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CAPITOL
State tightens retirement system rules
Regulations will clearly define who is entitled to pensions
BY BOB CONNER Gazette Reporter
Reach Gazette reporter Bob Conner at 462-2499 or bconner@dailygazette.net.

    State Comptroller Thomas Di-Napoli on Thursday announced enhanced regulations for the New York State and Local Retirement System that define more clearly who should and should not be in it.
    DiNapoli’s actions follow stories by Newsday and investigations by the comptroller, Attorney General Andrew Cuomo and federal authorities into five school districts on Long Island.
    According to a March 7 audit by DiNapoli, the five districts each incorrectly treated the same lawyer as a full-time employee, paying benefits for him into the retirement system. The now retired lawyer’s pension benefit has been suspended, pending a recalculation of his retirement service credit, a statement issued by DiNapoli said. Cuomo has extended his investigation into other school districts on Long Island and in Westchester County.
    DiNapoli’s statement said his strengthened regulations define how local governments and school districts should classify professional service providers. He was quoted as saying: “Pensions are for employees. They earn their pensions and they deserve them. Unfortunately, some individuals have taken advantage of the retirement system and received benefi ts they were not entitled to. That is not acceptable.
    “The enhanced retirement system regulations will help local governments determine who is and who is not eligible for retirement benefits.”
    David Albert, director of communications for the New York State School Boards Association, said the association has not previously focused on the issue in its training programs for school board members, but would be doing so in the future.
   Karen Corona, public information coordinator for the Schenectady City School District, said the district’s attorney, Shari Greenleaf, is a full-time employee, who earns retirement and other benefits. Greenleaf has worked for the district since 1994 and now earns $101,450 per year, Corona said.
    Corona said the district’s parttime physician, Dr. Jay Kravitz, does have health-insurance benefits provided. She was not sure if Kravitz also gets retirement benefits. “As far as we know, we’re in compliance [with state regulations], but our attorney is reviewing the situation,” Corona said.
    DiNapoli said his office also is reviewing registration lists of attorneys against retirement system membership records. Local governments and school districts will be required to recertify any professional employee who doesn’t clearly meet the regulations. He said his office would be continuing its examination of records for employees who may have been reported inappropriately by multiple employers.
    The regulations specify that if an individual’s employer has a contract or retainer to provide professional services to a municipality, the presumption will be that the individual is an independent contractor and not an employee of the municipality.
    DiNapoli’s office is mailing letters to local governments notifying them of the new regulations. School districts and municipalities with questions about whether an individual should be considered an employee or an independent contractor can contact the comptroller’s office.

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Pensions for employees only

    One of the perks of being a government or school district employee in New York state is having a pension — and a very generous one at that, both in terms of dollars and the years you must work to start collecting. That makes it all the more important that only those who are truly entitled to these taxpayer-funded benefits get them, something state Comptroller Thomas DiNapoli has just taken welcome steps to ensure.
    By issuing enhanced regulations on who should be in the state retirement system and who should not, DiNapoli has effectively put an end to the scam of lawyers and other professionals working as contractors or consultants for school districts or local governments, getting them to pay into the retirement system, and then collecting pension benefits as if they were actual employees. Last year, Newsday revealed that one lawyer was treated as a full-time employee by five different Long Island school districts (he was given credit for working 1,286 days one year), qualifying him for $61,500 and health benefits for life. Shortly after that, an investigation by the state Attorney General Andrew Cuomo found that six more Long Island districts were treating two more private attorneys this way, even as they paid their firms more than $1 million in fees.
    But this practice is not limited to Long Island, nor is it new. As far back as 1997, James Roemer, a well-connected labor lawyer in the Capital Region, had qualified for a pension of $80,000 under the same kind of scheme. He was listed as a part-time employee of two counties, one town and three cities at a time, including Schenectady. Then-Comptroller Carl McCall said this was an egregious manipulation of the system but apparently legal.
    Cuomo isn’t so sure; he has used the word “fraud” and is investigating other Long Island and Westchester County districts. And federal authorities have been involved in the Long Island cases.
    But whatever happens with these existing pensions, it is essential that no one else qualify in this way. DiNapoli’s new rules, which presume that anyone on contract or retainer is not an employee and offer clear, common-sense guidelines for who is an employee, should stop this abuse right here.

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State Comptroller Thomas Di-Napoli on Thursday announced enhanced regulations for the New York State and Local Retirement System that define more clearly who should and should not be in it.

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Corona said the district’s parttime physician, Dr. Jay Kravitz, does have health-insurance benefits provided. She was not sure if Kravitz also gets retirement benefits. “As far as we know, we’re in compliance [with state regulations], but our attorney is reviewing the situation,” Corona said.

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Jay A. Kravitz, MD
Family Practice Practitioner
CapitalCare Family Practice Rotterdam
  
  
After earning his Medical Doctor degree at St. George's University, School of Medicine in Grenada, Dr. Kravitz completed his residency at St. Clare's Hospital. He has specialized in Family Medicine for more than 15 years.
Dr. Kravitz is certified by the American Board of Family Practice, and is a member of the American Academy of Family Physicians and the New York State Academy of Family Physicians. He is a member of CapitalCare' s Clinical Research Committee, and is a member of the group's Information Systems Committee.

Dr. Kravitz sees patients at CapitalCare Family Practice Rotterdam, 1667 Elizabeth Street. Call 518-356-5377.

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Cuomo expanding public pension fraud probe
Tuesday, April 15, 2008
The Associated Press

ALBANY — Attorney General Andrew Cuomo says he’s expanding an ongoing pension fraud probe to include all local governments across the state and all types of professional consultants.
The investigation started with findings that some Long Island school districts were listing outside lawyers as employees, allowing them to qualify for public pensions while their private practices collected millions of dollars in legal fees.
Now Cuomo is seeking information from more than 4,000 of the state’s county governments, villages, towns, and special districts about their employment arrangements.

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CAPITOL
State says 5 didn’t earn benefi t Comptroller: Lawyers should not get pensions
BY BOB CONNER Gazette Reporter

    Five attorneys from the Albany law firm of Girvin & Ferlazzo were incorrectly reported as employees of the Hamilton-Fulton-Montgomery BOCES, lining up pension benefits they were not entitled to, state Comptroller Thomas DiNapoli said Thursday.
    DiNapoli’s office said the attorneys who were improperly awarded credit in the state retirement system are Salvatore Ferlazzo, James Girvin, Kristine Lanchantin, Jeffrey Honeywell and Kathy Ann Wolverton.
    DiNapoli’s office removed five years of service credit for Ferlazzo in the retirement system and revoked the other four attorneys’ membership in it.
    In addition, an April 16 letter to BOCES Superintendent Geoffrey Davis from Deputy Comptroller Steven Hancox said: “We also determined that the attorneys’ work time was significantly over-reported. Each one of these attorneys was paid and reported to [the state and local Employees’ Retirement System] for having worked 231.4 days — almost full time — for the BOCES 2006-07 fiscal year ended June 30, 2007. However, according to data provided to the BOCES by the attorneys’ law firm, each partner worked only a fraction of the reported time, ranging from 71 days for one partner to four hours for another partner. In total, the five attorneys were paid $234,000 for working the 1,157 days that BOCES reported to ERS as their work time.”
    According to a DiNapoli news release, the fi ve lawyers “actually worked a total of 196 days. None of these individuals are retired. They inappropriately earned 5 to 16 years of service credit in the Retirement System. These attorneys did not work fixed hours, submit time sheets or work onsite at BOCES. In addition, BOCES management did not oversee the work they performed.”
    According to the comptroller’s office, Ferlazzo was paid $29,000 for working less than a day, Girvin got $55,000 for 27 days’ work, Lanchantin got $55,000 for 71 days, Honeywell $55,000 for 28 days and Wolverton $40,000 for 69 days.
    The law firm has been fired by the BOCES district. Davis, the BOCES superintendent, said the lawyers were not working almost full time and should not have been on the public payroll or earning retirement credit. As employees of a law firm, they should have been classifi ed as independent contractors, he acknowledged. They had been earning the pension credit under an arrangement made 20 years ago, he said, and the district expects to get back the payments it made for them to the retirement system.
    But Davis said the law fi rm did do labor relations work for local districts. It appears, he said, that other people at the firm were doing some of the work, even though the payments went to the five lawyers who were inappropriately on the BOCES payroll. He acknowledged that BOCES has no records of this but said the local school districts would not have kept renewing their contracts with the firm if they were dissatisfied with its services.
    Four of the lawyers named by DiNapoli could not be reached for comment Thursday, and the fifth, Wolverton, declined to comment.
    According to its Web site, “Girvin & Ferlazzo and its attorneys have been representing school districts for over 20 years and is one of the largest and most experienced school law fi rms in New York state, currently representing over 70 school districts throughout the state. Very few law firms have the ability to bring its clients such a broad base of experience and knowledge in school and education law.”
    One of the many local school districts represented by Girvin & Ferlazzo is Guilderland. Its superintendent, John McGuire, said he would be discussing the issue with the law firm and the school board, but he is confi dent Girvin & Ferlazzo attorneys are not listed as Guilderland employees and are providing appropriate legal services for the money they are paid.
    DiNapoli and Attorney General Andrew Cuomo have been conducting parallel investigations of lawyers on school district payrolls. Girvin & Ferlazzo said previously that it was cooperating with Cuomo’s investigation. DiNapoli spokeswoman Emily DeSantis said information about the Hamilton-Fulton-Montgomery BOCES case has been shared with the attorney general’s offi ce.
    Cuomo recently expanded his probe beyond school districts to include other local governments.
    Cuomo has said his investigation will focus on civil actions to recover public funds but may also pursue criminal prosecutions in egregious cases. His press office could not be reached for comment Thursday.
    DiNapoli said in a news release: “Hamilton-Fulton-Montgomery BOCES took immediate action when it learned its designation of its lawyers as employees was not appropriate. Other participating local governments should review their relationships with professional service providers and take appropriate action immediately to correct any arrangements that do not comply with legal requirements.”
    Earlier this month, DiNapoli announced strengthened regulations to provide clarification and guidance for local governments when they determine who is an employee.
    DiNapoli said his office would recover any pension benefi ts paid out to wrongly classified individuals who have already retired, and he would ask the attorney general to pursue civil recovery of those benefits when necessary.

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Carl Strock THE VIEW FROM HERE
Carl Strock can be reached at 395-3085 or by e-mail at carlstrock@dailygazette.com.
Why would
BOCES give
away money?

    I have a question that I am so far unable to get an answer to: What benefit accrues to a school district or a BOCES in putting a lawyer on the payroll when that lawyer is not really an employee but rather an independent contractor?
    I understand there is a benefi t to the lawyer, and quite a big benefi t, in becoming eligible for a state pension and state health insurance, but what benefit is there to the school or the Board of Cooperative Educational Services?
    I’m thinking, of course, of the recent expose by the state comptroller of apparent irregularities in the BOCES of Hamilton, Fulton and Montgomery counties, where five lawyers were on the payroll to the happy tune of $234,000 a year, when, by the lawyers’ own account, they worked only 196 days among them rather than the 1,157 days that BOCES reported and earned therefore only a sixth of what BOCES paid them.
    By no stretch were they employees. They were independent contractors, the comptroller declared.
    My first thought was that the lawyers cheated. They billed for more hours than they worked. But Mary DeSantis, a spokesperson for the comptroller, tells me it was the BOCES administration that over-reported to the state, and when the comptroller inquired, the lawyers themselves provided the lower and presumably more accurate numbers.
    No doubt the superintendent of that BOCES, Geoffrey Davis, could explain this curious situation, but alas, he does not return my phone calls, so I get no help from that quarter. And a spokesman for the state Department of Education, Tom Dunn, represents that he has no information.
    The attorney general, Andrew Cuomo, said in a press release, “There may have been financial benefits for the BOCES to list professionals as employees instead of as independent consultants,” but he did not spell out what those benefits would be.
    So isn’t it odd? A public educational institution pays some outside lawyers six times as much as they were due — for what?
    A kickback scheme? Not likely, since Cuomo says, “There appears to be a chronic fraud that has occurred across New York State for many years.”
    I do note that Cuomo has expanded his inquiry, which actually began a couple of months ago on Long Island, to encompass “all forms of local governments,” not just school districts and not just BOCES, so I will be interested to see where this goes.
    And I heartily endorse the view expressed by some readers that this be treated as a criminal matter, if it indeed involves defrauding the taxpaying public of millions of dollars.

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School districts answering questions from Cuomo
BY BOB CONNER Gazette Reporter

    Local school districts have been responding to a Web site questionnaire from the office of Attorney General Andrew Cuomo, who is trying to find out whether attorneys and other professionals are improperly enrolled in the New York State Retirement System.
    Cuomo’s office is sending out several thousand letters to local governments including school districts, said Matt Wing, a spokesman for the attorney general. The main focus of the investigation is whether lawyers, doctors, architects, engineers and other professionals have been improperly listed as public employees instead of as independent contractors, thus accumulating pension credit they are not entitled to.
    An April 11 letter to the Cohoes City School District says “you must complete and submit an electronic questionnaire no later than April 21.” A Web site is given, and an access code. The Web site warns, “If you are an unauthorized user you must disconnect now; proceeding further subjects you to arrest and prosecution.”
    Charles Dedrick, the Cohoes superintendent, said he was filling out the questionnaire Monday. John McGuire, superintendent of the Guilderland School District, said his assistant superintendent for business was filling out the attorney general’s questionnaire.
    Cohoes and Guilderland are among the many local districts represented by the Albany law fi rm Girvin & Ferlazzo. Last week, state Comptroller Thomas DiNapoli reported that five leading attorneys at Girvin & Ferlazzo were inappropriately accumulating pension credits through the Hamilton-Fulton-Montgomery BOCES.
    McGuire said that revelation would be taken into consideration by the Guilderland school board when it decides whether to renew Girvin & Ferlazzo’s contract, which expires June 30. The district will issue a request for proposals for legal work, he said.
    Dedrick said, “I think we need to see how it plays out,” but acknowledged, “We aren’t going to be able to go to our attorneys for advice.” Dedrick, who in June will become superintendent at Capital Region BOCES, said the New York State School Boards Association may be the best source of advice for districts.
    NYSSBA spokesman David Albert said that if school boards have unresolved questions regarding their relationship with their attorneys, they may want to hire a special counsel to consider the matter. School board members also should not hesitate to get answers, he said.
    Girvin and Ferlazzo lawyers did not return calls on Monday. The law firm also did not respond to Gazette inquiries last week. It said previously, however, that it was cooperating with the attorney general’s investigation.
    Emily DeSantis, a spokeswoman for the comptroller, said the law firm has not responded to the comptroller’s letter and news release of last Thursday, which made public the allegedly inappropriate enrollment of five of its lawyers in the state retirement system

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Why BOCES would have fudged hours
Carl Strock can be reached at 395-3085 or by e-mail at carlstrock@dailygazette.com.  

    I wondered the other day what benefit might accrue to a BOCES or to a local school district from having a lawyer counted as a full-time employee rather than as a contract vendor, and now I think I have the answer.
    A BOCES, or Board of Cooperative Educational Services, basically provides services to school districts that school districts cannot economically provide for themselves, the schools pay for those services, and the state reimburses them a percentage of the cost. The most prominent service is vocational education, but there are others too, including labor negotiations, which I only just learned about.
    A school district, let’s say, needs a lawyer specializing in labor law to negotiate a new contract with its teachers’ union. It can hire a lawyer on its own, or it can get one from the regional BOCES, and you don’t need a doctorate in public administration to figure out which way is more beneficial. If it hires one on its own, it has to pay full freight. If it gets one from BOCES, a large part of the freight will be reimbursed by the state Department of Education. How large depends on the wealth of the district, but in the case of the relatively poor Amsterdam district, to take one example, it’s 67 percent.
    But there is a condition. The lawyer must be a full-time BOCES employee, he (or she) cannot be a free-lancer working out of his or her own office and just doing the odd job on contract.
    Which I think answers the question: Why did the BOCES of Hamilton, Fulton and Montgomery counties report to the state Retirement System that five lawyers from the Albany law firm of Girvin & Ferlazzo were full-time employees when they were not?
    Answer: Because that way the participating school districts in those counties could get reimbursed for the cost of legal services.
    We’re not talking a huge amount of money. The Amsterdam school district last year spent $30,000 on Girvin & Ferlazzo lawyers, by way of BOCES, and got reimbursed about $20,000, but that’s the advantage.
    BOCES itself gets no direct fi - nancial reward, as far as I can tell, though of course it amplifies the scope of its operations, which is valuable to any institution.
    One thing I misunderstood: The lawyers were not necessarily overpaid; they were just over-reported for retirement purposes.
    BOCES reported to the Retirement System that the lawyers had worked a total of 1,157 days in the 2006-07 school year, but it paid them only $234,000.
    I say “only” because that amount breaks down to about $200 a day, and if you know of any lawyer capable of holding McKinney’s Index rightside up who is available for $200 a day, please let me know.
    When the state comptroller inquired, the firm reported its members had actually worked only 196 days, and that would work out to a more realistic $1,200 a day, or $150 an hour.
    Not to suggest the lawyers were blameless. They surely knew they were piling up valuable state retirement credits to which they were not entitled, per the comptroller.
    They had to have understood these devious workings. They describe themselves on their Web site as “one of the most experienced school law firms in New York State.” They could even have bid low on jobs with the understanding they would get the bonus of a state pension at the end of the road.
    Likewise the state Education Department. Given the revolving door between the department and BOCES and school districts, they too surely knew how things worked.