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The Black River is seen here near Glen Park. Watertown Daily Times

WATERTOWN — An investigation by the state inspector general has found that the former chief fiscal officer of the state Hudson River-Black River Regulating District received more than $50,000 in wrongful retirement benefits when he left in October 2019 — and took no action to address the mistaken payout.

Inspector General Letizia Tagliafierro said in a statement Thursday that Richard J. Ferrara received a lump-sum payment of $51,082.58 to which he was not entitled in October 2019 and, despite knowing he was not supposed to receive the money, made no attempt to return the money and refused to cooperate with her investigation.

The regulating district, a public benefit corporation, maintains reservoirs and regulates water flow in two watersheds in the Adirondacks: the Upper Hudson River and the 125-mile Black River that empties into Lake Ontario.

Mr. Ferrara served as the district’s CFO from April 2005 until his retirement in October 2019. The inspector general’s investigation found that for the first six months of his tenure, Mr. Ferrara was working as a temporary contractor via CFO for Hire LLC before being hired as an employee in October 2005. Because of this timing and pursuant to the district’s employment rules and benefit guidelines, he was ineligible to receive certain retirement benefits. Ms. Tagliafierro said specifically that the applicable district’s employment rules and benefit guidelines state:

Employees hired prior to July 2005 are entitled to a payout of up to 100 days of unused sick leave upon retirement and do not have to contribute toward their health care insurance premiums during retirement. Employees hired after July 2005 are not entitled to such a payout and must contribute 10% toward their health care insurance premiums during retirement.

The investigation found that Mr. Ferrara repeatedly — and unsuccessfully — petitioned the district’s board and several executive directors to change the rules so he could receive the sick leave accruals and make no payments toward health care insurance premiums following retirement. Mr. Ferrara was erroneously paid the $51,082.58 in October 2019 by the district for his sick leave accruals to which he was not entitled.

The inspector general said Mr. Ferrara, who served as the district CFO for 14 years, should have been aware that his payout was not permitted yet failed to notify the district of the error or return the improper disbursement.

“The former CFO’s actions in failing to acknowledge the wrongful payout, compounded by deficient checks and balances within the District, are troubling,” Ms. Tagliafierro said in a prepared statement. “Our investigation found that a series of missteps led to this payout and outlined recommendations to ensure the District can continue its mission while adhering to fiscally responsible practices.”

The investigation found that the payout was calculated in error by a senior administrative assistant of the district under the mistaken belief that Mr. Ferrara had been an actual employee — and not a contractor — in April 2005. The miscalculated benefits were reviewed and approved by the district’s executive director, the incoming CFO and its board. No one identified the mistaken payout. The miscalculation was compounded by inaccurate personnel records, poor internal controls, the recent hiring of staff who were unfamiliar with Mr. Ferrara’s prior work history and the relocation of HRBRRD’s main office and records.

Notably, the investigation uncovered the board’s problematic lack of attention to the matter given Mr. Ferrara’s numerous unsuccessful petitions to the board for this same payout, Ms. Tagliafierro said.

The inspector general recommended, among other things, that the district take appropriate action to recoup funds that were improperly paid to Mr. Ferrara; ensure his retirement pension payment and health care insurance premiums are accurately calculated; review and improve relevant internal controls; and implement additional fiscal controls.

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