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City says state comptroller probing Long Beach payouts

Officials: separation payments were questionable, but not illegal

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State Comptroller Tom DiNapoli’s office is looking into six years worth of “separation” payouts given to City of Long Beach union and non-union employees as part of a comprehensive audit of the city’s finances, according to city officials.

The audit comes as questions continue to swirl over payments made to former City Manager Jack Schnirman, now the Nassau County comptroller, who left in January with $108,000, as well as a number of other non-union employees.

At the May 15 City Council meeting, council President Anthony Eramo said that the city provided information to DiNapoli’s office to determine whether the payouts were appropriate.

“I don’t think there’s one council member up here that was happy to find out about the way it had been done,” Eramo said. “The City Council asked them to look at the last six or seven years of payments that had been done — all employees, union and non-union . . . contracted and not contracted. Let’s look at everything, see what’s going on and come up with a different plan going forward.”

A spokesman for DiNapoli declined to comment. In a recent review of the city’s proposed budget, DiNapoli’s office said that Long Beach is in “significant fiscal stress” and criticized its handling of separation payouts, saying that its continued practice of borrowing for the payments is not “fiscally prudent.”

The city’s Code of Ordinances states that non-union employees like Schnirman are entitled to 30 percent of total accrued sick days at the time of separation, and can claim up to 50 vacation days. A Herald analysis of Schnirman’s payout documents in April showed that he appears to have been overpaid by more than $50,000 after he received a payout amounting to 100 percent of his accrued sick days.

Officials with knowledge of the payouts said that since 2014, Schnirman, who earned $173,800 a year as city manager, allowed a number of non-union employees to collect up to 100 percent of their accrued sick time based on an interpretation of the Code of Ordinances that dates back to 1997 (see sidebar). Additionally, union and non-union employees have also been able to collect up to 75 vacation days since the late 1990s, but the code was never updated to reflect that accrued time for non-union workers, officials said.

Council members John Bendo and Anissa Moore voted down a $2.1 million bond measure last month to make up for “separation payouts” to 62 union and non-union employees in 2017-18 when they learned that a number of them remained employed by the city. Bendo and Moore questioned whether a number of non-union employees, in particular, should have received the separation payments they recently did.

Payouts legal?

County Legislator Denise Ford, a Republican from Long Beach, recently called on county District Attorney Madeline Singas to investigate the payouts, as well as Schnirman’s handling of Long Beach’s finances in the midst of a fiscal crisis.

“You all have to rebuild trust in this city,” Ford told the council, “because I think it’s completely gone.”

Acting City Manager Mike Tangney said at last week’s meeting that “outside agencies” are investigating the payments, but he did not provide further details. One city official, who declined to be identified, said that Singas’s office began looking into the payouts two weeks ago. Singas’s office also declined to comment.

City officials say that while the payouts may have been financially questionable, they were not illegal.

“While one can always question the business judgment of certain financial decisions in hindsight, one thing is clear: There has been no unlawful conduct with employees’ receipt of any separation pay or drawdown of accrued time,” said Assistant Corporation Counsel Greg Kalnitsky, who did not receive a payment and added that he did not advise any city officials on the payouts.

Bendo continued to question the legality of the payouts. “The same people who violated the city’s code by making these payouts are now trying to tell us that no laws were broken,” he said. “Their legal interpretation of the law in this case is suspect.”

An ‘open’ retirement incentive

Those with knowledge of the payments said that Schnirman authorized them to union and non-union employees alike as part of an early-retirement incentive that “was left open.” “Instead of forcing them to leave,” one official said, “it kept getting extended.”

Schnirman declined to comment and cited a recent op-ed essay he wrote in the Herald. He argued that separation payouts had dropped from more than $5 million in 2012 to about $2 million as part of an early-retirement incentive launched in 2012 that reduced the city’s payroll.

That year, the council approved a resolution that allowed Civil Service Employees Association members and non-union employees to collect 50 percent of their unused sick time, as opposed to 30 percent outlined in the contract and city code if they left service within 90 days.

However, CSEA members and non-union employees later received 65 percent of their accumulated sick time, a measure that did not receive council approval, according to documents obtained by the Herald. CSEA members could also choose to increase their terminal leave from five days for each year of service to 10 days.

“Schnirman exercised his discretion to exceed the entitlements in the CSEA contracts,” said one official with knowledge of the payments who declined to be identified. “It’s not an incentive if everyone is getting it. They were essentially bonus terminal payouts. There’s a pervasive feeling among a lot of people that Jack threw everyone under the bus by this unfolding mess that he left behind.”

CSEA President John Mooney declined to comment.

Payouts to employees

Not including the payouts in 2017-18, 32 employees had also received drawdowns since 2012 of their accumulated sick, vacation and other unused time while continuing to work for the city — the majority of them CSEA members — a practice that past administrations followed, officials said.

The CSEA contract states that members can be paid for accrued terminal time while still employed, though Schnirman and past city managers have allowed both union and non-union employees to collect sick, vacation and, for CSEA members, compensatory time, a city official told the Herald.

“Drawdowns of accrued time is a practice that has extended for decades, from administration to administration,” Kalnitsky said. “The practice of drawing down accrued time occurs in municipalities across the country. It is a business judgment decision where the city has the ability to draw down accrued time, which can relieve its future financial liabilities.”

According to a list of payouts obtained by the Herald, 16 union and non-union employees received more than $300,000 in separation payouts and “drawdowns” of their accumulated time in 2017-18 but remain on the payroll, including Tangney, who collected $52,000, and Corporation Counsel Rob Agostisi, who received a payout of $128,000 because he had intended to leave for another job after 11 years of service.

People with knowledge of the payouts said they were made to a number of non-union employees — some of them politically connected — who had intended to leave the city for positions elsewhere, or who were uncertain about their jobs with the city after last November’s elections.

Kalnitsky said that non-union employees make up 1 percent of the city’s work force, receive fewer benefits than union workers, pay a portion of their health care costs and recently offered to give up a week’s salary amid the city’s fiscal crisis.

“In tumultuous political circumstances outside of our control, we have no job security,” he told the council at the May 1 meeting.

“Some people in non-elected leadership positions decided that because their predecessors exhibited bad behavior, they could continue it and take it to an extreme,” said Bendo, who said that officials have yet to release information about specific payouts to the council and public. “These same unelected city employees . . . decided to set policy without the approval of the City Council.”