Audits by New York State Comptroller Thomas P. DiNapoli issued during the week ending June 5, 2020

New York State Comptroller Thomas P. DiNapoli announced the following local government audits were issued during the week ending June 5, 2020. 

Click on the text typed in color to access the full text of the audit.

Office of Addiction Services and Supports (OASAS): Oversight of Drug Disposal (2018-S-64) Overall, OASAS addiction treatment centers and OASAS-certified providers have met the regulatory requirements for collecting and disposing of unneeded drugs. However, there are improvement opportunities in some of their pharmaceutical management practices. While some of the sampled providers had effective controls over the drug disposal process, which followed the regulations and were environmentally friendly, others did not use environmentally sound methods of disposal whenever possible.

Division of State Police: Processing of Sexual Offense Evidence Collection Kits (2019-S-44) From Nov. 28, 2017 to Oct. 31, 2019, the state police processed 1,656 kits. Only 356 of the 1,656 kits (21 percent) were completed within the time frames prescribed by law. As of Oct. 31, 2019, state police had 1,916 kits that needed to be processed, and as of that date, the required processing time frame had elapsed for 1,681 kits (88 percent).

Department of Taxation and Finance: Collection of Petroleum Business Tax and Motor Fuel Excise Tax (2018-S-28) Diesel and motor fuel distributors may be required to provide collateral security in an amount provided for in statute or determined by the department. Distributors whose combined tax liability exceeds $5 million for the department’s reference period must enroll in its PrompTax electronic filing and payment program and prepay a portion of each month’s tax liability. Auditors found the department does not review distributors’ existing collateral security amounts to determine if they continue to be appropriate and identified distributors that were not enrolled in PrompTax and were not prepaying their tax liability as required.

Office of Temporary and Disability Assistance: National Directory of New Hires Data Security (2019-S-67) The office has taken actions to comply with the federal requirements for securing directory data. Auditors found that the office is fully compliant with 30 of the 32 requirements; the remaining two requirements were found to be not applicable.

Islip Fire District – Financial Condition (Suffolk County) The board did not effectively monitor expenditures and fund balance. As a result, the unrestricted fund balance deficit increased to as much as $171,492 during the audit period. Auditors also determined that the board did not properly plan for the funding of and spending from reserves. In addition, the board transferred unavailable funds to its capital reserves, and expended funds from reserves without adequate public notice; for example, transfers to reserves totaling $593,941 and expenditures from reserves totaling $841,477 that were not included in the budgets.

Sodus Center Fire District – Board Oversight (Wayne County) The board maintained a lax control environment and did not carry out its responsibility to oversee district financial operations and safeguard district assets. Auditors determined that the board allowed the treasurer to perform all key aspects of district financial operations without providing independent oversight.

City of Long Beach – Budget Review (Nassau County) Significant revenue and expenditure projections in the proposed budget are reasonable.      

Although the city appears to have budgeted sufficiently for termination salary payments for the 2020-21 fiscal year, auditors caution the city that its continued practice of borrowing to fund these operating costs is not fiscally prudent. The city has improved its projections for overtime costs in certain departments. However, it does not appear that the total appropriation will be sufficient. The city’s proposed budget includes a tax levy of $46.6 million which is $4,136 above the limit established by law.

Mottville Fire District – Budgeting and Financial Recordkeeping (Onondaga County) The board’s budgets were incomplete because the real property tax levy and a schedule of other estimated revenues were not included. Auditors also determined that the board did not adopt a fund balance policy or establish targeted funding levels for its reserve funds. In addition, the treasurer did not maintain accurate and reliable accounting records.

Rockland County – Sale of Estate Real Property The Office of Public Administrator (PA) guidelines regarding the sale of estate real property state that the PA shall determine fair market value and sell all real property or cooperative apartments at public auction or by private sale at the highest and best price available. Auditors determined that the administrator did not always get a professional appraisal for estate houses before listing them for sale.

Town of Smithville - Annual and Claims Auditing (Chenango County) The board did not annually audit the records of the supervisor or town clerk. Auditors also found that the board did not perform a deliberate and thorough audit of claims.

Wyoming County Court and Trust Funds The records maintained by the treasurer were not complete. Auditors found two actions, totaling $30,455, in the treasurer’s custody that were not recorded on the annual report sent to the State Comptroller’s Office as required. In addition, auditors identified one action for $28,204.84 that improperly remained in the treasurer’s custody that should have been turned over to the State Comptroller as abandoned property

City of Yonkers – Budget Review (Westchester County) Under the proposed budget, the city will have exhausted 80.1 percent of its constitutional tax limit. Auditors caution the city that if property values do not increase, its ability to increase taxes may be reduced in future years.

Town of Yorktown - Information Technology (Westchester County) Personal internet use was found on computers assigned to 10 employees, including four who routinely accessed personal, private and sensitive information (PPSI). Auditors found town officials did not adequately manage user accounts. In addition, the board did not develop a disaster recovery plan. Sensitive information technology (IT) control weaknesses were communicated confidentially to officials.

Unilaterally altering a past practice that impacts on a mandatory subject of negotiation

In this action the Appellate Division was asked to review two determinations of the Public Employment Relations Board [PERB] that found that the State of New York [State] committed an improper employer practice.

Civil Service Law §200 et seq., the so-called Taylor Law, requires a New York State public employer to bargain in good faith with its employees regarding all terms and conditions of employment.* Further, the presumption in favor of collective bargaining "may be overcome only in special circumstances where the legislative intent to remove the issue from mandatory bargaining is plain and clear." 

The genesis of the filing of improper employer practice claims in this action by various employee organizations [Unions] representing employees in collective bargaining units was a bulletin issued by the New York State Department of Civil Service stating that "a fee schedule had been created for the processing of applications for promotional and transitional examinations"** under color of a provision set out in the State Budget. Ultimately PERB found that the Unions had a reasonable expectation of a past practice of not charging applicants for such examinations a fee was an economic benefit and, therefore, was a subject of mandatory negotiation.

State commenced this CPLR Article 78 proceeding seeking annulment of PERB's determinations. PERB responded and, in addition, asserted a counterclaim seeking to enforce its remedial order. 

Observing "Whether a past practice exists depends on whether it was unequivocal and was continued uninterrupted for a period of time under the circumstances to create a reasonable expectation among the affected unit employees that the practice would continue, the Appellate Division said that its review of a PERB determination was limited to whether it is supported by substantial evidence, i.e., whether there is a basis in the record allowing for the conclusion that PERB's decision was legally permissible, rational and thus not arbitrary and capricious." 

Rejecting State's assertion that the application fee was not a term and condition of employment, the Appellate Division agreed with PERB's finding that the employees at issue received an economic benefit by not having to pay an application fee for promotional examinations. 

Further, the court said that it disagreed with State's contention that "under Civil Service Law §50(5), the creation of a fee schedule was a prohibited or permissive subject of bargaining," noting that PERB had opined that CSL §50(5) contains "no express prohibition on the bargaining of application fees." Indeed, the Appellate Division noted that the statute "also gives [the State] discretion to charge or abolish fees ... and, therefore, is not "so unequivocal a directive to take certain action that it leaves no room for bargaining." 

Finding no error in PERB's determination that the application fee was a mandatory subject of negotiation, the Appellate Division turned to the issue of ""past practice," explaining that it was undisputed that: 

1. For at least 10 years prior to the challenged bulletin advising of the creation of a fee schedule, fees were not charged to employees who wanted to take a promotional or transitional examination; and 

2. There were no negotiations with any of the employee organizations regarding these fees. 

Although on two occasions proposals were submitted, presumably by the State, to establish a fee schedule for promotional and transitional examinations, they were ultimately rejected and PERB concluded that the employees represented by the Unions had a reasonable expectation that the practice of not charging fees would continue. 

Finding that there was substantial evidence supporting PERB's determination that the State had engaged in an improper practice, the Appellate Division said it would not disturbed PERB's ruling. 

Addressing PERB's counterclaim for a judgment of enforcement of its remedial order, the Appellate Division held that it should be granted given that it "could be reasonably applied, was not unduly burdensome and seemingly furthered the goal of reaching a fair negotiated result." 

* See Matter of City of Watertown v State of N.Y. Pub. Empl. Relations Bd., 95 NY2d 73.

** The Appellate Division also noted that the fees were to be applied only to promotional and transitional examinations, which target current state employees, as opposed to open examinations, which pertain to the public at large. 

The decision is posted on the Internet at: 

http://www.nycourts.gov/reporter/3dseries/2020/2020_02839.htm

Determining if an expired collective bargaining agreement provided certain retirees with vested health insurance benefits

Plaintiffs in this action are teachers who retired from their positions with the  Central School District [District] in June 2011 and who at the time they retired were covered by the provisions set out in "an expired collective bargaining agreement" [CBA] between the Teachers Association [Association] and the District.

That CBA had "expired" on June 30, 2010 [Former CBA]. A successor CBA [Successor CBA] between the DTA and the District was ratified in October 2013 and its provisions were made applicable retroactively effective July 1, 2010.

The Former CBA provided, among other things, that the District would pay 100% of the health insurance premiums for health insurance coverage for retired employees and their dependents. The Successor CBA between the DTA and the District was ratified in October 2013 and no longer provided that the District would pay 100% of the health insurance premiums for such coverage for retired employees and their dependents. Rather the Successor CBA required certain employee contributions for health insurance premiums for both individual and dependent coverages. 

In January 2014, Plaintiffs individually submitted verified claims to the District  stating that their vested contract rights had been violated when they were required to pay five percent of the required  health insurance premium for coverage and in October 2014 commenced this action, contending that the Former CBA, rather than the Successor CBA, controlled with respect to their health insurance premium costs in retirement for individual and dependent coverage. 

Ultimately Supreme Court, among other things, granted Plaintiffs' motions for summary judgment, finding that the Former CBA was still effective at the time that Plaintiffs had retired and that there was no evidence that they waived their retiree health insurance benefits under the Former CBA. The District appealed the Supreme Court's ruling.

Observing that "the essential facts are not in dispute," the Appellate Division said "this case presents questions of law"  —  specifically:

1. What health insurance provisions apply to plaintiffs — the Former CBA or the Successor CBA; and 

2. Whether Plaintiffs' health insurance rights vested under the Former CBA. 

Noting that Civil Service Law §209-a (1) (e), the so-called Taylor Law, "requires an employer to continue all the terms of an expired CBA while a new agreement is being negotiated," the Appellate Division opined that "the assumption is that all terms of a CBA remain in effect during collective bargaining of a successor agreement," citing Matter of City of Yonkers v Yonkers Fire Fighters, Local 628, IAFF, AFL-CIO, 20 NY3d 651.

Although the court said that typically "contractual rights and obligations do not survive beyond the termination of a [CBA], rights which accrued or vested under the [old CBA] will, as a general rule, survive termination of the [old CBA]."*  Thus courts "must look to well-established principles of contract interpretation to determine whether the parties intended that the contract give rise to a vested right." 

While a court when determining whether a CBA creates a vested right to future benefits  should not construe ambiguous writings to create lifetime promises, when an agreement is ambiguous or subject to more than one interpretation is it appropriate for the court to consider extrinsic evidence to determine the parties' intent and "it is logical to assume [from the absence of any such durational language of how long retirees will receive benefits] that the bargaining unit intended to insulate retirees from losing important insurance rights during subsequent negotiations by using language in each and every contract which fixed their rights to coverage as of the time they retired."

The Appellate Division decided that Supreme Court properly found that, pursuant to Civil Service Law §209-a(1), because the Successor CBA had not yet been ratified at the time Plaintiffs retired, the terms of the Former CBA remained in effect pending the negotiation and ratification of the Successor CBA. Accordingly, the question turns to whether Plaintiffs' contractual rights vested under the Former CBA  survived its termination.

Finding that the language in the Former CBA was ambiguous, the Appellate Division said that this "permits this Court to look outside the contract to extrinsic evidence to discover the intent behind this provision of the Former CBA and in this instance the evidence adduced "supports the conclusion that it was the District's intent to provide full coverage for retired employees such as Plaintiffs."**

The court also noted that retirees were not permitted to vote in the ratification of the Successor CBA process and that such an absence of voting rights "further indicates that [the District] intended to protect Plaintiffs from losing their health insurance benefits," and concluded that Plaintiffs' rights vested under the Former CBA and survived its termination.

Finally, the Appellate Division said it was "unpersuaded by [the District's] contention that Plaintiffs waived their health insurance rights under the Former CBA" as they ratified the Successor CBA by their receipt and retaining retroactive pay in 2014 for the 2010-2011 school year, and the Successor CBA contained a clause making it applicable retroactively. Indeed, said the court, the record indicates that Plaintiffs had been making their health insurance premium payments under protest and had told the District that acceptance of such retroactive salary payments would not constitute such a waiver.

Supreme Court, said the Appellate Division, properly inferred that it was not Petitioner's  intention to waive the benefits provided them under the Former CBA*** and thus Supreme Court properly granted Plaintiffs' motions for summary judgment and denied the District's motion for summary judgment.

* See Kolbe v Tibbetts, 22 NY3d 344.

** The District's amended response to a Plaintiff's demand for interrogatories stated the it interpreted the language "district participation rate in effect of 1/1/84" "to refer to those employees who retire under the [Former CBA] receiving the same benefit as employees who were retired as of 1/1/84."

*** The Appellate Division said that one of the Petitioners had "made clear in her letter of resignation, she had an agreement with [the District] that she would receive the retroactive [salary] payment while retaining the [health insurance] benefits of the old CBA."

The decision is posted on the Internet at:
http://www.nycourts.gov/reporter/3dseries/2020/2020_02843.htm

Court sustains dismissal of a teacher found to have placed a student at serious risk of harm

A teacher [Plaintiff] employed by the New York City Department of Education [DOE] was served with disciplinary charges and specifications pursuant to Education Law §3020-a. The arbitrator found Plaintiff guilty of having had a physical altercation with a student and the penalty imposed on the teacher was dismissal from his position.

Plaintiff then filed an appeal pursuant to CPLR Article 75 in Supreme Court challenging his termination from his position. Finding that the penalty imposed, dismissal, was disproportionate to Plaintiff's offense, Supreme Court vacated the penalty set in the arbitration award and remanding the matter to DOE to provide for a hearing before a different arbitrator, who would then issue a new penalty determination. DOE appealed Supreme Court's ruling and the Appellate Division unanimously vacated the lower court's decision on the law.

The Appellate Division, noting that Plaintiff did not contest the  arbitrator's finding at his disciplinary hearing that he had punched a student twice in the head or face while physically removing him from the classroom, said that the record demonstrates that the arbitrator considered all the circumstances, including the fast-developing situation necessitating the student's removal from the classroom and generally credited Plaintiff's testimony. 

The court concluded that regardless of whether or not the arbitrator erred in finding that Plaintiff's denial of having thrown punches precluded a finding of remorse, the record showing minor injuries to the student, and a separate finding by the arbitrator that Plaintiff's actions put the student at serious risk of harm, supports imposing the penalty of dismissal based on the Plaintiff's use of excessive force.

Citing Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, 34 NY2d 222, the Appellate Division opined that "Contrary to Supreme Court's finding, the penalty of termination of [Plaintiff's] employment was not so disproportionate to his offense as to shock one's sense of fairness" and reinstated the penalty  initially imposed on Plaintiff by the arbitrator, dismissal from his position. 

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2020/2020_02893.htm

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A Reasonable Disciplinary Penalty Under the Circumstances
 Determining an appropriate disciplinary penalty to be imposed on an employee
 in the public service found guilty of misconduct or incompetence.
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