Politics & Stuff: The Unchecked Erie County Water Authority

by / Jun. 14, 2017 12am EST

Here is a thumbnail history of the Erie County Water Authority (ECWA): The organization was created by state legislation in the late 1940s to provide water service to a growing suburban population in the county that was pushing out from the central city. County government at that time was not much removed from horse-and-buggy days, so an authority was seen as the best vehicle for answering the needs of a sprawling community.

Erie County government in 2017, however, is a $1.5 billion organization that provides a wide range of services to the public. It has fully functioning administrative and public works operations that are totally compatible with and much more sophisticated than a small public entity such as the ECWA.

And yet the Erie County Legislature, whose control over the ECWA comes from its power to appoint the ECWA directors, is content to let the authority go on its merry way, hiring duplicative senior staff at high salaries to run the organization. Some of the agency’s contracts also appear duplicative of the responsibilities of authority staff.

In the past couple months we have witnessed some organizational changes at the ECWA. Board chairman Earl Jann’s term expired in April and he was replaced by Karl Simmeth, who also holds a full-time position at the Erie County Medical Center. ECWA directors are paid $22,500 annually. Then almost immediately Simmeth along with the other two Board members appointed Jann as the $145,000 executive director.

Jann’s appointment was loudly criticized by the Buffalo News for his lack of professional qualifications for the job. Given the senior staff roster identified in the ECWA annual report that was issued last year, it is hard for an outsider to figure out who is really in charge there.

Is it ECWA secretary Joseph Burns, who was paid $132,756 in 2015?

Is it deputy executive director Robert Lichtenthal, who was paid $147,574 the same year?

Or is it director of administration Paul Riester, with a salary of $138,399?

Perhaps the human resources staff could help answer the job duties question. That crew includes the director of human resources ($112,114), the director of employee relations ($105,874), and the coordinator of employee relations ($99,480). There are fewer than 240 employees in the entire organization.

The management staff of the authority, given their limited public works responsibilities of acquiring, treating, and distributing water, is over-staffed and over-paid.

The News (and The Public, and before that Artvoice) has been pursuing an ECWA arrangement concerning high-priced outside legal assistance which the authority refuses to explain. The authority has a five-member in-house full- and part-time legal staff that is collectively paid $365,510.

Michael Caputo and his Zeppelin Communications firm might be asked why the staff he assigns to the Erie County Water Authority under his annual $60,000 public relations contract seem to take as their mission dodging and weaving about authority meetings and operations. “Public relations,” by definition, means being open about what is going on and cultivating cooperative arrangements. Why can’t some of those high-priced executives carry on the limited PR duties of the authority?

Newly appointed executive director Earl Jann is in line for the assignment of a brand-new Chevy SUV. Granted, Jann’s $145,000 paycheck should probably be enough to pay for his own car and he could simply be reimbursed for his travels around the county in his personal vehicle. Despite that, it doesn’t seem inappropriate for the executive director to have a car assigned given the geography that the ECWA covers.

Aside from the overly-generous salary and the new vehicle, there is another benefit that Jann might someday take advantage of.

His authority website biography indicates that Jann spent 16 years in the Town of Marilla government as a planning board member, councilman, and supervisor. I assume the planning position was unsalaried, but Marilla council members make about $10,000 annually and the supervisor’s salary is above $30,000.

Those paid public positions qualified Jann for a New York State public pension. See Through New York reports that Jann receives $3,350 annually from his pension. Since Jann is over 65 years of age he can continue to collect his pension while being re-employed in the public sector. But there is another option open to Jann that might be much better financially for him when his service as ECWA executive director is complete.

The law and rules of the New York State Employees Retirement System permit someone in Jann’s situation to re-enter the retirement system. Pension benefits are calculated based on length of qualified public service and the average of the employees’ best three years of salary payments.

As a key part of the calculations for determining a state pension, a salary of $145,000 certainly beats the high-point salary of approximately $30,000 that Jann would have been paid as supervisor of the Town of Marilla. So there is potentially a major financial incentive for Jann to suspend his pension payments and to re-enter the Retirement System through his new job.

The process is a bit complicated. Here is how the Office of the State Comptroller’s website explains procedures:

If after retiring from public employment in New York State, you later decide to go back to work in the public sector, be aware that you also have the option of rejoining the Retirement System…

When you retire again, a new retirement date will be established. …

Once you earn two or more years of service credit in your new membership, you will have the option to receive a recalculated pension that takes into account your original service credit, the additional service credit you earned, and any increase in salary…

Please note that, in order to receive a recalculated benefit that includes your additional service, you will have to repa …the entire amount of the pension that you received when you first retired. You may repay the amount, plus interest, either in a lump sum or by installments before you retire again, or you may request a permanent actuarial reduction of the new pension calculated by us to account for the previously received benefits.

The large staff of the ECWA, with their very large salaries, exists basically because there is no oversight and control over its operations. They hide some of the things they do and misdirect press inquiries. They do it because they can.

The Erie County Legislature could change things. The Erie County Executive could also make the ECWA’s operations one of his concerns. So too could the Erie County Comptroller, who might use his position to focus attention on the financial wheeling and dealing of the authority. There is a campaign for comptroller this year where the issue might be discussed.

The law that created the ECWA provides that its corporate existence extended until 1961 and “thereafter until all its liabilities have been met and its bonds have been paid in full or such liabilities or bonds have otherwise been discharged.” At that point “all rights and properties of the authority shall pass to and be vested in the county of Erie.” At the end of 2015 the authority carried a debt of $66.4 million. It isn’t much of an option but there theoretically exists a legal avenue for putting the ECWA out of existence.

The ECWA says that 540,000 people in Erie County rely on the water they distribute. All of the authority’s rate-payers would stand to benefit from the lower costs that would result from the abolition of the Authority and rolling it into county government. When will the county—the legislature, the executive, and the comptroller—stand up for those ratepayers?

Ken Kruly writes about politics and stuff at politicsandstuff.com.