Municipal audits issued during the week ending April 24, 2020

On April 24. 2020, New York State Comptroller Thomas P. DiNapoli announced the following local government audits have been issued.

Click on the text highlighted in color to access the complete text of the report.

Village of Bloomingburg – Financial Operations (Sullivan County)

The board did not adequately oversee the treasurer’s work or require annual audits of the treasurer’s records and reports. Auditors also found that the treasurer did not provide regular financial reports to the board or maintain adequate accounting records. In addition, the treasurer did not file Annual Update Documents (AUDs), which are the required annual financial reports, with the Office of the State Comptroller (OSC) or the board in a timely manner.

Village of Greenwich – Cash Management (Washington County)

The board did not develop and manage a comprehensive investment program to ensure interest earnings were maximized. Also, village officials did not solicit interest rate quotes from additional financial institutions or prepare any cash flow forecasts to estimate the amount of funds available for investment. Had officials invested available funds in a financial institution with higher available interest rates, interest earnings could have been increased by approximately $42,200 during the audit period.

Village of Greenwich – Water and Sewer Financial Operations (Washington County)

The Village lacked effective procedures to ensure water and sewer charges were accurately billed, collected and enforced. Board-adopted water rates were incorrectly set up in the billing and collection software. Customer bills were not accurately prepared. As a result, the customers auditors reviewed were underbilled by $4,758 and overbilled by $235. In addition, delinquent customer accounts were not always assessed penalties in accordance with the board-adopted local laws. As a result, based on the delinquent customer accounts auditors reviewed, the Village lost revenue totaling $3,244.

Village of Suffern – Budget Review (Rockland County)

Auditors found that significant revenue and expenditure estimates in the tentative budget are reasonable. The village budgeted approximately $2.13 million in metered water revenue and $2.67 million in sewer rent revenue. However, based on collections of water and sewer rents in prior years, auditors estimate the total 2020-21 collections for water and sewer revenue will be approximately $1.94 million and $2.38 million, respectively, which is approximately $190,000 less than budgeted for water revenues and approximately $290,000 less than budgeted for sewer revenues. The tentative budget includes a tax levy of $12,426,613 which is $471,753 above the limit established by law.

Cybersecurity and COVID-19

Concerns about the impact of COVID-19 individuals and the economy has resulted in a variety of efforts by some individuals to use email, text messages, telephone calls and postings on the Internet to persuade organizations and individuals to reveal financial and other confidential information to their detriment. 

Below are some of the types of messages that are currently being used in targeting government agencies, not-for-profits, businesses and individuals in an effort to obtain an organization's confidential data or information or an employee's or an individual's personal information.

A pop-up or message seeking to confirm or update the organization's or an employee's banking or other financial information. 

  

An email or text seeking contributions to "Fight the Coronavirus."*

A message offering investment opportunities in organizations "Fighting Coronavirus." 

A message seeking information to assist the organization or individual to apply for or receive an economic stimulus check or similar funds. 

Calls, emails, or other communications claiming to be from the FDIC or another federal agency or a state or municipal government organization offering COVID-19 related grants or payments upon receipt of certain financial information. 

Robocalls offering funds to organizations and businesses affected by the pandemic and selling "referral programs." 

Fraudulent checks from entities posing as a vendor.

The above information was provided by Mr. Heinan Landa, CEO and Founder of Optimal Networks, an IT services firm. Mr. Landa offers to discuss online security and what your organization can do to protect itself against COVID-19 generated scams. You may contact Mr. Landa by telephone  [240-506-5702] or email [hlanda@optimalnetworks.com].

* NYPPL received the e-mail set out below on April 23, 2020:

NOMZING TRADING N.G.O FOUNDATION
Thu, Apr 23 2020 3:06 PM

From: cvd19.relieffunds@sa. . . . .

ATTENTION:

This is pleading with all well meaning organizations and kind individuals to please come and let's join South Africa Government fight CORONA VIRUS (COVID 19) Through (NOMZING TRADING NGO FOUNDATION ) to enable us support the less privilege amongst us, So they can be able to buy Hand sanitizers, Face-Mask, Food, and other Items during this Lock-down period. It doesn't matter the country you're from, we are all one. Let's fight this together to spread love and support to our people, we can't leave this heavy load of The Pandemic to our Government alone, it is also our duty to be there for people that are not able to benefit from Government, they need our support at a time like this, Please you can support us with financial donations through the following account details, no amount is too small.

[Instructions for processing contributions deleted.]

N.B. A Google search for "NOMZING TRADING NGO FOUNDATION" reported:

"No results found for "NOMZING TRADING NGO FOUNDATION".

A CPLR challenge to an administrative determination is subject to a four-month statute of limitations

Challenges to the Retirement Systems' calculation of a member's pension benefit, an administrative determination, may be challenged to CPLR Article 78 but such a challenge is subject to a four-month statute of limitations.

In this Article 78 action a member of the New York City Teachers' Retirement System objected to the exclusion of his 2011 summer pay from the calculation of his pension benefit.* The member did not initiate a judicial challenge to the Retirement System's decision, which decision became final and binding upon member in October 2011, when he received his benefits letter from the Retirement System. 

In 2017 the member received a response to the member's inquiry concerning his pension benefit stating the "there is nothing further than can be done." 

In dismissing the member's Article 78 decision the Appellate Division opined that the Retirement System's response to the member's letter in 2017 "did not extend the [Article 78] limitations period" for bringing a timely action.

As the Appellate Division held in Baloy v Kelly, 92 AD3d 521, a request for reconsideration of an administrative determination neither extends nor enlarges the statute of limitation for filing a timely Article 78 petition.


* Essentially the retirement allowance payable to a retired member of a New York public retirement system consists of two part, a pension portion determined by the members "final average salary" and "years of service credit" and an annuity portion to which the member has made employee contributions.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_01968.htm

Determining if a dispute between a public employer and a public employee organization is arbitrable

In this hybrid Article 75 proceeding the Board of Education [Board] sought a court order pursuant to CPLR article 75 permanently staying an arbitration. Supreme Court denied the petition and granted the Federation of Teachers' [Federation] motion to compel arbitration. The Appellate Division affirmed the Supreme Court's ruling.

Federation had filed a grievance alleging that the Board had violated a term and condition of the relevant collective bargaining agreement [CBA] between the parties by failing to enforce a parking space assignment set out in the CBA.

The Appellate Division, citing Matter of City of Yonkers v Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 153 AD3d 617, said that "Public policy in New York favors arbitral resolution of public sector labor disputes"  but that a dispute between a public sector employer and a public sector employee organization is only arbitrable if it satisfies a two-prong test.

The first prong of this two-point test to be satisfied is the absence of any statutory, constitutional, or public policy prohibition against arbitrating the grievance. If the court finds that there is no such prohibition against the arbitration, it must then determine if the parties agreed to arbitrate the particular dispute by examining their collective bargaining agreement.

In this instance the Board did not contend that arbitrating the Federation's grievance was barred by law or public policy. Accordingly, the issue to be addressed by the Appellate Division was whether the Board and Federation did, in fact, agree to arbitrate the particular dispute. To resolve this question the court must determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA.

Recalling that in analogous cases "this Court had held that the arbitration provision of the CBA at issue here is broad,"* the Appellate Division concluded that there was "a reasonable relationship between the subject matter of the dispute, staff parking, and the general subject matter of the CBA, including conditions of employment" and affirmed the decision of the Supreme Court.

* See Board of Educ., Yonkers City School Dist. v Yonkers Fedn. of Teachers, 110 AD2d 897, 898-899; Matter of Board of Educ. of Yonkers City School Dist. v Yonkers Fedn. of Teachers, 81 AD2d 585; and Matter of Board of Education of Yonkers City School Dist. v Yonkers Fedn. of Teachers, 49 AD2d 753.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_01343.htm

New York State Governor Cuomo waives the statutory 15-day "waiting period" for a public employee's effective date of retirement

New York State Comptroller DiNapoli requested the Executive Order* in order to safeguard benefits for families who may lose a loved one to COVID-19 before their service retirement can be made official. The Executive Order applies to member of the New York State and Local Retirement System.

“Many government workers are on the front lines battling the coronavirus in their communities every day,” DiNapoli said. “God forbid something should happen to them before their retirement becomes effective. Waiving the waiting period after filing for service retirement benefits ensures their families will get the benefits that were intended for them. My thanks to Governor Cuomo for acting on my request and taking steps to protect our heroic state and local workers and their families in these tough times.”

Under the existing law, members of the New York State and Local Employees Retirement System (NYSLRS) must wait 15 days before their service retirement date is effective. This window exists to give the member time to change their mind about their retirement, since the decision is irrevocable. If members of the Employees Retirement System were to die before the period was over, however, their service retirement would not be effective and their beneficiary would lose the retirement benefits the member wanted to provide for them.

Executive Order 202.18 authorizes a retroactive waiver of the 15 day waiting period to March 7, 2020, the date that the state emergency was declared, for members who have died of a COVID-related illness. The EO will enable the many members who are eligible to retire and experience the sudden onset of COVID-19, to choose an effective date of retirement that is less than 15 days from the date of filing. Beneficiaries of Police and Fire members already have the ability to choose service retirement benefits if the member dies before retirement is effective.

NYSLRS recommends that members place an effective date of retirement on their application or if filing using Retirement Online. Alternatively, members using a paper application may indicate “ASAP” in the effective date field and their retirement will be effective on the day after the application is filed with NYSLRS.

DiNapoli wrote to Governor Cuomo last week to request the Executive Order, which rescinds the 15-day window for NYSLRS’ members applying for service retirement during the current state of emergency through May 16, 2020.

* Click on the text in color to link to the full text of the referenced item.

Workers' compensation benefit voided as a result of making a false statement or misrepresentation

Following establishing a claim for workers' compensation benefits by an employee [Claimant], which claim was subsequently amended twice to include other injuries, the self-insured employer [Employer] raised the issue of whether Claimant had violated Workers' Compensation Law §114-a by making a false statement or representation of a material fact for the purpose of obtaining workers' compensation benefits.

Following a hearing, a Workers' Compensation Law Administrative Law Judge [ALJ] found that Claimant violated §114-a and imposed a penalty of "a rescission of awards, as well as a disqualification of future awards." Claimant subsequently appealed a panel of the Workers' Compensation Board sustaining the ALJ's determination.

The Appellate Division upheld the Board's decision. Citing §114-a [1], the court explained that "A fact is considered material when it is significant or essential to the issue or matter at hand." Further, if supported by substantial evidence, the Appellate Division explained that the Board's determination that a person violated Workers' Compensation Law §114-a will not be disturbed.

In this instance the Board had found that Claimant violated §114-a by making a false statement of fact about her work activities and by failing to disclose critical information to an examining physician.*

Because substantial evidence supports the Board's determination that claimant violated Workers' Compensation Law §114-a, the Appellate Division held that "it will not be disturbed," and found Claimant's challenge to the imposed penalty to be without merit.

* The Appellate Division noted that its review of the record confirms the Board's finding that although Claimant testified that, since her classification with a permanent total disability, she had not worked in any capacity or run any businesses, in the subsequent disqualification hearing that Claimant stated that she had operated a photography business and took photographs for parties and family events.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_02209.htm

Standards of evidence required to support termination of employment decisions vary

Among the issues addressed by the U.S. Circuit Court of Appeals, Second Circuit, in this action was the standard of evidence that must be met to support the termination of a public employee in a disciplinary action. 

A §75 Disciplinary Hearing Officer found that “substantial evidence” supported several of the charges filed against the employee [Complainant] and recommended that he be demoted to a lower grade position. The then Assistant City Manager adopted the Hearing Officer’s findings of fact but decided to terminate rather than demote the Complainant.

The Complainant then filed an Article 78 petition in New York State Supreme Court seeking reinstatement to his former position and back pay contending that New York statutory law and the Due Process Clause of the Fourteenth Amendment both require that for-cause termination decisions be based upon a preponderance of the evidence and not substantial evidence.

In civil trials the preponderance standard is met when the party with the burden of proof, in this situation the charging party, convinces the hearing officer that the evidence it presented has a greater than 50% chance that it is true.

In contrast, substantial evidence is “more than a mere scintilla" of evidence. As the U.S. Supreme Court explained in Richardson v. Perales, 402 U.S. 389, substantial evidence is  such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.”*

Ultimately the Appellate Division rejected Complainant's challenge, concluding that “due process requires application of the preponderance of the evidence standard only when the penalty of dismissal is accompanied by some added stigma,” which the court found was not present in this case.**

After the Appellate Division issued its decision, the parties cross-moved for summary judgment on the due process claims. The federal district court granted summary judgment to the employer, concluding that Complainant was collaterally estopped from re-litigating his due process claims and that, in the alternative, he was afforded adequate process.

* For a comprehensive analysis see Standards of Appellate Review in the Federal Circuit: Substance and Semantics by Kevin Casey, Jade Camara and Nancy Wright, posted on the Internet at:  https://www.slideshare.net/umesh1989/standards-of-appellate-review-in-the-federal-circuit-substance-and-semantics-83pages.

** Marentette v. City of Canandaigua, 159 AD3d 1410.

The Circuit Court's decision is posted on the Internet at:

https://www.courtlistener.com/opinion/4723922/marentette-v-city-of-canandaigua/