Long Beach City Council OKs $400K bond for payouts

The Long Beach City Council voted unanimously at a special meeting on Wednesday to approve a $400,000 borrowing measure to help cover retirement payouts to four police officers and city employees.

The bond measure comes at a time when the city’s payout practices are being audited by State Comptroller Tom DiNapoli's office and questions continue to swirl about whether a number of union and non-union employees, including former City Manager Jack Schnirman, were overpaid in the 2017-18 fiscal year for accrued sick and vacation time.

City officials said that the bond measure was needed to cover a number of unanticipated retirements, including a total of $525,458 to four police officers who left in the current fiscal year.

Last year, the council had initially considered a $2.5 million bond proposal to fund retirement and separation payouts for 27 police, firefighters and Civil Service Employees Association members who retired or intended to leave the city’s employ in the 2018-19 fiscal year.

Council members agreed, however, to scale down the measure, because the budget approved in May 2018 called for $1.8 million in borrowing — the equivalent of a 5 percent property tax increase — to cover contractual obligations.

The city issued a list on Wednesday of 46 employees who separated or intended to separate in the current fiscal year ending June 31. City officials said that the unanticipated retirements increased the amount to $2.1 million and created a $340,000 shortfall.

Former city Comptroller Kristie Hansen- Hightower, who continues to work as a consultant, said that the city would face a deficit and cash flow shortfall if the council failed to approve the $400,000 bond. Failure to pass the measure could have led to a further downgrade by Moody’s Investors Service, she said.

Council members express concern

Councilman John Bendo expressed concerns over the bond measure, particularly after officials said that the Police Department has not had a cap on accrued vacation time in decades.

Bendo asked whether the payout formula was in accordance with the Long Beach Police Benevolent Association’s contract, which has a 50-day cap on vacation time, according to the city. Bendo expressed concern about whether the payouts were legal.

Vacation time has exceeded the cap, Police Commissioner Mike Tangney said, for more than 40 years. The city said it believes that it’s a “binding” past practice under the state’s Public Employees Fair Employment Act, also known as the Taylor Law.

Bendo, who, along with Councilwoman Anissa Moore, voted against a controversial $2.1 million borrowing measure last year to cover separation payouts in the 2017-18 fiscal year — including a number of non-union employees who remained on the payroll — said that the rejection of that bond and subsequent outcry by residents triggered the state audit, which is expected to be released this summer.

“We know there’s an investigation underway,” Bendo said. “This was to focus on the police officers because there’s a concern because we could potentially be voting on something that could be illegal if the comptroller comes back and says that this practice is illegal. In reviewing for these police officers, I found that two of them are paid more than that’s allowed in accordance with the contract. But our corporation counsel is assuring us because it’s a past practice, it’s legitimate.”

The city is currently involved in binding arbitration with the PBA, after contract negotiations reached an impasse. City officials said they are trying to curtail the practice as part of the arbitration process and contract negotiations. Tangney also said that a cap on vacation time was put on new hires in the last contract.

“As far as changing some of these things, I believe the city has raised this point during the PBA … arbitration,” said Assistant Corporation Counsel Greg Kalnitsky. “We’re hopeful that the arbitrator will take what was said under account and impose more stringent limits … going forward.”

LBPD Lt. Bill Dodge, who calculates officers’ separation payouts, said that it was a management decision that helped curb overtime costs.

“With respect to the vacations, sometimes officers aren’t afforded the ability to take a vacation because it would incur overtime someplace else,” Dodge said. “The alternative is to put that officer on vacation and bring another officer in on overtime to fill the spot, so they make management decisions with that respect to which way it works better. If an officer is injured and they have a vacation scheduled … a line of duty injury … they can’t take that vacation and it moves back to their bank … again, it’s not always practical for them to take that vacation at a later time because it would incur overtime.”

Residents criticize additional borrowing

But in the wake of a fiscal crisis, a number of residents criticized the city for its borrowing practices and how it calculates separation payments to its employees.

Karen McInnis, one of three Democrats challenging the incumbent slate of City Council President Anthony Eramo and Vice President Chumi Diamond in a June primary, said that the city should work on finding savings instead of borrowing, including putting a freeze on raises for exempt employees.

“It was in poor taste to single out four [police officers] who we are specifically borrowing for because it just ain’t true,” she said. “Separation payment bonding is being used by the city as a mechanism to cop out of making long-term budget decisions.”

Eramo said the long-term goal is to start budgeting so that the city doesn’t have to borrow for separation payouts.

“I’m hopeful that we can get there,” Eramo said.

Before the meeting, Frank McQuade, a Republican running against Nassau County District Attorney Madeline Singas, held a rally in front of City Hall, where he and Nassau County Legislator Denise Ford (R-Long Beach) called on Singas to investigate last year’s payouts.

The rally was held after Singas, a Democrat, said last week that she was looking into $350,000 in separation payments at the county's Industrial Development Agency to five employees who remained on the payroll in 2018 under a Republican administration, according to Newsday.

“District Attorney Madeline Singas has not acted in any independent and proactive way, all the while she was ready to jump in on the IDA scandal … and those payouts are lower than what we’re talking about in Long Beach,” McQuade said. “And the Long Beach City Council, on this very night, is about to bond for more separation payouts a year later, without any guidance from the state comptroller or office of the district attorney.”

City officials have said that while the 2017-18 payouts were financially questionable, they were not illegal. They have also said that they have been working with DiNapoli’s office.

Though Singas’s office said nearly a year ago that it was investigating the city’s payouts, Moore said that Singas had “turned a blind eye” to the issue and that the state comptroller’s office has yet to issue its audit. She called for a moratorium on bonding for future separation payments.

“We cannot continue to approve and administer improper overpayments,” she said. “We cannot ignore the fact that some of the same individuals that were involved last year are still involved in this process.”

In a statement to Newsday, Singas’s office said, “The district attorney’s office promptly began investigating these separation payments when they were first reported. Throughout our investigation we have collaborated with the Office of the New York State Comptroller as they have audited these payments. Our investigation is ongoing, and consistent with our legal and ethical obligations, we will not comment on the substance of a pending investigation.”

Bendo said that he was voting in favor of Wednesday’s bond because the city was “backed into a corner.”

“The problem we have is that there are people expecting their checks, and if this doesn’t pass they don’t get them,” Bendo said.

Councilman Scott Mandel echoed that sentiment, saying he was “not thrilled with this process.”

“I believe we will, going forward, address more safeguards being put in place as the whole process is being reviewed … and as the audits are carried out,” Mandel said. “But I also recognize that not passing the bond would be irresponsible. Voting against this would put the city in jeopardy.”