Auditor review finds Albany nearly overpaid insurance bill by millions

ALBANY - The city auditor's office says it prevented an unnecessary payment of more than $2 million to the city's health insurer before the money was disbursed.

The halted payment to CDPHP was one of roughly 7,000 invoices the city's Office of Audit and Control reviewed during the first six months of the year. Chief City Auditor Sam Fein said the city's Department of Administrative Services had nearly overpaid health insurance premiums for city workers by tallying the totals of other bills already moving through the city's payment processes.

The invoice submitted to the auditor's office was for $2.9 million, but the amount actually owed - and ultimately paid to CDPHP - was $729,912.

Fein said the mistaken expense, which he described as an "error," would have been rectified eventually, but it could have taken several months to fix at a time when the city can ill afford any needless expenditures.

"We have concerns with cash flow in the city of Albany," Fein said. "We have to make sure there's enough money in our actual bank account to pay the bills so we don't have to borrow money. So (the overpayment) would have essentially been a no-interest loan to a health insurance company."

The insurance payment was by far the largest cost-saving measure identified in the report that Fein's office released Monday.

The report also identified nearly $100,000 in savings after the auditor's office took a closer look at how health insurance opt-out incentives were paid to city workers. Employees who do not use the city's health plan are entitled to payments of $1,500 to $5,000 per year, based on their dependents and other factors. In some cases, those payments had been incorrectly calculated and improperly prorated for workers who did not work the full six months of the billing cycle.

"We pay (the incentives) every six months, so if someone started in March and then left the city in April or May, they shouldn't get the full six-month buyout," Fein said.

Fein stressed there was no suspicion of wrongdoing associated with any of the potential waste his office found. He said the office was working on a calculator to determine the correct prorated amount city employees should receive to prevent a similar near-mistake from happening again.

The findings illustrate how easily taxpayer dollars can be lost even after Mayor Dorcey Applyrs instituted sweeping austerity measures across city government in March as the city's fiscal crisis roared into view.

The report also identified over $6,000 in charges on city credit cards that officials are now trying to claw back. Those charges largely stemmed from sales taxes and other fees paid on purchases that Albany, as a tax-exempt municipality, is not obligated to pay.

Recovering those funds can be laborious and time-consuming.

"Identifying recoverable credit card charges can be complex due to varying tax exemption laws and lumped travel billing statements," the report says.  "Affected city departments are currently working to claw back all eligible funds."

The report warns that city departments now have 30 days to secure refunds for improperly assessed fees or risk suspension of their municipal credit card privileges.

"I wouldn't say this is really an audit," Fein said, describing the report as part of the Office of Audit and Control's "control" function. "On a day-to-day basis, this is what we spend most of our time doing."

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