An examination of expenses, procurement, and financial practices at three special sanitary districts has found examples of excessive compensation for administrators, extravagant travel and meal spending, and an utter lack of record-keeping in some districts, according to County Comptroller Howard Weitzman.

"At two of the three garbage collection districts we examined, the bottom line is that nobody is minding the store. The lack of control generates abundant opportunities for unscrupulous individuals to line their pockets with taxpayer money," Weitzman said at a press conference at which he released reports on the three districts.

According to Weitzman, in the case of one district, Sanitary District No. 1 in the Town of Hempstead, which serves the Five Towns and Valley Stream South, the examination uncovered excessive and unexplained payments to commissioners and top staff, lavish meals including one steak dinner for four that totaled nearly $700, and an inadequate - and for some employees nonexistent - timekeeping system. Weitzman stated that the district's treasurer, ostensibly a 20-hour-a-week position, was found to hold three additional public sector jobs, as well as operating a private tax practice and that no records are kept of his time spent working for the sanitary district.

The three audits are the first of five special tax districts to be audited by the Comptroller's Office. The reports focus on Town of Hempstead Sanitary District No. 1 and sanitary districts in Syosset and Port Washington. The review of Port Washington found generally good financial practices and modest expenses, in contrast to the other two, particularly SD-1, where serious examples of overspending and lapses of management control were found.

"Considering that these districts have been operating for decades with virtually no oversight, we expected that in some cases we might find poor business practices," Weitzman said. "But in two of the districts, and particularly in Hempstead's first sanitation district, what we found was worse than we feared.

"We know that some homeowners in Nassau pay two to three times as much as others for garbage collection," he said. "Now we know why - those who overpay for these services, often by hundreds of dollars per year, are paying to support wasteful spending that may include bloated payrolls, top-heavy management structures, non-competitive contracts, and in the case of District 1, lavish meals and business trips."

"A number of the preliminary audit findings of SD-1 raise the possibility of fraud, as they meet criteria specified in the New York State Comptroller's 2005 report, 'Red Flags for Fraud,'" Weitzman said. Copies of the Comptroller's letter to District Chairman Jack Rose outlining the abuses have been sent to the Nassau County District Attorney and the New York State Comptroller, so they may take any further investigative actions they deem appropriate.

Describing them as "a hidden government that drains taxpayers' wallets," Weitzman originally announced his intention to begin auditing some of the county's more than 400 special taxing districts in February 2005. The first group to be audited comprises five sanitary districts - districts Nos. 1, 2 and 6 in the Town of Hempstead, and districts in Syosset and Port Washington. The comptroller plans to release reports on districts 2 and 6 within the next few weeks.

Unlike Sanitation District No. 1, Syosset contracts with a private hauler to provide refuse collection to its 762 residential and 108 commercial customers. The audit found that more than 25 percent of the district's annual budget ($383,000 in 2004) went to cover administrative expenses, over and above the cost of the private hauling contract. By contrast, such expenses in the Port Washington district, which also uses a private contractor, totaled only 2 percent of that district's budget.

"The $100,000-plus spent by the Syosset commissioners is equivalent to an extra tax of $115 per year on Syosset residents. Our audit shows that the money was used to compensate commissioners for meeting excessively, and to retain a second lawyer, reportedly to second-guess the decisions of their primary counsel" Weitzman said.

Weitzman stated that in 2003 and 2004, the three commissioners of the Syosset Sanitation District received combined total compensation of $44,640. In 2004 alone, the commissioners, who are paid per meeting, met 128 times, a minimum of 10 times per month. Most of the 128 "meetings" were described as off-site "compliance inspections."

Auditors also found the commissioners incurred legal fees of $67,243 and $55,113 in 2003 and 2004, respectively, representing a relatively high percentage of the district's annual budget. In addition to its law firm of record, Murphy, Bartol & O'Brian, the district also hired a second attorney as special counsel. Details of the second lawyer's work, examined by the auditors, indicate much of it was duplicative of items covered under the retainer agreement with Murphy, Bartol.

"The cost of garbage disposal per parcel in Syosset was surprisingly high, averaging $656 annually. Residents served by Syosset receive back-door pick-up, as do residents of Hempstead's SD-1. Although such service normally costs somewhat more than curb-side service, our auditors determined that residents of this district are paying substantially more than in other similar districts that also feature back-door service (see chart, p. 8). We attribute the disparity to the excessive administrative expenses and the lack of real competitive bidding," Weitzman stated.

The preliminary audit of Sanitary District 1, and the reports of the Syosset and Port Washington Sanitary Districts may be read or downloaded from the comptroller's website, www.nassaucountyny.gov/comptroller.