Report faults Erie County auditor’s record as Evans town supervisor

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A state audit of payroll practices at the Town of Evans found sloppy bookkeeping and improper payments to a former town supervisor who is now a top lieutenant of Erie County Comptroller Kevin Hardwick.

Mary Hosler, deputy comptroller in charge of audits for Erie County, oversaw a blockbuster investigation of the Erie County Clerk’s office, released in February, that uncovered thousands of missing dollars and led to a deputy clerk pleading guilty to embezzling more than $320,000 in public funds.

But before she took that job two years ago, Hosler paid herself $6,000 she was not entitled to while serving as Evans supervisor, according to the report released today by the state Comptroller Thomas DiNapoli.

State investigators also found more than $11,ooo in “inaccurate or unsupported” separation payments to workers leaving town employment, among other “errors and discrepancies” in the town’s payroll management during and after Hosler’s tenure. 

The audit describes a “decentralized process” and “lack of oversight” by town officials that made it difficult for auditors to determine whether the town was spending taxpayer money appropriately. Paid leave records “were generally not accurate, supported and/or approved,” the auditors found. The same was true of separation payments for retiring employees.

Benefit payments — such as the $6,000 Hosler took — “were not properly supported or approved,” either.

“In my opinion this audit is only the ‘tip of the iceberg,’” Town Board Member Michael Schraft said in a statement.

Schraft, a frequent critic of Hosler when she was supervisor, noted in his statement that the state comptroller’s investigators evaluated just a small sample of employee records and payroll transactions, and yet “found tens of thousands of misappropriated tax dollars.” 

He said he was particularly concerned by the state comptroller’s finding that Hosler “allocated to herself benefits to which she was not entitled.”

Hosler — who is identified in the audit as a “former Town Supervisor,” not by her name  — took issue with many of the audit’s findings, including any suggestion that she’d taken benefits for which she didn’t qualify. 

“Everything was followed in the right procedures,” she said of the payments the comptroller’s audit described as “unsupported.”

She said when she took office in January 2016 the town’s finances were in crisis. When she left in February 2023 those finances were stabilized, she said, and the town was continuing a process she began to rationalize and centralize its payroll policies and procedures.

The state auditors reviewed nearly four years of town payroll records, from January 2020 to November 2023. Hosler was town supervisor for all but nine months of the audit period.

Double-dipping on health benefits

Hosler took $6,000 in “four unsupported opt-out payments,” according to the audit. 

Opt-out payments are compensation offered to employees who choose not to enroll in the town’s health insurance program. 

The board in 2011 had voted to make its members ineligible for such opt-out payments. But in 2015 the board adopted a new plan that made elected officials eligible for the benefit — $1,500 per year for those who didn’t take the town insurance.

Then, in February 2020, the board adopted switched policies again, ending elected officials’ right to claim that compensation. In doing so, the board rescinded all previous health benefit policies as they related to elected officials, meaning there was no going back to seek previously unclaimed benefits.

Nonetheless, Hosler sought retroactive opt-out payments after that vote. That August she received payments totaling $6,000, covering the years 2016 through 2019. 

During those years she was covered by town health insurance through her husband, Bill Hosler, a laborer for the town’s parks department, according to the state comptroller’s audit. The Hoslers paid nothing for their insurance when Bill Hosler was working, per the terms of his union contract. Bill Hosler retired in 2020 and now collects a state pension.

Other board members in the same boat — covered by town insurance through a spouse — did not qualify for or receive opt-out payments, according to the state comptroller. Two board members covered by their spouses’ town health insurance sought opt-out payments in 2016 but were deemed ineligible, according to the audit. One of those was Jeanne Macko and Hosler was the other.

Hosler told Investigative Post she didn’t question whether she could have received the opt-out payments in 2016, after she was told she didn’t qualify. But in 2020, when her husband was preparing to retire, she looked into how his retirement would affect her health coverage. She said the accounting firm the town contracted with told her she should have qualified for the opt-out payments in those years that town policy permitted elected officials to collect them.

So she applied for the money and received it.

“Every employee is entitled their own individual benefits,” Hosler said, noting that the town has many employees who are married to one another.

Hosler was the only elected official among the 19 town employees who received opt-out payments in the audit period.

“Officials were unable to explain why the former Supervisor was treated differently than other Board members,” the auditors wrote.

Other “errors and discrepancies”

The state auditors’ inquiry began more than two years ago. The comptroller’s office sent a draft report to town officials in August, so the town could respond to its findings.

The board did not dispute any of those findings.

In addition to the “unsupported” payments to Hosler, the audit found “errors and discrepancies” in how the town handled paid leave for employees and separation payments for employees on their way out the door.

For example:

• A review of paid leave records for 27 of the town’s 80 employees found 373.5 of the 6,077 hours of leave time they took were “recorded incorrectly or not at all in the payroll system.”

• Almost half the separation payments made during the audit period — $105,051 of $230,717 — lacked “any supporting documentation or evidence to indicate whether the payments were reviewed or approved by an appropriate official.”

• Four separation payments to departing employees totaling $11,282 were “inaccurate or unsupported.”

One departing employee was paid $3,558 for 37.5 unused sick days upon leaving town service. The auditors found the employee had just 37.5 unused hours, not days, of sick leave. 

The employee shouldn’t have been paid for any of those hours at all, the comptroller concluded, because the employee’s union contract required at least 20 days of unused sick leave to qualify for a separation payment.

Hosler attributed some of the dysfunction described in the audit to the town’s bric-a-brac policies and procedures, which she was trying to collect into a cohesive handbook when she left office. She also said turnover in HR and finance staff — she called it “a revolving door” — also contributed to confusion and inconsistencies in payroll management.

That assessment jibes with the comptroller’s conclusions. The audit described a situation in which “more than one Town official or employee, such as the former Supervisor, Personnel Clerk or the part-time payroll clerk,” might be updating a leave records, for example, creating opportunity for errors that would cost the town or the employees money down the road.

“Because neither the Supervisor, nor another appropriate Town official, performed periodic independent reviews of the leave records and balances, these discrepancies were not detected or corrected,” the auditors wrote.

Schraft, a Democrat, said in his statement that he raised issues of “fraud, waste and abuse” back in 2021, while Hosler — also a Democrat — was still town supervisor. He said he expressed his concerns to fellow board members and other town officials, as well as the state comptroller. 

Four times in recent years Schraft filed resolutions asking the board to approve a third-party audit of the town’s payroll management, most recently in August. Those resolutions were defeated each time, with all the board’s other Democrats voting no. 

“Perhaps the Comptroller’s scathing audit will cause them to reconsider,” Schraft said in his statement.

Only Town Board Member Jeanne Macko, the board’s lone Republican, supported Schraft’s requests for a payroll audit.

“The Town Board has a fiduciary responsibility to the taxpayers to recover all funds owed, especially from people that were in power that received funds they were not entitled to,” Macko told Investigative Post in an email. “Politics need to be put aside and a full payroll and benefits audit should be performed.”

“No one’s going to jail”

When Hosler first took office in 2016, the town was facing a $1.7 million deficit. She was credited with righting the town’s finances, thanks in part to a short-term loan that year from Erie County that gave the town some breathing room. 

“There was a lot of fixing to be done in the seven-and-a-half years I was there,” Hosler said.

She was reelected to a second four-year term in 2019.  Evans town supervisors are limited to two terms, and in 2022 — halfway through her second term — Hosler’s name began circulating as a potential Democratic challenger to incumbent Erie County Clerk Mickey Kearns.

That didn’t happen. Instead, Erie County Comptroller Kevin Hardwick hired Hosler as deputy comptroller in October 2022. Hardwick at the time praised Hosler’s private sector experience — she worked for Evans Bank for 27 years — and her “ability to scrutinize the use of public funds, to identify savings and efficiencies, and to effectively manage her employees as town supervisor.” 

Hosler continued to serve as town supervisor for several months after taking the county job, before resigning in February 2023. Among the first tasks she undertook in the new job was a series of audits that exposed serious shortcomings in the Erie County Clerk’s office under Kearns. 

The audits uncovered failures to distribute mortgage tax money to municipalities, the counterfeiting of a check for more than $326,000, and sloppy practices that enabled one of Kearns’s deputies to embezzle hundreds of thousands more. The deputy pleaded guilty last month to grand larceny and other charges.

Hosler was succeeded as Evans town supervisor by Ray Ashton, a Democrat, who won a four-year term last November.

Ashton did not immediately respond to a request for comment this morning, after the comptroller’s report was released. Neither did the town board’s two other Democrats, Laurie Reitz and John Wilson.

Ashton did speak to Investigative Post about the audit back in March, when the comptroller’s investigators were wrapping up their inquiry and briefing the town’s elected official about their findings.

“There’s no money missing,” Ashton told Investigative Post then. “Nobody’s going to jail.”

In a Sept. 16 letter to the state comptroller, Ashton thanked the auditors and agreed with their findings.

“Please be advised, the Town is currently working on a corrective action plan and will forward same to your office in the near future,” Ashton wrote.

Hosler told Investigative Post she didn’t think the town’s corrective action plan would include asking her to return the $6,000, because she was entitled to it. She said she would return the money if the comptroller demonstrated she was wrong to think so.

Geoff Kelly