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City Audit Describes Management Meltdown

Human Resources Dept. targeted in scathing report

A management "meltdown" in a department run by one of Mayor Byron W. Brown's political allies has sparked problems that include overpayments of health insurance premiums and the possibility that premiums were paid for some former workers, including dead people.

The scathing audit also found that the Human Resources Department made double payments for health insurance for up to 250 sanitation and water division workers, resulting in a $526,309 overpayment. The city is seeking reimbursement from the insurer.

Comptroller Andrew A. SanFilippo said the problems plaguing the department are so severe that an outside consultant may have to be hired to "straighten this mess out."

Auditors said they were alarmed to find numerous former employees — including some deceased individuals — on city records for prolonged periods. They're trying to determine whether health benefits were paid for any dead people. They know of at least one instance in which the city paid health insurance for an employee who had left the payroll many months earlier.

The audit paints a picture of a department plagued by bulging paperwork backlogs, a lack of checks and balances, poor delegation of tasks and a need for employee training.

When auditors tried to explain the magnitude of the problems to Human Resources Commissioner Karla L. Thomas, a memo indicates she "rebuffed" them by saying "TMI," meaning "too much information." Auditor Darryl McPherson reported that one week later, Thomas contacted the comptroller's office.

"The commissioner e-mailed her desire not to be included in e-mails that discussed how to develop and manage procedures regarding payment processing," McPherson wrote in a memo.

When Thomas was tapped for the six-year appointment by Brown in the fall of 2008, she was chairwoman of Grassroots, a political group that Brown helped to form years earlier. She resigned her post in the group prior to the Common Council's decision to confirm her.

Other city commissioners serve at the pleasure of the mayor, but the state sets fixed terms for personnel administrators who supervise civil service policies. The six-year appointment is meant to insulate commissioners from politics. Hence, Thomas' term does not expire until September 2014.

Thomas was not commissioner during most of the audit period, which spanned from July 2006 through December 2008. But auditors said there have been no indications that reforms have been made to improve efficiency. Furthermore, they expressed concern about the commissioner's apparent attempts to try to distance herself from efforts to solve the problems.

Thomas, who has held the $88,713-a-year job for nearly 16 months, described herself as a "new commissioner" in a follow-up letter to McPherson.
"While some issues revealed in the audit bear explanation and culpability outside of the Compensation and Benefits [unit], mutual collaboration on their remedy will yield solutions that will ensure smoother, more accountable operation of this department," she wrote.

Thomas met briefly with the Council on Monday, but she offered no comment on the audit. However, she agreed to meet with the Council's Finance Committee to discuss the issues. Mayoral spokesman Peter K. Cutler said the administration will stand by Thomas' written response to the audit.

In the rebuttal, Thomas laid much of the blame on the comptroller's office. She said that several years ago, a senior accountant position was removed from the Human Resources Department budget with an understanding that city auditors would absorb the duties. SanFilippo said no such agreement was ever made, and he criticized Thomas for trying to deflect blame.

"It's certainly a total meltdown in management," said the comptroller. "You can't hide your head in the sand, pretend there's nothing wrong with your department and say the culpability is elsewhere."

McPherson was equally harsh in a memo he sent to the Council.

"We would note that it is highly unusual, if not unprecedented, that a department has made such an effort to both deny any responsibility for its shortfalls and attempt to lay the blame almost entirely upon the auditing authority," said McPherson.

Other problems red-flagged in the audit include delays in processing payments to some companies that do business with the city.

"Some of our vendors are at their wits' end," said Deputy Comptroller Darby R. Fishkin.

The department has even dropped the ball in performing relatively simple tasks, said auditors. For example, they said delays in notifying departing workers of their rights to buy health insurance under a program known as COBRA put the city at risk of facing hefty fines.

In fairness, said Fishkin, human resources officials several weeks ago began showing a "genuine desire" to try to address problems. But shecq acknowledged that this was long after auditors began scrutinizing operations, and only after it became clear that the report's findings would be unflattering to the department.