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September 20, 2007


DiNapoli: Audit Finds Excessive Overtime and
Improperly Bid Contracts in Town of Brookhaven

Town Officials are Addressing Audit’s Concerns

The Town of Brookhaven paid approximately double the amount budgeted for employee overtime and out-of-title compensation, according to an audit released today by State Comptroller Thomas P. DiNapoli. In addition, questionable bidding practices cost taxpayers $89,000.

“Brookhaven taxpayers shouldn’t have to pay for the lax work of its elected officials,” DiNapoli said. “But that is exactly what happened under the former supervisor in 2005. These are taxpayer dollars. Spending should be closely scrutinized so overtime is properly managed and taxpayers pay the right price for services. The job my office has done is helping Supervisor Foley and Clerk Betheil take measures to improve things since they took office.”

Overtime and Out-of-Title Compensation
The audit found the town did not adequately control payroll costs for overtime and out-of-title work. During the audit period, January 2005 through December 2005, the town incurred $7.6 million in overtime costs and $1.1 million for out-of-title work, both of which represent about twice the amount the town budgeted for these expenses. Overtime alone represented 16 percent of the town’s payroll costs.

Town officials did not establish written procedures to guide employees in how to maintain accurate and complete overtime records, but rather left it up to the individual departments to determine. Auditors found that in most cases, overtime was not pre-approved in writing, certified by the employee’s supervisor or justified on employee time records. In many cases, town employees seem to have assigned themselves overtime without approval or consent of their supervisors.

Out-of-title compensation is typically earned when an employee is re-assigned to a job title that has a higher rate of pay than the employee’s normal job title. The audit found the town did not have procedures to ensure the re-assignments are justified in writing and the hours worked are properly recorded.

Among the audit’s findings:

  • certain employees at the highway department worked overtime hours to complete normal work assignments, which suggests the town should consider hiring additional workers to perform these job functions;
  • emergency repairs only accounted for 20 percent of overtime at the highway department, while more than 1,000 hours of overtime occurred for non-emergency work such as street sweeping, blacktop treatment, road paving and resurfacing;
  • the town did not take advantage of a provision in its union contracts to alternate work schedules so weekends were included in some parks and recreation employees’ regular work schedules rather than unnecessarily accumulating overtime hours; and
  • the waste management department did not use staggered work schedules but instead assigned most employees the same work schedule, which forced employees to work overtime to ensure the facility had coverage for set-up work at 6 a.m. and close-down work until 5:30 p.m.

Procurement
Auditors discovered that the town paid $89,000 more than necessary for contracted services because it did not properly oversee competitive bidding for contracted services. Specifically, the audit found the town failed to properly estimate annual quantities in the bid specifications for two contracts.

This allowed one company, with which the town already did business, to submit an irrationally low bid for fence installation at $10,407. This company’s contract bid included only the individual unit cost for goods and did not factor in the quantity needed of each item. The company was ultimately paid $428,000 to complete the work.

In addition, the audit found the town entered into five contracts, totaling $114,732, without advertising for bids in accordance with state law and town policy. In each case, the town purchased items from companies it had existing contracts with, but the items purchased were not included in the contract.

Clerk’s Office
The audit also found the clerk’s office did not establish written procedures for employees to follow when handling cash receipts and disbursements. Other problems noted in the clerk’s office included:

  • not adequately safeguarding cash, permits and licenses;
  • not always issuing receipts for cash collections;
  • deleting certain cash collection entries from the computer system;
  • failing to complete bank reconciliations in a timely manner; and
  • not properly segregating duties among employees.

The audit recommends the town and board:

  • establish policies and controls to ensure overtime and out-of-title compensation is necessary and pre-approved by a supervisor;
  • analyze overtime costs to determine if alternate work schedules would significantly reduce overtime expenses;
  • include estimated quantities of materials needed in bid specifications;
  • compare items to be purchased with the contracts to ensure the items are included;
  • and adopt policies to establish control and direction over cash receipt and disbursement procedures in the clerk’s office.

The town supervisor and town clerk requested the audit. The town and clerk’s office generally agreed with the audit’s findings and have already implemented some of the audit’s recommendations. Their full responses are included in the audit.

Click here for a copy of the audit.

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