Municipal and School Audits released by New York State Comptroller Thomas P. DiNapoli

On October 25, 2023 New York State Comptroller Thomas P. DiNapoli announced the following local government and school audits were issued.

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

Marathon Joint Fire District – Investment Program (Cortland County)  

District officials did not develop and manage a comprehensive investment program. The board did not develop and adopt a comprehensive written investment policy as required by state law until the end of the audit period. The district earned interest totaling approximately $2,000 from its checking and savings accounts, which had an average daily balance of approximately $567,000 during the audit period. However, the district could have earned approximately $12,600 more had officials used other available investment options. Officials did not consider other legally permissible investment options or formally solicit interest rate quotes that may have resulted in higher investment earnings. As a result of the audit, the board subsequently approved an investment policy in March 2023 and invested $653,000. 

 

Depew Union Free School District – Investment Program (Erie County)  

District officials did not develop and manage a comprehensive investment program. The business administrator and district officials did not invest available funds in financial institutions that offered competitive interest rates, prepare monthly cash flow forecasts to estimate funds available to invest or solicit interest rate quotes. Over a 16-month period, officials missed an opportunity for the district to realize approximately $487,000 in additional investment earnings. Had the district realized such earnings, the board may have been able to avoid increasing the 2023-24 tax levy.  

 

Lake Placid Central School District – Investment Program (Essex County)  

District officials did not develop and manage a comprehensive investment program. The assistant superintendent for business, finance and support services and district officials did not solicit interest rate quotes or prepare monthly cash flow forecasts to estimate funds available to invest or consider other legally authorized investment options when investing available funds. Had officials done so the district might have earned approximately $267,000 more in investment earnings than the $189,305 earned during the audit period. 

 

Lake Placid Central School District – Transportation State Aid (Essex County)  

District officials did not apply for all applicable transportation state aid for new bus acquisitions. As a result, the district’s taxpayers will not benefit from the $18,842 in aid the district would have received upon State Education Department (SED) approval. In addition, if officials do not properly file the aid applications with SED, taxpayers will also not benefit from the remaining $45,034 officials can claim. 

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A college student disciplinary hearing is not a quasi-judicial proceeding absent certain procedural safeguards

Plaintiff appealed a partial final judgment by a United States District Court judge dismissing his claims alleging "defamation and tortious interference with contract" brought against Yale University and certain named parties [University]. University had accused Plaintiff, of sexual assaulting another student, "Jane Doe" [Doe], while both were students at Yale.

Plaintiff argued that the district court erred in finding:

1. University had absolute quasi-judicial immunity for statements made at a University disciplinary hearing that resulted in Plaintiff’s expulsion from Yale; and 

2. Plaintiff’s tortious interference claims were untimely.

In its preliminary review, the Second Circuit said it was unable to determine whether the Connecticut Supreme Court [Connecticut] would recognize the Yale disciplinary hearing at issue as a quasi-judicial proceeding, supporting University's claim of absolute immunity in the action brought by Plaintiff. Accordingly, it certified questions pertinent to that issue to Connecticut.

Connecticut responded, indicating that absolute immunity could not be claimed by  University in Plaintiff's action because the Yale disciplinary hearing at issue was not a quasi-judicial proceeding. Connecticut explained the Yale disciplinary hearing lacked certain procedural safeguards such as an oath requirement, the ability to call witnesses, an opportunity to cross-examine witnesses, meaningful assistance of counsel, and an adequate record for appeal, all typically associated with judicial proceedings.

Further, while Connecticut recognized the possibility for participants in such a hearing to be shielded by qualified immunity, Connecticut concluded the "University is not presently entitled to dismissal on that ground because [Plaintiff’s] complaint sufficiently pleads the malice necessary to defeat such immunity."

Accordingly, the Second Circuit:

1. Affirmed, in part, so much of the district court's judgment that dismissed as untimely Plaintiff’s tortious interference claim based on Doe’s 2015 statements; and

2. Vacated, in part, so much of the district court's judgment that dismissed Plaintiff's action under color of absolute immunity with respect to Plaintiff’s defamation and tortious interference claims based on Doe’s 2018 statements.

The Second Circuit then remanded the matter to the district court "for further proceedings consistent with this opinion."

Click HERE to access the Second Circuit's decision posted on the Internet.

 

Commissioner of Education asked to remove certain school officials for willfully disobeying a decision of the Commissioner

In this ultimate of several appeals to the Commissioner of Education, Petitioner contends that certain officials of a BOCES [Respondents] should be removed from their respective positions because, among other reasons, they willfully disobeyed a decision of the Commissioner of Education.

The Respondents contended that the petition is moot because Petitioner:

[1] Was earlier restored to the payroll and paid all back wages; and

[2] Respondents had not engaged in a willful violation of law or neglect of duty because they generally acted upon advice of counsel.

The instant appeal, reported as Ed Dept. 18,347, arises out of the events described in appeals to the Commissioner reported, respectively, as 62 Ed Dept Rep, Decision No. 18,147 and 62 Ed Dept Rep, Decision No. 18,211.  

In brief, Respondents terminated Petitioner’s probationary appointment. In the appeal that followed the Commissioner of Education found that the three stated reasons advanced by Respondents for terminating Petitioner were “too vague to allow [Petitioner] to ascertain whether any of the reasons were constitutionally or statutorily impermissible" and remanded the matter to the Board.

The Commissioner ordered, among other things, that the district superintendent resubmit her recommendation with “appropriate specifics of the reasons therefor.” The Commissioner also directed the Board to make a new decision regarding the proposed discontinuance of Petitioner’s probationary appointment.

In the instant application, Petitioner contended that Respondents should be removed because, among other reasons, they willfully disobeyed the Commissioner's decision in Decision No. 18,211.  Petitioner also argues that the Superintendent improperly denied a request to discuss her circumstances in executive session.  For relief, Petitioner requests the removal of all named Respondents and an award of costs and fees.

Respondents contend that the petition is moot because Petitioner was restored to the payroll as of January 3, 2023 and paid all back wages as of January 13, 2023.  Respondents additionally contend that they have not engaged in a willful violation of law or neglect of duty because they generally acted upon advice of counsel.

The Commissioner opined that the crucial question in the instant application is whether any Board member understood that Petitioner was not going to be paid or reinstated while BOCES' attorneys prepared and filed a judicial appeal.  Noting that the record does not provide a clear answer, the Commissioner declined to remove any members of the Board, explaining that in this instance "The practical responsibility for implementing [the Commissioner's] decision lay with the District Superintendent and BOCES staff, not the [Board]."

The Commissioner also noted that to the extent board members receive legal advice concerning an issue, board members who act on such advice of counsel lack the requisite willfulness to warrant removal from office unless no reasonable person could have believed the advice to be lawful. The Commissioner opined "Any legal advice justifying [the Board Members'] actions would not, in [her] view, meet this demanding standard."

This, said the Commissioner, does not mean that she condoned Respondent’s  conduct as they failed to cite any legal authority for the proposition that it was entitled to delay implementation of the Commissioner's earlier decision [see Decisions of the Commissioner Decision No. 18,211]. Further, in the words of the Commissioner, "the evidence in the record suggests that BOCES did not implement the decision in an attempt to bolster its case for temporary relief in the judicial appeal.* 

In the words of the Commissioner: "This was improper.  Petitioner had a legal right to return to the classroom, with pay, within a reasonable time after issuance of my decision [No. 18,211].  Not only did BOCES fail to do this, but it did not clearly communicate with [Petitioner] about her status for over a month.  And, even then, counsel for BOCES only did so in response to [Petitioner’s] inquiry 'about the process for [her] reinstatement, backpay, etc.'  This exceeded any reasonable period necessary to implement decision and deprived [Petitioner] of work, and pay, for over a month.  I remind BOCES that, absent a judicial order, it must implement all orders of the Commissioner, even those with which it disagrees (see Education Law §§ 306, 310, 311)."

* In an affidavit submitted with this appeal, counsel for BOCES indicated that she "spoke with outside counsel ... and 'expressed concern that the time lapse'  i.e., filing the judicial appeal a few weeks after [the Commissioner's Decision No. 18,211] would affect the request for a stay.”  

Click HERE to access the Commissioner's ruling in Decisions of the Commissioner Number 18,347.

 

Judicial review of administrative determinations is limited to the facts and record adduced in the course of the agency's administrative hearing

The New York City Office of Administrative Trials and Hearings [OATH] affirmed so much of a determination of a hearing officer, as, after a hearing, found that Petitioner in the administrative appeal violated Administrative Code of the City of New York §28-210.3 and directed the petitioner to pay a civil penalty of $1,000 per day for a period of 39 days.

The Appellate Division confirmed OATH's ruling "on the merits," without costs or disbursements.

Petitioner had filed an administrative appeal from so much of the hearing officer's determination as imposed a civil penalty of $1,000 per day for a period of 39 days. Petitioner contended that the violation of Administrative Code §28-210.3 at issue was cured almost immediately after the Petitioner received notice of the violation and, therefore, the daily penalties should be limited to only two days. 

OATH, however, had  affirmed so much of the hearing officer's determination as directed the Petitioner to pay a civil penalty of $1,000 per day for a period of 39 days from November 9, 2019, to December 17, 2019, December 17, 2019 being "the date the violation was corrected according to a sworn certificate of correction of the Petitioner's owner".

Citing Matter of Call-A-Head Portable Toilets, Inc. v New York State Dept. of Envtl. Conservation, 213 AD3d 842, the Appellate Division said "Judicial review of an administrative determination made after a hearing required by law, and at which evidence was taken, is limited to whether that determination is supported by substantial evidence", observing that "Substantial evidence 'means such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact'".

Here, contrary to Petitioner's contention, the Appellate Division opined that OATH's determination directing the Petitioner to pay a civil penalty of $1,000 per day for a period of 39 days was supported by substantial evidence, including the sworn statement by the Petitioner's owner in the certificate of correction identifying December 17, 2019, as the date the violation was corrected.

Noting that judicial review of administrative determinations is confined to the facts and record adduced before the agency, the court opined that Petitioner's reliance upon evidence that it did not introduce at the hearing was improper.

Click HERE to access the Appellate Division's decision posted on the Internet.

 

Part-time teaching assistants not within the ambit of Education Law §3013(2) in the event of a layoff

Education Law §3013(2) provides as follows: "Whenever a trustee, board of trustee, board of education or board of cooperative educational services abolishes a position under this chapter, the services of the teacher having the least seniority in the system within the tenure of the position abolished shall be discontinued."

Two part-time teaching assistants [Petitioners] challenged their termination by the Board of Education when the Board declined to terminate the employment of at least two full-time teaching assistants having less seniority. Petitioners contended that the Board's decision resulting in their termination violate Education Law §3013(2) and provisions set out in a collective bargaining agreement between the Board and Petitioners' union.*

Supreme Court denied the Petitioners' petitions and dismissed the proceeding. The Appellate Division affirmed the Supreme Court's ruling.

Pursuant to Education Law §3013(2), whenever a board of education "abolishes a position under this chapter, the services of the teacher having the least seniority in the system within the tenure of the position abolished shall be discontinued." In this instance the relevant collective bargaining agreement provided that "[l]ayoffs for Teaching Assistants shall be in accordance with Education Law Section 3013." Moreover, the Court of Appeals has recognized that teaching assistants fall within the ambit of Education Law §3013(2) "for the purpose of determining layoffs".**

However, the Board contended that the protections afforded individuals pursuant to Education Law §3013(2) apply only to full-time teaching assistants and that the Petitioners were part-time teaching assistants. Petitioners did not dispute the Board's contention that Education Law §3013(2) applies only to full-time teaching assistants.

Citing Matter of Walters v Amityville Union Free School Dist., 251 AD2d 590, and Matter of Cole v Board of Educ. of Syosset Cent. School Dist., 167 AD2d 538, the Appellate Division, noting that Petitioners "failed to establish that they were full-time teaching assistants entitled to the protections afforded under Education Law §3013(2)", held that Supreme Court properly denied their petitions.  

* Taylor Law contract provisions, however, may not adversely affect the layoff rights vested in employees by law. See, for example, Plattsburgh v Local 788, 108 AD2d 1045 and Szumigala v Hicksville Union Free School District, 148 AD2d 621, citing Cheektowaga v Nyquest, 38 NY2d 137.

 ** Matter of Madison-Oneida Bd. of Coop. Educ. Servs. v Mills, 4 NY3d 51.

Click HERE to access the Appellate Division's decision posted on the Internet.

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