New York State Inspector General Letizia Tagliafierro today announced that her investigation of the New York State Hudson River-Black River Regulating District (HRBRRD) found that Richard Ferrara, the former chief fiscal officer (CFO) for the public benefit corporation, received more than $50,000 in wrongful retirement benefits when he left in October 2019 – and took no action to address the mistaken payout.
The HRBRRD maintains reservoirs and regulates water flow in two watersheds in the Adirondacks: the Upper Hudson River and the 125-mile Black River that empties into Lake Ontario.
Ferrara served as CFO at HRBRRD from April 2005 until his retirement in October 2019. The Inspector General’s investigation found that for the first six months of his tenure, Ferrara was working as a temporary contractor via CFO for Hire, LLC before being hired as an employee in October 2005. Because of this timing and pursuant to the District’s employment rules and benefit guidelines, Ferrara was ineligible to receive certain retirement benefits. Specifically, the applicable HRBRRD employment rules and benefit guidelines state:
Employees hired prior to July 2005 are entitled to a payout of up to 100 days of unused sick leave upon retirement and do not have to contribute toward their health care insurance premiums during retirement.
Employees hired after July 2005 are not entitled to such a payout and must contribute 10 percent toward their health care insurance premiums during retirement.
The investigation found that Ferrara repeatedly – and unsuccessfully – petitioned the HRBRRD Board and several executive directors to change the rules so he could receive the sick leave accruals and make no payments toward health care insurance premiums following retirement. Nonetheless, Ferrara was erroneously paid the $51,082.58 in October 2019 by HRBRRD for his sick leave accruals to which he was not entitled.
Ferrara – who served as CFO of the District for more than 14 years and should have been aware that his payout was not permitted – did not notify HRBRRD of the error or return the improper disbursement. Ferrara also declined to cooperate with the Inspector General’s investigation.
“The former CFO’s actions in failing to acknowledge the wrongful payout, compounded by deficient checks and balances within the District, are troubling,” said Inspector General Tagliafierro. “Our investigation found that a series of missteps led to this payout and outlined recommendations to ensure the District can continue its mission while adhering to fiscally responsible practices.”
The Inspector General found this payout was calculated in error by an HRBRRD senior administrative assistant under the mistaken belief that Ferrara had been an actual employee – and not a contractor – in April 2005. The miscalculated benefits were reviewed and approved by the HRBRRD’s executive director, the incoming CFO, and the Board. No one identified the mistaken payout. The miscalculation was compounded by inaccurate personnel records, poor internal controls, the recent hiring of staff who were unfamiliar with Ferrara’s prior work history, and the relocation of HRBRRD’s main office and records. Notably, the investigation uncovered the Board’s problematic lack of attention to the matter given Ferrara’s numerous unsuccessful petitions to the board for this same payout.
The Inspector General recommends that HRBRRD:
Take appropriate action to recoup funds that were improperly paid to Ferrara.
Ensure his retirement pension payment and health care insurance premiums are accurately calculated.
Review and improve relevant internal controls.
Verify the accuracy of its retirement records and personnel databases.
Ensure that pertinent information is shared with appropriate staff in a timely manner.
Implement controls to ensure that all payments made by HRBRRD that require the review and approval of the Office of the New York State Comptroller (OSC) have, in fact, been reviewed and approved by OSC.
Consider, in consultation with the New York State Authorities Budget Office, expanding the scope of its annual reporting to the Governor to include a description of this matter, how it was addressed, and policies and procedures implemented to ensure such improper retirement benefits are not provided to future HRBRRD retirees.
Require the Board and administrative and finance staff attend Authorities Budget Office training on their respective duties and responsibilities.
The investigation’s findings have been provided to OSC to review Ferrara’s payout to determine if any adjustments or reductions are appropriate to his pension calculation.
The HRBRRD advised that it has accepted the findings of this investigation and will implement the Inspector General’s recommendations. The corporation also advised that it reviewed payouts to its retirees for accrued leave time and health care insurance premium contributions paid on behalf of retirees and found no additional improper payments.
The Inspector General’s report, “Investigation of the New York State Hudson River-Black River Regulating District,” is available online.