June 25, 2008

Weitzman applauds State pension reforms aimed at stopping
consultants from receiving employee benefits

Nassau County Comptroller Howard Weitzman said today that he is very pleased that State lawmakers unanimously approved a package of pension reforms that will increase penalties for pension fraud, close loopholes that have allowed some retirees to collect salaries in addition to pensions in school districts, and bar attorneys from serving as both employees and independent contractors for districts.

“I believe these reforms will go a long way in restoring people’s faith in government and the system,” said Weitzman. “Every dollar saved through these reforms will mean less of a burden on our taxpayers.”

Last month Comptroller Weitzman testified 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 and focused on how professionals and special district commissioners on payroll abuse the system.

“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 a recent investigation by my office has shown that this was only the tip of a very, large iceberg.” 

The investigation by Weitzman’s office of 37 special taxing districts in Nassau County, which included parks, water, water pollution control, and garbage districts, revealed 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.”

Since 2005 Comptroller Weitzman has released audits of special districts that comment critically on districts that wrongly categorize professional consultants as employees, giving them health benefits and pension credits.

In April Weitzman asked that New York State Comptroller Thomas DiNapoli’s office to repay Nassau County taxpayers $102,246 that was inappropriately charged in 2000 to pay for over 21 years’ worth of retroactive pension credit for a Valley Stream attorney who did not work for the county as an employee.

The private attorney, Albert D’Agostino, worked under contract as a County consultant for the Planning Commission, but in 2000 he had his status converted to “full time employee” so that he could receive over two decades worth of pension credit retroactively, costing the County $102,246. Since that time, dozens of other instances have come to light involving independent contractors employed by school districts, who were given “full-time employee” status in order to receive generous pension benefits to which they were not entitled to.

Weitzman said that the IRS rules laid out in IRS Publication 15-A has always been quite clear on this subject.