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| CONTACT: | Press
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FOR RELEASE: |
Immediately July 14, 2004 |
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Hevesi Announces Increased Oversight of Schools in Response to Long Island Financial ScandalsNew York State Comptroller Alan G. Hevesi today announced a program to increase oversight of schools statewide in response to the scandals at the Roslyn and William Floyd school districts, in cooperation with District Attorneys Denis Dillon and Thomas J. Spota, Nassau County Comptroller Howard Weitzman, the NYS School Boards Association (NYSSBA), the NYS Council of School Superintendents (NYSCOSS), the New York State United Teachers (NYSUT) and the New York State Society for Certified Public Accounts (CPA's). Hevesi was joined at a press conference in Nassau County by Nassau County District Attorney Denis Dillon, Nassau County Comptroller Howard Weitzman, Senator Michael Balboni (R-Mineola), Assembly Member Patricia Eddington (D-WFP-I/Medford), and representatives from the New York State Schools Boards Association, the New York State Council of School Superintendents, the Nassau-Suffolk School Boards Association and the New York State Association of School Business Officials. “Most school district officials are honest, hard-working professionals and most schools are well managed. Their job is made more difficult by the few who steal,” Hevesi said. “The initiative I’m announcing today will help ensure there is a culture of accountability and integrity in all of our schools. It can only work if everyone plays a part — local school boards and administrators, the State Education Department, independent auditors and my Office. School taxes are a major expense for New Yorkers. When they vote on their local school budget, they must have confidence that their school is well managed.” Hevesi announced a four-part school oversight initiative:
Nassau County Comptroller Howard S. Weitzman said, “Some of the most egregious and shocking elements of the recent scandals in the Roslyn and William Floyd school districts might have been preventable by instituting some of the most basic internal financial controls. That’s why State Comptroller Hevesi and I are joining forces to assist local school officials with some ‘back-to-basics’ training in financial control systems and fraud prevention.” Hevesi said, “Nassau County itself had historically suffered from poor internal financial controls, which led to its near financial collapse a few years ago. Since then, Nassau Comptroller Weitzman has been instrumental in ferreting out waste and fraud, and putting new financial control systems into place in Nassau. His experience in this area will be of great benefit to school districts as they work to prevent financial abuses in their own backyards.” State Education Commissioner Richard Mills said, “The public needs to feel confident that their taxes are being spent honestly and carefully. We have always worked closely with the Comptroller's Office and want to be helpful as we deal with this situation now.” Senator Michael Balboni (R-Mineola) said, “I am happy to join with Comptroller Hevesi to provide for more sunshine and accountability for school district budgets. More audits are needed and funding for them should be a priority in this year’s State budget. I am also going to lobby for support for applying the Public Officers Law to school board members and superintendents. Last year, school districts on Long Island spent $7 billion. It’s time we found the resources necessary to ensure that money is spent properly and the taxpayers’ confidence is restored.” Assemblywoman Patricia Eddington (D/WFP/I-Medford) said, “It’s revolting that someone would steal from the very students whose finances he was entrusted to look after. This can never happen again. And to ensure it won’t, I’m supporting the Comptroller’s plan to increase oversight and accountability so that we know that the resources to educate our children are being spent for what they were intended for — providing our children with the best education possible.” Nassau County District Attorney Denis Dillon said, “I welcome Comptroller Hevesi's commitment to increase his office’s investigations of school district activity, and to work with local school districts and independent auditors to ensure effective internal controls and improve the effectiveness of independent audits. I am happy to join with the Comptroller in reiterating the call I made last week for the Governor and State Legislature to provide whatever funding is necessary to enable the Comptroller’s office to conduct its own audits of school districts throughout New York State. As I said last week, parents and residents of every public school district in our state have a right to know that the dollars they are investing in their most precious resource — their children — are actually being used for the children’s education.” New York State School Boards Association Executive Director Timothy G. Kremer said, “Even isolated incidents can erode the public trust that school boards work so hard to build. Through our advocacy for appropriate reforms and through workshops that NYSSBA has already conducted and will conduct, we will strengthen the governance role of school boards and reassure our communities that their public schools remain in good hands.” Nassau-Suffolk School Boards Association President Jeannette Santos said, “Our Association, along with others in the education community, is prepared to take on the task of reviewing district financial practices and soliciting advice to help strengthen current controls. We welcome the offer of the State Comptroller’s Office to assist us in this important endeavor. New York State Council of School Superintendents Executive Director Tom Rogers said, “The State’s school superintendents look forward to working with Comptroller Hevesi and other state officials to improve school district fiscal practices. The actions that the Comptroller is recommending today will help reassure the public that confidence in their schools’ finances is justified. The state’s school superintendents share the outrage felt by Long Island taxpayers. The alleged actions of a few individuals amount to a betrayal, not just of a community, but of the institution of public education and the profession of school district leader.” New York State Association of School Business Officials Executive Director George A. Perry said, “New York State ASBO understands and encourages a reasonable and appropriate response from policymakers and offers our experience and expertise to the Comptroller and others in developing responsible future actions.” New York State United Teachers Executive Vice President Alan B. Lubin said, “We’re anxious to work with Comptroller Hevesi. The fraud committed in some school districts on Long Island has destroyed taxpayer confidence, disrupted schools and, worst of all, damaged the education of far too many children. This has to be stopped. Money meant for students should be spent for students.” New York State Society for CPA's Executive Director Lou Grumet said, “CPA’s understand that school boards connect the will of the people to the education of the child. Every dollar raised through tax monies should be used for the education of our children. Our Society will work with the Comptroller on this initiative.” The School Oversight Initiative Ensure strong internal controls The Comptroller’s Office will provide training to school board members and school officials that will focus on building stronger financial oversight and accountability. Training will be delivered at three levels:
Improve the Effectiveness of Independent Audits The Office of the State Comptroller will spearhead an effort to make these audits more effective in detecting mismanagement and potential fraud.The Comptroller’s Office will randomly audit the auditors to identify the strengths and weaknesses of these audits. It will use the findings of these audits to spark a discussion of audit standards with the State Education Department, the State Society of CPAs and with school board organizations. The Comptroller’s Office training program will teach school board members
the purpose of these audits and show how to get the most out of them. School
boards should use competition to select audit firms. School boards should have
an audit committee or a board appointed advisory group including non-board
members with financial or accounting expertise. Boards should be encouraged
or required to either select a new auditing firm at least every five years
or change the partner at the firm responsible for the audit. Also today, Hevesi asked the Governor and Legislature to provide $5.4 million to hire 89 auditors to conduct 140 school district audits each year. That would permit the Comptroller to audit every school district once every five years. Click here for a copy of the request sent to Governor Pataki. Similar letters were sent to Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver. Legislation introduced by Senator Michael Balboni would require that every school district be audited every three years by the State Comptroller. Implementing Senator Balboni’s bill would cost about $8.6 million a year and require the State Comptroller to add 146 staff. State Senator Carl Marcellino has introduced similar legislation. Nassau District Attorney Denis Dillon has also suggested that the State Comptroller add staff to do more school audits. “I thank Senators Michael Balboni and Carl Marcellino and Assembly members Pat Eddington, Tom DiNapoli and David Sidikman for their leadership on this issue. Given the State’s current financial problems, I would recommend amending Sen. Balboni’s bill to give my Office the resources to conduct an audit of every school district in the state over the next five years. That would cost about $5.4 million a year, which is not unreasonable to protect $26 billion in annual education spending. After the first five years, we should evaluate the findings and determine whether it is appropriate to continue at that level or make adjustments,” Hevesi said. “Our audits of school districts would focus on assessing the adequacy of internal controls and testing the propriety of transactions, especially in areas where internal controls are weak. Our audits would include procedures and tests that are intended to identify potentially inappropriate transactions, so that we can investigate those further,” Hevesi said. Increase Investigations In addition, OSC will be able build on its already collaborative, ongoing partnerships with law enforcement agencies and prosecutorial offices. These working relationships, with local law enforcement agencies, State police, local Districts Attorney, the Attorney General and United State Attorney Offices have in other areas already proven to be a benefit in deterring, detecting and prosecuting public corruption. Since the Division was created, 18 separate incidents of possible criminal conduct in municipal governments have been identified and referred for possible prosecution to legal entities, including the State Attorney General, several county District Attorneys, and federal agencies including the Internal Revenue Service, the General Services Administration, and the U.S. Citizenship and Immigration Services. To date, these referrals have resulted in several arrests and indictments and six individuals have pled guilty to charges. “I am requesting funding to add five additional law enforcement professionals to my Investigations Division staff to expand our ability to investigate school districts in conjunction with the increased auditing,” Hevesi said. This increase in investigators would cost about $310,000. To begin his program immediately, Hevesi will redirect $1.2 million in existing resources in his Office for audits and training. He is requesting an additional $5.8 million to expand his auditing and investigations staffs. “There is no single measure that by itself can guarantee an end to fraud in our schools. Only by having every level of government work together and by encouraging school employees and the public to report suspicious activities can we send the clear message that the few dishonest school district officials are likely to be caught and suffer the consequences,” Hevesi said. # # #
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