PATERSON, NJ – The state has determined that Paterson’s fired personnel director, Betty Taylor, should be reinstated to the civil service position she held prior to her promotion two years ago, city officials said.

The City Council had terminated Taylor on June 14 for her role in Paterson’s flood overtime scandal. But she contested that action, filing an appeal with the New Jersey Civil Service Commission, on the grounds that she was serving as “acting” director and that her previous position as assistant personnel director provided her with union and civil service protections.

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Officials said the state last week sent the city a letter saying Taylor should be allowed to resume work as assistant director.

“The council will abide by any higher authority if instructed to do so,’’ said Councilman Kenneth Morris, who was chairman of the committee that imposed the punishment against Taylor and three other administration officials.

Morris said he said he has not seen the state’s letter about Taylor yet. But he said his understanding was that it said the council did not follow the requisite procedures for imposing discipline against an employee like Taylor who had civil service and union protections.

Neither Taylor, her union representative, nor her attorney could be reached for comment for this story. Taylor’s mother died recently and a funeral service was held on Monday. It was not clear when Taylor would return to work because of her mother’s death.

Her mother’s poor health was one of the reason’s Taylor’s lawyer, Neal Brunson, had asked the city council to delay last month’s disciplinary proceeding. But the council denied that request.

Taylor’s critics went far beyond Paterson. In December, the New Jersey Department of Community Affairs said in a report about Paterson’s overtime practices that Taylor’s job performance “with respect to payroll functions has been extraordinarily poor.’’ The report said there were discrepancies between the information on employees’ sign-in sheets and the hours for which they were paid overtime, that overtime was paid without written justification and that sloppy bookkeeping resulted in erroneous checks, such an one issued for $18,000 that should have been for $1,800. The state also said Taylor herself had received almost $15,000 in inappropriate overtime the past two years.

In its report, the City Council said Taylor had conspired with Community Development Director Lanisha Makle to “defraud and misrepresent” time records. The council also said Taylor “systematically processed and allowed overtime payments to be made to city employees without the proper documentation, and or verification of hours claimed to have worked.”

As a result of the city council inquiry, the city discontinued its recent practice of putting the personnel director in charge of payroll. Those duties were assigned to the finance department, where they had been previously under former Mayor Joey Torres' administration.

Also, this spring, the city hired a state-approved personnel expert, Steve Chestnut, to serve as Taylor’s assistant. In recent weeks, some officials have speculated that Chestnut would be made the director in light of Taylor’s termination. That still may end up happening with her being relegated to the assistant’s job.

As assistant director, Taylor’s salary had been $53,868. As director, she was making $81,947.

Last year, Taylor had been involved in another city controversy over the $43,000 in home repair funds she received from the Paterson Pride program, which is supposed to benefit people with low and moderate incomes. At her assistant’s salary, Taylor qualified for the program. But the director’s salary put her above the income limit. Taylor’s Paterson Pride funding had been approved by Makle.