Audits issued by the New York State Comptroller during the week ending November 20, 2020

New York State Comptroller Thomas P. DiNapoli announced the following municipal and school district audits were issued during the week ending November 20, 2020.

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

MUNICIPAL AUDITS

Village of Fort Plain – Leave Benefits (Montgomery County) Village officials did not establish appropriate controls over employee leave time. Auditors found the board did not establish comprehensive leave benefit policies and procedures. Officials also did not accurately maintain employee leave records. Leave used and compensatory time (comp time) earned was not always properly recorded or supported by village records. As a result, 133 hours of accrued comp time, valued at approximately $4,600, was not supported by an employee’s time and attendance records. In addition, 33 hours of comp time and eight hours of personal time, valued at approximately $900, were used but not deducted from employee leave records.

Town of Locke – Financial Condition (Cayuga County) The board did not effectively manage the town’s financial condition. As a result, it levied more taxes than necessary to sustain operations. The board also did not adopt budgets with sound estimates, nor did it monitor budgetary results during the year. In addition, unrestricted fund balances as of December 31, 2019 in the general and highway funds and water district were excessive, ranging from 89 percent to 536 percent of actual expenditures. The board did not adopt formal fund balance, reserve and budgeting policies, along with multiyear financial and capital plans.

City of Newburgh – Budget Review (Orange County) The city’s proposed budget includes appropriations of $67,066,159. The city’s use of approximately $4.6 million of fund balance to close gaps in the budget decreases the fund balance that is available to cover unforeseen circumstances. The city could potentially face shortfalls based on revenue estimates for sales and use tax.

Town of Palermo – Procurement and Fuel Inventory (Oswego County) Town officials did not always use competitive methods when procuring goods and services or properly account for and monitor diesel and gasoline fuel. Town officials purchased $299,298 in goods and services that should have been competitively procured, however, $101,121 was purchased without competition. Town officials also overpaid a vendor by almost $2,500.

Rockland County– Budget Review The significant revenue and expenditure projections in the proposed budget are reasonable. The review considered county officials’ projections in response to the potential impact of the COVID-19 pandemic. The county’s proposed budget includes a tax levy of $146,052,165.

 SCHOOL DISTRICT AUDITS

Fayetteville-Manlius Central School District – Professional Services (Madison County and Onondaga County) District officials appropriately sought competition through requests for proposals or quotes for professional services totaling approximately $4.3 million (93 percent) of those reviewed. The district had written agreements with 18 of 19 professional service providers and payments were made in accordance with the terms of the agreements.

Tioga Central School District – Cash Management (Tioga County) Interest earnings were not maximized. District officials did not develop and manage a comprehensive investment program or comply with the district’s investment policy. Had officials invested available funds in a financial institution with higher interest rates, the district’s interest earnings could have increased by $215,120.

Tioga Central School District – Health Insurance and Special Education Cost Savings (Tioga County) District officials could achieve cost savings by offering an acceptable health insurance buyout incentive in lieu of health insurance coverage. Savings could range between approximately $10,000 and $251,000. District officials could also save approximately $43,500 by providing select special education programs in-house.

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A volunteer firefighter cannot be terminated for incompetence or misconduct "except for absenteeism at fires or meetings," absent notice and an administrative hearing

When the Board of Wardens [Board] of a volunteer fire department [Department] expelled a volunteer firefighter [Volunteer] from the fire department based on its finding that Volunteer had violated the Department's bylaws and "the Firefighter's Oath," Volunteer initiated a CPRL Article 78 action challenging the Board's action. Supreme Court denied Volunteer's petition and dismissed the Article 78 proceeding. Volunteer appealed.

The Appellate Division reversed the Supreme Court's judgment "on the law, with costs," indicating that §209-l of the General Municipal Law provides that a volunteer firefighter may not be removed from office or membership for incompetence or misconduct, except for absenteeism at fires or meetings, "unless [the volunteer is] afforded a hearing."* 

The court's decision indicates that at a meeting of the Board, which Volunteer had attended, the Board determined that Volunteer he had violated the Department's bylaws by donating department property in contravention of an order from the chief of the department.

Noting that the provision of the bylaws relied upon by the Board with respect to its expelling Volunteer authorized the chief of the department "to suspend members of the department for insubordination, refusal to follow orders, and for conduct unbecoming or detrimental to the department, and required the Board of Wardens to review such suspensions," the Appellate Division opined that the bylaw relied upon by the Board did not empower the Board to dismiss a member based on a violation of that bylaw.

Concluding that Volunteer was entitled to a hearing upon due notice and upon stated charges pursuant to General Municipal Law §209-l but had not been afforded one, the Appellate Division annulled the Board's determination and remitted the matter to the Board for a hearing and a new determination "by an impartial finder of fact."

* Citing Matter of Ferrara v Magee Volunteer Fire Dept., 191 AD2d 967, the Appellate Division noted that §209-l "by its own terms, does not affect the right of members of any fire company to remove a volunteer officer or voluntary member of such company for failure to comply with the constitution and by-laws of such company".

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06793.htm

Determining if an alleged violation of a memorandum of understanding supplementing a collective bargaining agreement is arbitrable

On November 18, 2020, the Appellate Division, Second Department, handed down four decisions:

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County [DIA], 2020 NY Slip Op 06745; 

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County, 2020 NY Slip Op 06779;

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06780; and 

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06746.

All four cases involved the same basic issue: efforts by organizations representing employees in different collective bargaining units pursuant to the Taylor Law [Article 14 of the New York State Civil Service Law] to compel the arbitration of a dispute involving the implementation of terms set out in a "memorandum of understanding" [MOU] providing for " longevity payments" and efforts by Nassau County, as the employer, to obtain a court judgment declaring that the MOA invalid and unenforceable because Nassau Count alleged it was based upon a mutual mistake of fact.

The employee organizations had submitted grievances to the Commissioner of Police, alleging that its respective members were not receiving longevity payments in accordance with the MOA, thereby exhausting their respective administrative remedies and then demanded the matter be submitted to arbitration.

The County subsequently commenced a proceeding pursuant to CPLR Article 75 seeking to permanently stay arbitration while employee organizations countered by seeking a court orders compelling the submission of the disputes to arbitration.

Cross-referencing the four decisions, the Appellate Division opined that the grievances arising from Nassau County's decision not to implement the provisions in the relevant MOA's was arbitrable, explaining:

1. In Matter of Board of Educ. of the Yonkers City Sch. Dist. v Yonkers Fedn. of Teachers, 180 AD3d 1041, the court said that "Public policy in New York favors arbitral resolution of public sector labor disputes."

2. A dispute between a public sector employer and an employee is only arbitrable if it satisfies a two-prong test" whereby the court must:

    [a] First determine whether there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance;" and second, 

    [b] "If there is no prohibition against the arbitration," the court must determine whether the parties agreed to arbitrate the particular dispute by examining their collective bargaining agreement;" and

    [c] Consider whether "there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the collective bargaining agreement [CBA]."

3. In the event there is no such "reasonable relationship", the issue, as a matter of law, is not arbitrable but if such a relationship is found, the court is to rule that the matter arbitrable, and "the arbitrator will then make a more exacting interpretation of the precise scope of the substantive provisions of the CBA, and whether the subject matter of the dispute fits within them."

4. Agreeing with Supreme Court's determination denying the County's petition to permanently stay arbitration and granting the Detectives Assn., Inc.'s [DAI] motion to compel the County to submit to arbitration, the Appellate Division noted that the County had not identified any constitutional, statutory, or public policy prohibition to arbitrating the grievances and the issue to be resolved is whether the County and the respective employee organizations had agreed to arbitrate this dispute.

5. The arbitration provision of the relevant CBAs was broad, and there was a reasonable relationship between the subject matter of the dispute, which involved longevity payments, and the general subject matter of the CBAs. (See Matter of City of Yonkers v Yonkers Fire Fighters, Local 628 IAFF, AFL-CIO, 176 AD3d at 1199).

6. Thus, as the Court of Appeals held in Matter of Cassone, 63 NY2d 756 and Matter of Prinze [Jonas], 38 NY2d 570, the Appellate Division indicated:

    [a] The validity of the substantive provisions of the MOAs, including whether a particular MOA is invalid because of mutual mistake, is for the arbitrator to decide; and

    [b] Any issues regarding the validity and effect of the MOAs involved were for the arbitrator to determine under the relevant CBA's grievance procedures.

The several decisions are posted on the Internet as indicated below:

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County [DIA], 2020 NY Slip Op 06745, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06745.htm;

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County, 2020 NY Slip Op 06779, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06779.htm;

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06780, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06780.htm; and

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06746, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06746.htm.

 

 

Determining if an alleged violation of a memorandum of understanding supplementing a collective bargaining agreement is arbitrable

On November 18, 2020, the Appellate Division, Second Department, handed down four decisions:

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County [DIA], 2020 NY Slip Op 06745; 

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County, 2020 NY Slip Op 06779;

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06780; and 

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06746.

All four cases involved the same basic issue: efforts by organizations representing employees in different collective bargaining units pursuant to the Taylor Law [Article 14 of the New York State Civil Service Law] to compel the arbitration of a dispute involving the implementation of terms set out in a "memorandum of understanding" [MOU] providing for " longevity payments" and efforts by Nassau County, as the employer, to obtain a court judgment declaring that the MOA invalid and unenforceable because Nassau Count alleged it was based upon a mutual mistake of fact.

The employee organizations had submitted grievances to the Commissioner of Police, alleging that its respective members were not receiving longevity payments in accordance with the MOA, thereby exhausting their respective administrative remedies and then demanded the matter be submitted to arbitration.

The County subsequently commenced a proceeding pursuant to CPLR Article 75 seeking to permanently stay arbitration while employee organizations countered by seeking a court orders compelling the submission of the disputes to arbitration.

Cross-referencing the four decisions, the Appellate Division opined that the grievances arising from Nassau County's decision not to implement the provisions in the relevant MOA's was arbitrable, explaining:

1. In Matter of Board of Educ. of the Yonkers City Sch. Dist. v Yonkers Fedn. of Teachers, 180 AD3d 1041, the court said that "Public policy in New York favors arbitral resolution of public sector labor disputes."

2. A dispute between a public sector employer and an employee is only arbitrable if it satisfies a two-prong test" whereby the court must:

    [a] First determine whether there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance;" and second, 

    [b] "If there is no prohibition against the arbitration," the court must determine whether the parties agreed to arbitrate the particular dispute by examining their collective bargaining agreement;" and

    [c] Consider whether "there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the collective bargaining agreement [CBA]."

3. In the event there is no such "reasonable relationship", the issue, as a matter of law, is not arbitrable but if such a relationship is found, the court is to rule that the matter arbitrable, and "the arbitrator will then make a more exacting interpretation of the precise scope of the substantive provisions of the CBA, and whether the subject matter of the dispute fits within them."

4. Agreeing with Supreme Court's determination denying the County's petition to permanently stay arbitration and granting the Detectives Assn., Inc.'s [DAI] motion to compel the County to submit to arbitration, the Appellate Division noted that the County had not identified any constitutional, statutory, or public policy prohibition to arbitrating the grievances and the issue to be resolved is whether the County and the respective employee organizations had agreed to arbitrate this dispute.

5. The arbitration provision of the relevant CBAs was broad, and there was a reasonable relationship between the subject matter of the dispute, which involved longevity payments, and the general subject matter of the CBAs. (See Matter of City of Yonkers v Yonkers Fire Fighters, Local 628 IAFF, AFL-CIO, 176 AD3d at 1199).

6. Thus, as the Court of Appeals held in Matter of Cassone, 63 NY2d 756 and Matter of Prinze [Jonas], 38 NY2d 570, the Appellate Division indicated:

    [a] The validity of the substantive provisions of the MOAs, including whether a particular MOA is invalid because of mutual mistake, is for the arbitrator to decide; and

    [b] Any issues regarding the validity and effect of the MOAs involved were for the arbitrator to determine under the relevant CBA's grievance procedures.

The several decisions are posted on the Internet as indicated below:

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County [DIA], 2020 NY Slip Op 06745, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06745.htm;

County of Nassau v Detectives Assn., Inc., of the Police Dept. of Nassau County, 2020 NY Slip Op 06779, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06779.htm;

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06780, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06780.htm; and

County of Nassau v Police Benevolent Assn. of the Police Dept. of the County of Nassau, 2020 NY Slip Op 06746, posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06746.htm.

 

 

Court dismisses Article 78 petition for failure to allege acts of employment discrimination in violation of New York State's or New York City's Human Rights Laws

A CPLR Article 78 petition alleging unlawful discrimination filed by the petitioner [Plaintiff] alleged that Plaintiff 's employment with the New York City Department of Correction [Correction] was terminated because of his alleged disabilities due to asthma, chronic obstructive pulmonary disease [COPD] and cancer.

Supreme Court dismissed Plaintiff 's Article 78 action "for failure to state a cause of action for employment discrimination under the State or City [Human Rights Laws]." The court observed that Plaintiff's Article 78 petition "does not contain any factual allegations showing that [Plaintiff 's] employment was terminated under circumstances giving rise to an inference of [unlawful] discrimination." Plaintiff appealed the Supreme Court's decision.

The Appellate Division said that assuming Correction knew of Plaintiff 's asthma and COPD, it promoted Plaintiff twice although he suffered from those medical conditions at the time. Although Plaintiff contends that he was subsequently demoted, his complaint does not state why he was demoted or allege that he was demoted because of his medical conditions.*

The complaint states that Plaintiff took an approved medical leave of absence for treatment of his cancer and that he was discharged about 10 months after his leave started and 8 months after he returned to duty.

The Appellate Division opined that this passage of time "is too long to establish any causal connection between any decisionmaker's knowledge of his cancer or medical leave and [Plaintiff 's] discharge to raise an inference of discrimination." Further, said the court, Plaintiff's complaint "does not allege that any decisionmakers made remarks that showed any discriminatory intent" nor does his petition allege facts that would establish that similarly situated persons who did not share his alleged disabilities were treated more favorably than he was.

Although Plaintiff was not required to plead facts that would establish that similarly situated persons who did not share his alleged disabilities were treated more favorably than he was to state a claim of unlawful discrimination, Plaintiff's complaint does not allege any other facts that establish circumstances  giving rise to an inference of discriminatory intent.

According, said the Appellate Division, Supreme Court's dismissal of Plaintiff's Article 78 petition was proper.

* The Appellate Division noted that Plaintiff 's demotion predated his cancer diagnosis.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06700.htm.

 

Judicial review of an arbitration award issued following an Education Law §3020-a disciplinary hearing

An Education Law §3020-a disciplinary hearing arbitrator issued an award that, in part, directed the City School District of the City of New York [DOE] to reinstate a former school principal [Principal] to particular DOE principal position. DOE filed a petition pursuant to Article 75 of the Civil Practice Law and Rules [CPLR] seeking a court order vacating the arbitrator's award.

Supreme Court, finding that the arbitrator exceeded her authority by ordering the reinstatement of Principal to a specific school, granted DOE's petition to vacate that part of the arbitrator's award. Supreme Court also dismissed Principal's companion CPLR Article 78 petition seeking to enforce the arbitration award. Principal appealed the Supreme Court's ruling.

The Appellate Division unanimously affirmed Supreme Court's judgment, noting that Supreme Court had jurisdiction to adjudicate the matter pursuant to Education Law §3020-a(5) which "specifically provides for judicial review of arbitrator's decisions pursuant to CPLR [§]7511."

Citing Matter of Adlerstein v Board of Educ. of City of N.Y., 64 NY2d 90, the Appellate Division concluded:

1. Supreme Court had correctly determined that "the arbitrator exceeded her authority by ordering the reinstatement of [Principal] to a specific school, as the authority to place pedagogical staff is within DOE's sole purview;" and 

2. Principal "was not cleared" of all of the charges and specifications filed against him."

The Appellate Division then addressed a CPLR Article 78 proceeding initiated by Principal and opined that "since the [Supreme Court] correctly determined in the article 75 proceeding that [Principal was] not entitled to reinstatement at his formerly assigned school, and that the arbitrator exceeded her authority by rendering a contrary determination, there [was] no basis for mandamus relief to enforce the arbitrator's decision."

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06476.htm.

 

Audits of Municipalities and School Districts issued during the week ending November 13, 2020

On November 13, 2020, New York State Comptroller Thomas P. DiNapoli announced the following local government audits has been issued.

Click on the text highlighted in color to access the complete audit report

 

MUNICIPAL AUDITS

Town of Decatur – Town Clerk (Otsego County) Auditors determined the town clerk did not issue duplicate receipts for any collections during the audit period which totaled $1,630. The clerk also did not report or remit any fees received to the supervisor or New York State Agriculture and Markets. In addition, the board did not conduct or cause an annual audit of the clerk’s records and reports.

Town of Decatur – Disbursement Oversight and Accounting Records and Reports (Otsego County)The board did not provide adequate oversight of the disbursement process and the supervisor did not maintain complete, accurate and timely accounting records and reports. The board also did not approve all claims. The board did not require adequate supporting documentation for all claims or annually audit, the supervisor’s records and reports. The 2018 general ledger was significantly incomplete and the 2019 general ledger had several accounts misclassified. In addition, the annual financial reports and tax cap forms were not filed, as required. As a result, the board was unaware that the 2019 levy significantly exceeded the cap and did not pass the required local law to override the cap.

Town of East Hampton - Budget Review (Suffolk County) Based on the results of our review, auditors found that the revenue and expenditure projections in the tentative budget are reasonable. The town’s 2021 tentative budget includes a proposed tax levy of $60,177,065.

City of Lockport – Budget Review (Niagara County) Based on the results of auditors’ review, the revenue and expenditure projections in the proposed budget appear reasonable. Auditors cautioned that evolving circumstances caused by the pandemic may require adjustments to the budget throughout the year. The proposed budget includes state aid and sales tax estimated revenues of $2.1 million and $5.5 million, respectively, which may not be attainable.

Town of Patterson – Justice Court Operations (Putnam County) Although the justices accurately collected, recorded and deposited fines and fees, they did not disburse or report all fines and fees in a timely and accurate manner. The justices also did not adequately account for bail, which led to them retaining $14,793 in bail funds that could not be identified by payee. The court clerks did not return unclaimed exonerated bail totaling $16,287 to the known payees or remit them to the town. In addition, 55 of 100 tickets reviewed were not reported or incorrectly reported to the New York State Department of Motor Vehicles (DMV), or were not submitted to the DMV’s Scofflaw Program.

City of Troy – Budget Review (Rensselaer County) The significant revenue and expenditure projections in the proposed budget are reasonable. The proposed budgeted revenues for state aid funding and traffic and parking ticket fines may not be fully realized. City officials project the general fund having an unassigned fund balance of approximately $3 million at the end of 2020 or the same amount as the recorded unassigned fund balance at the end of 2019. However, the 2019 amount of unassigned fund balance has not been verified.

 

SCHOOL DISTRICT AUDITS

Mount Pleasant Cottage Union Free School District – Procurement (Westchester County) District officials did not use a competitive process to procure goods and services. For example, auditors found that district officials paid a vendor $238,465 without documentation and they justified this was a valid exception to competitive bidding. They also did not issue requests for proposals for six of 10 professional services providers that were paid $416,367. In addition, district officials did not obtain quotes for 20 purchases totaling $150,293 out of 30 reviewed.

Newfane Central School District – Financial Management (Niagara County) The board and district officials can better manage fund balance and reserves. Auditors determined surplus fund balance exceeded the limit each year by $8.1 million to $9 million, or 26 to 28 percentage points, which exceeded the 4 percent statutory limit. In addition, $13.4 million was improperly restricted in two reserves: $12.6 million in the employee benefit accrued liability reserve and $800,000 in the debt service reserve.

Southern Cayuga Central School District – Financial Condition (Cayuga County and Tomkins County) The board underestimated revenues by an average of $141,038 and overestimated appropriations by an average of $1.3 million over the three completed years. As a result, the district generated large operating surpluses and did not use about $1.1 million in appropriated fund balance. As of June 30, 2019, recalculated surplus fund balance totaled almost $1.7 million and was 10.7 percent of 2018-19 expenditures. In addition, the board and district officials did not develop adequate multiyear financial and capital plans.