Local government and school audits issued during the week ending April 12, 2024

On April 11, 2024 New York State Comptroller Thomas P. DiNapoli announced the following local government and school audits were issued.

 

Village of Corinth – Investment Program (Saratoga County)

Village officials did not develop and manage a comprehensive investment program. During the 12-month audit period, the village earned $1,516 from money on deposit in its two checking accounts, which had an average monthly available balance of $4.8 million. Had officials considered other legally permissible investment options, the village may have earned an additional $148,755 in interest earnings. Village officials did not: solicit interest rate quotes or prepare monthly cash flow forecasts, or; consider other legally authorized investment options when investing available funds. 

 

Town of Glen – Water and Sewer Operations (Montgomery County)

Town officials did not properly manage water and sewer fund financial operations. The board did not adopt the water and sewer rates that were charged to customers or audit the clerk’s records and water and sewer bills and meter readings were not independently reviewed for accuracy. As a result, officials and customers have no assurance that water and sewer bills and account balances are accurate. Of the 306 bills reviewed, 73 (24%) were inaccurate. The clerk also made 12 unsupported adjustments totaling $1,981 to four customer accounts without any review or approval and the bookkeeper did not record amounts billed totaling $592,956 for water and sewer services in the accounting records and sewer revenue was overstated by $152,023 as of Dec. 31, 2022.

 

Village of Hunter – Financial Operations (Greene County)

The board and clerk-treasurer did not properly manage village financial operations. The board did not: ensure board actions were captured in the village record and transparent to the public; establish controls to address the lack of segregation of the clerk-treasurer’s duties; provide oversight of the clerk-treasurer’s payroll, or; perform required annual audits of the clerk-treasurer’s reports and records. Auditors found the clerk-treasurer did not: prepare or maintain board meeting minutes; maintain supporting documentation for deposits; prepare abstracts for payment of claims; make timely deposits, or; file annual financial reports with the Office of the State Comptroller. The clerk-treasurer also was paid $34,988 without support or approval over a two-year period for overtime ($32,462) and unused leave time ($2,526).

 

Town of LaGrange – Financial Management (Dutchess County)

The board did not develop a multiyear financial plan or manage general fund balance in accordance with town policy. As of Dec. 31, 2022, the general unassigned fund balance was $3.3 million, or 51% of the ensuing year’s budgeted appropriations, which exceeded the town’s fund balance policy limit by more than $725,000. As a result, it is difficult for the board to assess alternative approaches to financial needs without a multiyear financial plan and more taxes may have been levied than necessary.

 

Newcomb Central School District – Claims Audit (Essex County)

District claims were not properly audited in accordance with New York State Education Law prior to payment. Auditors reviewed 90 claims totaling $1.3 million and determined the board of education did not ensure 60 claims totaling $1.2 million were audited and approved before payment. Because claims were not properly audited, there is an increased risk that improper or unsupported payments could have been made and may not be detected and corrected.

 

Otsego County Soil and Water Conservation District – Board Oversight  

The board did not effectively manage grants or ensure that authorized disbursements were supported and for appropriate purposes. As a result, district officials made overpayments, unsupported payments and unnecessary payments at taxpayers’ expense. Specifically, officials overpaid landowners a total of $174,950 for six grants resulting in an inappropriate use of local taxpayer money. They also made 49 disbursements totaling $145,876 without adequate support (out of 63 disbursements reviewed totaling $154,080) and paid $11,630 in unnecessary payments, including excess tree purchases, late fees, interest, unused cell phone accounts, sales tax and lease payments for a copier that had been replaced. Officials also paid employees for unsupported leave payments totaling $8,860 and made an unallowed payment totaling $1,192.

 

Putnam County Court and Trust

Auditors reviewed the commissioner’s, county clerk’s and surrogate’s court’s processes, procedures and records for the receipt and management of court and trust funds as well as estates in the commissioner’s custody. The records maintained by the commissioner, county clerk and surrogate’s court were generally up to date and complete, and auditors noted no material discrepancies.

 

Tioga County – Social Service Contracts  

While department officials generally monitored contracts through reviewing agency reports, in-person meetings with agency staff and firsthand observation of services, they could improve contract monitoring. Three of the 10 contracts reviewed, totaling $344,210, did not meet contract terms. Officials were either unaware that the agencies did not achieve contract terms or were aware and allowed the contract to continue without termination. In addition, agency records were not always complete, and seven contracts were executed, on average, 34 days after services commenced. As a result, performance measures were not always met, and the impact of services intended to improve the well-being of residents was reduced.

 

Washington-Saratoga-Warren-Hamilton-Essex Board of Cooperative Services (BOCES) – Meals Provided at Meetings  

BOCES officials did not adequately support meals provided at meetings were appropriate, which increased the risk that BOCES may have paid for unnecessary meals. Auditors reviewed payments for meals totaling $63,009 provided at 80 meetings. Officials did not document the need for meals totaling $62,357 (99%) provided at 79 meetings and also did not document who attended 39 meetings at which payments totaling $28,446 (45%) were made for meals. The superintendent/designee did not document prior approval for meals totaling $31,991 (51%) provided at 29 meetings. Officials paid $6,772 more than federal per diem rates for meals provided at 34 meetings.

 

Western Suffolk Board of Cooperative Educational Services (BOCES) – Clerical Overtime (Suffolk County)

BOCES officials did not appropriately monitor and approve overtime for clerical employees. As a result, officials may have paid more overtime than necessary. Officials paid 17 employees overtime totaling $123,276 without written preapproval and paid 13 employees overtime totaling $72,218, without any explanation as to why the overtime was worked. Additionally, officials paid 13 employees for unsupported overtime totaling $19,932.

 

Wyandanch Union Free School District – Budget Review (Suffolk County)

Auditors found that the significant revenue and expenditure projections in the proposed budget are reasonable. The district’s proposed budget includes approximately $10.9 million in health insurance appropriations; this appropriation is $1.5 million, or 17%, more than the $9.4 million projected expenditure for 2023-24. The district’s proposed budget includes approximately $1 million in New York State and Local Retirement System appropriations, which is approximately $414,000, or 70%, more than the $590,000 projected expenditure for 2023-24. The district’s proposed budget complies with the tax levy limit. 

 

An administrative agency is responsible for making the final determination in an administrative appeal and the court's role is limited to determining whether the administrative determination is supported by substantial evidence

In this CPLR Article 78 action, it was undisputed that the hearing before a Department of Motor Vehicles [DMV] Administrative Law Judge was recorded by an electronic recording system. The recording was sent to a transcription service but the transcription service only provided one audio recording transcript. As DMV was reviewing the record for this proceeding, DMV's counsel discovered that the Appeal Board [Board] had only received the first audio recording, which consisted of the automotive facilities inspector's testimony.

The Board credited the inspector's testimony but the Appellate Division said the Board "obviously ... did not consider the cross-examination of the inspector nor Petitioner's own testimony as to the process undertaken in diagnosing the vehicle's problem and the repairs provided based on the diagnosis of the problem. In the words of the Appellate Division, "the Board could not properly assess that argument without the testimony of all witnesses" and it is imperative that an appeal board's obligatory review, as well as this Court's substantial evidence review, be based "on the entire record".

As the transcripts had been provided to the Appellate Division, Petitioners argued that the requisite factual findings may be discerned by the court's review of the entire record. The Appellate Division opined that "the [Board} is the administrative agency responsible for making the final determination" and the court's role "is to examine whether the [Board's] determination was supported by substantial evidence".

Citing Matter of Morgan v Warren County, 191 AD3d 1129, the Appellate Division explained that there must be sufficient findings of facts in the first instance and the Appellate Division  could not supply the necessary factual findings upon a review of the hearing evidence given that the Appellate Division's review "is limited to a consideration of the statement of the factual basis for the determination".

Accordingly, the Appellate Division ruled that the Board's determination must be annulled and remitted the matter "to the Repair Shop Review Board for its de novo determination on the entire record."

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

 

Mayoral Control of New York City Schools report issued by the New York State Department of Education

On April 10, 2024, the New York State Department of Education released its report addressing "Mayoral Control of New York City Schools". Click HERE to access the Department's report posted on the Internet.

N.B.: This report is Copyrighted ©2024. However, the report includes the following statement:

"Except as expressly provided to the contrary, permission to copy, use, and distribute the materials within is hereby granted without fee for personal, private and educational purposes, except that reproducing materials for profit or any commercial use is strictly forbidden without express prior written permission of the New York State Education Department. Requests for permission should be sent to legal@nysed.gov."

 

Seeking a Writ of Mandamus to compel a particular action by a public official

In deciding a CPLR Article 78 action, the Appellate Division, First Department, addressed the efforts of one of the parties in the action to obtain a Writ of Mandamus to compel a particular action by a public official.

Citing Klostermann v Cuomo, 61 NY2d 525, the court observed that mandamus "is an extraordinary remedy that, by definition, is available only in limited circumstances". 

The Appellate Division's decision also notes that mandamus "will lie only to compel the performance of a ministerial act, and only where there exists a clear legal right to the relief sought", citing Matter of Wyche v Haywood-Diaz, 206 AD3d 748. In addition, the decision points out that the remedy of mandamus "does not lie to compel an act which involves an exercise of judgment or discretion" by the official.

Further, the Appellate Division's decision notes that Supreme Court "properly denied a branch of the petition" because "the petitioners failed to exhaust their administrative remedies before commencing this proceeding pursuant to CPLR article 78, and there is no basis in the record to determine that any exception to the exhaustion of administrative remedies requirement would apply."

The Appellate Division then opined that "to the extent the petitioners' challenge ... was predicated upon a constitutional claim," that claim "hinges upon factual issues reviewable at the administrative level [which] must first be addressed to the agency so that a necessary factual record can be established," and thus, the petitioners were not excused from the obligation to pursue administrative remedies prior to commencing this proceeding.

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

 

Reviewing the Comptroller's determination denying an application for performance of duty and accidental disability retirement benefits

A police officer [Petitioner] filed applications for performance of duty and accidental disability retirement benefits in June 2014 based upon an incident that occurred on September 22, 2011. Petitioner alleged that he was injured when a rolling chair slammed into the back of a chair in which Petitioner was then seated, resulting in injuries to his back, as well as the development of depression, anxiety and post-traumatic stress disorder.

Petitioner returned to a light-duty position in January 2012 but stopped working in June 2013. Although the applications were initially denied, ultimately New York State and Local Retirement System [System] conceded that the September 2011 incident constituted an accident within the meaning of the Retirement and Social Security Law, and that the accident caused Petitioner's disability. Following a hearing, however, the Hearing Officer upheld the denials, finding that Petitioner had failed to establish that he was permanently incapacitated from performing the duties of his light-duty assignment. The Comptroller accepted the Hearing Officer's findings and conclusions, resulting in Petitioner initiating a CPLR Article 78 proceeding challenging the Comptroller's decision.

Both parties agreed that the applicable standard is whether Petitioner was capable of performing the duties of his light-duty assignment (see 2 NYCRR 364.3 [b].

Petitioner's expert concluded that Petitioner's psychological condition was permanent and prevents him from returning to any form of police work, including his light-duty assignment. The System's expert, however, concluded that Petitioner was permanently disabled from performing his light-duty position with his  police department, as returning to the location of the incident would trigger his condition, although Petitioner could perform a light-duty assignment elsewhere, provided certain conditions were met.

The Comptroller credited the System's expert and denied Petitioner's applications.

The Appellate Division, observing that the record indicated that there is no assignment available that complies with the limitations described in the testimony of the System's expert in Petitioner's agency, said it was undisputed that Petitioner is permanently incapacitated from performing his light-duty assignment due to his psychological condition. 

Citing Matter of Lipsky v New York State Comptroller, 56 AD3d 1101, the court held that the Comptroller's determination that Petitioner was not permanently incapacitated from performing the duties of his assignment was "not supported by substantial evidence in this record and thus must be annulled."

Click HERE to access the Appellate Divisions decision posted on the Internet.