Who, What, When, Where, and Why.
UPDATED February 13, 2014 for Greater Clarity.
WHO: The protagonists are the Yonkers Board of Education (YBoE), the Yonkers Board of Education Trustees (YBoE Trustees), YBoE Trustee President Dr. Nader Sayegh, Esq., Yonkers Public Schools (YPS) Superintendent Bernard Pierorazio, YPS CFO Joseph Bracchita, CPA Nick (Nicholas) DeSantis, Yonkers Mayor Mike Spano, New York State Governor Andrew Cuomo, NYS Secretary to the Governor Lawrence “Larry” Schwartz, NYS Comptroller Thomas DiNapoli, NYS Democratic Conference Leader Andrea Stewart-Cousins, Senator George Latimer, NYS Assemblymembers Gary Pretlow and Shelley Mayer, Yonkers Finance Commissioner John Liszewski, among other less consequential actors.
WHAT: Yonkers Mayor Mike Spano’s revelation on January 17, 2014, of an accrued shortfall valued at upwards of $55 million in the combined Fiscal Year (FY) 2012-2013 and 2013-2014 respective budgets pertaining to the Yonkers BoE.
WHEN: The budget shortfall was divulged on January 17, 2014, by a communiqué (press release) on the cusp of the Martin Luther King Jr long weekend commemoration at approximately 4:30 p.m.
WHERE: The New York State Legislature,the State Capitol City of Albany, and the City of Yonkers
WHY: Why did the $55 million (plus or minus) shortfall come about?
The revelation of a $55 million shortfall allegedly expressed to Yonkers Mayor Mike Spano by Yonkers Public Schools Superintendent Bernard Pierorazio, asserted to have been the case by spokespeople for Mayor Spano, contested instead by Yonkers Tribune that it was indeed CPA Nick DeSantis who advised Mayor Mike Spano, is only relevant for the telling of the telling to be understood as the beginning point of this crisis. As dramatic as this “crisis" seems, once the onion is peeled, and the facts revealed, there is much blame to go around. At issue is whether heads will role for past mistaken errors or intentioned misconduct. Once the contrived or “unintentioned” errors are officially revealed, what standards of remedy can be construed to mitigate a repeat of this costly “crisis”.
On the Wednesday, February 12, 2014, “Westchester On the Level with Narog and Aris” BlogTalk Radio show hosted by Hezi Aris, New York State Democratic Conference Leader Andrea Stewart-Cousins advised that the New York State Legislature, among which are the four total members of the Yonkers Delegation, advised no one had requested a two-year sum total of $55 million to cover FY 2012-2013 and 2013-2014, and are adamant that they did not authorize any funds whatsoever. More damning is that the audit attesting to the actual figures and their impact on CoY may even be greater than $55 million, but that is yet to be the case.
Yonkers Public Schools Superintendent Bernard Pierorazio and Chief Financial Officer Joseph Bracchita designed the budgets for the onkers Public Schools in which over a two-year time frame were listed a total of $55 million in never authorized and unsubstantiated funds listed in two separate proposed budgets. One of the responsibilities of the Yonkers Board of Education Trustees, Dr. Nader Sayegh is its president, requires the nine-member board to conduct due diligence over the proposed Yonkers Board of Education budgets in their roles as trustees. The YBoE Trustees obtained the financial input devised by Pierorazio and Bracchita throughthe men individually and in tandem upon their presentations to the YBoE Trustees. The YBoE Trustees trusted the information they received of Superintendent Pierorazio and CFO Bracchita, to be unimpeachable. Despite the expectation, something went wrong; very wrong.
The funds were not authorized for either fiscal year!
The procedure for creating a budget fell on Pierorazio and Bracchita. They in turn substantiated their proposed budget to the YBoE Trustees. In the very telling and substantiation of the proposed budget to the YBoE Trustees, both Pierorazio and Bracchita should have noticed the “error”. The information afforded the YBoE Trustees was flawed, yet they would not learn of it for over a year’s time later. And so it came to be the proposed education budget, based on some "flawed" and “erroneous” information given to to the YBoE Trustees endorsed the proposed budget and had the proposed budget presented to Mayor Mike Spano and subsequently thereafter to the Yonkers City Council (YCC). Once approved by the YCC, the documents were returned to Mayor Spano who presented it to NYS Comptroller Thomas DiNapoli who approved the budgets for the two years in question, seemingly unaware and unperturbed by the two respective false entrees.
Albany dispensed the funds over the entire year as governed by the fiscal year (FY) of CoY and the FY of the YBoE with respect to each budget, the total of which approaches $1 billion every year. Yetthe amount reecieved from Albany was deficient each year to the amount specified in the "flawed" items requested in the YBoE proposed budget. In other words, the $55 million was never received by CoY. The FY for CoY begins at a different time than it does for the YBoE; the money received for each overlaps the other. If someone had added the money allegedly approved by Albany for the YBoE, they would have realized that over the two years in question, $55 million listed in the budgets were missing from the money received from Albany. A red flag was not raised in horror until first notice of the debacle was revealed on January 17, 2014.
Since all funds are received by the CoY, even those funds for the benefit of the YBoE, Yonkers Department of Finance dispenses the funds to the YBoE when the YBoE requests it from the CoY. CoY is not authorized by law to ask the purpose for the funds requested, or how it will be spent. Most importantly, CoY cannot withhold or deny payment to the YBoE… ever.
The $55 million shortfall, plus or minus, though never authorized by Albany, was however "used and/or spent" by the Yonkers Public Schools for paying for supplies and services rendered. Once the actual funds authorized and spoken for were exhausted, the issue of how the YBoE was able to fund a $55 million shortfall arises. Because the funds specific to the YBoE were not kept separate from the funds designated for use for and by CoY, the cash flow of the YBoE and the CoY would be such that it covered any shortfall from the “approved” budget of the other. In a sense, one can say the Department of Finance was ignorant of the ticking time bomb that was their responsibility to know and manage. In most cases, cash flow can maintain a budget shy of $1 billion in value each year. The bubble burst on January 17, 2014. The situation is so dire, and so politically charged, that little has come to light from official sources.
City Hall advise the Yonkers Commissioner John Liszewski of the Department of Finance when in receipt of funds from Albany presents an opening sum to the Yonkers BoE so that they may satisfy their purchases of services and other responsibilities. The YBoE continues to request money as they must to operate throughout the year, requesting sums as they are needed. CoY is said t wire the funds to the YBoE when they are requested to send funds to the YBoE. CoY may not ask any questons of the YBoE as for what the money is spent and with whom. CoY must meet the financial demand of them by the YBoE. The YBoE may not be denied fund, allegedly stipulated by New York State Law.
In a 7-0 ruling the Yonkers City Council on February 11, 2014, authorized an Inter Municipal Agreement (IMA) unanimously. The IMA was adopted devoid of any discussion or insight into the rationale for the Resolution being authorized. The Agreement was signed into effect on February 3, 2014, by Yonkers Deputy Mayor Sue Gerry and YBoE Trustee President Dr. Nader Sayegh, Esq. The Agreement demands the YBoE provide all resources, materials, documents and other information of any kind to assist CoY in uncovering the deficiencies of accountability that have been revealed, with all costs borne by the YBoE. The IMA shall take place from the moment of signing on February 3, 2014 and be terminated no lated than June 30, 2014.
Most importantly are the Indemnification and defense clauses:
“That except for the amount, if any, of damage contributed to, caused by or resulting from the negligence of CoY, the YBoE shall indemnify and hold harmless CoY, its officers, employees and agents from and against any and all liability, damage, claims, demands, costs, judgments, fees, attorney’s fees or loss arising directly or indirectly out of the errors, omissions o unlawful or negligent acts hereunder by the YBoE or third parties under the direction or control of the YBoE; and
“To provide defense for and defend, at its sole expense, such claims, demands or causes of action directly or indirectly arising out of the Agreement, as described in subsection” (above), “and to bear all other costs and expenses related thereto."
Not being a lawyer, I am uncertain whether those involved in any “error, or other wrongdoing” are liable to face prosecution. That is a decision which may and can be made by NYS Inspector General Catherine Leahy Scott, NYS Attorney General Eric T. Schneiderman, Westchester County District Attorney Janet DiFiore, among others.
What is evident is that the protocol and / or standards of scrutiny heretofor have been lacking and went previously untested. Authentication and rationale for a specific line in any budget has been lax at both Yonkers City Hall, YBoE, and the Yonkers City Council (YCC). Accounting standards adopted by CoY must be seamless with respect to the YBoE and transparently defined. Safeguards to deny and deflect erroneous or intentioned subterfuge must be engaged post haste. CoY and YBoE must present their budget proposals in the most succinct and understandable manner before the public and not hidden from The People.
CoY must also not co-mingle funds intended for CoY with money intended for YBoE. Lawyers are known to set up “escrow” accounts for the purpose of serving a specific entity or individual. This must likewise be done for the benefit of the YBoE.
Further, once funds have been allocated to the YBoE, there must be redundant mechanisms to advise the YBoE CFO (finance officer) through the YBoE Trustees that the account is depleted and public notice to that end must be noticed. In so doing, accounts could not and would not be overdrawn.
Many suggestions to mitigate this “crisis” must be given voice.
Moving forward, Dr. Michael Yazurlo, a Yonkers resident who earned accolades of accomplishments as Assistant Principal at Roosevelt High School, and as Principal at Hawthorne Pearls (Grades 4-6), Hawthorne Jr. High School (Gifted and Talented Magnet), Roosevelt High School, and as Superintendent of Schools at Tuckahoe Union Free School District is favored to be chosen interim YPS Superintendent.
YPS Superintendent Bernard Pierorazio is expected to relinquish his responsibilities without further remuneration as previously noted at the end of the business day of Februray 16, 2014 and Dr. Yazurlo is to wtep into the role of YPS Superintendent on February 17, 2014.
The audit explaining what transpired, and for how many years, remains unknown keeping all interested parties in limbo.The audit was said to be concluded by January 31, 2014; the audit was not expected to be divulged this Wednesday, February 12, 2014 either. February 12, 2014, was the second date in the timeline to be off. Conclusion of the audit is now unlikely to be divulged until its very telling.
YBoE Trustee President Dr. Nader Sayegh has for many months immersed himself in gaining access to information of protocol and validation of facts in deference to his appointed responsibilities. He was beginning to gain insight when this revelation shocked CoY by its enormity and possible ominous consequences financially and politically. Comprehending the protocols skirted, maligned, or overwhelmed will bring about standards to mitigate such calamity from our future. Dr Sayegh is systematically shepherding the investigation and study of what transpired toward a much more respected standard. Dr. Sayegh is expected to continue at the helm as YBoE Trustee President.