Let us preface this article by saying that the truth is never simple. That said, as readers know, the New York State Education Department is requiring the Port school district to return approximately $1.7 million in building aid, which it paid to the district for construction projects from the period of 1987-1995. Readers who lived here in 1995 and 1996 will also recall the turmoil when the NYS Comptroller's Office performed an audit of the Capital Fund of the PWUFSD for projects between, specifically, July 1, 1987 and June 30, 1995, during which time the district spent approximately $18 million on capital expenditures.
The audit found "lack of subsidiary accounting records," noting that there were "no separate accounting records maintained for individual capital projects" and "there was no documentation available to support the revenues and expenditures reported for each capital project in the school district's annual financial reports or to determine whether individual capital projects were authorized or over expended."
This lack of proper accounting records meant that the Final Cost Reports required by the state for building aid were never filed, or not filed in a timely manner, even though the state had paid, or started to pay for the projects when the certificate for substantial completion was filed, and the debt incurred. At this substantial completion stage, however, all of the final costs are not necessarily determined.
The findings of the comptroller's audit also led to the BOE appointment of a Citizen's Advisory Committee, which began its task in September 1996. The CAC addressed, among other items found in the report, the issue of the district's failure to make timely filings necessary to receive state aid in connection with the capital projects and the lack of sufficient procedures to monitor the filing for and receipt of state building aid.
The CAC also made several recommendations to prevent the same things from happening on future construction projects. The current Assistant Superintendent for Business Mary Callahan commented that for the recent $68 million construction bond, the district was very aware of the community's sensitivity to financial oversight, and took many steps to ensure that all of the paperwork for the projects be filed correctly and in a timely fashion.
A logical question is why the state has taken so long to recoup the money. The information available shows that in 1999, the then Superintendent of Schools Al Inserra and Assistant Superintendent for Business Larry Blake, contracted with a consultant to review the many open capital projects that the state was requesting Final Cost Reports for. While this consultant was able to file some Final Cost Reports, he was not able to locate many documents needed for these reports for several of the old projects.
Superintendent of Schools Dr. Geoff Gordon notes that Dr. Inserra was not involved in any way with the non-existent Final Cost Reports because he was not superintendent from 1987-1995. The projects date to the terms of Superintendent William Heebink and Assistant Superintendent for Business Richard Helfont. Also, Dr. Heebink left in 1994 and the interim superintendent was Bud Baron.
Then in 2003, the district was again contacted by the New York State Education Department Office of Facilities Planning regarding outstanding Final Cost Reports. At that time, the district was able to submit approximately seven more. However, the other projects were not filed, as the necessary documents to support such filings did not exist. In looking back at the 1996 New York State Comptroller's Audit and Report, those documents did not exist then.
In the fall of 2004, Mary Callahan and Dr. Gordon met with Jim Sherry from New York State Senator Michael Balboni's office, to request special legislation to have a waiver granted for these remaining projects. (Mary Callahan advises that this happens in other districts, and the state has been known to "forgive" the debt.)
Balboni's office stipulated that if the district could provide the necessary documentation to prepare the Final Costs Reports for these projects in question, he would propose special legislation for the district.
In November 2004, the district contracted with another consultant, Spectra School Aid Services, to close out all old, open capital projects. These consultants reviewed many files of the old projects, but could also not locate the necessary accounting records needed from 1987 through 1995 to submit accurate Final Cost Reports to the state. They also read the NYS Comptroller's audit from 1996 and saw the same comment about the lack of existing records to properly prepare the final cost paperwork.
Dr. Gordon stresses that this is an inherited problem. "For any individual to attempt to associate any of the 1987-1995 failures to any BOE or administration from 1996 to the present is outrageous. The attempt to alarm the Port Washington community is also outrageous. Rather, responsible citizens must carefully address the facts." He adds, "The truth is that this issue of the 1980s and l990s is not an issue of today, but rather was an issue fully investigated and disclosed to all involved including the media in the mid-1990s."
The district was able to negotiate a three-year pay-back plan, rather than a lump sum of $1.7 million. In June 2005 - the amount was $374,235; in June '06 it will be $567,656 and in June '07-$567,656. This meant that the tax levy for 2005-06 would be 6.6 percent and not 5.9 percent as the district had informed the voters prior to the second budget revote on June 21.
Dr. Gordon disputes charges leveled by some that the district deliberately withheld the fact that the tax increase was going to be greater than originally announced.
Explaining, the superintendent says, "In late May of 2005, which was received in June 2005 after the budget vote, the Department of State Aid issued a letter to District Treasurer Maria Carpinelli stating that they would be recouping building aid that had been previously issued in respect to these projects, and would do so over a three-year period, based on the enacted legislation. Otherwise, the full amount would have been due to NYSED on June 30, 2005, thus having no impact on the tax levy." However, he continues, "As this letter was not received and processed until after the second budget-vote postcard and brochure had gone to print, the documents again could not and did not reflect the take back of aid because the assistant superintendent for business originally anticipated that the full amount, $1.7 million, would be taken back as of June 30, 2005." He noted that Ms. Callahan had discussed this at board budget meetings and, because she had not received any notification of anything to the contrary, she believed that the money was to come out of the district fund balance, which would not affect the 2005-06 tax levy.
Summing up, Dr. Gordon states that "the fact that the failures of a time period of 10-20 years ago have now come due has absolutely nothing to do with any BOE or administration since that time other than that the present ones are the ones being punished."
Dr. Gordon also assures taxpayers that now that the "mess" is resolved and the amount of money to be returned has been determined, the district will be pursuing any legal recourse it may have and also is looking into any monies that can be gotten back through insurance.