CAPITAL REGION — The Hudson River-Black River Regulating District overpaid its former chief financial officer after his retirement, a report from state Inspector General Letizia Tagliafierro said on Thursday.
The report concluded that Richard Ferrara received more than $50,000 in wrongful retirement benefits when he left in October 2019, and that the regulating district took no action to address the mistaken payout. The regulating district has acknowledged the error and an official there said it first alerted the inspector general’s office to the discrepancy.
The HRBRRD maintains reservoirs and regulates water flow in two watersheds in the Adirondacks, including the upper Hudson River. It manages and maintains the Great Sacandaga Lake reservoir in Fulton and Saratoga counties, which controls the Sacandaga River’s flow into the Hudson, as well as the Black River watershed in the western Adirondacks. It has offices in Albany, Mayfield and Watertown.
Ferrara served as CFO of the regulating district 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, before being hired as an employee in October 2005. Because of the timing, the inspector general said Ferrara was ineligible to receive certain retirement benefits.
Specifically, 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 the payout, and must contribute 10% toward their health-care insurance premiums during retirement.
The investigation found that Ferrara repeatedly -– though unsuccessfully –- petitioned the HRBRRD board and several executive directors he served with to change the rules so he could receive the sick leave accruals and make no payments toward health-care insurance premiums following retirement. When he retired, though, Ferrara was erroneously paid $51,082.58 for sick leave accruals.
The payment was made by a senior administrative assistant who was under the impression Ferrera has been hired prior to July 2005, the investigation found. The new CFO, executive director and board approved the 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,” the report found. “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.”
Ferrara, the inspector said, did not notify the HRBRRD of the error or return the improper disbursement, though it said as CFO, he should have been aware the payment was improper. Ferrara declined to cooperate with the inspector general’s investigation, Tagliafierro said.
“The former CFO’s actions in failing to acknowledge the wrongful payout, compounded by deficient checks and balances within the district, are troubling,” Tagliafierro said in a release. “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 recommended that HRBRRD seek to recoup the improper payment, improve internal controls, verify the accuracy of the information it has in employee files, and recommended the board, administrative and finance staff attend Authorities Budget Office training on their respective duties and responsibilities.
The regulating district’s executive director, John C. Callaghan, on Thursday said he agrees with the conclusions, and praised the inspector general for a “professional and thorough investigation.”
“The Regulating District immediately referred the matter to the inspector general after identifying this discrepancy, which was also subsequently identified in the Regulating District’s independent audit report for the period in question, issued in September, 2020,” Callaghan said in an email. “The Regulating District has implemented new procedures in cooperation with the Office of State Comptroller which would prevent such an occurrence in the future, and will also work to adopt additional recommendations included in the inspector general’s report, including working with appropriate agencies toward the prompt and complete retrieval of funds inappropriately paid out to Mr. Ferrara at the time of his separation.”
Ferrara could not be reached for comment.