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

On February 8, 2024, 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 of and the complete audit report

 

Garrison Union Free School District – Information Technology (IT) (Putnam County) District officials did not adequately secure the district’s network user accounts, establish physical controls, maintain complete and accurate inventory records for IT equipment or develop an IT contingency plan. Auditors found that district staff did not have sufficient documented guidance or plans to follow after an unexpected IT disruption or disaster. As a result, district officials have an increased risk they may not recover data and resume essential operations in a timely manner.

 

Town of Marion – Misappropriation of Justice Court Cash Collections (Wayne County) The justices and board did not provide adequate oversight of court financial activities. As a result, the former court clerk misappropriated more than $59,000, or 38%, of the fines, fees and surcharges collected between Jan. 1, 2016 through May 31, 2021. In August 2023, the former court clerk pleaded guilty to grand larceny in the second degree, corrupting the government in the second degree, tampering with records in the first degree and official misconduct. In October 2023, the former court clerk was sentenced to serve six months in jail and pay more than $59,000 in restitution. The justices did not perform a proper review of reports submitted to New York state agencies to ensure that all cases, including any cash collected, were properly reported and remitted. The justices failed to perform an adequate review of bank reconciliations or accountabilities to ensure that all collections were accurately accounted for and to promptly identify discrepancies or review deleted transactions reports. In addition, the board did not perform a proper annual audit.

 

Village of Washingtonville – Budget Review (Orange County) The scope of the review was significantly limited by the village’s lack of complete, accurate and current accounting records. Specifically, the village does not maintain up-to-date budget-to-actual reports to aid in the monitoring of its fiscal performance. The 2024-25 tentative budget includes sewer meter rents revenue of $1.6 million, Orange County sales tax revenue of $1.2 million, and water meter rents revenue of $1.1 million, but auditors were unable to project the amount the village will receive as most of revenue has not been posted in the financial software for 2022-23 or 2023-24. The 2024-25 tentative budget includes personal services of $3.4 million, employee benefits of $1.8 million, retirement expenditures of $675,000 and debt service of $542,000. Auditors were unable to project the amount the village may spend, as the village did not provide salary schedules and most of the expenditures have not been posted in the financial software for 2022-23 or 2023-24. The 2024-25 tentative budget includes a $100,000 general fund contingency and a $20,000 water fund contingency. There is no contingency for the sewer fund. Given the potential cost overruns from current economic conditions and the lack of complete, accurate, and current accounting and financial records, the board needs to consider whether the contingency appropriations are adequate and appropriate for unanticipated events and uncertainties.

 

Willsboro Central School District – Student State Aid (Essex County) District officials did not properly claim state aid for special education students who received services in summer placements. As a result, as of June 30, 2023, the district had not claimed $55,771 in state aid to which it was entitled, of which $52,640 would have already been received and benefited the district if claimed in a timely manner. The district also claimed $8,569 in aid to which it was not entitled. District officials also did not establish adequate procedures to ensure state aid was properly claimed for all special education students and also did not provide oversight over the official who prepared and submitted state aid claims.

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Appellate Division held the New York State Office of Court Administration properly denied a FOIL request, which it described as "overbreadth"

The New York Civil Liberties Union Foundation [Petitioner] was concerned that New York State Office of Court Administration [OCA] "is privately instructing judges how to interpret and apply substantive law". Respondent filed a CPLR Article 78 petition seeking a court order compelling the New York State Office of Court Administration [OCA] to disclose records requested by Petitioner pursuant to the Freedom of Information Law [FOIL], Public Officers Law §§84-90. Such records included all documents directed to judges or their chambers staff, from January 1, 2011 to the present, "in which federal or state court decisions, statutes, regulations, or ordinances are summarized, analyzed, interpreted, construed, explained, clarified, or applied". Supreme Court granted the petition and OCA appealed the Supreme Court's ruling.

The Appellate Division unanimously reversed the Supreme Court's decision "on the law," opining that Petitioner's concern that OCA is privately instructing judges how to interpret and apply substantive law "is unfounded, as the court is not bound by [OCA's] interpretations." Citing People v Knickerbocker Ice Co., 99 NY 181, the Appellate Division said "[it] has always been the province of the court to declare what the law is."

The court said that OCA "properly denied the FOIL request, insofar as raised on appeal, consititted"overbreadth", noting OCA had established that that the information sought by Petitioner is "not stored in any centralized manner, and responding to the FOIL request would involve manually reviewing employees' files and making individual determinations as to" each file.

In the words of the Appellate Division: "Under the circumstances presented, [OCA] made a particularized showing that attempting to comply with this broad request would be impracticable" and it does not avail Petitioner to argue "that [its FOIL] request should have been interpreted in a much more limited form," where "nothing in the language of the original request or the administrative appeal supports such an interpretation".

In addition the Appellate Division pointed out that OCA had properly determined that the records at issue "were exempt under the attorney-client privilege ... and the attorney work product privilege."

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

 

The United States Circuit Court of Appeals for the District of Columbia holds public policy compels the rejection of former President Trump's claim of immunity in a criminal case

On August 1, 2023, former President Donald J. Trump was charged in a four-count criminal Indictment stemming from his actions challenging the 2020 election results and interfering with the sequence of procedures set forth in the Constitution of the United States providing for the transfer of power from one President to the next.

The former President moved to dismiss the Indictment and a federal district court denied his motion. Former President Trump appealed the lower court's ruling.

The United States Court of Appeals for the District of Columbia Circuit affirmed the  federal district court's denial of the former President's motion to dismiss the Indictment.

In the words of the Circuit Court of Appeals, for the purpose of this criminal case  "former President Trump has become citizen Trump, with all of the defenses of any other criminal defendant. But any executive immunity that may have protected him while he served as President no longer protects him against this prosecution."

Click HERE to access the United States Court of Appeal for the District of Columbia Circuit's decision in United States of America v Donald J. Trump posted on the Internet.

Terminating a probationary employee without notice and hearing

Plaintiff, a correction officer serving as a probationary appointee, appealed Supreme Court's ruling denying his petition challenging his termination from his employment prior to the completion of his maximum period of probation. The Appellate Division affirmed the lower court's decision. 

Plaintiff had commenced this proceeding pursuant to CPLR Article 78 to review the appointing authority's decision to terminate Plaintiff's probationary employment. His petition, alleged, among other things, that the determination was arbitrary and capricious.

The Appellate Division, citing, Matter of Trager v Suffolk County, 185 AD3d 697, explained "An employee's probationary appointment may be terminated ... for any reason or no reason at all, so long as the termination was not in bad faith or for an improper or impermissible reason".* Further, the decision notes that "In demonstrating that administrative actions were made in bad faith ... the petitioner bears a heavy burden of proof, for which conclusory allegations and speculative assertions will not suffice".

Citing Matter of Trager v Suffolk County, 185 AD3d at 698, the decision notes that an appointing authority's discretion to terminate probationary employees is especially broad "in appointment of law enforcement officers, to whom high standards may be applied."

Noting that Plaintiff did not allege that his dismissal from his position was made in bad faith, the court said the record indicated that there was "a rational basis for the determination terminating the [Plaintiff's] probationary employment and that the [appointing authority's] determination was not arbitrary and capricious."

* In York v McGuire, 63 NY2d 760, the Court of Appeals set out the basic rule concerning the dismissal of probationary employees as follows: “After completing his or her minimum period of probation and prior to completing his or her maximum period of probation, a probationary employee can be dismissed without a hearing and without a statement of reasons, as long as there is no proof that the dismissal was done for a constitutionally impermissible purpose, or in violation of statutory or decisional law, or the decision was made in bad faith.”

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

 

Determining if a demand to arbitrate an alleged violation of a term or condition set out in a collective bargaining agreement is viable

Teamsters Local 445 [Union] filed a demand for arbitration of a grievance against the Village alleging that the Village breached the parties' collective bargaining agreement [CBA] by deducting a certain amount from each paycheck of an individual in the relevant collective bargaining unit for health insurance costs.

The Supreme Court granted the Village's petition to permanently stay arbitration on the ground that the claim sought to be arbitrated was barred by the four-month statute of limitations applicable to CPLR Article 78 proceedings. The Appellate Division held that the "principal issues raised on this appeal are (1) whether the underlying claim is in the nature seeking review of an administrative determination or in the nature of breach of contract, and (2) if the latter, whether the claim is predicated on a single breach or a series of breaches that occurred with each paycheck.

The court determined that the nature of the claim is breach of contract and that the claim is predicated on a series of independent alleged breaches. The Appellate Division opined that as "the statute of limitations began anew as to each breach," it found that the claim to be arbitrated was not wholly time-barred and modified the Supreme Court's order to "permanently stay so much of the grievance as was not time-barred and granting the Union's cross-motion to the extent of compelling arbitration of so much of the grievance as was not time-barred."

As to the issue concerning whether a grievance is arbitrable, the Appellate Division, explained that the court must follow a two-part test* in making that determination:  

1. The court considers "whether there is any statutory, constitutional or public policy prohibition against arbitration of the grievance". If no prohibition against arbitrating exists; then

2. The court examines the CBA "to determine if the parties have agreed to arbitrate the dispute at issue.

Finding no constitutional, statutory, or public policy provision prohibiting the arbitration of the dispute at issue in this matter, the Appellate Division said with respect to determining whether the parties agreed to arbitrate the dispute, "the merits of the grievance are not the courts' concern. Even an apparent weakness of the claimed grievance is not a factor in the court's threshold determination. It is the arbitrator who weighs the merits of the claim."

In making that determination, "A court ... should merely determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA. If there is none, the issue, as a matter of law, is not arbitrable.

In the event the there is such a "reasonable relationship", the court should rule the matter arbitrable, and the arbitrator will then make "a more exacting interpretation of the precise scope of the substantive provisions of the CBA, and whether the subject matter of the dispute fits within them".

The Appellate Division noted that "The plain terms of the CBA define a grievance to include a claimed violation of the CBA and provide that the Union may seek arbitration so long as it complied with the other steps of the grievance process". Such compliance was not in dispute in the instant appeal.

Here, however, the Village contended "that the matter is not arbitrable because the Union improperly amended the grievance in its demand for arbitration." The Appellate Division, however, said "the precise scope of the substantive provisions of the CBA, and whether the subject matter of the dispute fits within them," is for the arbitrator to determine, citing  Matter of Board of Educ. of Watertown City School Dist. [Watertown Educ. Assn.], 93 NY2d at 143. Accordingly, the Appellate Division held that Supreme Court properly concluded that the subject demand for arbitration should not be stayed on the ground that a valid agreement to arbitrate was not made.

* See Matter of City of Johnstown [Johnstown Police Benevolent Assn.], 99 NY2d 273.

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