SW Officials Slammed By State Comptroller
By Dan Hust
LAKE HUNTINGTON October 20, 2006 Sullivan West Central School District officials “mismanaged the merger and wasted millions of taxpayer dollars.”
That’s the verdict from the NYS Comptroller’s Office, which released an audit of the district on Tuesday.
The yearlong investigation in part requested by local residents and officials surveyed issues surrounding the 1999 merger of the Delaware Valley, Narrowsburg and Jeffersonville-Youngsville school districts.
Although it officially covered the years 2002-2005, the audit took into account documents and activities going as far back as 1998, when the possibility of merging was being studied.
The auditors determined that the board and administration at the time had not developed a critically-needed long-range comprehensive plan, deliberately ignored declining enrollment figures and a state building aid ratio far lower than the 95 percent publicized, failed to consolidate staff and programs to achieve economies of scale, and did not exercise enough control over the finances of the district.
The result, said the report, was $2.1 million unrealized in space savings and another $12.5 million wasted on the the renovations of two campuses Delaware Valley and Narrowsburg that would ultimately have to be closed due to falling enrollment.
In addition to an alleged lack of proper board/administration oversight of the purchasing and inventory policies, the auditors said the district improperly paid former Business Manager Elizabeth “Betsy” McKean $8,400 for “unused vacation time” after she stepped down in 2002 even though that wasn’t a requirement of her employment contract.
Auditors noted that the district had already brought its unreserved, undesignated fund balance (surplus monies untethered to any use) into line with state regulations and also acknowledged that it is still in litigation with construction and architectural companies involved in building the high school which could result in several million dollars being refunded to the district.
They addressed a few taxpayer complaints, although most weren’t considered within the purview of the audit.
Perhaps of most note was the complaint that the State Education Department (SED) approved the construction of the high school despite an identified trend of declining enrollment. That also tied in with a complaint that the promised 95 percent state aid rate turned out to be closer to 75 percent.
“The choice to build a new facility is a local choice and is approved by district voters . . . Further, it is up to the local board to determine what size high school to build,” replied the auditors. “It was also the responsibility of the board to communicate to district taxpayers the difference between what the total costs of the capital project would be and the actual amount that the district would receive in state building aid for the project.
“Education Department officials determine how much state building aid the project will generate,” they continued, “but it is not within their realm to determine whether the project will be built or to notify the public of any possible disparity between project costs and eligible state aid.”
So what does the district need to do now?
According to the auditors:
1. District officials should create an ongoing comprehensive strategic plan which includes building uses, staffing levels and financial resources (which the district is currently doing).
2. Properly segregate duties in the business office to ensure transactions are always being handled and looked at by more than one person.
3. Follow the procurement policy (which up to recently had been sporadically enforced).
4. Have officials sign off on the purchasing agent’s requisitions (which didn’t always occur in the past).
5. Keep a current inventory of capital assets such as land, buildings and equipment (something the district is undertaking).
6. The board must ensure all leave payments are consistent with employment contracts.
7. The board should consider an attempt to retrieve the money improperly paid to Betsy McKean.
Board President Arthur Norden, in a written response included in the report, acknowledged that “all these conditions were the result of a lack of strategic planning and leadership.”
However, he added, “SED’s failure to adhere to its own guidelines for the approval of aid for new construction resulted in an allotment of aid that was unnecessary for the purpose of fulfilling the district’s need for a centralized facility and for the upgrading of facilities necessary for increased academic achievement for SW students.
“. . . Had SED followed its own guidelines for the approval of aid for new space, district officials would not have had the opportunity to spend millions of tax dollars needlessly.”
Norden also countered that the district saved $2.1 million a year by consolidating staff and facilities and has already taken many of the corrective steps outlined in the report.
Copies of the report can be obtained by going online to www.osc.state.ny.us/localgov/audits/2006/schools/sullivanw.htm or by contacting Sullivan West at 482-4610.
SW Officials React To Report . . .
By Dan Hust
LAKE HUNTINGTON Arthur Norden could easily feel vindicated these days.
A NYS Comptroller’s Office report released Tuesday confirmed many of the concerns he has aired publicly since the merger of the Sullivan West Central School District concerns that were often downplayed, criticized or outright dismissed.
But he’s not saying, “I told you so.”
For one, the new SW board president has serious problems to address, having taken the lead since July of the effort to fix a district brought low by what the comptroller’s office bluntly calls mismanagement.
For another, he’s disappointed that the comptroller’s staff failed to point a damning finger at what he feels is a primary wrongdoer in all of this.
“I think the report accurately reflects a lot of what happened, but it lacks the State Education Department’s (SED’s) culpability in the matter,” he said on Tuesday.
In what Norden feels is a deliberate action to sidestep inter-agency rancor at the state level, little mention is made in the report of SED’s involvement in the complicated 1999 merger which coalesced the Delaware Valley, Narrowsburg and Jeffersonville-Youngsville school districts.
In fact, in response to taxpayers’ complaints about the infamous 95 percent state building aid issue, the comptroller’s office said in the report that SW district officials knew about the fact that they’d only get 75-80 percent building aid for the construction/renovations project but failed to communicate that to the public.
However, the comptroller’s office reported that that belief arises solely from their reading of an SED letter to the district.
Throughout the rest of the report, unnamed “district officials” are blamed for every problem, save for one finger pointed in the direction of BOCES Superintendent Dr. Martin Handler.
The report notes that Handler wrote in a May 1999 issue of the Sullivan County Democrat that SED “will pay 95 percent of the cost of renovations and new structures.”
The report intimates that this, coupled with other information originating from merger consultants and leaders of the involved districts, misled voters into thinking that they’d only have to shoulder 5 percent of the costs of building a high school and renovating the existing three campuses.
“That was an extremely influential piece of information for taxpayers,” said Norden. “How could you reasonably say ‘no’ to that merger?”
BOCES Supt. Agrees, Disagrees
Handler called the accusation “upsetting.”
He does acknowledge that he could have better explained the 95 percent aid issue, but he is adamant that he did not try to mislead anyone, saying his article in the Democrat said that “the building costs necessary to the merger would be aided at 95 percent.”
In that respect, he is in agreement with Norden that the district overbuilt and suffered the consequences.
But he refuses to take any blame for the merger woes before, during or after the actual merger.
“The decisions that were made by the district did not involve me,” he said. “I could not have known that they [the board and administration] would build a high school they didn’t need.”
In fact, he warned the board about it in a letter in the early days of the merger, saying that public approval of the high school plans would result in higher taxes.
He also said he advocated for a consolidation of students into the existing campuses rather than immediately building a new high school, saving that decision for a full facilities needs assessment.
“But I had no part in the decision-making in that school district after the first six weeks,” Handler said, referencing his short stint as the district’s interim superintendent.
He also said he didn’t know about declining enrollments or many of what he feels were flawed decisions made by the board and administration in the early part of the 21st century decisions which he agreed with the comptroller’s office sent the district spiralling into a financial crisis.
“I think the board of education for Sullivan West in the first five years were well-meaning people,” he remarked, “but they made some poor decisions.”
He also blamed the original merger study of 1998, saying it was “inaccurate and overly optimistic” regarding state aid. However, the later Rural Schools Association school improvement study (an organization of which he is vice chairman) was “much less pie-in-the-sky and more realistic,” said Handler.
“It said the ultimate aid percentage would be determined by the local decision-making,” he explained.
“Unfortunately, some people have made this a personal attack on me,” he concluded, saying it’s more important now to determine how to “get the district moving in the right direction.”
“The merger was a good idea,” he commented. “The implementation of it was not well-done.”
That implementation, of course, was authorized by the voters of the three former districts.
“I’m not going to totally absolve the voters either,” said Norden, who agreed with Handler that the merger was a good idea that can still succeed.
Original Board Members Differ
But Norden was adamant that if SED had been more proactive in monitoring the $50 million construction project at SW, “this never would have happened.
“They never should have approved that new high school,” he said, citing SED’s awareness of declining enrollment figures and the common-sense fact that four campuses are more expensive to operate than three.
Norden also pointed out that the comptroller’s office considers the closing of the Delaware Valley and Narrowsburg campuses to have wasted $12.5 million of state taxpayers’ money provided to the district through aid that ultimately did amount to 95 percent.
“Who blew that? The State Ed. Dept.,” he stated.
Norden looks at the matter in three ways:
1. The merger was sold to the public with “bogus info.”
2. So was the building project.
3. The millions of dollars in the undesignated, unreserved fund balance (a violation of state education law that wasn’t resolved until two years ago) was “to cover up how financially unfeasible this plan was” meaning that Norden feels officials illegally “padded” the budget with the fund balance so as to avoid having to face the public’s wrath over the inevitable, significant tax hikes.
In the end, however, he agrees with the report that “it is former administrators and mostly former board members who caused this problem.”
The only original SW board member remaining on the board is Rick Lander.
Lander criticized the report for intimating that board members should have known to avoid the pitfalls of the merger.
“We didn’t lose 250 kids when we merged,” he said, pointing out that enrollment dropped gradually. “And all of Sullivan County thought that enrollment and population were going to increase.”
Even if they had been told the numbers would fall, “nobody would have believed it,” said Lander, referencing the common belief then that casinos, Bethel Woods and housing developments would result in a population boom.
He admitted that the drop in enrollment led the district to close mostly empty buildings and lay off staff, but he felt that was necessary and completely defensible financially.
“The board should have been congratulated [by the comptroller’s office] for closing the two schools not that we wanted to do it, but it had to be done,” he remarked, adding that he’s glad SW isn’t facing crumbling and crowded buildings like other area districts.
Besides, he said, if Sullivan West hadn’t been created, “we wouldn’t have been able to survive as three individual districts.
“Was that a smart decision?” he said of the merger. “It was the only decision we had.”
Lander does think that the board was pushed by consultants, construction/architectural personnel and the public to create a complex that was more than what the district needed.
“They told us we could have everything,” he said of the consultants. “And I think that’s what voters voted for: a new school.”
Lander, however, argued that even at just 75 percent in aid, SW got a good deal that resulted in increased educational opportunities for local children.
“We have nine AP courses . . . Our curriculum is much better than it was,” he explained, adding that none of the students he talks to want to go back to the pre-merger days. “Our kids are getting a better education than they were before.”
He feels that’s in danger from board members and residents who want to reconfigure the district.
“It is in danger if these people get their political way in closing the high school,” he said.
Union Prez Urges Focus on Future
Teachers’ union president Carol Slotkin, however, said politics has always been a part of SW’s decisions.
“In order to accomplish the merger, political compromises had to be made,” she said, saying that the merger wouldn’t have happened if a central high school and the continued operation of the existing campuses had not been agreed upon.
But she agreed with Lander that the focus should be on the current and future quality of education.
“What we’re about is providing a quality program for our students,” she said. “The fact of the matter is that the most important thing in front of us is where we go from here. . . . I would hope that the discussion focuses on the future and not on anger from past errors.”
Top People Have Moved On
None of the administrators who served in the early days of the merger remain, having left by their choice or the board’s. In fact, the comptroller’s report notes that SW has had three superintendents, six business managers and four district treasurers since merging in 1999.
Michael Johndrow was named superintendent shortly after the merger, succeeding Handler in the role, and he eventually left in 2004 after the board expressed no confidence in his leadership abilities.
Johndrow is now the interim director of secondary education at James I. O’Neill High School in Highland Falls.
He hadn’t read the report as of yesterday, but from what he was told, the comptroller’s office was assuming that he, his staff and the board should have seen what he feels was unforeseeable.
“They’re dealing with what is now,” he said yesterday, saying that if he had known what the auditors now know, “of course we wouldn’t have done it [the building project].”
But contrary to what the auditors say, Johndrow said that figures showing steep enrollment declines were non-existent.
“I couldn’t have anticipated enrollment would drop like that,” he said. “Nobody had a magic ball. . . . I think we made the best decisions we could make under the circumstances we had.”
And there were pressures especially to retain the existing schools while building a huge high school.
“We were under the microscope every minute,” recalled Johndrow, citing the fact that this was the first such three-way merger in 20 years. “The merger would never have passed if any of those buildings were closed.”
As for the now-closed campuses, he said there was every intention to utilize them to their fullest.
“For them to say we wasted $12.5 million is ridiculous,” Johndrow remarked. “We knew DV would have a few extra classrooms. You don’t always build or renovate for what you need now you think ahead.”
And from building aid to educational needs, Johndrow is firm in saying he was always honest and upfront about what SW could get, even defending the oversized fund balance as a smart, taxpayer-conscientious way to minimize tax impacts.
He admitted his tenure as leader of both SW and the old Delaware Valley district was “the toughest six years of my life” but that the district is and will be the better for the merger.
“I’m proud of what we established for the education of our children,” he said.
Alan Derry is the current superintendent of Sullivan West, having been hired by the board in 2004 to replace Johndrow. He could not be reached for comment.