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What you need to know for 07/21/2017

Watchdog nips at state authorities in annual report

Watchdog nips at state authorities in annual report

Many entities exist to spend or manage money or boost economic development
Watchdog nips at state authorities in annual report
The Albany County Airport Authority has the second-highest operating expenses at $46.5 million.
Photographer: Daily Gazette file photo

The state Authorities Budget Office has published its annual review of 500-plus state authorities, and with it a now-familiar criticism of the way some authorities thumb their noses at the ABO, ignoring regulations that govern them.

Many of the entities exist to spend or manage money or boost economic development, and a huge amount of money is involved: Operating expenses for the 47 state and 531 local authorities totaled just under $52 billion in 2016, and their combined debt was nearly $270 billion. 

These numbers are heavily skewed by massive agencies in Albany (the Dormitory Authority manages $47 billion in debt) and the New York City area (the Metropolitan Transportation Authority had $16 billion in operating expenses in 2016). By comparison, the Saratoga County IDA’s 2016 budget was in the $200,000 range, and the Fulton County IDA manages about $3.84 million in debt.

ABO Director Jeffrey Pearlman gives his opinion of the situation in the first two sentences of an introduction to the report:

“Public authorities play a tremendous role in government. However, for too long they have operated with limited oversight and often have amassed crippling debt that has threatened the stability of our state and local economies.”

The report also repeats the frustration voiced previously by the ABO: That some regulated authorities don’t comply with all the rules that apply to them or with the ABO’s efforts to check whether they are following those rules.

“Over the past 11 years in conducting compliance reviews, investigations, quality assurance of reporting and responding to inquiries, an underlying theme for a public authority’s noncompliance with the law has been the board of directors’ lack of oversight of and engagement with staff and the authority’s activities,” the report states.

Here are some excerpts from the ABO’s 2017 annual report, which was issued July 1:

By the numbers

Some notable 2016 statistics about public authorities in the Capital Region:

  • The Capital District Transportation Authority has the highest operating expenses, $105.7 million. The Albany County Airport Authority is second-highest at $46.5 million. Most others are below the $1 million mark.
  • The highest debt levels are at the Airport Authority ($88.2 million), Saratoga County IDA ($83.4 million) and Schenectady County Capital Resource Corp. ($60.3 million).
  • The dozens of economic development authorities formerly operating in Schenectady County have been whittled to five: The Schenectady Metroplex Development Authority, Schenectady City IDA, Schenectady County IDA, Schenectady County Capital Resource Corp. and Glenville Local Development Corp.
  • Metroplex administers itself, as well as the two IDAs and the CRC, with a paid staff of five at a combined annual salary of $535,490.
  • Other workforces and payrolls vary widely. The Albany Port District Commission has 53 employees earning a combined $1.6 million; the Airport Authority has 30 staffers earning $1.82 million; the Saratoga County Water Authority has 11 earning a combined $330,769; Mechanicville-Stillwater IDA has seven earning a total of $2,450; and Schoharie County IDA has a staff of three earning a total of $25,287.
  • There were 20 IDA-assisted projects in Saratoga County from 2012-16. During that period, private-sector employment climbed by 65,843 to 72,461, or 10.1 percent, the highest percentage of any county in the state.
  • Metroplex’s operating expenses rose and fell from 2012 through 2015 to finish the four-year period essentially unchanged, then jumped from 13.4 percent to $1.09 million in 2016. This was due to its taking over the Land Bank, which is funded by state grants.

Bonus or bogus?

Authorities are allowed to give employees bonus pay, provided the criteria for doing so are clearly defined and a performance review is completed. 

There were 22 public authorities that reported having bonus programs in 2016, and they said 2,407 employees received such payments. Of those, 181 employees received bonuses of $10,000 or more. 

The greatest number of those big bonuses (74) and the largest single reported bonus ($141,505) were paid to employees of the Roswell Park Cancer Institute Corp. in Buffalo. Many of them are physicians, and 73 of the 74 had six-figure total salaries. The 74th-largest bonus — which went to the corporation president — pushed his total salary for that year past the $1 million mark.

The report also lists 56 of the CDTA's 883 employees receiving bonuses of anywhere from $10,004 to $36,698. That baffled a CDTA spokeswoman, who said the transit company has only about 675 employees and does not give them bonuses. With a little research, she determined that all 56 of the employees had retired, and the money in each case was a payout for accrued leave time or unused benefits. That’s technically a bonus, by the ABO’s definition, but it is not a performance-based reward for a job well done.

Roswell Park’s bonuses, on the other hand, are performance-based payouts that match the popular definition of a bonus, a spokeswoman there confirmed.

Multiplying like bunnies

The ABO notes that it can be hard to quantify the number of authorities in the state, as they are continually being created and dissolved.

In its report, it counts 578 entities, 47 of them state authorities. Among the other 531, there are:

  • 295 not-for-profit corporations affiliated with, sponsored or created by a local government, including 37 tobacco asset securitization corporations
  • 109 IDAs
  • 41 urban renewal or community development agencies
  • 28 water, water finance, and water and sewer authorities
  • 21 miscellaneous authorities
  • 20 land banks
  • 9 solid waste and resource recovery authorities
  • 5 parking authorities
  • 3 airport authorities

No response

A recurring problem for the ABO is non-cooperation from entities it is trying to regulate.

“The ABO routinely identifies about one-quarter of the public authorities that repeatedly fail to submit required reports,” the ABO report states.

“The ABO issued 50 warning letters in 2017 to authorities that failed to submit reports and has been working with some of these authorities to finalize dissolution.

“There are entities that routinely deny being a public authority, although there is sufficient evidence that they meet the definition of a local authority, as defined in law.

“The ABO will be working with other state enforcement agencies that also have oversight of these entities to ensure these entities are following requirements of NYS laws, or they could possibly encounter dissolution.”

In the Capital Region, the following entities had not submitted their 2016 data to the ABO, as of June 29:

  • Albany Community Development Agency
  • Albany Municipal Water Finance Authority
  • Albany Water Board
  • Corinth Industrial Development Agency
  • Crossroads Incubator Corp., part of the Fulton County Center for Regional Growth
  • Fulton County Economic Development Corp., also part of the FCCRG
  • Hoosick Local Development Corp.
  • Johnstown Economic Development Corp.
  • Mechanicville Community Development Agency
  • Saratoga Springs City Center Authority
  • South Glens Falls Local Development Corp.
  • Troy Community Land Bank Corp.
  • Watervliet Local Development Corp.
  • Waterford (town) Capital Resource Corp.
  • Waterford (village) Local Development Corp.
  • Wilton Water and Sewer Authority

Audit reports and annual reports were due to be submitted to the ABO by March 31, 2017, except for Crossroads, the Johnstown EDC and the village of Waterford LDC, which were due Aug. 31, 2016. 

The ABO report noted that the Johnstown EDC and Waterford LDC have indicated their intention to dissolve but have not completed dissolution.

Toothless tiger

The report expresses the ABO director’s wish that the ABO could do more to control the hundreds of authorities across the state and respond more forcefully to things like ignored reporting deadlines.

“While the ABO can continue to monitor authorities and provide board member training, the ABO is left with few enforcement powers to remedy these issues. The law allows for the ABO to censure boards of directors and to recommend to the appointing authority the removal or suspension of board members.

"Unfortunately, there have been instances over the years when the ABO used these powers and there was little or no reaction by the board or appointing authority. The ABO believes that consideration should be given to granting it the ability to assess fines, suspend directors or to curtail certain activities of an authority and its board which have been censured but remain out of compliance with state law or deficient in performing its fiduciary duty.”

Finally, the ABO casts doubts on some of the very statistics contained in the report.

“Data reported in [the Public Authorities Reporting Information System] by public authorities is questionable, as it has been repeatedly inaccurate and unreliable,” the report states. “ABO reports on IDA procurement practices and board member training have identified inaccurate reporting by authorities. Authorities continue to report no staff and compensation at the authority to purposely avoid transparency."

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