August 3, 2020

NYS IG TAGLIAFIERRO FINDS NYS BRIDGE AUTHORITY SHIRKED FIDUCIARY DUTY IN APPROVING FORMER EXEC DIRECTOR’S EXCESSIVE SEVERANCE PACKAGE

NYS IG TAGLIAFIERRO FINDS NYS BRIDGE AUTHORITY SHIRKED FIDUCIARY DUTY IN APPROVING FORMER EXEC DIRECTOR’S EXCESSIVE SEVERANCE PACKAGE
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Former Bridge Authority Board of Commissioners approved $92K package without considering and questioning terms of agreement

New York State Inspector General Letizia Tagliafierro today released the findings of her office’s investigation into the New York State Bridge Authority and the details of a lucrative severance package for former Executive Director Joseph Ruggiero. 

 

The Bridge Authority is responsible for the operation and maintenance of five Hudson Valley bridges: Bear Mountain, Newburgh-Beacon, Mid-Hudson, Kingston-Rhinecliff, and Rip Van Winkle bridges. It is financed by toll revenue and receives no state budget appropriations.  

 

The Inspector General found that the Bridge Authority’s former Board of Commissioners approved Ruggiero to receive a total of $92,846.58 in paid leave accruals and severance without fully considering and questioning the actual terms of his employment agreement and what is required under State law. The severance – $58,600.37 for 720 hours – was calculated contrary to the terms of Ruggiero’s employment agreement. 

 

“The Bridge Authority’s former leadership failed to act in the authority’s best interest when it blindly rubber-stamped a lucrative severance package for the former executive director without doing its job,” said Inspector General Tagliafierro. “The Bridge Authority must ensure its new commissioners fully understand their roles and responsibilities. New Yorkers depend on state authority leaders to exercise fiscal prudence and competence at all times.”  

 

The Inspector General commenced an investigation into the Bridge Authority in June 2019 after the Hudson Valley News reported that Ruggiero was being paid by the Bridge Authority as an “advisory” consultant while also running for Dutchess County Executive.  

 

Ruggiero was appointed executive director of the Bridge Authority in March 2010 and served for almost five years as an at-will employee. In January 2015, amidst legislation introduced to possibly merge the New York State Thruway Authority and Bridge Authority, Ruggiero sought an employment contract with the Bridge Authority. Such agreements were entered into in 2015 and 2017 and ultimately expired without renewal in 2018.  

 

In January 2019, Ruggiero asked the Bridge Authority’s outside general counsel, Carl Whitbeck, Jr., to draft a termination agreement with the following components:  

  • Ruggiero would resign as executive director effective February 22, 2019. 

  • Ruggiero would continue employment at his same annual salary ($169,290) and benefits in the position of executive assistant to an acting executive director until March 12, 2019 – thereby surpassing his work anniversary and entitling him to an additional 208 hours of leave accruals valued at $16,929.  

  • The agreement also included the language of Ruggiero’s expired 2017-18 employment agreement and granted him payment for the value of his leave accruals and unspecified severance pay.  

  • It also provided him continued health, dental, and vision benefits until December 31, 2019 – an additional nine months after his planned separation from service. 

 

Notably, the termination agreement failed to define how severance pay would be calculated. Ruggiero sought pay for 90 work days, which he ultimately received (720 hours, valued at $58,600.37) instead of 90 calendar days (512 hours, valued at $41,671.37).  

 

The stated reason for Ruggiero’s continued employment as executive assistant was to foster a transition of leadership to a new acting executive director. In reality, the evidence shows he did not make himself available to her during the transition and took leave during the period. Additionally, the move allowed him to formally commence his candidacy for county executive while not running afoul of a provision of state law that bars any state agency leader from running for elected office.  

 

The former Bridge Authority Board met February 21, 2019 and entered into executive session to discuss the matter – with Ruggiero participating. During the session, no paperwork was presented reflecting calculations of the value of Ruggiero’s accrued leave and severance. Additionally, Whitbeck incorrectly claimed that precedent for payment of such severance pay beyond the value of accrued leave existed. Nevertheless, the former Bridge Authority board unanimously approved the package with the greater severance amount.  

 

While the board was not prohibited from granting Ruggiero severance pay, the investigation found substantial deficiencies in the process: 

  • The former commissioners failed to exercise care in the management and financial activity of the Bridge Authority to ensure it acted in its best interest, mission, and the public interest as required under New York State Public Authorities Law. 

  • All former board commissioners voted to approve the termination agreement without having reviewed any supporting materials including any calculations of the value of Ruggiero’s accruals, extension of employment, and proposed severance.  

  • The former board commissioners failed to make informed decisions based on a thorough review of the termination agreement and failed to be cognizant of the ramifications of Ruggiero’s continued employment in a new title and his earning of leave accruals including failing to determine whether he was to be compensated for 90 work days or calendar days.  

 

Additionally, the Inspector General found that Whitbeck failed to properly counsel the board. Specifically, Whitbeck:  

  • Did not define a key term of Ruggiero’s termination agreement. 

  • Failed to advise the former board prior to and during executive session of the agreement’s provisions and the board’s legal authority for granting severance pay.  

  • Did not review and properly advise the former board on precedent at the Bridge Authority for severance pay awarded to prior executive directors. 

  • Failed to consider the financial consequences of granting Ruggiero continuing employment in another title to gain the benefit of additional leave accruals. 

 

In December 2019, Governor Andrew M. Cuomo signed the Severance Pay Limitation Act into law, requiring that severance pay provided to at-will employees at public authorities “not exceed an amount equivalent to their prior three months‘ salary.” The granting of the value of 90 working days of severance pay to Ruggiero would have been prohibited under this new law, thereby saving New York State $16,929. 

 

Based on this investigation, the Inspector General therefore recommends: 

  • All new board members undergo initial and annual training by the Authorities Budget Office, covering compliance with fiduciary duties and responsibilities, good governance practices, and the Severance Pay Limitation Act.  

  • The Bridge Authority should promulgate policy to provide guidance to commissioners on their fiduciary duties and responsibilities.  

  • The Authorities Budget Office should review annual evaluations of each new member’s performance as per New York Public Officers and Public Authorities Laws.   

  • The new Bridge Authority board should evaluate the feasibility of seeking a return of Ruggiero’s ultimate pay out. 

  • OSC should review Ruggiero’s pension accruals as appropriate. 

  • The Bridge Authority board should review the services provided by Whitbeck. 

 

The Inspector General also recommends that the new board consider seeking the return of a portion of Ruggiero’s ultimate payout. Further, the Office of the New York State Comptroller should review Ruggiero’s severance package and payout to determine if any adjustments or reductions are appropriate to his ultimate pension calculation.   

 

The report, “Investigation of the New York State Bridge Authority,” is available online

 

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