Audits and reports issued during the week ending August 28, 2021 by the New York State Comptroller

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending August 28, 2021

Click on the text highlighted in colorto access the complete audit report.

State Departments and Agencies

Department of Agriculture and Markets: Oversight of Industrial Hemp (Follow-Up) (2021-F-9)

A report covering the period April 1, 2016, through May 31, 2019, found that while the department’s industrial hemp program had expanded opportunities for hemp production in the state, it did not always follow established practices when reviewing applications, conducting inspections and sampling plants. In a follow-up, auditors found department officials made progress in addressing the problems identified in the initial audit. Of the initial report’s three audit recommendations, one has been fully implemented and two have been partially implemented.

 

Office of Mental Health (OMH): Oversight of Telemental Health Services (TMH) (2020-S-16)

As of December 23, 2020, there were 448 OMH-licensed, -designated, and/or -funded mental health care providers operating 1,677 programs eligible to offer TMH; however, 307 of those 448 providers operating 1,050 programs were not approved to use TMH beyond the declared COVID-19 disaster emergency. As a result, some patients may no longer be able to access TMH services once the disaster emergency period ends.

 

Metropolitan Transportation Authority - Metro-North Railroad: Response Planning for Unexpected Events (2019-S-55)

Overall, Metro-North has procedures to address how its employees respond to most issues that cause unexpected or unplanned events. However, the procedures were not always followed. In 38 of the 80 events sampled by auditors, there was not always documented evidence that the procedures were followed completely. In addition, 26 of the 80 events required the railroad’s Emergency Management Task Force (EMTF) to be placed on standby or activated; however, the EMTF was notified of only one event. Metro-North’s procedures require customers to be notified of unexpected or unplanned events within a set time frame, but during the sampled events, customers either were not notified or were informed late.

 

New York City Department of Buildings (DOB): Oversight of Sidewalk Sheds (2019-N-9)

DOB is responsible for regulating the safe and lawful use of more than 1 million buildings and construction sites in the city including sidewalk sheds, temporary structures installed to protect people and property on city sidewalks during construction and demolition operations. Auditors found DOB needs to better ensure that owners and other responsible parties comply with relevant codes, laws, and rules pertaining to the timely permitting, installation, maintenance, and removal of sheds. During the period Dec. 20, 2019, through March 10, 2020, auditors visited a sample of 74 sites located throughout the five boroughs, finding many with hazardous conditions and without posted permits.

 

New York City Department of Education (DOE): Career and Technical Education (CTE) (2019-N-4)

DOE could not show how existing CTE programs aligned with the labor market and student demand. Information provided did not reflect how DOE is overseeing or assisting high schools to align CTE programs with high-growth, high-demand industries. For three high-growth industry programs reviewed, auditors found school requirements and program admission priorities (based on residence in a particular borough or attendance at a fair or information session) made it difficult or impossible for some students to qualify or attend.

 

New York City Department of Housing Preservation and Development: Mitchell-Lama Vacancies (2020-N-2)

The Mitchell-Lama Housing Program was created in 1955 to provide affordable rental and cooperative (co-op) housing to middle-income families. Auditors found that despite the scarcity of affordable housing, vacant apartments were generally not filled within the 120-day time frame, with 1,286 apartments taking, on average, 222 days to fill, including 214 that remained vacant for a year or longer. Protracted delays in filling apartments cost the developments about $9.1 million in unrealized income as of December 2019. At one development – Lindsay Park in Brooklyn – 15 apartments had been vacant for as long as 30 years.

 

Office of Parks, Recreation and Historic Preservation: Oversight of Construction Management Contracts (2020-S-43)

Parks has generally established controls to ensure construction management term contractors are meeting contract terms and requirements. Auditors identified only limited instances where the office could not provide documentation showing requirements were met and minor overpayments were made, for which Parks has obtained a refund from the contractor. Auditors also found Parks paid over $229,000 in fees under the contract with the Dormitory Authority of the State of New York (DASNY) that could have been avoided if it had used a term contract rather than the DASNY contract.

 

Department of State: Implementation of the Security Guard Act (2019-S-42)

The department generally complies with the act’s requirements, having processes in place to ensure only individuals meeting requirements are issued registration cards, and maintaining an accurate registry of security guard applicants. However, the department lacks sufficient internal controls to monitor training requirements for security guards classified as police and peace officers – a classification that includes individuals who are retired. Auditors identified instances where the department inappropriately renewed security guard registrations for security guards with these classifications without evidence that training was completed.

 

State University of New York Upstate Medical University (Upstate): Human Resource (HR) Practices (Follow-Up) (2021-F-7)

An audit issued in September 2019 found insufficient HR monitoring and oversight, as well as inadequate or poorly enforced policies and procedures, contributed to questionable and weak practices that rendered Upstate vulnerable to misuse of funds and safety and security risks. In a follow-up, auditors found Upstate officials made significant progress in addressing the problems identified in the initial audit, having implemented all four recommendations.

 

State University of New York Upstate Medical Center: User Access Controls Over Selected System Applications (Follow-Up) (2021-F-8)

An audit issued in June 2020 determined that Upstate’s access controls were not sufficient to prevent unnecessary or inappropriate access to various applications. Upstate employees maintained unnecessary and inappropriate access to applications after a change in their status, such as employment separation or death, and some of these user accounts were logged into during the period of inappropriate active access. In a follow-up, auditors found Upstate made significant progress in addressing the problems identified in the initial audit. Both of the initial report’s recommendations were implemented.

 

Local Governments

Town of Centerville – Town Clerk/Tax Collector (Allegany County)

Although the clerk recorded, deposited, remitted and reported all tax collections, she did not always record dates of receipts or deposit or remit payments timely. Auditors also found that the clerk did not properly record dates of collections for clerk fees on 21 of 29 daily collections totaling $438 (64%). The clerk did not deposit all tax collections within 24 hours as required. In addition, the clerk did not remit real property tax collections to the town supervisor or the county treasurer in a timely manner.

 

Town of Owasco – Financial Management and Procurement (Cayuga County)

The board did not effectively manage fund balance and reserve levels, establish multiyear plans or ensure the proper procurement of professional services and playground equipment. The board also did not adopt an adequate reserve policy, which resulted in the unrestricted general fund balance to increase to an excessive level. The board did not always seek competition for professional services or have adequate written agreements for the services provided. In addition, the board did not properly procure playground equipment totaling $397,000.

 

Town of Willing – Town Supervisor’s Financial Duties (Allegany County)

The town’s bookkeeper maintained adequate records and the accounting records auditors reviewed were accurate and complete. However, the supervisor did not prepare and submit appropriate reports or provide sufficient oversight of the bookkeeper. Annual update documents were not filed with the Office of the State Comptroller, as required. Bank reconciliations were not always performed by the bookkeeper and were not reviewed by the supervisor. In addition, monthly financial reports were not always prepared for and submitted to the town board. The reports did not include a detail of money received and disbursed as required.

 

School Districts

 

Cornwall Central School District – Information Technology (Orange County)

District officials did not establish adequate internal controls to safeguard the district’s user accounts. Specifically, network user accounts were not adequately managed. Officials did not monitor compliance with the district’s acceptable use policy. The board also did not adopt adequate information technology (IT) policies or a disaster recovery plan. Sensitive IT control weaknesses, including issues related to software updates, were communicated confidentially to officials.

 

Edwards-Knox Central School District – Medicaid Reimbursements (St. Lawrence County)

The district did not claim any Medicaid reimbursements to which it was entitled. District officials did not claim Medicaid reimbursements for 12 students that auditors identified were likely Medicaid-eligible who received speech, occupational or physical therapy services during 2019-20. Had these services been claimed, the district could have realized revenue totaling about $25,000. District officials also believed it was not cost-effective to file Medicaid claims but could not support their assertions because the district did not prepare a recent cost benefit analysis to support it is not cost-effective. In addition, district officials did not establish Medicaid claim policies or procedures or ensure that sufficient documentation was maintained for the eligible services provided.

 

Millbrook Central School District – Information Technology – User Accounts (Dutchess County)

Officials did not establish adequate controls over the district’s user accounts to prevent unauthorized use, access and loss. Officials also did not periodically review and disable unneeded network user accounts.

The audit found 46 unenrolled students had active network user accounts and 13 former employees who left between 2013 and 2020 also had active network user accounts. In addition, auditors found nine generic accounts last used between 2015 and 2018. Officials also did not develop a breach notification policy, as required by New York State Technology Law. Sensitive information technology (IT) control weaknesses were communicated confidentially to officials.

 

Ripley Central School District – Financial Management (Chautauqua County)

The board and district officials did not properly manage fund balance in accordance with statute. The board and district officials overestimated budgetary appropriations and appropriated fund balance, resulting in surplus fund balance exceeding the 4% statutory limit by approximately $1.4 million, or 15 percentage points. The board and district officials also did not develop and adopt a comprehensive written multiyear financial plan and did not adhere to the fund balance policy.

 

Ripley Central School District – Payroll and Leave Accruals (Chautauqua County)

While the district’s payroll payments were paid at accurate rates, payroll payments were not always properly supported and approved and leave time accruals were not always accurate. Further, district officials did not properly monitor the payroll and leave accrual process and they have not developed any payroll policies or procedures. Auditors reviewed 41 timecards and found that while not required by the district, more than 70% of the timecards (30 of 41) were not signed by a supervisor and none were signed by the employee. More than 60% of the timecards (25 of 41) were incomplete as a result of missed punches totaling approximately 250 hours or $4,400. Timecard adjustments totaling $3,130 were not properly reviewed or approved, as required. In addition, the payroll clerk did not deduct a total of 13 days of approved leave time, valued at $2,100, from two employees’ leave accrual records.

 

Audits and reports issued during the week ending August 28, 2021 by the New York State Comptroller

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending August 28, 2021

Click on the text highlighted in colorto access the complete audit report.

State Departments and Agencies

Department of Agriculture and Markets: Oversight of Industrial Hemp (Follow-Up) (2021-F-9)

A report covering the period April 1, 2016, through May 31, 2019, found that while the department’s industrial hemp program had expanded opportunities for hemp production in the state, it did not always follow established practices when reviewing applications, conducting inspections and sampling plants. In a follow-up, auditors found department officials made progress in addressing the problems identified in the initial audit. Of the initial report’s three audit recommendations, one has been fully implemented and two have been partially implemented.

 

Office of Mental Health (OMH): Oversight of Telemental Health Services (TMH) (2020-S-16)

As of December 23, 2020, there were 448 OMH-licensed, -designated, and/or -funded mental health care providers operating 1,677 programs eligible to offer TMH; however, 307 of those 448 providers operating 1,050 programs were not approved to use TMH beyond the declared COVID-19 disaster emergency. As a result, some patients may no longer be able to access TMH services once the disaster emergency period ends.

 

Metropolitan Transportation Authority - Metro-North Railroad: Response Planning for Unexpected Events (2019-S-55)

Overall, Metro-North has procedures to address how its employees respond to most issues that cause unexpected or unplanned events. However, the procedures were not always followed. In 38 of the 80 events sampled by auditors, there was not always documented evidence that the procedures were followed completely. In addition, 26 of the 80 events required the railroad’s Emergency Management Task Force (EMTF) to be placed on standby or activated; however, the EMTF was notified of only one event. Metro-North’s procedures require customers to be notified of unexpected or unplanned events within a set time frame, but during the sampled events, customers either were not notified or were informed late.

 

New York City Department of Buildings (DOB): Oversight of Sidewalk Sheds (2019-N-9)

DOB is responsible for regulating the safe and lawful use of more than 1 million buildings and construction sites in the city including sidewalk sheds, temporary structures installed to protect people and property on city sidewalks during construction and demolition operations. Auditors found DOB needs to better ensure that owners and other responsible parties comply with relevant codes, laws, and rules pertaining to the timely permitting, installation, maintenance, and removal of sheds. During the period Dec. 20, 2019, through March 10, 2020, auditors visited a sample of 74 sites located throughout the five boroughs, finding many with hazardous conditions and without posted permits.

 

New York City Department of Education (DOE): Career and Technical Education (CTE) (2019-N-4)

DOE could not show how existing CTE programs aligned with the labor market and student demand. Information provided did not reflect how DOE is overseeing or assisting high schools to align CTE programs with high-growth, high-demand industries. For three high-growth industry programs reviewed, auditors found school requirements and program admission priorities (based on residence in a particular borough or attendance at a fair or information session) made it difficult or impossible for some students to qualify or attend.

 

New York City Department of Housing Preservation and Development: Mitchell-Lama Vacancies (2020-N-2)

The Mitchell-Lama Housing Program was created in 1955 to provide affordable rental and cooperative (co-op) housing to middle-income families. Auditors found that despite the scarcity of affordable housing, vacant apartments were generally not filled within the 120-day time frame, with 1,286 apartments taking, on average, 222 days to fill, including 214 that remained vacant for a year or longer. Protracted delays in filling apartments cost the developments about $9.1 million in unrealized income as of December 2019. At one development – Lindsay Park in Brooklyn – 15 apartments had been vacant for as long as 30 years.

 

Office of Parks, Recreation and Historic Preservation: Oversight of Construction Management Contracts (2020-S-43)

Parks has generally established controls to ensure construction management term contractors are meeting contract terms and requirements. Auditors identified only limited instances where the office could not provide documentation showing requirements were met and minor overpayments were made, for which Parks has obtained a refund from the contractor. Auditors also found Parks paid over $229,000 in fees under the contract with the Dormitory Authority of the State of New York (DASNY) that could have been avoided if it had used a term contract rather than the DASNY contract.

 

Department of State: Implementation of the Security Guard Act (2019-S-42)

The department generally complies with the act’s requirements, having processes in place to ensure only individuals meeting requirements are issued registration cards, and maintaining an accurate registry of security guard applicants. However, the department lacks sufficient internal controls to monitor training requirements for security guards classified as police and peace officers – a classification that includes individuals who are retired. Auditors identified instances where the department inappropriately renewed security guard registrations for security guards with these classifications without evidence that training was completed.

 

State University of New York Upstate Medical University (Upstate): Human Resource (HR) Practices (Follow-Up) (2021-F-7)

An audit issued in September 2019 found insufficient HR monitoring and oversight, as well as inadequate or poorly enforced policies and procedures, contributed to questionable and weak practices that rendered Upstate vulnerable to misuse of funds and safety and security risks. In a follow-up, auditors found Upstate officials made significant progress in addressing the problems identified in the initial audit, having implemented all four recommendations.

 

State University of New York Upstate Medical Center: User Access Controls Over Selected System Applications (Follow-Up) (2021-F-8)

An audit issued in June 2020 determined that Upstate’s access controls were not sufficient to prevent unnecessary or inappropriate access to various applications. Upstate employees maintained unnecessary and inappropriate access to applications after a change in their status, such as employment separation or death, and some of these user accounts were logged into during the period of inappropriate active access. In a follow-up, auditors found Upstate made significant progress in addressing the problems identified in the initial audit. Both of the initial report’s recommendations were implemented.

 

Local Governments

Town of Centerville – Town Clerk/Tax Collector (Allegany County)

Although the clerk recorded, deposited, remitted and reported all tax collections, she did not always record dates of receipts or deposit or remit payments timely. Auditors also found that the clerk did not properly record dates of collections for clerk fees on 21 of 29 daily collections totaling $438 (64%). The clerk did not deposit all tax collections within 24 hours as required. In addition, the clerk did not remit real property tax collections to the town supervisor or the county treasurer in a timely manner.

 

Town of Owasco – Financial Management and Procurement (Cayuga County)

The board did not effectively manage fund balance and reserve levels, establish multiyear plans or ensure the proper procurement of professional services and playground equipment. The board also did not adopt an adequate reserve policy, which resulted in the unrestricted general fund balance to increase to an excessive level. The board did not always seek competition for professional services or have adequate written agreements for the services provided. In addition, the board did not properly procure playground equipment totaling $397,000.

 

Town of Willing – Town Supervisor’s Financial Duties (Allegany County)

The town’s bookkeeper maintained adequate records and the accounting records auditors reviewed were accurate and complete. However, the supervisor did not prepare and submit appropriate reports or provide sufficient oversight of the bookkeeper. Annual update documents were not filed with the Office of the State Comptroller, as required. Bank reconciliations were not always performed by the bookkeeper and were not reviewed by the supervisor. In addition, monthly financial reports were not always prepared for and submitted to the town board. The reports did not include a detail of money received and disbursed as required.

 

School Districts

 

Cornwall Central School District – Information Technology (Orange County)

District officials did not establish adequate internal controls to safeguard the district’s user accounts. Specifically, network user accounts were not adequately managed. Officials did not monitor compliance with the district’s acceptable use policy. The board also did not adopt adequate information technology (IT) policies or a disaster recovery plan. Sensitive IT control weaknesses, including issues related to software updates, were communicated confidentially to officials.

 

Edwards-Knox Central School District – Medicaid Reimbursements (St. Lawrence County)

The district did not claim any Medicaid reimbursements to which it was entitled. District officials did not claim Medicaid reimbursements for 12 students that auditors identified were likely Medicaid-eligible who received speech, occupational or physical therapy services during 2019-20. Had these services been claimed, the district could have realized revenue totaling about $25,000. District officials also believed it was not cost-effective to file Medicaid claims but could not support their assertions because the district did not prepare a recent cost benefit analysis to support it is not cost-effective. In addition, district officials did not establish Medicaid claim policies or procedures or ensure that sufficient documentation was maintained for the eligible services provided.

 

Millbrook Central School District – Information Technology – User Accounts (Dutchess County)

Officials did not establish adequate controls over the district’s user accounts to prevent unauthorized use, access and loss. Officials also did not periodically review and disable unneeded network user accounts.

The audit found 46 unenrolled students had active network user accounts and 13 former employees who left between 2013 and 2020 also had active network user accounts. In addition, auditors found nine generic accounts last used between 2015 and 2018. Officials also did not develop a breach notification policy, as required by New York State Technology Law. Sensitive information technology (IT) control weaknesses were communicated confidentially to officials.

 

Ripley Central School District – Financial Management (Chautauqua County)

The board and district officials did not properly manage fund balance in accordance with statute. The board and district officials overestimated budgetary appropriations and appropriated fund balance, resulting in surplus fund balance exceeding the 4% statutory limit by approximately $1.4 million, or 15 percentage points. The board and district officials also did not develop and adopt a comprehensive written multiyear financial plan and did not adhere to the fund balance policy.

 

Ripley Central School District – Payroll and Leave Accruals (Chautauqua County)

While the district’s payroll payments were paid at accurate rates, payroll payments were not always properly supported and approved and leave time accruals were not always accurate. Further, district officials did not properly monitor the payroll and leave accrual process and they have not developed any payroll policies or procedures. Auditors reviewed 41 timecards and found that while not required by the district, more than 70% of the timecards (30 of 41) were not signed by a supervisor and none were signed by the employee. More than 60% of the timecards (25 of 41) were incomplete as a result of missed punches totaling approximately 250 hours or $4,400. Timecard adjustments totaling $3,130 were not properly reviewed or approved, as required. In addition, the payroll clerk did not deduct a total of 13 days of approved leave time, valued at $2,100, from two employees’ leave accrual records.

 

New York State Employees Retired System one of the best managed and best funded public retirement systems in the United States

On September 27, 2021, New York State Comptroller Thomas P. DiNapoli today announced reductions in employer contribution rates to the New York State and Local Retirement System (NYSLRS) for both of its systems – the Employees’ Retirement System (ERS) and Police and Fire Retirement System (PFRS). The adjusted rates will impact payments next State Fiscal Year 2022-23. In addition, DiNapoli lowered the long-term assumed rate of return on the Fund’s investments from 6.8% to 5.9%.

“The Fund’s strength gives us the ability to weather volatile markets. Our prudent strategy for long-term, steady returns helps ensure our state’s pension fund will continue to be one of the nation’s strongest and best-funded,” DiNapoli said. “While the reduction in employer contribution rates is welcome news for taxpayers, our investment decisions are always made based on what is best for our 1.1 million working and retired members and their beneficiaries.”

The estimated average employer contribution rate for ERS will be lowered from 16.2% to 11.6% of payroll. The estimated average employer contribution rate for PFRS will be reduced from 28.3% to 27% of payroll. According to the Fund’s Actuary’s estimates, the expected total employer contributions for Feb. 1, 2023 are $4.4 billion, which is $1.5 billion less than the expected employer contributions during the same period for 2022 – the lowest level since 2011.

This marks the fourth time that DiNapoli has lowered the state pension fund’s assumed rate of return as economic and demographic conditions have changed. In 2010, he decreased the rate from 8% to 7.5%, in 2015 to 7% and in 2019 to 6.8%.

The median assumed rate of return among state public pension funds is 7.0% as of August 2021, according to the National Association of State Retirement Administrators. Thirty-four out of the 133 state public pension plans listed had assumed rates of return of less than 7%. There are plans that have a fiscal year end date of June 30, 2021 and many have already announced intentions to lower their assumed rates of return further.

DiNapoli also announced the funded ratio of the state pension fund is 99.3%.

The state pension fund’s annualized rates of return are 11.17% over the past five years, 9.19.% over 10 years, 7.65% over 20 years and 8.96% over 30 years.

Employer rates for NYSLRS are determined based on investment performance and actuarial assumptions recommended by the Retirement System’s Actuary and approved by DiNapoli. A copy of the Actuary’s report can be found here.

In 2012, DiNapoli began providing employers with access to a two-year projection of their annual pension bill. Employers can use this projection in the preparation of their budgets. Projections of required contributions vary by employer depending on factors such as the types of retirement plans they adopt, salaries and the distribution of their employees among the six retirement tiers.

There are more than 3,000 participating employers in ERS and PFRS, and more than 300 different retirement plan combinations.

Payments based on the new rates are due by Feb. 1, 2023, but employers receive a discount if payment is made by Dec. 15, 2022.

Report

Click on the text highlighted in blue to access the Comptroller's report

Annual Report to the Comptroller on Actuarial Assumptions

About the New York State Common Retirement Fund 

The New York State Common Retirement Fund is the third largest public pension fund in the United States with estimated assets of $268.3 billion as of June 30, 2021. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. The Fund has consistently been ranked as one of the best managed and best funded plans in the nation. The Fund's fiscal year ends March 31.

Considering the prior disciplinary record of an employee found guilty of disciplinary charges in determining an appropriate disciplinary penalty to be imposed

The Petitioner [Firefighter] in this CPLR Article 78 proceeding was served with disciplinary charges pursuant to §75 of the Civil Service Law alleging that he had engaged in an act of insubordination when he failed to obey an order while actively engaged in fire suppression operations.

Firefighter denied the charges and at the disciplinary hearing that followed Firefighter and his superior officer [Captain] provided sharply conflicting testimony as to what occurred in the course of his being engaged in a fire suppression operation.

The designated hearing officer credited the Captain's testimony at the hearing, found that a preponderance of the credible evidence supported the conclusion that the Firefighter was guilty of insubordination, and recommended that the Firefighter be:

1. Returned to the payroll without back pay;

2. Suspended for a period of three months without pay; and

3. His employment be on a "last-chance basis" for a period of two years.

City Administrator [Administrator] adopted the findings of the hearing officer that Firefighter was guilty of insubordination but declined to adopt the hearing officer's recommendation with respect to the penalty and sent Firefighter a letter informing him that his prior disciplinary record would be considered in setting the penalty to be imposed and attached the disciplinary records that would be considered. Firefighter responded to Administrator's letter.

Ultimately Administrator found that Firefighter "was incorrigible, based upon that incident, as well as a review of [Firefighter's] prior disciplinary record" determined that the appropriate penalty was termination of [Firefighter's] employment" as a firefighter.

Firefighter commenced this proceeding pursuant to CPLR Article 78 to review the City Administrator's determination, contending, among other things, that the findings of insubordination were not supported by substantial evidence. Supreme Court transferred the proceeding to the Appellate Division pursuant to CPLR 7804(g).

Contrary to Firefighter's contentions, the Appellate Division found that he was provided the appropriate due process in this matter, given access to his disciplinary record and was allowed to submit a written response offering mitigating circumstances. The court noted that the City Administrator did not rely on unestablished allegations when considering the penalty to be imposed on Firefighter as the record indicated that Firefighter "had prior knowledge of all unusual occurrence reports in his disciplinary records and had waived his rights as to the matter that he claimed was never settled or adjudicated."

Noting that in a proceeding pursuant to CPLR Article 78, judicial review of factual findings made by an administrative agency following an evidentiary hearing is limited to consideration of whether the findings are supported by substantial evidence, the court explained that "Substantial evidence means more than a 'mere scintilla of evidence,' and the test of whether substantial evidence exists in a record is one of rationality, taking into account all the evidence on both sides." Further, opined the Appellate Division, "Where there is conflicting testimony and questions of credibility, the reviewing court may not weigh the evidence or reject the administrative agency's determination of credibility."

Citing  Matter of Fernandez v Rodriguez, 180 AD3d 897, the Appellate Division said that the hearing officer resolved the issue of credibility as between the two witnesses, and it discerned "no basis to disturb that determination." Accordingly, the finding that Firefighter was guilty of insubordination was held to be supported by substantial evidence in the record.

Addressing the penalty imposed by the City Administrator, the Appellate Division opined that "A court may set aside an administrative penalty only if it is so disproportionate to the offense as to be shocking to one's sense of fairness."  [A] result is shocking to one's sense of fairness if the sanction imposed is so grave in its impact on the individual subjected to it that it is disproportionate to the misconduct, incompetence, failure or turpitude of the individual, or to the harm or risk of harm to the agency or institution, or to the public generally visited or threatened by the derelictions of the individuals", the so-called Pell Doctrine.*

Further, said the court, "That reasonable minds might disagree over what the proper penalty should have been does not provide a basis for ... refashioning the penalty", concluding with the observation that "[u]nder the circumstances presented here, the penalty of termination of [Firefighter's] employment with the City was not so disproportionate to the offense as to be shocking to one's sense of fairness."

Accordingly, the Appellate Division confirmed the City Administrator's determination, denied Firefighter's petition and dismissed the proceeding "on the merits, with costs."

* Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d at 234.

Click HERE to access the Appellate Division decision in this action. 

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A Reasonable Disciplinary Penalty Under the Circumstances - The text of this publication focuses on determining an appropriate disciplinary penalty to be imposed on an employee in the public service in instances where the employee has been found guilty of misconduct or incompetence. For more information click HERE.

Vacating an arbitration award in a disciplinary action conducted pursuant a disciplinary procedure set out in a collective bargaining agreement

The Appellate Division reversed, on the law, without costs, a Supreme Court ruling that granted an application filed by New York State Correctional Officers and Police Benevolent Association, Inc. [NYSCOPBA] to confirm an arbitration award and [2] granted the motion of the New York State Department of Corrections and Community Supervision's[Corrections] to dismiss [NYSCOPBA's] appeal and remitted the matter to the arbitrator "for further proceedings not inconsistent with [its] decision."

NYSCOPBA is the bargaining representative for all correction officers employed by Corrections. A corrections officer [CO] represented by NYSCOPBA was served with a notice of discipline that sought to terminate CO's employment based on three charges — two related to alleged unauthorized telephone contacts with two former inmates, and one for allegedly making false statements made to investigators.

Pursuant to terms set out in the relevant collective bargaining agreement [CBA] between NYSCOPBA and the Corrections, NYSCOPBA filed a disciplinary grievance on behalf of the CO and demanded arbitration.

In response to NYSCOPBA motion to dismiss the disciplinary charges as untimely and not sufficiently particularized, the arbitrator reserved decision on the motion and proceed to conduct "a full disciplinary hearing." After completing the hearing, the arbitrator dismissed — based on the face of the notice itself, not on the evidence at the hearing — the two charges related to the phone calls. The arbitrator, however, found CO guilty of the charge relating to his false making statements and imposed a 75-day suspension without pay as a penalty.

NYSCOPBA then commenced a CPLR Article 75 proceeding seeking to confirm the arbitration award. Corrections cross-moved to vacate the award with respect to the  two charges dismissed by the arbitrator concerning the alleged unauthorized telephone contacts. Supreme Court denied Correction's cross-motion and granted NYSCOPBA's petition, confirming the award. Corrections appealed.

The Appellate Division commenced it consideration of Correction's appeal by observing:

1. Although courts are generally bound by an arbitrator's factual findings and interpretation of the parties' contract, a court may vacate an award that "violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator's power;"

2. In view of these narrowly circumscribed exceptions, "courts lack authority to review arbitral decisions, even where an arbitrator has made an error of law or fact"; and

3. If the arbitrator imposes requirements "not supported by any reasonable construction of the CBA, then the arbitrator's construction in effect makes a new contract for the parties and exceeds his or her authority."

Here, said the court, the CBA limits the role and authority of the arbitrator, as it provides that [1] disciplinary arbitrators shall confine themselves to the issues of guilt or innocence and the appropriate penalty; [2] directs that "[d]isciplinary arbitrators shall neither add to, subtract from nor modify the provisions of [the CBA]"; [3] sets a time limitation for disciplinary action"; and [4] provides that "[t]he conduct for which discipline is being imposed and the penalty proposed shall be specified in the notice."

Because it was undisputed that the allegations in charge 1 and portions of charge 2 fall outside the CBA's nine-month time limitation, for those allegations to be timely Corrections was required to invoke the exception that the alleged misconduct "would constitute a crime." 

The arbitrator determined that the bare identification and quoting of a criminal statute did not meet the requirements of "due process" — what the arbitrator defined as, "in essence[,] an underlying requirement that the charge that a crime has been committed must be fully communicated to the maximum possible degree in the 'charging instrument' (here, the [notice of discipline]) at the outset of the [p]roceedings" — as the notice did not provide factual details relating CO's conduct to each element of the cited crime. 

"On that basis," the arbitrator concluded that the notice of discipline did not satisfy the CBA's time exception.

However, the Appellate Division found that "the CBA does not refer to 'due process,' nor does it require that each element of the underlying crime be established in the notice." Citing People v Iannone, 45 NY2d 589, in which the Court of Appeals held that, "[w]hen indicting for statutory crimes, it is usually sufficient to charge the language of the statute unless that language is too broad," the Appellate Division opined that "by requiring [Corrections] to prove the underlying crime in the notice to support [applying] the CBA's time exception," the arbitrator essentially added a term to the CBA and, thus, exceeded his authority.

As the arbitrator dismissed the first two charges as untimely based on what he perceived to be deficiencies in the notice of discipline, he never determined whether Corrections met its burden of proof based on the hearing evidence. Accordingly, the Appellate Division remitted the matter to the arbitrator to determine whether charge 1 and any of the allegations under charge 2 were timely, i.e., "whether [Corrections] proved at the hearing that [CO's] conduct would constitute the crime of official misconduct" within the meaning of the State's Penal Law §195.00.

Further, said the court, "[e]ven if the arbitrator determines that those allegations are untimely ... some of the allegations in charge 2 occurred less than nine months prior to service of the notice of discipline; thus, the arbitrator must address those timely allegations.

As the arbitrator also based his dismissal of the first two charges on NYSCOPBA's argument that the charges lacked particularization with respect to the date of the alleged misconduct, the Appellate Division opined that, in general, "in the administrative forum, the charges need only be reasonably specific, in light of all the relevant circumstances, to apprise the party whose rights are being determined of the charges against him [or her] and to allow for the preparation of an adequate defense." Here, however, the CBA requires somewhat more, a "detailed description" of the misconduct with "references to dates." The arbitrator found it significant that neither charge at issue "specif[ied] the specific dates on which the alleged wrongful acts occurred, nor any other substantive facts relevant to the occurrences of those phone conversations."

NYSCOPBA, said the court, focused their challenge to the notice on the absence of specific dates for each phone call. In the words of the Appellate Division, "[B]oth charges at issue listed dates, albeit as date ranges. Nothing in the CBA required respondent to list each phone call as a separate charge, nor to list the exact date of each call, especially for a continuing pattern of misconduct.... Charge 1 stated a range of only three days. For the second charge, the notice stated that [CO] engaged in 36 unapproved phone calls over a time period spanning six months. This comports with the CBA's requirement of "a detailed description of the alleged acts and conduct including references to dates" (emphasis in the decision).

Thus the Appellate Division concluded that the arbitrator modified the CBA and exceeded his authority by dismissing the first two charges as facially deficient due to an alleged lack of particularization in the notice of discipline. Rather, said the court, "the arbitrator should have rendered a determination as to [CO's] guilt based on the evidence presented at the hearing."

Accordingly, because the arbitrator exceeded his authority, the Appellate Division vacated the portion of the arbitration award dismissing the first two charges.

Click HERE to access the Appellate Division's ruling.