May 22, 2008

Weitzman testifies before State Attorney General on Special District payroll abuses

Nassau County Comptroller Howard Weitzman testified today before State Attorney General Andrew Cuomo and a bipartisan group of state legislators at a hearing on the granting of improper benefits to professionals employed by schools, special districts and local governments. Weitzman was part of a panel of speakers, including Nassau County District Attorney Kathleen Rice, Suffolk County Comptroller Joseph Sawicki, and Suffolk County District Attorney Thomas Spota. Weitzman focused on how professionals and special district commissioners on payroll abuse the system. He also revealed new evidence uncovered by his office of numerous private attorneys being treated as consultants by special taxing districts.

“We have found that this improper practice is more widespread than we ever thought,” said Comptroller Weitzman. “In 2005 when this office first issued audit findings of several sanitation districts, we found several consultants wrongly carried as district employees. But our recent investigation has shown that this was only the tip of a very, large iceberg.” 

A recent questionnaire sent by Weitzman’s office to 37 special taxing districts in Nassau County revealed that 16 private attorneys are being treated by the districts as employees. Eleven are receiving pension credits, eleven are receiving health benefits, and seven are receiving both pension and health benefits. The extensive review comes on the heels of recent media revelations about the improper categorization of consultants as employees of school districts.         

In total, 37 districts, which included parks, water, water pollution control, and garbage districts, were surveyed and asked to complete a one page questionnaire regarding consultants on the payroll. Thirty-six returned the completed survey. According to the Comptroller’s office, 12 of the districts had consultants on the payroll, 16 attorneys (13 part time and three full time), with the salaries ranging from $3,500 for one of two part time attorneys in Franklin Square to $43,523 for a part time attorney in the Bethpage Water District. Bethpage also paid an extra $44,670 in fees to the attorney’s firm.

 “We sent commissioner-run special districts the rules for determining whether a consultant is an employee laid out in IRS Publication 15-A,” Weitzman said. “We asked common-sense questions like, ‘Does the consultant have fixed hours at the district? An office? Another full-time job? Are they supervised?’ and this helped us decide whether a district was doing something that smelled wrong in putting a consultant on payroll.”

Of the 37 districts that were sent the questionnaires, only Town of Hempstead’s Sanitation District One refused to cooperate, Weitzman said. However, a 2005 audit conducted by Weitzman of Sanitation District One found an outside accountant and lawyer listed on the payroll who was receiving health benefits. A review of New York State pension records found that the accountant also held three additional public sector jobs.

“Sanitation District One officials stated that they were providing information to the District Attorney’s Office and would not be returning our survey,” Weitzman stated.

The 2005 audits found several questionable practices: 

• Franklin Square Water District had two outside attorneys on payroll, including the Town Attorney for the Town of Hempstead, receiving health benefits and pension credits;
• Great Neck Water Pollution Control District had one outside attorney on payroll with health benefits and the right to pension credits written into his retainer agreement;
• Town of Hempstead Sanitary District One had one outside accountant on payroll receiving health and pension credits and one outside attorney on payroll receiving health benefits;
• Town of Hempstead Sanitary District Two had two outside attorneys on payroll with health benefits but no pension credits reported;
• Town of Hempstead Sanitary District Six had three outside attorneys on payroll, all of whom received health benefits and pension credits;

In his questionnaire survey sent to special district commissioners, Weitzman informed them that the New York State Attorney General is also investigating these practices statewide, and has asked for the cooperation of the Nassau County Comptroller’s Office.