The City Council voted unanimously to approve a $2.1 million bond measure at its meeting on July 16 to cover separation payouts to 31 employees, but pledged to review the city’s payout practices amid an ongoing state audit and investigation by the Nassau County district attorney’s office.
Acting City Manager Rob Agostisi said that payments to 27 police officers, firefighters and Civil Service Employees Association members — all contractual — had previously been approved by the council. Four other city employees have since retired or intend to retire.
The payouts cover the current fiscal year, though a number of the employees left their jobs over the past three years and have been receiving their payments in installments.
The city’s practice of borrowing to cover separation payouts has come under fire from residents and council members alike. A number of residents criticized the city for continuing to borrow to cover the payments, at least three of which amounted to more than $500,000, with some questioning whether some payouts exceeded limits established by collective bargaining agreements.
The bond measure also comes at a time when the city’s payout practices are being audited by State Comptroller Tom DiNapoli’s office and investigated by county D.A. Madeline Singas over whether a number of city employees — including former City Manager Jack Schnirman and a number of non-union staffers who remained on the payroll — may have been overpaid in the 2017-18 fiscal year for accrued sick and vacation time that exceeded the city’s Code of Ordinances.
In June, the state’s Financial Restructuring Board for Local Governments issued a report saying that the city’s separation payouts are a major driver of its fiscal stress, and that the city’s payout policies are unprecedented in the state. The board noted the city’s reliance on borrowing and using its fund balance to cover large separation costs, which in part led to imbalanced budgets.
Agostisi said during recent budget talks that the recommendations of the FRB would factor into a long-term plan to turn the city’s finances around, including a re-evaluation of its payout process to union and non-union employees.
But council members said at the meeting that those discussions have yet to take place, and vowed before the vote to address the city’s payout practices.
Councilwoman Anissa Moore issued a statement prior to the vote, saying, “The council recognizes questions surrounding payouts made in the past. In a collective effort to move forward and in the spirit of transparency, the council — working with our new comptroller and legal counsel — will review payout practices to address the ongoing and systemic issue.”
Council President Anthony Eramo did not attend the meeting. Councilman John Bendo said he had requested an analysis comparing collective bargaining agreements, the city’s Code of Ordinances and past practices after a special meeting in May, when the council approved a $400,000 borrowing measure to cover unanticipated retirements to four police officers and city employees in the previous fiscal year. Bendo expressed concerns at that meeting, particularly after officials said that the Police Department has not had a cap on accrued vacation time in decades.
Agostisi said he was not aware of Bendo’s request, and that it was not related to the latest borrowing measure. Agostisi added that while the city could work with the unions on future payouts, the city was obligated to make the payments.
“As far as these union employees, there are certain obligations that must be met,” Agostisi said. “They’re not going to wait — they’re going to bring claims [against the city].”
“It does affect this item,” Bendo responded. “Because right now this city is under investigation by the district attorney and state comptroller for potentially improper and illegal payout practices, and we continue to perform and double down on these same practices. And what we have not done is have a discussion about this issue, how it should be addressed working with the collective bargaining units.”
Resident Eileen Hession said that the city has continued to borrow based on “past practices,” and referred to former employees such as Schnirman, who received a $108,000 payout, the equivalent of at least 100 percent of his accrued sick days, when he left the city’s employ, even though city code states that non-union, or management, employees like Schnirman should be paid only 30 percent of total accrued sick days at the time of separation.
“It looks like some people have worked here for 30 years,” Hession said, “but never took a day off that whole time.”
CSEA President John Mooney pressed the council to approve the measure as part of an early-retirement incentive the union reached with the city three years ago. Mooney said that 21 members chose that option, and that their payments, an average of $23,000, account for 30 percent of the bond. He added that CSEA membership is down from 244 members to 220, and that 20 percent of the union’s members are now paying a portion of their health care costs.
“Our union has been lumped together with non-union employees and other unions,” Mooney said. “I heard ‘excessive payouts’ — that doesn’t sound that excessive for somebody who worked 35 years to get $23,000 that they earned. This incentive was agreed to be paid over three years to help the city. We’re not the brunt of the bonds … and all we’re asking for is what they’re entitled to be paid, because we provided the savings in good faith to the city during this time, with the medical contributions and working more with less.”
Neither Bendo nor other council members disputed that employees were entitled to the payments. “The goal here is not to punish employees who have calculated payouts that are correct,” Councilman Scott Mandel said, “it’s to begin the conversation with legitimate steps moving forward to correct any inconsistencies.”
The city’s new comptroller, Inna Reznik — who had been in the position for only a week — said that the payment calculations related to the latest bond measure were correct and based on existing contractual union and arbitration agreements and past practices. Still, she said, she could not comment on specific separation agreements.
“I cannot opine on the level of separation agreements,” Reznik said. “I also cannot opine on your union contracts at this point — obviously, the issue is systemic here, and needs to be addressed comprehensively.”
Bendo said that the city would not necessarily use the entire $2.1 million, and would borrow only what it needs to cover the payments. “We will authorize the bonds so we start to make the payments, because there are people who are legitimately owed payments,” he said, “and then we will work with legal counsel to address the question of the practice of exceeding collective bargaining agreements and the Code of Ordinances.”