Volunteer fire association chief alleged to have taken fire association fuel for his personal use

Volunteer fire association chief alleged to have taken fire association fuel for his personal use

Source: Office of the State Comptroller

Click on text highlighted in color to access the audit report

Pennellville Volunteer Fireman’s Association (VFA) Fire Chief Duane Royal was charged with grand larceny Sunday, November 26, 2015, for allegedly stealing gas from the fire association for his private use according to an auditand investigation by State Comptroller Thomas P. DiNapoli.

Royal admitted to DiNapoli’s staff and the New York State Police that he gassed up at the VFA pump and used the VFA chief’s truck for his personal business as a process server.  He was charged with grand larceny in the fourth degree, a class E felony. DiNapoli’s staff also found that Royal was suspended for a month after selling the VFA truck for $3,000 without informing his colleagues.

The Comptroller’s auditconcluded that the Pennellville VFA failed to account for cash disbursements, that the treasurer lacked cash receipts for 261 deposits totaling $134,882, and that board members could not say whether music event-fundraisers benefited the VFA due to the lack of treasurer reports for four such events.

DiNapoli made 16 recommendations to the VFA board and Treasurer, including:

1. Strengthen internal controls with specific guidance for cash receipts and disbursements;

2. Train the treasurer to adequately perform his or her duties and require monthly reports on financial transactions;

3. Strengthen fuel purchase controls; and

4. Maintain detailed financial records related to cash transactions, fundraising events and loans to members.

VFA officials agreed with the Comptroller’s audit findings and stated that most have been implemented. Their response is included in the final audit report, which can be viewed on the Internet at: http://www.osc.state.ny.us/localgov/audits/firedists/2015/pennellville.pdf  

DiNapoli reported that his audits and investigations have led to more than 100 arrests and $20 million in money recovered since 2011. Since taking office in 2007, DiNapoli has been committed to fighting public corruption and encourages the public to help fight fraud and abuse. Allegations of fraud involving taxpayer money may be reported by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at investigations@osc.state.ny.us, or by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.

Prior case reports may be viewed on the Internet at: http://www.osc.state.ny.us/investigations/index.htm. 
 

A Freedom of Information request for records concerning law enforcement operations may be denied

A Freedom of Information request for records concerning law enforcement operations may be denied

Madeiros v New York State Educ. Dept., 2015 NY Slip Op 08028, Appellate Division, Third Department

Pamela A. Madeiros submitted a Freedom of Information Law [FOIL] request seeking the audit guidelines issued by the New York State Department of Education [SDE] and any communications that it had with municipalities or school districts "relating to the standards and procedures for, or relating to past, current or future fiscal audits of services or programs."

SDE denied the request in its entirety, stating that the documents were exempt from FOIL as records compiled for law enforcement purposes.* Ultimately SDE provided Madeiros  with 55 pages of redacted documents as a response to her FOIL request, maintaining that the redacted portions were exempt from disclosure pursuant to Public Officers Law §87(2)(e) and (g). 

Supreme Court rejected SDE efforts to invoke Public Officers Law §87(2)(g) with regard to two of the pages, but held that the undisclosed portions of the remaining documents were compiled for law enforcement purposes and were exempt from disclosure under Public Officers Law §87(2)(e)(i).

Madeiros’ appealed of the Supreme Court’s ruling but the Appellate Division, explaining that "FOIL is based on a presumption of access to the records, and an agency . . . carries the burden of demonstrating that the exemption applies to the FOIL request,." sustained the Supreme Court's ruling. In this instance, said the court, DOE had relied upon Public Officers Law §87(2)(e) with respect to providing redacted records a provision that exempts records from disclosure that "are compiled for law enforcement purposes and which, if disclosed, would . . . interfere with law enforcement investigations or judicial proceedings."**

Noting that Madeiros had obtained unredacted copies of almost 20 of the produced pages from another source, rendering academic a good portion of the relief she seeks, certain records, including an internal control questionnaire, the Appellate Division said that the redacted portions of the documents demanded by Madeiros to be supplied by DOE would, indeed, reveal to “unscrupulous [providers] the path that an audit is likely to take and alert them to items to which investigators are instructed to pay particular attention,” agreeing with Supreme Court that such documents  constituted "compilations of investigative techniques exempt from disclosure."

* The release of some public records is limited by statute [see, for example, Education Law, §1127 - Confidentiality of records; §33.13, Mental Hygiene Law - Clinical records; confidentiality]. Otherwise, an individual is not required to submit a FOIL request as a condition precedent to obtaining public records where access is not barred by statute. A FOIL request is required only in the event the custodian of the public record[s] sought declines to “voluntarily” provide the information or record requested. In such cases the individual or organization is required to file a FOIL request to obtain the information. It should also be noted that there is no bar to providing information pursuant to a FOIL request, or otherwise, that falls within one or more of the exceptions that the custodian could rely upon in denying a FOIL request, in whole or in part, for the information or records demanded.

** DOE had contended that the redactions were necessary because disclosure of the unredacted documents would reveal auditing techniques that would enable the providers of preschool special education programs to conceal their financial misdeeds more effectively.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2015/2015_08028.htm

Employees of Suffolk County Community College held ineligible to participate in the County’s Deferred Compensation Plan

Employees of Suffolk County Community College held ineligible to participate in the County’s Deferred Compensation Plan

Suffolk County Assn. of Mun. Empls., Inc. v Levy, 2015 NY Slip Op 08180, Appellate Division, Second Department

Suffolk County Assn. of Mun. Empls., Inc. v Levy, 2015 NY Slip Op 08181, Appellate Division, Second Department

A number of individuals employed by the Suffolk Community College represented by Suffolk County Association of Municipal Employees [SCAME], an employee organization representing employees of Suffolk County including those at the College, had been permitted to participate in the Suffolk County Public Employees Deferred Compensation Plan [County Plan].

The County Planis administered by the Suffolk County Deferred Compensation Board [County Board] and in 2009 the County and the College entered into a Sponsor Service Agreement and a Memorandum of Understanding of Procedures that provided that the College and the County are independent entities and that neither entity's employees are to be deemed employees of the other entity.

The County Board then asked New York State Deferred Compensation Board [State Board] if the College's employees were eligible to continue to participate in the County Plan in view of the terms of the 2009 Memorandum of Understanding deeming them to be employed by an entity other than the County. The State Board determined, primarily based upon the terms of the New Operating Agreement, that the County and the College were separate and distinct employers and, therefore, the College's employees could no longer participate in the County Plan.*

The County Board adopted the State Board's determination and, in a letter dated March 29, 2010, informed the College's employees that they could no longer participate in the County Plan.

SCAMEchallenged the County Board's determination that the County and the College were separate employers and, thus, the College's employees could no longer participate in the County Plan. Supreme Court dismissed SCAME's CPLR Article 78 petition and the employee organization appealed.

The Appellate Division sustained the Supreme Court’s ruling. The Appellate Division explained that “contrary to [SCAME’s] contentions, the challenged determination that the County and the College are separate employers and, therefore, the College's employees could no longer participate in the County Plan, had a rational basis and was not arbitrary and capricious or an abuse of discretion. Accordingly, said the court, the Supreme Court properly denied the petition and dismissed the proceeding.

* The State Board cited §457 of the Internal Revenue Code as the authority for establishing the Suffolk County Public Employees Deferred Compensation Plan. It should be noted, however, that Article 8-C of the Education Law [§§398-399-A], SPECIAL ANNUITY, also referred to as a “tax-deferred annuity plan,” permits an individual employed by “the state university, the board of higher education of the city of New York, or a community college established and operated under article one hundred twenty-six of this chapter to participate in a tax-deferred annuity plan as permitted under §403(b) of the United States Internal Revenue Code” should such an entity “elect to establish by resolution special annuity and custodial account programs which shall provide for the purchase of contracts or establishment of custodial accounts providing retirement and death benefits for or on behalf of employees electing to enter into an agreement with such employer providing for a reduction of annual salary for the purpose of purchasing such contracts or for making contributions to such custodial accounts.”

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2015/2015_08180.htm

Governor Cuomo announces a minimum wage of $15 an hour for state workers by July 2021

Governor Cuomo announces a minimum wage of $15 an hour for state workers by July 2021

Source: Office of the Governor 

Incumbents of some 10,000 state positions in the Executive branch, the Legislature, the Judiciary, and the Department of Law and the Office of State Comptroller are expected to benefit by the implementation of the Governor’s plan. Approximately 9,000 of these positions are outside of New York City and 1,000 within New York City.

According to the Governor, this wage adjustment will be reflected in the State’s Budget Policy and Reporting Manual. When fully phased in on July 1, 2021, the Governor’s estimated cost of this $15 minimum wage for state employees will be about $20.6 million, including the anticipated additional costs for fringe benefits.

The plan calls for period increase in the hourly wage of employee affected as follows:

New York City		Statewide (excluding NYC)
Min. Wage	Effective Date	Min. Wage	Effective Date
$10.50	12/31/2015	$9.75	12/31/2015
$12.00	12/31/2016	$10.75	12/31/2016
$13.50	12/31/2017	$11.75	12/31/2017
$15.00	12/31/2018	$12.75	12/31/2018
		$13.75	12/31/2019
		$14.50	12/31/2020
		$15.00	7/1/2021

 

Incumbents of some 10,000 state positions in the Executive branch, the Legislature, the Judiciary, and the Department of Law and the Office of State Comptroller are expected to benefit by the implementation of the Governor’s plan. Approximately 9,000 of these positions are outside of New York City and 1,000 within New York City. 

According to the Governor, this wage adjustment will be reflected in the State’s Budget Policy and Reporting Manual. When fully phased in on July 1, 2021, the Governor’s estimated cost of this $15 minimum wage for state employees will be about $20.6 million, including the anticipated additional costs for fringe benefits.

 

Selected Reports issued by the Office of the State Comptroller during the week ending November 13, 2015

Selected Reports issued by the Office of the State Comptroller during the week ending November 13, 2015

Click on text highlighted in color to access the full report

School DistrictAudits

Chatham CSD – Financial Condition
The district realized operating surpluses because the board overestimated expenditures when developing budgets. The district has not established a formal plan stating how much will be set aside in each reserve, how each reserve will be funded or when reserve funds are to be used.

http://www.osc.state.ny.us/localgov/audits/schools/2015/chatham.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015arelease

Cherry Valley-Springfield CSD – School Lunch Operations
The district is serving nutritious meals to its students. However, the meals cost more to prepare than the revenue generated by the meal sales.

http://www.osc.state.ny.us/localgov/audits/schools/2015/cherryvalleyspringfield.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015arelease

Edmeston CSD – School Lunch Operations
The district serves nutritious meals to its students and cafeteria staff produce the meals in a productive manner. However, meals cost more to prepare than the revenue generated by the meal sales.

http://www.osc.state.ny.us/localgov/audits/schools/2015/edmeston.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015arelease

Kenmore-Town of Tanawanda UFSD - Financial Management

The district consistently appropriated fund balance that was not needed to finance operations. In addition, the district overfunded three reserves by approximately $5.6 million, incorrectly recognized $1.2 million in liabilities and accumulated $905,606 in the debt reserve as of June 30, 2014.

http://www.osc.state.ny.us/localgov/audits/schools/2015/kenmoretonawanda.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015arelease

Penfied CSD – Financial Management

The district adopted budgets with overestimated expenditures and appropriated fund balance to finance operations that was not actually used. As of June 30, 2015, two reserves with balances totaling approximately $8 million are overfunded and potentially unnecessary. The school lunch fund’s total fund balance exceeds the federally regulated limit by more than $45,000.

http://www.osc.state.ny.us/localgov/audits/schools/2015/penfield.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015arelease

Municipal Audits

Town of Deerpark – Budget Review
The significant revenue and expenditure projections in the preliminary budget are reasonable. However, the continued reliance on appropriated fund balance to fund town operations will eventually deplete fund balance and adversely affect the town’s financial condition. The town’s 2016 proposed budget complies with the property tax cap levy limit.

http://www.osc.state.ny.us/localgov/audits/towns/2015/deerpark_br.pdf

Town of East Hampton – Budget Review

The significant revenue and expenditure projections in the tentative budget are reasonable. The town’s 2016 tentative budget complies with the property tax cap levy limit.

http://www.osc.state.ny.us/localgov/audits/towns/2015/easthampton_br.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

Village of East Hampton – Information Technology

The board has not adopted written computer-related policies to address user access, remote access, password security and management, or data backups. Additionally, village officials improperly assigned administrative privileges, created generic user accounts and provided excessive access rights to the village’s financial and real property tax software.

http://www.osc.state.ny.us/localgov/audits/villages/2015/easthampton.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

Halfmoon Hillcrest Volunteer Fire Company – Financial Operations

The former treasurer did not maintain appropriate, accurate, complete or timely financial records and reports. The board did not perform an audit of the treasurer’s records for the 2011, 2012 and 2013 fiscal years until April 2014.

http://www.osc.state.ny.us/localgov/audits/firedists/2015/halfmoonhillcrest.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

Jamison Road Volunteer Fire Company, Inc. –Internal Controls Over Financial Operations

The board generally did not provide adequate oversight of company financial activities to ensure that resources are safeguarded. The treasurer did not obtain board and membership approval for all bills before paying them and did not retain adequate supporting documentation to demonstrate that all purchases were for a valid company purpose.

http://www.osc.state.ny.us/localgov/audits/firedists/2015/jamisonroad.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

City of Lockport – Budget Review

The city has three different contracts with employee unions which have expired and has not included the potential financial impact of contract settlements in the proposed budget. The water rent revenue estimate could be overstated by approximately $400,000. The common council has indicated it will adopt a local law to override the tax levy limit in 2016.

http://www.osc.state.ny.us/localgov/audits/cities/2015/lockport_br.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

Rockland County – Budget Review

The significant revenue and expenditure projections in the proposed budget are reasonable. However, the county will need to closely monitor revenue associated with the sale of real property and chargebacks to other local governments. If this revenue is not realized, officials will either have to find another revenue sources or reduce appropriations accordingly. The county’s proposed budget exceeds the tax levy limit. The Legislature must pass a local law overriding the tax levy limit before adopting the proposed budget.

http://www.osc.state.ny.us/localgov/audits/counties/2015/rockland_br.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

City of Troy – Budget Review

The proposed budget, while generally reasonable, needs improvement to make it a better tool for prudently managing the city’s resources. For example, the city’s proposed budget includes estimated revenues related to the sale of real property, franchise fees, sales tax and advanced life support charges which may not be realized. The city’s proposed real property tax levy is not in compliance with its tax levy limit and officials have not adopted a local law to override the limit.

http://www.osc.state.ny.us/localgov/audits/cities/2015/troy_br.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

Village of Victor – Financial Management
The board needs to improve its oversight and management of the village’s budgeting and financial operations. The board has not adopted policies and procedures governing the budget process or a fund balance policy establishing the level of fund balance to maintain.

http://www.osc.state.ny.us/localgov/audits/villages/2015/victor.pdf?utm_source=weeklynews20151115&utm_medium=email&utm_campaign=111015brelease

Unions representing public employees are not state actors absent evidence of meaningful State participation in the activity underlying the complaint

Unions representing public employees are not state actors absent evidence of meaningful State participation in the activity underlying the complaint

Callaghan v United Fedn. of Teachers, 2015 NY Slip Op 08049, Appellate Division, First Department

Supreme Court granted the United Federation of Teachers’ [UFT] motion to dismiss James V. Callaghan’s lawsuit alleging [1] violation of his “state constitutional right to free speech and [2] defamation. Callaghan appealed but the Appellate Division sustained the lower court’s action.

Addressing Callaghan’s complaint alleging a violation of his free speech rights, the Appellate Division, citing Ciambriello v County of Nassau, 292 F3d 307, explained that his claim fails as a matter of law as the UFT is a private entity and New York courts have consistently held that unions, even those representing public employees, such as the UFT, are not state actors.

Further, said the court, Callaghan’s conclusory allegation that the UFT acted in concert with a “state actor” is not sufficient to state a claim against the UFT. The court cited SHAD Alliance v Smith Haven Mall, 66 NY2d 496, in which the Court of Appeal held that in order for a plaintiff to maintain such an action the plaintiff would have to allege facts that would show that the State [1] "is so entwined with the regulation of the private conduct as to constitute State activity"; [2] that "there is meaningful State participation in the activity"; or [3] that "there has been a delegation of what has traditionally been a State function to a private person."

As to Callaghan’s compliant alleging “defamation, “the Appellate Division ruled that the Supreme Court properly dismissed Callaghan’s cause of action for defamation explaining that “even to the extent that some of the statements about [Callaghan’s] disciplinary and professional history are assertions of fact, the statements were made by UFT officials in their official capacities, and they cannot be held liable for acts committed in their capacity as union representatives.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2015/2015_08049.htm