A state audit of the Saratoga Springs Housing Authority released Friday lists irregularities, including how much the authority pays its executive director.
Executive Director Edward Spychalski, who was hired in 2006, is paid $144,921 per year, making him the highest-paid public housing director in the Capital Region, according to the audit by state Comptroller’s Office.
The auditors did a survey of the pay of other housing authority executives in Albany ($139,000), Schenectady ($96,100), Troy ($95,500) and Plattsburgh ($127,000), and Spychalski’s pay for 2012-13 exceeded them all. In each of these other housing authorities, the audit noted, the directors are responsible for significantly more rental units than in Saratoga.
“The authority did not pay the director in accordance with its policy,” the audit says.
The authority policy set in 1981 is to keep the executive director’s pay at the level of a principal in the Saratoga Springs City School District. He exceeded the principals’ pay by at least $13,000, the audit states.
The audit indicates that Spychalski’s pay falls within the top 7 percent of housing authority directors nationwide and suggested it be reduced according to new HUD guidelines.
Saratoga Springs Mayor Scott Johnson in February asked state Comptroller Thomas DiNapoli to conduct an audit of the financial practices of the housing authority. The request followed media reports about potential financial irregularities; questionable spending practices, such as salary, compensation and travel and business expenses; and claims of nepotism in hiring, the mayor said at the time.
Scrutiny of the authority, which operates the Stonequist Apartments on South Federal Street and the Vanderbilt Terrace and Jefferson Terrace rental apartments on the east side of the city, started last December. Several residents of Stonequist attended a City Council meeting to complain about bedbugs in their building and the way the authority was handling the problem.
After several months, the authority hired a professional exterminator to do a complete sweep of the 176-unit high-rise building. The authority staff also has instituted a regular in-house monitoring and eradication program.
“The authority officials did not assess the extent of infestation or bring in a professional exterminator as soon as they should have,” the audit says. “Authority officials were aware of bed bug infestation in September 2011 and attempted several different methods to exterminate them before obtaining services from a professional exterminator in February 2012,” the audit says.
The audit, which covered the period from July 1, 2010, to Feb. 21, 2012, did not find any major financial problems or misappropriation of public funds. However, the audit noted that the authority’s Board of Commissioners did not “institute appropriate internal controls in regards to the approval of travel to conferences.” This resulted in the payment of nearly $12,000 in “questionable” travel costs between 2010 and 2012.
The audit recommends that the authority receive reimbursement from the board members and employees for the excess travel costs, as stipulated in the report.
The audit says the $85,000 annual salary of authority accountant Cindy Gaugler was appropriate and in line with similar salaries in the city and other housing authorities in the region.
The audit found that Spychalski’s use of an authority vehicle was authorized and in compliance with contractual provisions. The use of an authority vehicle by Spychalski had been an issue raised in the press, as was the use of Spychalski’s brother’s repair shop to repair authority vehicles. The authority stopped that arrangement early this year.
Eric Weller, chairman of the authority’s Board of Commissioners, provided eight pages of responses to the audit’s findings and recommendations.
“We feel vindicated to the degree that the audit found no fiscal mismanagement or inappropriate use of public funds,” he says in the response.
Weller, however, takes issue with other findings in the audit, including Spychalski’s pay. Authority officials have also noted that Spychalski was a project manager for the Saratoga Springs Housing Authority before he was named executive director.
When he was named executive director, the project manager position was not filled, and Spychalski performs both duties, they said.
“On the issue of the director’s total salary, this is an issue more complex in reality than may appear on the surface because of the vagueness in [the U.S. Department of Housing and Urban Development’s] most recent advisory on salary caps for executive directors, based solely on agency size as measured by the number of housing units under his administration,” Weller writes.
The suggested salary for Spychalski under these guidelines is capped at $125,000 per year. Weller said Spychalski and the authority have a contractual agreement on his salary and holding him to a federal salary cap could lead to litigation.
Weller also took exception to the recommendation that the authority Board of Commissioners should audit all bills before they are paid. The auditors tested 75 vendor payments totalling $449,333 and found the claims were nearly always paid without any review by board members.
Weller said the executive director and authority accountant review all these bills before they are paid. Weller said the board reviews all vendor payments and asks questions about them, but not before the bills are paid.
He said the volunteer authority board meets once a month, while bills come in daily and must be paid on a regular basis. He said they are appropriately reviewed and paid by the authority’s paid administrative staff.
During the discussion of the authority over the past year, the issue of Spychalski’s son and daughter being on the payroll led to allegations of nepotism. The son was hired as a laborer by the previous executive director in 2005, and no waiver was required in the federal nepotism regulations, the audit said. The son resigned from his position early this year.
The audit also finds that the hiring of the daughter in 2009 was appropriate and complied with Civil Service Law and that HUD, after an investigation, granted a waiver for her hiring in April.