TO: Rev. Gerald Sudick, President of the Yonkers Board of Education

All Board of Education Trustees

Bernard Pierorazio, Superintendent

FROM: Philip A. Zisman, Inspector General

CC: Philip A. Amicone, Mayor
Chuck Lesnick, City Council President
All City Council Members
Frank Rubino, Corporation Counsel

SUBJECT: Response to April 28, 2009 letter and Statement of May 1, 2009

DATE: May 5, 2009

I write in response to the April 28, 2009 letter of Board of Trustees President Rev. Gerald Sudick, and the May 1, 2009 “Statement released by Superintendent of Schools Bernard P. Pierorazio on behalf of the Yonkers Board of Education Trustees.” (attached)

First, in President Sudick’s April 28, 2009 letter, it is asserted that “the Board of Education is not a department of the City of Yonkers and is not subject to the City Charter of the City of Yonkers, but is an independent municipal corporation governed exclusively by the New York State Education Law.” Therefore, the letter implies, the Inspector General does not have the authority to conduct independent audits and investigations at the School District under the powers of the Inspector General as set forth in the City Charter.

President Sudick’s argument, however, is inapplicable because it does not address clearly established legal precedent of the New York State Court of Appeals. The Court has recognized that school boards in school districts, which are considered “dependent” because they do not have their own taxing authority, do not exercise complete independence from City government.

The Court of Appeals has defined the permissible area of local control over the schools as follows: “While the educational affairs in each city are under the general management and control of the Board of Education, such board is subject to municipal control in matters not strictly educational or pedagogic.” Matter of Hirschfield v. Cook, 227 N.Y. 297, 304 (1919). See also Matter of Maloff v. City Commission on Human Rights 38 N.Y.2d 329 (1975) (City Commission on Human Rights had jurisdiction over teacher’s claim of sex discrimination because such claims are not “strictly educational or pedagogic” matters.); Goldin v. Greenberg, 49 N.Y. 2d 566 (1980) (City Comptroller authorized to investigate and audit School District transportation contracts.)

In Karelson v. Yavner, 59 N.Y.S2d 683 (1945) the Court expressly recognized the mayor’s power to direct the New York City Commissioner of Investigation to investigate the actions of a board of education committee. More recently, in January of 2009, in Matter of New York Charter Schools Assoc. v. DiNapoli, the court confirmed the right of the State Comptroller to audit the State’s charter schools and cited the compelling State interest of auditing vast expenditures of taxpayer’s money.

It is clear that 1) based on the powers that the City Charter vests in the Yonkers Inspector General to provide “ongoing review of monetary commitments, expenditures and processes”… “of any person or entity who is paid or receives money from or through the city” (City Charter §§ C7-2D and F), and 2) the legal precedent that authorizes municipal control of school districts in matters that are not strictly educational or pedagogical; the Inspector General is authorized to conduct appropriate independent audits and investigations at the School District without the express permission of the Board of Trustees. Moreover, with respect to the audit of the District’s annual $65 million in health insurance payments, there is a compelling municipal interest in ensuring that this vast expenditure of taxpayer’s money is appropriate.

Second, with respect to the May 1, 2009 Statement of Superintendent Pierorazio, I want to correct certain factual inaccuracies. The Statement suggests that the Inspector General’s Office is interfering with the efficient administration of the School District by attempting to conduct duplicative audits that are already being performed by the Board’s internal auditors. This is simply not the case.

With respect to the review of the School District’s health insurance payments, we first proposed this audit, and others, three years ago in May of 2006, based on the findings in the KPMP audit. In January 2008 we renewed our call for a review of fringe benefit payments based on a review of the 2007 Risk Assessment Analysis conducted by D’Arcangelo & Co., LLP. The Board rejected both of these proposals on the basis that the District was working with its own internal auditors.

Despite the Trustees’ unwillingness to support our proposed health insurance payments review, during 2008, I continued to advocate for this audit, in part, because it was our understanding that the District’s auditors were not working on such a project. I specifically told Mr. Pierorazio that we did not want to perform duplicative work. Over several months, I had discussions with Mr. Pierorazio regarding our proposed review, and he specifically asked if we could incorporate into our work a review of the District’s payments to the School District’s union health and welfare funds. Even though we incorporated this request into the scope of our proposed work, the Board of Trustees nonetheless again rejected our proposal. Thereafter, on December 1, 2008, we announced, that despite the Trustees’ opposition, we would independently perform the review. It was not until after my announcement that the D’Archangelo auditors started to conduct a review of the health insurance payments.

Thus, contrary to the assertions in the May 1, 2009 statement, the Inspector General never proposed conducting a duplicative audit. If fact, it was our insistence that the work needed to be performed that led the District to act.

I also want to point out that there is a significant difference between the audit work that Inspector General’s Office performs and the work of internal auditors that are retained by the Board of Trustees. The audit findings of the Inspector General are public and provide for transparency and accountability in the School District’s administrative operations. The findings of the School District’s internal auditors, however, have never been made public, and thus, have not furthered the objectives of providing greater administrative transparency and accountability.

Finally, it is my intention to request that the City’s Corporation Counsel render a legal opinion regarding the authority of the Inspector General to conduct independent audits consistent with the recitation of the legal principles set forth in the memorandum.

I would welcome an opportunity to meet with the Trustees in an effort to resolve our differences.

Inspector General
Philip A. Zisman