Audit calls out NYPA on party expenses

The state Comptroller criticized the New York Power Authority Wednesday for spending $340,000 on such items as holiday parties, AARP memberships and sympathy gifts in the past two years.

"Although discretionary spending generally appeared reasonable and proper," the report from Thomas DiNapoli's office said, " . . . we question if the purpose and/or the amount of such expense represents the best use of public funds particularly during what are difficult fiscal times for New York State."

Among the $340,000 identified in the audit, which covered expenses from January 2009 through this past June, was $160,000 spent on 21 holiday parties and picnics over the past two years, as well as $21,000 in AARP memberships for retired employees and $10,000 in sympathy gifts for employees and others.

NYPA's chairman said the authority would change its ways to conform to the comptroller's recommendations.

In a letter in response to the audit included in the report, NYPA chairman Michael Townsend noted the authority has implemented "significant reductions" in the discretionary spending tracked in the report.

The comptroller's report also examined overseas travel expenses by 15 employees and found them to be "necessary and reasonably priced." In addition, it found NYPA's cost of debt and debt management to be "reasonable."

NYPA spokeswoman Connie Cullen said NYPA was "pleased by the findings" in the report, saying it found "appropriate expenditures in all areas examined, including consulting and service contracts, discretionary spending and the cost of debt."

The audit was begun before state Inspector General Ellen Biben began a separate review of authority chief Richard Kessel's spending on grants, donations and legal services at the authority. That probe is ongoing.

Kessel, the former Long Island Power Authority chief who heads the authority, announced last month he will step down from his post Sept. 6.

In addition to her NYPA probe, the inspector general is conducting a wide-ranging audit of LIPA.

The comptroller's NYPA audit was based on samples of 39 invoices, 58 procurement cards and 15 travel transactions "that presented what we considered higher risks of impropriety," the office said.

"After identifying certain potentially inappropriate or questionable expenses, we expanded our samples to include 177 procurement card and 52 invoice transactions to determine the total costs associated with these higher-risk expenses," the report said.

NYPA, which has 1,600 employees, operates primarily upstate but provides energy for Greenport, Freeport and Rockville Centre.

The holiday parties included two at the authority's White Plains office, each of which included between $9,100 and $9,500 for food. The authority also gave $46,000 and $39,000 respectively in gifts or awards for "employee service and recognition" and spent $57,000 for ceremonies related to the awards, most of it for food.

The report says NYPA officials "defended their spending practices, stating that the expenses we cited were minor in scope and helped to boost employee morale."

NYPA's total 2010 operating expenses were $2.3 billion. The authority had total 2010 revenue of around $2.5 billion.

But NYPA officials also told the comptroller's staff they would discontinue paying for sympathy flowers and AARP memberships for retiring employees and "cut back" on costs for employee ceremonies and holiday parties.