Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

Issued during the week ending April 18, 2013 [Click on text highlighted in bold to access the full report] 


DiNapoli Audit Finds $7.7 Million in Questionable Charges by Special Education Providers

The Lake Grove School and the Mountain Lake Children’s Residence, two special education providers run by the same company, overcharged taxpayers by as much as $7.7 million over a four–year period, according to an auditreleased Friday by New York State Comptroller Thomas P. DiNapoli.

DiNapoli: State’s Brownfield Cleanup Program Needs To Reach More Sites; Be More Cost–Effective

The New York State Legislature should examine options to restructure the state’s primary program to revitalize contaminated properties – the Brownfield Cleanup Program – in order to fully achieve the important economic, public health and environmental goals set when the program was created, according to a reportreleased Monday by State Comptroller Thomas P. DiNapoli.

DiNapoli Supports Lobbying Disclosure and Independent Director Proposals at Peabody Energy

New York State Comptroller Thomas P. DiNapoli Tuesday announced support for two shareholder proposals at Peabody Energy Corporation’s annual meeting on April 29 calling for Peabody to disclose corporate lobbying expenses and to require the chairman of the board to be an independent director.

DiNapoli Refers Investigation of Substance Abuse Provider to U.S. Attorney

Phoenix Houses of New York, Inc. provided inappropriate perks to its executives exceeding $223,000 while under contract with the Office of Alcoholism and Substance Abuse Services, according to a reportreleased Wednesday by State Comptroller Thomas P. DiNapoli. DiNapoli referred the findings to U.S. Attorney Preet Bharara’s office for review.

Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

Selected reports and information published by New York State's Comptroller Thomas P. DiNapoli

Issued during the week ending April 26, 2013 [Click on text highlighted in bold to access the full report] 

Bloomingburg Joint Fire District – Internal Controls Over Financial Operations (Sullivan County)
The district board did not ensure that disbursements were made for authorized district purposes. The board did not adequately segregate duties or implement sufficient compensating controls. The district treasurer performs all aspects of the cash disbursements process – including preparing the monthly abstracts; printing, signing, and mailing the checks; and preparing the bank reconciliations – without sufficient oversight by the board.

Village of Depew – Internal Controls Over Capital Projects (Erie County)
Auditors found significant problems with the accounting for and reporting of capital project activity as well as the use of certain debt proceeds. The village did not maintain capital project records in a manner that readily provides information about actual resources committed and expenditures incurred throughout the course of each project, which often span two or more fiscal years.

Essex County Probation Department – Internal Controls Over Financial Operations (2013M-38)
County and department officials had not established an adequate system of internal controls over the department’s financial operations. As a result, cash receipts were not properly accounted for, secured, and deposited in a timely manner. The department’s failure to establish policies and procedures regarding DWI administrative fees has resulted in an inequitable assessment of fees to probationers and a lack of enforcement of inactive probationers’ delinquent accounts. For example, we found that 89 inactive probationers owe at least $9,710, but as much as $58,260, to the county for unpaid fees.

Essex County Sheriff’s Department – Internal Controls Over Cash Receipts and Disbursements (2013M-35)
Although the department established a money-handling policy in April 2012, cash receipts and disbursements were not processed in accordance with the policy. Auditors found the civil clerk performed virtually all financial duties without sufficient oversight or other mitigating controls. Bail and civil office cash receipts were not properly accounted for, secured, and deposited in a timely manner. Also, the department’s computer system allowed for the ability to modify and delete financial transactions, creating the opportunity for the manipulation and concealment of transactions.

Town of Johnsburg – Management Oversight and Online Banking (Warren County)
The town board did not adequately design, implement, or monitor internal controls over the town’s financial activities. The board did not conduct an annual audit of the records of officials and employees who receive and disburse cash. The town supervisor has not adequately segregated the bookkeeper’s online banking duties. Also, the town has not established a confirmation process with its bank for online transfers of town moneys.

Town of North Castle – Cash Disbursement (Westchester County)
Internal controls over cash disbursement are appropriately designed and operating effectively with the exception of bank reconciliations, which have not been prepared since May 2012. Because the town’s deposits total $26 million, the lack of bank reconciliations creates a risk that errors or fraudulent transactions could occur without detection.

Town of Owego Fire District – Board Oversight (Tioga County)
The district board did not audit and approve claims after the transactions occurred and prior to the treasurer paying those claims. Although the board did ensure that the goods purchased were for district purposes, they could not be sure that the amounts paid were aligned with its previously established expectations. In addition, district officials could not account for more than 50 percent of fuel delivered to two of the three district fire stations.

Rescue Fire Company, Inc. – Unaccounted-For Bar Receipts (Niagara County)
All four bar committee members had unmonitored access to the safe where the cash from bar operations was stored.  The board did not require bar committee members to have a second member present while conducting cash counts or adding or removing cash from the safe. Company officials said over the last several years, the bar committee chairman was able to divert cash from the cash register in the bar without their knowledge.

Village of Village of the Branch – Internal Controls Over Financial Operations (Suffolk County)
The village building inspector did not take an oath of office and, as generally required of a village officer, does not reside within the village. In addition, the village and the inspector have entered into a contract, which provides for an annual fee for basic services of $8,000 plus 50 percent of certain permit fees. During the audit period, the inspector received $84,197, nearly $73,000 of which was based on fees collected for building permits.  Because there is no cap on the amount of fees paid to the building inspector, the village cannot know whether the inspector’s compensation is excessive in any given year.

Beacon City School District – Budget Review (Dutchess County)
Auditors found that the significant revenue and expenditure projections in the preliminary budget are reasonable. The district’s proposed budget complies with the property tax levy limit.

Chenango Valley Central School District – Budget Review (Broome County)
Auditors found that the significant revenue and expenditure projections in the proposed budget are reasonable. The district’s proposed budget complies with the property tax levy limit.

Fairport Central School District – Financial Condition and Capital Improvement Project Expenditures (Monroe County)
The district’s budgeting practices have generated repeated operating surpluses and withheld significant funds from productive use. From fiscal year 2007-08 through 2011-12, the district generated net surpluses totaling $15.8 million, an average of $3.2 million in each year. Auditors also found we found that officials did not solicit proposals for $2.7 million in capital improvement project -related services, as required by the district policy.

Monroe-Woodbury Central School District (Orange County)
Auditors found that the significant revenue and expenditure projections in the proposed budget are reasonable. The district’s proposed budget complies with the property tax levy limit.

Oppenheim-Ephratah Central School District – Business Office Operations (Fulton County)
Auditors found the district established adequate internal controls over business office operations. Board policies and written procedures have been developed and adhered to by staff for cash receipts and disbursements, payroll, purchasing, and claims processing. Further, district officials developed appropriate segregation of duties amongst business office staff where possible and also implemented various reviews of the work performed as mitigating controls.

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For access to state and local government spending and more than 60,000 state contracts, visit http://www.openbooknewyork.com/. The easy-to-use website was created by Comptroller DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.

Judge removed from his position for cause notwithstanding his earlier resignation from the position

Judge removed from his position for cause notwithstanding his earlier resignation from the position

A former Judge [Judge] appealed a determination of the State Commission on Judicial Conduct in which the Commission had sustained a single charge of judicial misconduct against him and determined that he should be removed from office (see NYS Constitution, Article VI, §22; Judiciary Law §44[1]).

The Judge had earlier resigned from his position after admitting to certain conduct that he characterized as “indefensible” that occurred 40 years earlier.

Notwithstanding the Judge’s resignation, the Commission continued the proceeding and ultimately sustained the charge* and ordered Judge’s removal, finding that his admission, standing alone provided a sufficient basis for the determination.**

Citing Matter of Going, 97 NY2d 121 and Matter of Aldrich, 58 NY2d 279, the Court of Appeals affirmed the Commission’s action, explaining that it measures “the necessity for removal ‘with due regard to the fact that judges must be held to a higher standard of conduct than the public at large’ as even ‘relatively slight improprieties subject the judiciary as a whole to public criticism and rebuke, it is essential that we consider’ the effect of the Judge's conduct on and off the Bench upon public confidence in his [or her] character and judicial temperament."

The Court said that it agreed with the Commission that Judge's admissions, by themselves, were sufficient to warrant the finding of judicial misconduct. The admitted conduct undermined the integrity and impartiality of the judiciary and therefore, said the court, rendered Judge unfit for judicial office.

Noting that “[I]t is troubling that the petition is based solely on conduct that occurred 40 years ago —- 13 years before [Judge] was elevated to the bench,” the Court of Appeals said that the misconduct alleged is grave by any standard.

Accordingly, said the court, the determined sanction of removal should be accepted and Judge removed from the office of Judge.

* Two Commission members dissented in part on the ground that Judge had removed himself from his judgeship by resigning and that his post-resignation removal proceedings "served no purpose" in this case.

** Similarly, 4 NYCRR 5.3(b) which applies to employees in the classified service of the State and public authorities, public benefit corporations and other agencies for which the Civil Service Law is administered by the State Department of Civil Service, provides:provides, in pertinent part, “…when charges of incompetency or misconduct have been or are about to be filed against an employee, the appointing authority may elect to disregard a resignation filed by such employee and to prosecute such charges and, in the event that such employee is found guilty of such charges and dismissed from the service, his termination shall be recorded as a dismissal rather than as a resignation.” Many local civil service commissions have adopted a similar provision.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2013/2013_02773.htm

Employee’s argument that “mitigating circumstances” should temper imposing the penalty of dismissal from her position rejected

Employee’s argument that “mitigating circumstances” should temper imposing the penalty of dismissal from her position rejected

Thornton v Edwards-Knox Cent. Sch. Dist. Bd. of Educ., 2013 NY Slip Op 02450, Appellate Division, Third Department

A school bus driver [Driver] was promoted to Senior School Bus driver in 2006. She served in that capacity until her position was abolished in 2010 and she was returned to her previous duties as a bus driver.

The appointing authority then discovered that Driver had neglected to complete certain required records during the 2009-2010 school year and ultimately filed disciplinary charges against her pursuant to Civil Service Law §75 setting out nine counts of incompetence and misconduct alleging, among other things, that:

[1] She had failed to properly complete and maintain records required by several state agencies;

[2] She had provided bus drivers with advance notice of purportedly random drug and alcohol testing; and

[3] She had sent a disparaging email about the school district to transportation supervisors in other school districts.

The Hearing Officer found Driver guilty of seven of the nine charges and recommended that she be discharged. The appointing authority adopted the Hearing Officer's findings and recommendation as to the penalty to be imposed and dismissed Driver, who subsequently commenced a CPLR Article 78 proceeding challenging her termination. 

Supreme Court dismissed her petition. The Appellate Division sustained the Supreme Court’s ruling, explaining that in evaluating Driver’s appeal it ‘must consider whether, in light of all the relevant circumstances, the penalty is so disproportionate to the charged offense[s] as to shock one's sense of fairness.”

The Appellate Division first addressed Driver’s return to the position of bus driver after serving as senior bus driver noting that it was not a "demotion," but, rather, occurred as specified in a memorandum of understanding pursuant to which the position of senior bus driver had been created in contrast to being a disciplinary consequence of Driver's misconduct.

The decision notes that while Driver sent the disparaging email after being reinstated to a school bus driver position because she was "upset" about losing the post, most of the remaining charged conduct had occurred prior to the elimination of the position, but appointing authority neither learned about it nor took disciplinary action against Driver until after she had left the Senior School Bus Driver position.

The Appellate Division said that Supreme Court had noted that the charges here did not arise from a single issue or act, nor were the shortcomings limited to matters that did not impact student safety. Among the examples of misconduct described was the Driver “just before leaving the senior bus driver position in late August 2010 [had] discovered that she had ‘forgot[ten],’ for a period of almost a full year, to maintain certain required certifications for the school district's bus drivers” and wrote a note to successor that she placed “in a drawer with the unfinished paperwork and left for a vacation.”

The school district's employees testified that this and Driver's other failures endangered the school district's eligibility for state transportation aid and placed it at risk of fines and other legal and financial consequences and “[m]ost seriously, the safety of the school district's students was jeopardized by Driver's warnings to drivers of the dates of random drug and alcohol tests.”

As to mitigating circumstances that might temper imposing the penalty of dismissal, the Appellate Division said it was “unpersuaded by Driver's argument that, in light of her unblemished disciplinary record as a bus driver, she should not be terminated for her offenses involving supervisory and administrative responsibilities, as these are not part of her work as a bus driver” and found that the Driver's termination was neither disproportionate to her misconduct nor to the risk of harm it posed to the school district.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2013/2013_02450.htm