Erie County Comptroller Mark Poloncarz today released an audit of Erie County's (the "County") Department of Environment and Planning, Division of Sewerage Management ("Sewerage Management") and Sewer District No. 3 for the period January 1, 2007 to May 31, 2008 (the "Audit"). Among various areas examined, the Audit reviewed payroll, personnel and procurement transactions in Sewerage Management and Sewer District 3, and a 2007 transaction involving the construction of a sanitary sewer at the County-funded Frank Lloyd Wright Rowing Boathouse in Buffalo.

District No. 3 serves the towns of Hamburg, Boston, Orchard Park, and Eden and portions of the Towns of Holland and West Seneca.

In general, the Audit noted that most financial transactions are being handled pursuant to generally accepted accounting principles and county policy. However, the Audit identified two significant findings of concern.

First, the Audit revealed that in September 2007, Sewerage Management hired an employee of Erie Community College ("ECC") into a managerial-confidential title of Assistant Deputy Commissioner-Administration. The exempt title was created in 2006 but had been vacant for some time. The new employee was hired and given a salary at longevity step 5, allowing the employee to receive a starting pay of $16,376 more than was entitled. Based on County personnel policy regarding promotions or appointments from one bargaining unit to another, the hiring of this employee at step 5 was not proper.

In addition, the new exempt employee's higher salary at step 5 was granted by the County's Department of Personnel at the request of Sewerage Management without seeking or receiving the approval of the Erie County Legislature ("Legislature"). The failure to seek and receive Legislature approval also violated the 2007 Adopted Budget Resolution No. 76, which prohibited the County Executive from filling any position at a "variable minimum" without the prior approval of the Legislature. Accordingly, the Audit recommends that the Department of Personnel reduce the employee's step to the correct level and recoup the overpayment.

"I am deeply concerned that the prior County Administration and the Department of Personnel engaged in an action that clearly violated County policy and a Budget Resolution. Checks and balances exist in county government to ensure that just such an action as my auditors found does not occur," said Poloncarz. He added, "This failure to adhere to stated county policies reflects far more than poor judgment or carelessness, it a violation of county procedures and must be remediated."

The Audit also identified a convoluted funding mechanism used to provide sanitary sewer services to the Frank Lloyd Wright Boathouse. The Audit revealed that after first attempting to use up to $100,000 of Sewer District No. 3 capital reserves, then non-sewer funds from the Department of Environment and Planning, the County agreed to appropriate $85,000 of fund balance from Sewer District No. 1 to facilitate the construction of a sanitary sewer at the boathouse in the City of Buffalo – far outside of that district's operations. While approved by the Legislature, the use of fund balance for a project outside of that district's boundaries was questioned by auditors.

In addition, the Audit noted that despite an agreement with the County to repay the $85,000, the boathouse corporation failed to make its first year payment in April 2008. Sewerage Management did not collect the payment until auditors identified the issue and urged the Department of Environment and Planning to more aggressively pursue payment. Only recently did the boathouse corporation finally remit the payment.

"It is disappointing to see that Sewerage Management and the Department of Environment and Planning failed to follow basic accounts receivable processes and pursue the boathouse corporation after it failed to make its payment in April 2008. What is especially troubling is that it appears collection was only accomplished after my auditors identified that the payment had not been made some months after it was due. The failure to pursue any outstanding debt owed to the County, including any applicable penalties and interest, cannot continue," noted Poloncarz.

A copy of the Audit can be found at: http://www.erie.gov/comptroller/county_audits.asp.