social Security Law §607-c precludes such award here, as [Petitioner's] injuries were not caused by the acts of an inmate or person confined in an institution" and confirmed the Comptroller's denial of Petitioner's application for performance of duty disability retirement benefits.

Click HERE to access the Appellate Division's decision.

 

Court finds dismissal of a teacher during her probationary period supported by documentary evidence, performance evaluations and the existence of attendance issues

Supreme Court denied the CPLR Article 78 petition filed by a New York City probationary teacher [Plaintiff] seeking a court order annulling a determination of the New York City Board of Education and others [Respondents] that resulted in the termination Plaintiff's employment as a teacher.

Plaintiff appealed the Supreme Court's ruling. The Appellate Division unanimously affirmed the lower court's decision.

Citing Matter of Che Lin Tsao v Kelly, 28 AD3d 320 and other decisions, the Appellate Division held that Supreme Court "properly concluded that [Plaintiff] failed to meet her burden of demonstrating, by competent proof, that a substantial issue of bad faith existed warranting a hearing."

The Appellate Division noted that "documentary evidence, performance evaluations and Plaintiff's attendance issues" supported the lower court's determination that the Respondents' discontinuance of Plaintiff's employment during her probationary period was not made in bad faith

Further, said the Appellate Division, Supreme Court "properly determined" that to the extent the Plaintiff's Article 78 petition sought to challenge Respondents' denial of Plaintiff's request to withdraw her prior resignation, such challenge was untimely. Accordingly, the Appellate Division did not consider Plaintiff's claim that the New York City Board of Education Chancellor's Regulation C-205, which addresses the "general requirements for licensure and provisions relative to the termination and restoration of licenses," was improperly applied in her case.

Regulation C-205.28 provides, in pertinent part, that "a pedagogical employee who has resigned may, at the discretion of the Executive Director of the Division of Human Resources, be permitted to withdraw such resignation for the purpose of reinstatement to service, regardless of whether the person was tenured or not on the date of his or her resignation."

Click HEREto access the Appellate Division's decision.

 

Adopting disciplinary procedures applicable to a town's police officers pursuant to §155 of the Town Law

An employee organization [Union] brought a CPLR Article 78 proceeding seeking dismissal of disciplinary charges filed against a police officer [Officer] in the collective bargaining unit represented by the Union by the appointing authority [Town] pursuant to §155 of the Town Law and "the disciplinary procedures outlined in the police manual."

The Union contended that such disciplinary charges must be brought pursuant to §75 of the Civil Service Law and the collective bargaining agreement [CBA] between it and the Town. Unionalso sought a court order compelling the Town to reinstate Officer, who had been suspended without pay pending a disciplinary hearing to the payroll. Supreme Court granted the Article 78 petition and the Town  appealed.

The Appellate Division vacated that part of the Supreme Court's judgment prohibiting the Town from conducting disciplinary proceedings pursuant to Town Law §155 and that part of the court's order directing the Town "to abide by Civil Service Law §75 and the collective bargaining agreement regarding disciplinary issues, and by reinstating the amended charges against [Officer]."

The Appellate Division indicated that Town Law §155 states that "[t]he town board shall have the power and authority to adopt and make rules and regulations for the examination, hearing, investigation and determination of charges" against members of the town police department. Further, said the court, "although the police manual does not specifically reference Town Law §155, the police manual contains language that mirrors that statute.

Citing Matter of Town of Wallkill v Civil Serv. Empls. Assn., Inc. [Local 1000, AFSCME, AFL-CIO, Town of Wallkill Police Dept. Unit, Orange County Local 836], 84 AD3d 968, affd. 19 NY3d 1066, the Appellate Division concluded that the police manual "invokes the Town Law" and, contrary to [Supreme Court's] determination, the lack of any specific reference to §155 in the police manual does not mean that the police manual was not adopted pursuant to that section of the Town Law, and does not preclude the Town from using the procedures set forth in the police manual.

The Appellate Division also held that Town Law §155 does not specify the methods to be used by a town board when adopting rules and regulations regarding police discipline, and thus the statute does not require that police disciplinary procedures be adopted by passing a local law rather than a resolution.

Accordingly, the Appellate Division held that "where, as here, a town board has adopted disciplinary rules pursuant to Town Law §155, those rules are controlling and Civil Service Law §75 and any collective bargaining agreement are inapplicable." Thus, said the court, the Town had the authority to initiate disciplinary proceedings established pursuant to Town Law §155 against the Officer.

The court, however, sustained Supreme Court's reinstating Officer's salary and benefits, noting that the police manual states that, "[p]ending the hearing and determination of charges of incompetency or misconduct, an officer or employee against whom such charges have been preferred may be suspended without pay for a period not exceeding thirty (30) days."

Click HEREto access the text of the Appellate Division's decision.

 

Free webinar on Reporting Election Workers Earnings

The Tax Exempt and Government Entities Division invites interested readers toregister to watch the free webinar on Reporting Election Workers Earnings on June 24, 2021 at 1:00 p.m. (ET).

This webinar is designed to explain which workers should be treated as election workers and when taxes should be withheld from wages. It will also cover what should be included in earnings.

Questions emailed to: TEGE.outreach@IRS.gov with the subject line “Pre-submitted questions for Election Worker webinar (June 24)” will be answered as time permits. The deadline for submitting questions is June 10, 2021. 

For more information, see Webinars for Tax Exempt & Government Entities.