LAKEGEORGE-The state Comptroller's Office has asked the town of Lake George to recover a total of $234,000 in special stipends that were paid out over the past five years to 16 town employees - stipends not approved by a formal board vote - but town officials insist the employees earned the pay and they should keep it.
Between January and March, two auditors from the Comptroller's Office examined the finances and books of the town, and they made 17 suggested changes to the way payroll and finances have been handled. Those findings were sent recently to the town government. A formal state audit report is due to be published this week or next, Comptroller's Office spokesman Bill Reynolds said Tuesday.
Town Supervisor Frank McCoy said Friday that 16 of the 17 suggestions had been implemented already.
The "recovery" of special stipends to various town employees, however, is the one suggestion the town is not likely to follow through on.
The town board voted to retroactively affirm those "Title Pay" stipends and legitimize all such payments to employees - from a few hundred dollars up to $15,0000 annually - in a vote taken last week by the board at their monthly meeting.
All the board members voted in favor, except for Fran Heinrich, who abstained. She said Monday she had done so because she had been an employee of the town for many years. She said, however, she wasn't sure whether she had actually received such extra stipends during her 17 years working in the town planning office. She retired from the town in 2003, and started serving on the town board in January 2010.
"I didn't know how it all worked with Title Pay," she said. "I only saw what I was getting in my check."
She said she was not aware of reviewing any Title Pay allocations to other employees, either, during her tenure on the board.
"I don't know, I haven't thought about it," she said. "If I did, it's, skipping my mind."
McCoy said that about 20 years ago, former town supervisor Lou Tessier created a line in the budget called "Title Pay" which over the years included specific extra amounts above base pay and longevity stipends for certain employees, based on merit, educational certification, or extra work details.
In past years, some of these stipends were not formally approved by the town board, and at times, certain board members may not have been aware of them, McCoy said.
The public might not have been fully aware of the stipends, either.
The title pay amounts were not listed in pay ledgers published for the public and approved in annual organizational meetings, McCoy said. They were only listed in an aggregate sum under a special budget code, town officials said.
McCoy said these extra stipends, over the most recent five years that the auditors were focusing on, accounted for $234,000 - and perhaps far more if the auditors had taken all 20 or more years and examined all the town's employees payroll records, rather than just 20 employees records.
"These were not indiscriminate raises," McCoy said. "Title Pay" was awarded to those who deserved it based on performance, extra training, or working above and beyond expectations."
Former Lake George Town Supervisor Lou Tessier defended his practice of awarding the extra stipends.
He said that Title Pay was awarded based on extra work performed or additional responsibilities. he said it was a way to assure that new employees would not start out at the higher pay levels earned by those employees who retired.
"Our employees were paid well, and they provided good services to the town's residents," Tessier said. "They got paid what they deserved."
He said that the state should have voiced their objections to Title Pay years ago in three audits performed over 26 years. He said an auditor hired by the town over many years had no objection to the practice either.
Tessier said that town board members over the years were aware of the practice of awarding special stipends, although they weren't voted on by the board, or detailed in published pay documents.
"The board was involved in these decisions," he said.
Former Town Board member George McGowan disagreed. He served on the board for 12 years, up through 2008.
"I never heard of Title Pay - absolutely not," he said this week. "Board members didn't know what they were voting on during the budget process."
He said that Tessier only presented the board with "endless pages" of budget listings, identified only with codes.
Since his tenure on the board, McGowan has, as a citizen, repeatedly urged the board to fully identify the budget line items, rather than using code numbers.
He said he assumed that the employees were only receiving the pay that was published in the annual compensation statements distributed annually to the public, which didn't include extra stipends.
"I asked the bookkeeper for copies of employees' W-2 statements, but I couldn't get them." he said.
Tessier defended his practices, and said there was no attempt to hide the extra pay.
"There were public hearings on the budgets, but few people ever showed any interest in the budget," he said. "They could have come in to the town hall at any time and asked the bookkeeper for the figures."
Board member Scott Wood, who assumed his seat in January 2008, said he was aware only of some of the stipends, primarily raises, and until the audit, he wasn't aware the town's compensation practices were against state policies.
Wood agreed with McGowan about how the budgetary code numbers and various code numbers could obscure employees' total pay.
"The budget was very confusing in the past," Wood said. "I wondered why it wasn't made real simple."
Wood credited McCoy for leading an effort to get payroll practices straightened out, and praised his work towards getting budgets understandable.
"Frank's done a very good job," he said. "We've enacted a lot of changes since Louie (Tessier) retired."
Bill Reynolds of the state Comptroller's Office said he couldn't comment on the extra stipends - or how they'd potentially be recovered, until after the audit becomes public.
"This is not something I can comment on," he said. "However, I will say there were some issues with payroll control."
Other issues cited by the audit include:
• Resolving deficits in operating fund balances for sufficient cash flow.
• Adopting realistic budget estimates for expenses and revenue and fund balances.
• Properly recording and paying back inter-fund loans.
• Publicly and officially authorizing salary increases, separation payments, and making sure they are in accord with town policies and distributed equitably among employees.
Town Supervisor McCoy said all these concerns have been addressed, with the town implementing new payroll controls -and the town board has assured the auditors of these specific changes in procedure.