Community Update Newsletter

In this issue:
	THOMPSON RAISES CONCERNS ABOUT FISCAL ACCOUNTABILITY AT DEPT. OF EDUCATION
	THOMPSON: DEPT. OF EDUCATION POORLY MONITORED UNIVERSAL PRE-K FUNDING
	THOMPSON AUDIT IDENTIFY $198 MILLION IN ACTUAL AND POTENTIAL SAVINGS

Thompson raises concerns about fiscal accountability at Dept. of Education

New York City Comptroller William C. Thompson, Jr. spoke about “Fiscal Accountability in the Public Schools” at a Fordham University Graduate School of Education conference on Monday, March 12, 2007.

In a speech at Fordham University’s Graduate School of Education, Comptroller William C. Thompson, Jr. raised concerns about fiscal accountability of the City’s Department of Education (DOE).

“It is imperative that we understand clearly where our precious education dollars are being spent,” Thompson said, addressing several dozen principals. “This is a subject of great concern to me, not only as a New Yorker, but because I am charged with promoting transparency and accountability in the fiscal management of our city.”

Thompson noted that over the last several years, DOE has substantially increased use of non-competitive contracts. In 2001, there were 38 such contracts, valued at nearly $15 million; by 2003, the number had risen to 94, worth nearly $45 million.

“Much is made at Tweed about accountability, yet it often seems that they don’t wish to be held accountable themselves,” Thompson said. “DOE currently follows no formal rules when procuring goods and services.”

Noting DOE’s refusal to adopt formal procurement rules similar to those followed by every other City agency, the Comptroller pointed to its no-bid contract with Alvarez & Marsal to identify cost-cutting areas. A&M is charging $16 million for those services, including almost $500 per hour for one employee.

Thompson also cited A&M’s role in the recent school bus rerouting fiasco, which prompted mass confusion.

Vowing to continue to push for State legislation to make DOE transparent and accountable, he added, “New Yorkers have a right to expect that the billions they pay in taxes are being spent through an identifiable, documented and fair process.”

Thompson: Dept. of Education poorly monitored Universal Pre-K funding

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The Comptroller issued an audit faulting the Department of Education (DOE) for poorly monitoring whether millions given to non-public schools were properly spent on Universal Pre-Kindergarten (UPK) programs.

The audit found that funds earmarked for UPK services in DOE Regions 6 and 7, covering Staten Island and parts of Brooklyn, instead paid for karate uniforms, an air conditioner for a non-UPK site, and playground tiles. It also revealed questionable bank statement activity, including a cash withdrawal reportedly to repay an undocumented loan to a school building owner.

“It appears that some schools are freely able to manipulate UPK funds without any DOE oversight or authorization,” Thompson said. “It would seem that the substantial cost of the UPK program in non-public schools—approximately $97 million in FY 2004 alone—would compel DOE to seriously consider our findings instead of insisting that the system is working properly.”

Covering Fiscal Years 2004-05, the audit analyzed UPK payments to non-public schools authorized by DOE’s Regional Operation Center (ROC) in Staten Island. Six ROCs provide fiscal support to schools and programs, and determine whether contract expenditures are appropriate for children receiving contracted services. The Comptroller’s Office selected Regions 6 and 7 because they had the greatest number of non-public schools (183) with UPK contracts during FY 2004.

The audit identified $377,621 in overpayments, inappropriate payments and questionable bank activity. Thompson charged that DOE did not identify whether schools spent all their UPK funds, had unsupported or questionable expenditures, incorrectly classified expenditures, or operated with a lack of segregation of duties and poor recordkeeping.

Thompson audits identify $198 million in actual and potential savings

View the Annual Audit Report for 2006
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Comptroller Thompson announced that audits by his office over the past five years generated nearly $198 million in actual and potential revenue and savings.

The City Charter-mandated report details audit findings and recommendations over Fiscal Year 2006, and brings to 497 the number of audits and special reports conducted from FYs 2002 to 2006. The Charter requires every City agency be audited at least once every four years. The Comptroller’s Office also performs audits and studies of agencies and public authorities and private entities that receive funding from, or generate revenue for, the City.

“My auditors also have documented many instances of program inefficiency and mismanagement,” Thompson said. He noted that he instructed his staff to focus on operations that maximize revenues and cost savings and improve the quality of life for City residents.

During FY 2006, the Comptroller issued audits covering a range of subjects, including revenue identification and collection, cost savings, program performance, asset management, internal controls, and information technology.