Determining if a lump sum payment to a member of a New York State public retirement system is includable in calculating a member of the retirement system's final average salary

Petitioner was employed as a police officer for the Village pursuant to a series of collective bargaining agreements [CBA] and employment contracts negotiated by the Police Benevolent Association [PBA] from 1989 until his retirement on March 30, 2019, when he began to collect his pension.

In April 5, 2021, Petitioner received a final determination by New York State and Local Employees Retirement System advising him that three $25,000 lump sum payments (totaling $75,000) that he received on March 1 of each year from 2017 through 2019 were not includable in his final average salary for purposes of calculating his pension benefits.* 

This resulted in a recalculation of and reduction in Petitioner's pension benefits and a directive that the overpayments be recouped from his pension payments.

Following a hearing, a Hearing Officer agreed that the lump sum payments had been properly excluded from the calculation of Petitioner's final average salary. The Comptroller adopted the Hearing Officer's decision.

Petitioner then commenced this proceeding pursuant to CPLR Article 78 challenging the Comptroller's determination.

Citing Matter of Bohlen v DiNapoli, 34 NY3d 434, the Appellate Division explained the "Comptroller is vested with exclusive authority to determine applications for retirement benefits and such determination, if supported by substantial evidence, must be upheld". Further, opined the Appellate Division, "where substantial evidence exists to support the [Comptroller's] determination, a court may not substitute its judgment for that of the agency, even if there is evidence supporting a contrary conclusion".

Petitioner bears the burden of establishing his entitlement to the inclusion of the lump sum payments in the calculation of his final average salary, said the Appellate Division, and this he failed to do. 

"Consistent with the provisions of the Retirement and Social Security Law, a member's retirement benefit is based upon his or her final average salary, i.e., 'the average salary earned by such ... member during any three consecutive years which provide the highest average salary' ".**

Noting that a court "need not defer to the Comptroller's interpretation of the statutory exclusion for lump sum 'credits for time not worked' [the court said it was] in agreement with the Comptroller's determination as applied to the facts of this matter."

*This Retirement System determination was based upon its finding that the lump sum payments made pursuant to an October 17, 2017 memorandum of agreement between the Village and the PBA was not for "time worked" and, as such, were not pensionable.

** Annual compensation is defined as "(t)he salary or wages annually earnable by a member" (see Retirement and Social Security Law §302(2)(a).

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

 

Selected links to items focusing on government operations posted on the Internet during the week ending November 17, 2023

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Axon Aims to Reduce Police Shooting Deaths Via New Database The company, known for Tasers and body cameras, says detailed analysis of officer-involved fatal shootings could lead to better training and non-lethal technology. The database goes into minute detail about fatalities. READ MORE

 

Bay Area Transportation Officials Weigh Freeway Tolling Plan The Metropolitan Transportation Commission in the Bay Area is holding public meetings for community feedback on a plan to add tolling to the region’s most-crowded freeways to generate new funding for transit and other projects. READ MORE

 

Breach Notification Delays Draw Criticism for Maine Agencies The breach that exposed the data of an estimated 1.3 million residents was discovered six months before notifications were sent out. Experts say the delay was necessary to investigate the incident. READ MORE

 

CivicPlus Will Sell Its Monsido Accessibility Platform Acquia, which helps businesses build digital tools, is buying the platform, which is meant to make online experiences better for people with disabilities. CivicPlus will still serve local clients interested in Monsido. READ MORE

 

Cyber Attack Downs Washington State’s Transportation Website A cybersecurity incident on Tuesday has made key parts, including real-time information, of the transportation department’s website inaccessible, causing major disruptions. While some services have been restored, maps and permits are still down. READ MORE

 

Cyber Insurance Roundup: What’s Happening Now? From the roller-coaster ride in rates to new generative AI uses to dramatic changes in underwriting rules, cyber insurance is evolving fast. Here are some of the latest trends. READ MORE

 

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Feds Issue Warning on Ransomware Group Targeting Public Sector The FBI and CISA, along with the MS-ISAC, issued a joint advisory explaining Rhysida ransomware actors’ known tactics, techniques and procedures and indicators of compromise — and ways to better defend. READ MORE

 

Five States Recognized for Evidence-Based Investments At a virtual event co-hosted by the National Governors Association and Results for America, the 2023 Invest in What Works State Standard of Excellence was released, highlighting best practices in state data use. READ MORE

 

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MOVEit Hits Maine: More Than 1 Million People Affected The breach affected more than half of the data held by state’s Department of Health and Human Services, as well as data from other agencies. The incident affects 1.3 million people, in some cases exposing Social Security numbers. READ MORE

 

Nebraska CIO Talks Change Management, Consolidation and Cloud Nebraska CIO Ed Toner explained how the state’s ongoing cloud migration project is addressing agency change hesitancy, streamlining IT processes and securely centralizing data management. READ MORE

 

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

On November 17, 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

Schenectady City School District – Math Workbook Inventory (Schenectady County)

District officials did not maintain adequate inventory records and ordered excessive quantities of workbooks. As a result, officials ordered 4,126 workbooks that cost $143,036, which were not needed. Officials did not maintain a comprehensive perpetual inventory of workbooks, nor did they perform annual inventory counts at year-end. As a result, officials were not aware of the large quantities of workbooks stored at the elementary schools. The district lacked an adequate inventory policy or written procedures on how workbooks should be accounted for and how the inventory should be monitored. Officials did not determine the district’s actual workbook need before workbooks were ordered.

 

Corning City School District – Claims Auditing (Steuben County)

The district’s claims auditor did not properly audit and approve all claims prior to payment. Auditors reviewed 100 claims totaling approximately $19.5 million and determined that: the claims auditor, who is an employee of the Greater Southern Tier Board of Cooperative Educational Services (GST BOCES), inappropriately audited 43 claims totaling approximately $16.1 million paid to GST BOCES. This compromised the claims auditor’s objectivity and independence. The school board should have audited these claims. The treasurer paid 18 claims for health insurance reimbursements and credit card purchases totaling approximately $1.7 million before they were properly audited. Auditors found 49 travel-related credit card charges totaling $28,555 did not include a pre-approval form or other supporting documentation.

 

Rockland County – Budget Review

State law authorizes the county to issue debt up to $96 million to liquidate the accumulated deficit in the county’s general fund as of Dec. 31, 2012. Additionally, the law requires the county to submit its proposed budget to the State Comptroller . The county legislature, no later than five days prior to the adoption of the budget, must review all recommendations made by the State Comptroller’s office, and adjust its proposed budget, consistent with any recommendations made. Auditors found that the significant revenue and expenditure projections in the 2024 proposed budget are reasonable. The county’s proposed budget includes a tax levy of $141,791,700.

 

Brentwood Union Free School District – Information Technology (IT) (Suffolk County)

The board and district officials did not adequately monitor nonstudent network user accounts, provide IT security awareness training as required by a board-adopted policy or implement an IT contingency plan. As a result, the district’s computerized data was not adequately safeguarded. In addition, the district has an increased risk that the network may be accessed by unauthorized individuals, data will be lost, and the district may not be able to recover from a network disruption or disaster. Officials also did not disable 486 of the 3,525 enabled nonstudent network user accounts auditors reviewed and determined were not needed or establish written procedures for granting, changing and disabling network user account access.

 

North Tonawanda City School District – Information Technology (Niagara County)

District officials properly managed user account permissions in its financial application but did not properly secure user account access to the network or manage user account permissions in the student information application. As a result, there is a significant risk that network resources and student information could be inappropriately altered, accessed or used. In addition to sensitive IT control weaknesses that were communicated confidentially to officials, auditors found district officials did not disable 246 unnecessary network user accounts or properly manage permissions for 517 user accounts in the student information application by ensuring accounts were locked or disabled when an employee separated from the district.

 

City of Lockport – Budget Review (Niagara County)

Auditors found that the significant revenue and expenditure projections in the proposed budget appear reasonable. However, auditors identified certain revenue and expenditure projections and other matters that should be reviewed. Officials significantly underestimated the amount of overtime incurred by the fire department in 2023, which will exceed the amount budgeted by approximately $440,000. The proposed 2024 budget includes overtime funding of $500,000 for the fire department, an increase of $250,000. If officials cannot reduce 2023 overtime expenditures, the 2024 budget appropriation for overtime will be insufficient.

 

Fine Fire District – Board Oversight (St. Lawrence County)

District officials did not adequately monitor financial activities or maintain appropriate records and reports. As a result, more taxes were levied than needed to fund operations each year and there was an increased risk for errors and irregularities. The board did not ensure that basic accounting records were maintained, that it received written financial reports to manage operations, or that the district’s required annual update documents were filed. The board also did not conduct an annual audit of the secretary-treasurer’s accounting records or hold required public hearings on the proposed 2022 and 2023 budgets or formally adopt the budgets, as required by state law. In addition, annual appropriations were overestimated by an average of $43,300, or 40%.

 

Bellmore-Merrick Central High School District – Payroll (Nassau County)

Auditors determined district officials accurately paid salaries and wages to 58 employees totaling $609,317 of the $127.3 million paid to 1,290 employees during the audit period. There were no recommendations as a result of this audit.

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Individual injured in a "slip and fall" while engaged in a personal activity during her work shift found ineligible for accidental disability retirement benefits

An applicant for accidental disability retirement benefits injured while engaged in a personal activity determined not to have been engaged in performing the duties of the position. The police officer [Petitioner], had applied for accidental disability retirement benefits following her staining multiple injuries as the result of her "slip and fall" accident while exiting her patrol car "when she stopped for coffee". 

Petitioner's applications were denied by the retirement system and, following a hearing, a Hearing Officer upheld the denial of both her applications for benefits, finding that the injuries she suffered were not sustained while Petitioner was engaged in performing the duties of her employment. The State Comptroller adopted the Hearing Officer's findings and conclusions. Petitioner then initiated a CPLR Article 78 proceeding challenging the Comptroller's determination with respect to her applications for accidental disability retirement benefits.

The Appellate Division sustained the Comptroller's decision, holding:

1. The burden is on the applicant for accidental disability retirement benefits to demonstrate that his or her incapacitation was the natural and proximate result of an accident within the meaning of the Retirement and Social Security Law and sustained while in service;

2. The threshold issue of whether [a] petitioner was in service at the time that his [or her] injury occurred turns on whether he [or she] was performing job duties at the time of the injury*; and

3. The Comptroller "is vested with exclusive authority to determine all applications for retirement benefits, including the question of whether an accidental injury was sustained while in service," and, if supported by substantial evidence, the Comptroller's determination must be upheld.

The Appellate Division, noting that Petitioner testified that police officers routinely stopped for coffee and food during their shifts, said the record supports the finding that she was not directed or asked to do so by her supervisor or was a part of her job duties. As substantial evidence supported the Comptroller's determination that Petitioner was not injured while in service in that she was engaged in a personal activity at the time she suffered injury, the Comptroller's decision must be upheld.

Further, said the Court, "Petitioner's reliance on precedent under the Workers' Compensation Law is misplaced, as decisions decided thereunder are not binding on [State Comptroller]".

* See Matter of Verille v Gardner, 177 AD3d 1068

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

Daughter-in-law sentenced to over one year in federal prison and ordered to pay $459,000 in full restitution for stealing NYS Pension and Social Security payments

On November 15, 2023, New York State Comptroller, together with U.S. Attorney for the Northern District of Georgia Ryan K. Buchanan, and Inspector General for the Social Security Administration Gail S. Ennis, reported that a Georgia woman, Sandra Smith, was sentenced to over a year in federal prison and ordered to pay full restitution after Ms. Smith admitted she stole $459,050 in New York state pension and federal social security payments from her deceased mother-in-law’s bank account.

The State Comptroller said “The defendant callously exploited her mother-in-law’s death in an effort to defraud New York’s retirement system and the Social Security Administration". He thanked his investigative team, U.S. Attorney Buchanan, and the Social Security Administration Office of the Inspector General for their assistance in holding Smith accountable.

“Theft from government benefits programs is a common crime that regrettably often follows the death of a family member,” Buchanan said. “This defendant stole nearly half a million dollars from two separate government entities. Her sentence reflects the seriousness of her crimes and hopefully will help to deter others from engaging in similar conduct.”

“Ms. Smith knowingly concealed her mother-in-law’s death to steal over $450,000 in retirement benefits from the deceased’s bank account. Her selfish actions were criminal, and this sentence now holds her responsible for repayment of $194,351 in Social Security funds,” Ennis said. “I thank the New York State Comptroller’s Office for their work in this joint investigation and the U.S. Attorney’s Office and Special Assistant U.S. Attorney Diane Schulman for prosecuting this case.”

Smith’s mother-in-law, Minnie Smith, was a longtime Brooklyn resident who had worked for the State Insurance Fund from 1985 until her retirement in 2005. She subsequently moved to Georgia to be close to family but died on Sept. 14, 2006.

Minnie Smith’s family did not notify the New York state retirement system or the Social Security Administration (SSA) of her death. Instead, the retirement system received a change of address form purportedly signed and dated by the deceased.

At the time of Minnie Smith’s death in September 2006, Sandra Smith was her caretaker and handled her finances. As her caretaker, she had access to Minnie Smith’s bank account. After her mother-in-law died, Sandra Smith kept the bank account open while the retirement system and SSA continued to deposit funds into the account until early 2021 when Minnie Smith’s death was discovered.

A total of $264,699 in retirement system payments and $194,351 in Social Security payments were deposited into Minnie Smith’s bank account from September 2006 through April 2021.

Sandra Smith, of Morrow, Ga., accessed her deceased mother-in-law’s bank account online and then transferred the pension and social security funds into her personal bank accounts from which she either withdrew cash or further transferred the money to other bank accounts in her control.

Smith pleaded guilty to two federal counts of theft of government funds in July.

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Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse. New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at https://www.osc.ny.gov/investigations, or by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 8th Floor, 110 State St., Albany, NY 12236.

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