golden hill spearation payments

7/29/2019 Golden Hill Spearation Payments

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ULSTER COUNTY

OFFICE OF THE COMPTROLLERPO BOX 1800

KINGSTON, NEW YORK 12402

Telephone (845) 331-8774 Fax (845) 340-3697

___________________________________________________________________

September 23, 2013

Dear County Officials:

One of the County Comptrollers Office top priorities is to identify areas where Udepartments and agencies can improve their operations and services in order toCounty officials in performing their functions. This includes the development and short-term and long-term strategies to achieve reduced costs, improved service deaccount for and protect the Countys assets.

The reports issued by this Office are an important component in accomplishing theThese reports are expected to be a resource and are designed to identify current emerelated problems and provide recommendations for improvement.

The following Report details the findings from our review of the Golden Hill Healthemployee separation payout, totaling approximately $1.5 million, to 244 empconsequence of the sale of the Golden Hill Health Care Center, effective June 26,

of this report was provided to the Department of Finance, the Executives Office anHill Transition team a week in advance of its release, without comment.

If we can be of assistance to you, or if you have any questions concerning this Repofree to contact us.

Elliott AuerbachComptroller

JoseD

RonaDirec


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Golden Hill Health Care Center Separation Payout

September 23, 2013

EXECUTIVE SUMMARY____________________________________________

On June 26, 2013 Ulster County transferred ownership of the Golden Hill Health(Golden Hill) to a private entity. Since this transfer effectively ended the tfacilitys workforce as County employees, it qualified as a separation event whicpayout of unused accumulated benefit time from the date of hire until the sale of theaccumulated time paid, along with associated payroll taxes, amounted to approxmillion.

Depending on the date of hire and the employment contract, which in the management Ulster employees is known as the collective bargaining agreement (Cthe case of management, the personnel policy governing their position, the timeparticular separating employee may be eligible varies from one to another. The limCountys automated systems for tracking these entitlements, together with thenature of the calculations when performed manually, were cited as a source of cearlier report of this Office, Separation Payouts, released in December of 20122012 Report). That report offered numerous recommendations with respect to

inherent risks in this expensive operating cost to the County. In fact, referenspecifically to the challenges that would be faced in this regard by the sale of Golde

For these reasons, as well as the sheer size of the payout, we felt it prudent to examiof the Golden Hill separation payout. This Report represents the results of that revie

Our Office relied on three documents as a starting point for our review:

1) The Payroll Cover Sheet with the verification of the Department of Finmathematical calculations related to the payouts were correct;

2) An excel file prepared by the Department of Finance along with supportingback up the amounts paid out. These schedules were originally created information (hourly wages and accumulated hours) from the Countys payro

3) A letter dated May 14, 2013, from the Ulster County Personnel DepartmeHill employees, notifying them of the impending layoffs and specific agreem

With respect to these documents, certain issues were identified. For instancspreadsheets included a master spreadsheet (for which the payouts were actuallysupporting spreadsheets showing backup calculations, but the calculations repremaster spreadsheet were manually done, as opposed to utilizing Excels automfunctions to tie the backup calculations into the master spreadsheet. Also, while the

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Further, our review revealed several categories of processing and payment errors, s

follows:

1) Overpayment to an employee who had their Leave Without Pay time aservice rather than deducted

2) Duplication of payment to an employee for 133 hours of vacation in two coperiods

3) Duplication of payment to an employee for the same holiday4) Underpayment of employees at incorrect pay rates5) Overpayment to employees for shift differentials to which it appears thentitled under their CBAs

The processing errors identified cost the County approximately $17,000 in net overto which, we are advised, efforts are being made to recoup by the Finance DepartCounty Attorneys Office.

One source of these errors noted may have been the very short turnaround time the

processed, which may not have been necessary given the 45 day window for provided for in the referenced May 14th letter.

We are careful to note that given the size of the payout, and the complicated transaction as a whole, the statistical significance of the net overpayment is relatisome or all of the net loss may be collected, although the resources required to dfactored into the analysis. However, the focus of this Report is not limited to issues specific transaction. Rather, its scope also includes an analysis of the extent concerns noted in our December 2012 Report as to the entitlement to separatiogeneral have been addressed. The Golden Hill payout highlights the fact that theappear to pay separation benefits for categories of accrued time which individual allow, or as to which there are conflicting provisions. It is recognized that past prrole in the determination of employees entitlements notwithstanding the plain lanCBA, but such past practice must also be analyzed to determine whether it justifiespayouts, and it must be determined whether such practice should be made a part of

bargaining process going forward.

In our December 2012 Report we recommended that labor counsel be engaged toparticularity the categories of accumulated time to which each class of employentitled at separation, under each CBA which was in effect at any time governing thrights at each hire date. We thank the Executives Office and the County Attorneyf ll i h b d f l h f l dd d


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September 23, 2013

I. AUTHORITY_________________________________________________

The Office of the Ulster County Comptroller conducted this review and produced accordance with the Comptrollers authority as set forth in Article IX, Sectparagraph, and Sections 57(A) and (G) of the Ulster County Charter, as well as aplaws, rules and regulations.

II. BACKGROUND ______________________________________________

Golden Hill cost Ulster County approximately $5.6 million annually to operexpectation of operating costs escalating in future years. Ulster County trownership, via the Golden Hill Local Development Corporation, to Golden HCorporation, a private entity established specifically for that purpose, in an effort tocost of maintaining the facility while continuing its benefit to the County.

As part of the transition, 244 Golden Hill employees received payment of theirbenefit time from their date of hire to the effective date of the transfer of Golden

2013. The breakdown of accumulated hours and respective payout amounts are detaTable #1.

Table #1: Payout Amounts

Accum. Payout

Payout Type Hours Amount

Compensatory Time 464.50 10,694$

Accrued Vacation 15,237.00 301,602

Vacation Time 18,435.75 389,824

Floating Holidays 603.50 11,544

Holidays 1,673.00 32,912

Personal Time 4,506.25 85,834

Sick Time 28,529.00 578,563

Totals: 69,449.00 1,410,973

Plus: County's Share of Social Security (7.65%) 107,939

Total Payout & Social Security 1,518,912$

When an employee separates from employment with Ulster County, by means o


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September 23, 2013

On December 3, 2012 our Office released a report, Separation Payouts, (De

Report), which examined the practice of payments for timeaccrued by employees separation from County employment.

In the December 2012 Report, we noted recommendations as they relate to the riswith the calculations, controls, and contractual governance of the payout obligationumber of separation events which would result from the Golden Hill transaction mof specific cautionary recommendations in the December 2012 Report. The recowhich were made, as they directly relate to the Golden Hill Health Care Center (G

payouts are summarized below:

1) [T]he large projected expenditure as it relates to the closure of Golden Hclosely monitored due to the large number of employees that could seek thpayout. We recommend[ed] the use of a standard payout calculation form. should be in a standardized electronic spreadsheet format, to allow for coration factor calculations.

2) [W]e recommend[ed] the payout worksheet require finance tochecking the calculation. It is important that any payout be verified by ansource from the creator of the file to ensure its accuracy and integrity of thproduced.

3) [L]abor counsel [should be] required to report the accrued time policiesthe CBAs the County Attorneys Office should work with labor councontradictory, vague, or misleading language, as well as seek to standefinitions and terms across the CBAs with respect to accrued time payclarifications might reduce the Countys obligations if the classification understood.

Having made both general and specific recommendations on this issue, we consideto review the administration of the Gold Hill separation post-transfer.

III. SCOPE AND OBJECTIVES ____________________________________

The Ulster County Charter charges the Comptroller with powers and duties as detaiIX, C-57.F. as it relates to payroll. As the chief auditing officer of the County, theshall [a]udit and certify for payment all lawful claims or charges against the Cofor payroll or otherwise, or against funds for which the County is responsible inpart[.]

O Offi ifi d f h G ld Hill i f i i


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September 23, 2013

The objective of this review was to obtain reasonable assurance that the separation to Golden Hill employees, on July 19, 2013, were accurate. We accomplished theseverifying the following:

1) The numbers of hours paid to a separated employee were accurate based uphours contained in the Countys payroll system (MUNIS).

2) The amount of vacation hours accrued were accurately calculated.3) The hourly rate the employee was paid agreed to their current union contract4) The employees who received a shift differential of 10% were in fact eligpayout according to the hours recorded in MUNIS.

IV. METHODOLOGY ___________ _____________________

Our Office was provided a spreadsheet from the Department of Finance (Findetailed information necessary to compute the Golden Hill payouts. This spreadsheeby exporting payroll data from MUNIS. The data in the spreadsheet was used to

accrual of vacation and sick time, length of service, and amount the separated empbe compensated.

Our Office utilized this spreadsheet and its supplemental worksheets to analyze iwere accurately calculated. Our analysis of the schedule included the following:

1) Completed the mathematical calculations to ensure they agreed with the tototal payout amounts on the MUNISEarnings and Deduction Detailed Repo

2) Verified the hourly rate an employee was paid agreed to the terms of thaCBA. This entailed verifying the employees title and years of service.

3) Verified the number of vacation hours which an employee was paid agreedof that employees CBA.

4) Verified the calculation of the employees vacation accrual was correct.5) Compared the spreadsheet provided by Finance to the number of hours acc

vacation, holidays, personal, and sick time, to MUNIS.

6)

Referred to the applicable CBA to verify the types of payouts made to emauthorized by their respective contracts.

V. CRITERIA___________________________ _________________

Criteria represent the laws, regulations, contracts, standards, measures, expected d fi d b i i d b h k i hi h f i d


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September 23, 2013

1) Civil Service Employees Association, Inc., Local 1000 AFSCME, AFL-CIOArticle 12-Vacation, Sick, Personal and Bereavement Leave, Schedule C- Vacatand Salary Schedules)

2) Personnel Policy Manual for Ulster County Department Heads, Managerial StafEmployees, and Board of Election Employees. (Specifically Section D- Leave T

VI. FINDINGS AND RECOMMENDATIONS __________________

Finding #1: Overpayment to Employees for LWOP Errors

Leave without pay (LWOP) is a temporary non-pay status, and absence from dcommonly granted at the employees request. LWOP as detailed in the CSEA con20, includes: maternity, military, education, and union leaves. LWOP status employees out on workers compensation.

The effective date of entry and exit into the LWOP status is significant to the caccruing vacation and sick time. Employees who received separation payouts,

received the LWOP status during their employment, should have their pro-ratiobenefit time reduced by their absence. In other words, vacation time should not accrtime the employee was on LWOP status.

Review of the LWOP data identified an employee had this LWOP time added to rather than deducted. This error resulted in an overpayment of $5,671 to the employ

When brought to the attention of Finance, Finance notified the employee in an attem

the overpayment.

Recommendation #1: Our review of the spreadsheet provided by Finance made the mathematical functions of the spreadsheet program were not utilized in capacity. The columns of the supplemental spreadsheet were not totaled nor did themaster spreadsheet which was the backup to the payroll register. Our Office had tohours and payouts to the MUNIS report in order to substantiate the amounts. Had tbeen totaled, compared, reconciled and then verified by an independent soudiscrepancies and errors should have been uncovered. Such as the hours in the LWwhich should have been negative were entered as a positive amount, creating an Finances timely oversight and reconciliation of this spreadsheet would have doverpayment prior to its release and the subsequent efforts of recoupment wouavoided.


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September 23, 2013

Finding #2: Duplicate Payments

Duplicate Vacation Pay:

While comparing the hours paid, detailed on the spreadsheet, to the amounts MUNIS, we identified one employee received duplicate payments for 133 varesulting in an overpayment of $5,741. After inquiring about this transaction, we wthat Finance failed to change the status of the separated employee after the fininactive, therefore causing the system to generate an additional payment in

payroll run.

Duplicate Floating Holiday Pay:County employees may be entitled to three Floating Holidays a year. Floatingprovided as compensatory time off, for a day of the employees choice, in lieu of wfollowing government recognized holidays: Lincolns Birthday, Good Friday, and E

In reviewing the hours in MUNIS and the spreadsheet, we identified one employee

a duplicate payment for the same floating holiday causing an overpayment of $200. floating holiday pay is not inclusive to the separation payout, and the duplicate paresult of an error dating back to May 13

th, 2013, the error may have gone und

Office had not reviewed the separation payout and identified the mistake.

Recommendation #2: We recommend that whenever an employee separates employment, their inactive status be entered immediately in MUNIS to cease furthTo avoid future over/underpayments relating to benefit time payment, we furthe

that Finance perform a thorough review of their payroll entry prior to their supayment. This review should be performed by an employee independent from theensure all payments were entered correctly.

Finding #3: Incorrect Pay Rate

To verify the accuracy of the employees payouts we traced their title and hourCSEA contract pay scales. This test identified 16 employees whose pay rate did notcurrent contract rate resulting in an underpayment of $2,933.

Recommendation #3: We recommend that Finance conduct an annual review osystem to verify employees are paid at their correct salary, step and grade per thCBA to avoid material over/underpayments.


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September 23, 2013

According to the spreadsheet provided by Finance, 91 employees qualified for the

in their hourly rate. To verify these employees were entitled to the shift differential,a spreadsheet of their hours to determine if more than 50 percent of the employeesschedule was within the hours allocated for this shift differential pay.

This identified that six employees were paid, in total, an additional $1,371 for shipay they were not entitled to. It is important to note the amount overpaid only accumulated hours that were paid out for the Golden Hill separation. It did not conswhile employed with the County, which would be significantly higher.

Recommendation #4: We strongly suggest that Finance do a thorough review of awho are receiving shift differential pay in other administrative units to see ifoccurring elsewhere.

Our Office could be of assistance in performing these tasks.

Finding #5: Personal Leave Payout

Article 12, Section 10, Personal Leave and Section 11, Unused Personal LeaveCounty of Ulster and CSEA, Local 1000 AFSCME, AFL-CIO, states [f]ull-timshall accrue from 35 hours to a maximum of 40 hours per year [n]ewly hired embe limited to the use of two personal leave days during the first six months of eSection 11 further states Unused personal leave [for] those employees employed aHealth Care Center shall be paid out for unused personal leave on their anniversa

Contradictory to the language of the CSEA contract, the schedule provided by Finemployees with less than one year of service being paid out up to a maximum opersonal time. When we raised the concern for this payout, we were referred to a lethe Personnel Director to Golden Hill employees, dated May 14

th, 2013. The le

[a]ll leave accruals including Personal Leave will be paid out (Appendix Cinformed granting the payout of personal time was used as a method to discourafrom utilizing their remaining personal time within the last month of Golden Hilunder County ownership which would create a shortage of staff. This letter, howaddress the issue of whether agreeing to pay personal time, to which the employee been entitled under their CBA, was also meant to entitle them to payout ofmorethan they should have accumulated to that point.

Our review of the spreadsheet provided by Finance, unveiled four individuals, hir14

th2013 i d li $2 469 f d l i M


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be in the form of an executed agreement of the parties, and perhaps should have b

by the Legislature. We are not opining on these recommendations as required by lawe leave that analysis to the County Attorneys Office and Legislative counsel.

Finding #6: Separation Pay Deadline

Also stated in this letter, [a]ll leave accruals including Personal Leave will be paiddays of the transfer of ownership. This deadline would have allowed Finance to prthe mathematical calculations of employee payouts to the MUNIS payroll entries

stipulations, as well as utilize an independent third party to verify that the calculatewas accurate. However, the payout was processed July 18, 2013, fifteen business sale of Golden Hill.

Recommendation #6: With the authorization to process the separation payout withwould have been advisable to utilize this opportunity to verify all aspects of the completeness and accuracy, rather than put the County in a situation where resouextended in the efforts to recoup these overpayments. The errors identified in this

the result of miscalculations necessary to properly complete this transaction. Also,this payout was on a normal payroll cycle for all County employees. The errors in tpayout may have been avoided, had Finance taken the additional time to transact annon-payroll processing period.

Finding #7: Prior CBA Concerns to be Addressed; Importance of M

Departures from the CBA

Lastly, in reference to our December 2012 Report, we stated our concerns regardingwithin the CBAs as it relates to payouts for separating employees; particularly ththe CSEA contract, Article 12, Section 6, Unused Sick Leave, which states the follo

Employees terminated for cause upon the recommendation of the SectHearing Officer, shall receive no payout of sick leave

Employees who separate from County service shall not be entitled to unused sick leave.

This review prompted a number of questions as they relate to the language includedThe questions which, to date, have not been adequately addressed are:

1) Do employees who are just terminated (without cause) receive payment of si


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that the decision to pay this benefit was based on a desire to avoid a mass exodus o

employees in the last days of the Countys operation of the facility, due to employeuse the time rather than lose it. This is a sound basis for such decision, and comment on whether alternative methods of addressing such an issue might have bdeferring to the Executives prerogative in that negotiation. However, we do noteagreement should have been expressed as part of the written contractual documethe transaction, rather than simply as an internal administrative payroll determinatio

Recommendation #7: The consequence of the respective County personnels failu

the issues raised in our December 2012 Report has resulted in continued confusion wthe payout entitlement and the Countys obligations for separation precommendations are:

1) Internal memoranda should be produced to clearly reflect review of thepolicies by which each employee unit is governed and ensuring compliance.

2) Institute a formal process by which labor counsel is required to reportFinance the accrued time policies contained in the CBAs.

3) The County Attorneys Office should work with labor counsel dunegotiations on new CBAs to avoid contradictory, vague, or misleading langas seek to standardize the definitions and terms across the CBAs wiaccrued time payouts. It is recognized that each negotiation is unistandardization of defined terms and practices should still be a goal of the pFinance in processing such items uniformly and decreasing the risk of error;

4) Labor counsel should distribute memoranda to departments explaining withthe contradictory and conflicting language in various presently applica

resolve future confusion. In response to our December 2012 ReportExecutives Office, through the County Attorneys Office, did seek labadvice on these issues, but the response of counsel was general in natureprovide express guidance on how each type of accrued time should be comnot compensated) under each individual CBA. We believe such particulariand would benefit Finance in the administration of this enormous task.

5) In any future transaction where a departure from the payouts to which tobligated is negotiated, such an agreement should have been expressed awritten contractual documents governing the transaction, rather than simply administrative payroll determination.

VII. CONCLUSION________________________________________________

A f h d f R id d h D f Fi ll


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September 23, 2013

Table #2, summarizes our findings and the associated over/underpayments. It al

potential cost savings to the County had they not included personal time payouts with less than one year of service.

Table #2: Schedule of Findings and Costs to the County

Over (Under)

Finding Brief Description Payment

Direct Costs to County

Finding # 1 Overpayment for LWOP 5,671$

Finding # 2 Paying Employee Duplicate Vacation Hours 5,741

Finding # 2 Paying Employee Duplicate Holiday Pay 200

Finding # 3 Incorrect Payout Rates to Employees (2,933)

Finding # 4 Incorrect Shift Differential Pay 1,371

Sub-Total 10,050

Potential Savings

Finding # 5 Employees with < 1 Year of Service Should *

Not Receive Personal Leave Payouts 5,769

Total Payroll Overpayments15,819

Add Social Security Taxes 1,210

Total Payroll & Payroll Taxes 17,029$

* This figure does not consider the value of personal time taken prior to the sale.

Our findings indicate an aggregate overpayment by the County of approximaassociated with the Golden Hill payouts. These costs may have been avoided had been considered:

1) Finance had utilized the 45 day payment allowance to accurately calculate tpayout.

2) The spreadsheet, provided by Finance, had been thoroughly reviewed by anthird party prior to payout, including, potentially, the earlier involvement of

3) MUNIS, as it specifically pertains to the accumulation of hours has an appof system related drawbacks. Thus a careful review of the data shoul

considered.

We thank the County Executives Office, the Finance Department, and the Transition Team for their assistance in performing this review.

Respectfully submitted,


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