Audits issued by the New York State Comptroller during the week ending December 10, 2020

Click on the text highlighted in colorto access the complete audit report.

 

Municipal Audits

On December 10. 2020, New York State Comptroller Thomas P. DiNapoli announced the following local government audits has been issued.

Cayuga County Soil and Water Conservation District – Financial Condition District officials did not effectively manage the district’s financial condition, and it declined approximately $1 million during the audit period because of the board’s hindered ability to recognize revenue shortfalls or cost overruns, limiting any potential corrective action. The 2016 through 2020 adopted budgets were not realistic. Revenue and expenditure estimates were not based on prior years’ actual results or trends and did not contain estimates for all known revenues and expenditures. The adopted budgets were also not maintained in the financial accounting software. In addition, no budget-to-actual reports were prepared to monitor the district’s financial health. Comprehensive multiyear strategic, financial and capital plans were also not developed.

Cayuga County Soil and Water Conservation District – Information Technology Governance District officials did not establish adequate controls over information technology (IT) assets. The board did not develop comprehensive IT policies or procedures. The board also did not enter into a written service level agreement with the IT vendor. In addition, the board did not establish adequate safeguards for online banking transactions. Auditors also found the board did not implement strong access and financial application controls nor did they provide IT security awareness training for employees.

Town of Corning – Procurement (Steuben County) Town officials did not always seek competition, as required, when purchasing goods or obtaining professional services. Of the purchases totaling $455,792 from 35 vendors and 10 professional service providers examined, town officials purchased goods and services totaling $299,046 from 21 vendors and nine providers without using competitive methods. Officials also did not enter into a contract with any of the 10 providers. Auditors found a one-year mowing contract was awarded for $26,000 to a company owned by a board member’s son even though the company was not the lowest bidder. The board also extended the contract for another five years without seeking competition. Although the board was required to document its rationale for awarding the contract to a higher bidder, they did not do so.

Nyack Parking Authority – Parking Ticket Operations (Rockland County) The board and authority officials did not effectively pursue and maximize the collection of parking violation tickets. Auditors determined the board and authority officials did not provide oversight and were unaware of inconsistencies in penalty assessment, delinquent notices and collections. The board and authority also did not establish a benchmark collection rate. If the industry standard collection rate of 85 percent was achieved, over the five-year period, the authority would have collected additional revenue totaling $572,609. In addition, the board and authority officials did not review the number or the amount of outstanding tickets or consider alternatives to increase collections.

 

 School District Audits 

On December 10, 2020 New York State Comptroller Thomas P. DiNapoli announced the following school district audit has been issued.

Chenango Forks Central School District – Nonresident Tuition (Broome and Chenango County) District officials did not adopt a clear and comprehensive nonresident admission or tuition policy. As a result, auditors could not determine exactly which students should have been classified as a nonresident student and should have been billed tuition. In addition, some student records contained insufficient documentation to support residency or exceptions to the policy.

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Finding a reasonable relationship between the subject matter of a grievance and certain provisions set out in a collective bargaining agreement is often the key to submitting the dispute to arbitration

The Yonkers City School District School Board [Board] and the Yonkers Federation of Teachers [YFT] were parties to a collective bargaining agreement [CBA] negotiated pursuant to Article 14 of the Civil Service Law, the so-called "Taylor Law". YFT filed a grievance alleging that "someone disclosed confidential information to the public" related to disciplinary charges involving two tenured teachers represented by YFT filed a "contract grievance," claiming a violation of the Board's Code of Ethics and the relevant CBA, and ultimately demanded that the matter be submitted to arbitration. 

The Board objected to submitting the issue to arbitration and commenced a CPLR Article 75 proceeding seeking a court order to permanently stay the arbitration demanded by YTF. YTF, in response, filed a motion to compel arbitration. The Supreme Court dismissed the Board's petition and granted YFT's motion seeking to compel arbitration of its grievance whereupon the Board appealed the Supreme Court's ruling.

The Appellate Division affirmed the Supreme Court's decision. The court explained that "Public policy in New York favors arbitral resolution of public sector labor disputes," noting, however, that a dispute between a public sector employer and a public employee organization concerning a provision set out in a CBA will survive a motion to stay the arbitration if it fails the "two-prong test" used by New York State courts in resolving such matters.

The first test, said the court, is determining if there is any statutory, constitutional, or public policy prohibition against arbitrating the grievance. If no such prohibition is found, the second test is for the court to determine if the parties did, in fact, agree to arbitrate the particular dispute.

The Board, in the course of its argument before the Appellate Division, asserted, for the first time, that the arbitration of YFT's grievance was prohibited by General Municipal Law §806 and public policy, contending that the Board had "reserved its right to adopt the Code of Ethics authorized by the statute."

With respect to the first test, the Appellate Division opined that the Board may raise such an argument for the first time on appeal, citing  Matter of NiagaraWheatfield Adm'rs Assn. [NiagaraWheatfield Cent. School Dist.], 44 NY2d 68. The court, however, rejected the Board's argument as being without merit, pointing out that the fact that a violation of the Board's Code of Ethics is a potential basis for disciplinary action does not render it nonarbitrable.

Turning to the second test, the Appellate Division said that the Board contended that the grievance is excluded from arbitration as there is no reference in the CBA to the Code of Ethics.

The Appellate Division rejected this contention as well, explaining that when a court is analyzing whether the parties did, in fact, agree to arbitrate the particular dispute, the court "is merely to determine whether there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the CBA," citing Matter of Board of Educ. of Yorktown Cent. Sch. Dist. v Yorktown Congress of Teachers, 98 AD3d 665.

The Appellate Division observed that it has held that the arbitration provision of the CBA at issue here was broad and found that there was a reasonable relationship between the subject matter of the instant dispute, the disclosure to the public of confidential information regarding disciplinary charges against tenured teachers, and the general subject matter of the CBA, including the terms and conditions of employment.

Thus, said the court, it agreed with the Supreme Court's determination denying the Board's petition seeking a permanent stay of YFT's demand that its grievance be submitted to arbitration and granting the YFT's motion to compel the arbitration of its grievance.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06524.htm

 

Court's decision demonstrates why lawyers should encrypt e-communications

A court decision illustrating why lawyers [and others] should encrypt e-communications has been posted by Nicole Black, a Rochester, New York attorney, on her blog Sui Generis. The URL is https://nylawblog.typepad.com/suigeneris/2020/12/case-shows-why-lawyers-must-encrypt-e-communications.ht

The courts will not vacate an administrative decision unless the record shows that the decision was arbitrary, unreasonable, irrational or indicative of bad faith

The genesis of this CPLR Article 78 action was a school board's [Board] decision to decommission 20 school buses and to privatize portions of its bus routes because of budgetary issues confronting the school district. As a result, Board eliminated 20 school bus driver positions.

The employee organization [Union] representing the school bus drivers then initiated a  CPLR Article 78 action seeking a court order annulling the Board's action, contending that the Board's determination was arbitrary and capricious and was made in bad faith.

Supreme Court granted the Board's motion to dismiss the Union's Article 78 petition and the Union appealed. The Appellate Division, however, affirmed the Supreme Court's "judgment and order, with costs."

Addressing the merits of the Union's argument, the Appellate Division explained that "[i]n applying the 'arbitrary and capricious' standard ... a court inquires whether the determination under review had a rational basis." Further, said the court, the challenged administrative decision should not be disturbed by the court "unless the record shows that the agency's action was 'arbitrary, unreasonable, irrational or indicative of bad faith.'"

In this instance, opined the court, "the Board's decision to decommission 20 buses and to privatize portions of its bus routes because of budgetary issues facing the District, which resulted in its determination to eliminate 20 bus driver positions, had a rational basis and was not arbitrary and capricious." 

Citing the Court of Appeals decision in Riverkeeper, Inc. v Planning Bd. of Town of Southeast, 9 NY3d 219, the Appellate Division opined that "courts may not substitute their judgment for that of the agency for it is not their role to weigh the desirability of any action or [to] choose among alternatives."

Agreeing with the Supreme Court's determination to dismiss the Union's CPLR Article 78 petition, the Appellate Division denied the Union's appeal.

The decision is posted on the Internet at http://www.nycourts.gov/reporter/3dseries/2020/2020_06791.htm