The Padded Budget

Open Letter to NYS School Districts- Comptroller's Office Sanctions Padding of Contingent Budgets

Valhalla, NY May 16, 2005

We are writing to make you aware that New York State Comptroller Alan Hevisi’s Office has ruled, in effect, that Contingency budgets prepared for your public notice need not be presented in accordance with Education Law 2023. According the Comptrollers finding, a contingency budget only exists and must be lawfully prepared at the time it is adopted. Contingency budgets prepared for public notice as required Education Law 2022 can contain fraudulent, padded and improper items, with no penalty whatsoever.

Background:

In June 2003, taxpayer advocates uncovered several fraudulent, padded and illegal line items in the Valhalla Union Free School District contingency budget worksheet, which generated a contingency budget figure overstated by over $1.0 million. The fraudulently prepared figure was sent to every resident in the school district. (Contingency budgets disclose the maximum spending level allowed by law, in the event the voters fail to approve a school budget after two votes).

The taxpayers first contacted the New York State Education Department- Office of Management Services who volunteered that the line item looked like a fudge factor and was clearly not permissible under the rules of the budget handbook. Mr. Charles Szuberla wrote to the taxpayers saying that the district business manager knew it was not an allowable expense and that it was not meant to be seen by the public. Then the Office of Management Services began to stonewall the taxpayers group, referring them to an arcane process of appeals to the commissioner, a process that carries no penalties and takes years to complete.

The taxpayers then turned to the New York State Comptrollers department, which, after a year issued the attached letter, ignoring all the facts in the case and concluding in effect that a contingency budget, as presented to the public, may be padded in any fashion with any item, legal or fraudulent as long as, after two votes the contingent budget submitted to New York State Education Department is correct as prescribed by law. In Valhalla’s case their budget passed on the second vote, so the two fraudulent contingent budgets presented to the public were no longer an issue.

School Districts are now free to report any figure, legal or fraudulent to the public in its pre-budget vote notification, change it if the budget is put up a second time, as Valhalla did. They are free to use a fraudulent contingent budget to promote a yes vote, which is also here-to-fore illegal, which Valhalla also did.

In a conference call with Mr. Ellis, he admitted

He did not know the contingent budget was publicly disclosed to residents as required by Education Law 2022 or that it was to be sent to every resident at the time of the school budget vote.

He never read or referred to the New York State Education Department Budget Hand Book in making his decision

He did not know that the illegal line item they termed “Expenses Attributable to FAPE was changed by Valhalla between the first and second vote in order to maintain a spread between the budget being voted on and the reported contingent budget.

He did not know that Valhalla had actually presented two fraudulent and illegal contingency budgets in 2003.

His findings say that, as the district avoided going to a contingency budget, the fraudulent budget presented to the voters was no longer an issue. Of course, one of the reasons they avoided going to contingency was the fact that the contingency budget as presented was padded. The end, in his finding, justified the fraud used in the means.

If this finding stands, districts throughout the state are no longer bound to prepare their budgets in accordance with the law. They can include any and every fraudulent or improper expense in the contingent budget presented to the public, as long as they fix it after two defeats at the polls. Contingency budgets can now be equal to, or even greater than the proposed budget, in order to promote a yes vote.

Let's see if Mr. Hevisi will correct this incredible ruling or if he seeks to override the New York State Legislature and New York State Education Department, writing new law and rendering the entire statewide voting process, a joke.

Update: We appealed the Comptroller's department denial of access to their records on this matter and won. The Committe on open government has ruled that we must be given the documents that will show fraudulent financials prepared by the district and much more.

What State Ed Really said about Valhalla's Padded Budget

Here is what Mary Clark's supervisor, Charles Szuberla, a contingent budget expert, of the NY State Department of Education said about Dr. Kelly's convoluted explanation of the illegal padding of the Valhalla School district budget, the mystery "Expense attributable to FAPE" :

"The fact that we don't know what it is bothers me"

(Dr. Kelly's) " Explanation is unsatisfactory and still doesn't tell me what it is"

"to me, it is a non answer"

"I don't know what it is"

"this just looks like... where did it come from?"

"I have never seen it before"

"It looks like a fudge factor"

Mr. Szuberla later writes," I spoke with the district business official and he is aware that "FAPE" would not be an allowable expense to exceed the contingent budget cap. He said they put it in to show the resources necessary to continue to provide core educational services. The business official said that the worksheet was for internal use and was not distributed publicly."

We are sorry, Mr. Szubera, the contingent budget is not for "internal use" It generates the fall back budget. It appears on the mandated voter registration card. Voters rely on this budget to measure the effect of a defeated budget. It affected the vote.

It is illegal and unethical and is unique to Valhalla.

Illegal and Deceptive Item in Valhalla's Contingent Budget

Last year, in a letter to the editor of the Journal News, I discussed how abnormally high Valhalla's contingency budget figure was (7.7 percent) and that it was only 1 percent lower than its proposed budget (8.7 percent). Through a freedom of information request, I acquired Valhalla's contingency budget. On it was an expense identified as "FAPE" (Free Appropriate Public Education) in the amount of 941,840 dollars. This amount represented 3.5 % of the total budget. I also acquired the contingency budgets of every other school district in Westchester and discovered that not one of them had this expense! In an e-mail correspondence with Mary Clark, who works with General Education Management Services of the New York state Education Department, I asked about the legitimacy of the FAPE expense, and here was her reply: "Every item in a budget reflects FAPE; however, there is no such function or object of expense identified as FAPE."

The Education Department's "Budgeting Handbook 3" outlines the legal responsibilities of boards of education to prepare budgets. In this handbook, under the heading of "contingency budgets," there are seven expense items listed that are not subject to the contingency cap. Valhalla has broken new ground by providing an eighth. The 941,840 dollar FAPE expense that appeared on Valhalla's 2003-2004 contingency budget is not an allowable expense, according to department guidelines. It is Illegal.

Despite repeated requests from taxpayers and state ed, Valhalla has yet to identify what this expense was.

The padding of Valhalla's contingency budget affected voter turnout and drove up the amount of the budget by up to 3 percent after the first budget was defeated. It remains in the budget and grows every year.

Richard Panetta, North White Plains

If you think this is an unsubstantiated allegation, just click on any of the images on this page and judge for yourself. The picture of the shady characters will show you how the State Comptroller has looked the other way. The newsboy shows proof positive that the budget was padded and how they did it. The money flip shows is a bizarre and rambling email from the superintendent to the Mary Clark at State Ed, explaining the inclusion of this illegal line item in the contingent budget . This explanation, if it could be understood, contradicts what the business manager told Chuck Szuberla of Mary Clark's Office. Mary Clarks office denied that this email even existed when we foiled for it a year back in 2004. The coverup pervades state ed, the comptroller's office and the school district.

While the rest of the state is moving toward Contingent Budget Reform and a clear and accurate presentation of the budget, Valhalla committed fraud. The position that there was no fraud because we did not go to contingency is childish. We note that the April 4th letter was quickly removed from the district's website.

The Padded Budget, Illegal landfill and illegal turf lease all were connected

At last, the release of the Comptroller's audit report on the fill for fields scam finally explains why the Valhalla School board padded the 2003-2004 contingency budget.

Valhalla had allowed dozens of unidentified carters dump 90,000 cubic yards of undocumented fill on school property, mere feet from the Kensico School and on the High School athletic fields. The deal was unraveling. They had accepted delivery of a three hundred thousand dollar unneeded artificial turf field and to cover things up, they had entered into a seven year lease, that was clearly illegal. They had not gotten voter approval to buy the artificial turf or enter into a multi year bond or even to enter into a fill project. They had no DEP permits, no insurance from the carters or the brokers.

Two honest candidates were running for the board and the administration feared the budget might be defeated. Three years before, the budget went down, when three candidates ran without being annointed by the board. If the budget was defeated this time, the lease would be revealed, the illegal dump would be exposed, the soil would be subject to DEP testing and the state oversight of district actions would follow.

So they padded the contingent budget by over $1.0 million, making it appear so close to the proposed budget that no one would bother to vote against it. No one would bother to campaign against it. This is the only possible explanation for an action so childish and indefensible that to this day the school district has never explained what a million dollars in "Expenses attributable to FAPE" was. The current board president, who was running at the time, announced at a meet the candidates night that he saw no reason to vote against the budget because the alternative contingent budget was so high. I wonder how he knew?

Imagine their shock and distress when someone actually did put out an anti- budget flyer. Imagine the shock when although the annointed candidates were elected, the budget was defeated. Surely the taxpayers were angry. If a mere difference of one hundred thousand dollars between the proposed and contingent budgets were not enough to keep them home, they might well defeat the budget again. Panic set in, they were trying to cover up the illegal fill and illegal lease, they were deperately trying to get a legal opinion to justify the lease. Now they had padded the contingent (austerity) budget so high that there was no place to cut. Taxpayers resigned to an austerity budget over 7% asked why for ninety thousand why not save ten thousand on a revote and simply go to contingency. But the administration and board knew the Expenses attributable to FAPE would never be approved by state ed.

Caught in a web of lies, they lied some more. First they cut the contingent budget to give themselves some room to cut the proposed budget. They actually cut the illegal line item "Expenses Attributable to FAPE". Then they cut the proposed budget to appease the taxpayers, but still leaving room enough to scare the parents with an otherwise padded contingent budget.

As the re-vote drew near, they could not leave it to chance and certainly not to the electorate. Somehow they came up with a Verizon phone calling system, programmed it to call only the parents with children in the school district. The board president then recorded a message to remind only parents to vote and the calls were made over three days from Sunday to Tuesday. This promotion of a yes vote is of course, also illegal but it was all or nothing.

The budget passed, the phone system disappeared, they made the first payment on the illegal turf lease on July 1st, finally were able to buy that legal opinion in September and thought they had covered things up.

But thanks to this website and the investigative reporting of the Journal News' Dave Wilson and the Comptroller's Audit we know now what happened.

Contact Your Elected Officials

Deborah Sicuranzo President
Christine Petrillo Vice President
Judith Belville

Brian Macken

Michael Smith

Grace Stone

William Rosenberg

Who's in Charge?

In any school district there is a Board of Education responsible for representing all residents of a school district, not just the special needs of a few. In any given district only one third of the residents have children attending school and are the only ones receiving the direct benefit. This board has a fiduciary responsibility to the taxpayers of the entire community, and are the highest authority with regards to the decision making process of the school district. In the Valhalla School District we have a case of the tail wagging the dog. The Superintendent of Schools, Tom Kelly, is the person calling the shots with the board members loyally clenching their rubber stamps, ready to give the OK to anything he proposes. This is evidenced by information, obtained through freedom of information, that shows Tom Kelly negotiating deals involving hundreds of thousands of tax dollars before he received approval from the school board. The board refuses to assert its authority and follows Kelly's every command..

By virtue of the fact he is a civil servant, it's easy to understand the total disregard for fiscal responsibility and cost effective practices by Superintendent Tom Kelly, but what about the Board of Education? Let's examine this closely.

Six of the seven board members have children attending Valhalla Schools, and the seventh has only recently had their last child graduate. Although this does not fall into the legal definition of a "conflict of interest" anyone can see that a practical, ethical conflict does exist. Our system of funding schools asks the senior citizen on a fixed income to pay the same amount as a family with four children attending school. With this in mind it's easy to see how parents with children attending school would encourage increased spending, and since the Board members are all parents, you can see how the conflict exists. This also explains the double digit budget increases we've had over the last four years. Adding to this conflict is the fact that one board member is a teacher in an adjacent town, another board member's spouse is a teacher at Valhalla, one does not own a home in the district and one's wife is a teacher aide.

The residents of the Valhalla School District have defeated their budgets more than any other school district in Westchester County, which speaks volumes about how poorly Valhalla's Board of Education represents the district.

We invite any community member, including past and present and future board members to explain and defend the 2003-2004 coningency budget worksheet. Your response, unedited will be be posted here. .
Please tell us, where in the budget handbook, expenses attributable to fape is an allowable item, explain why you think cells on the worksheet were moved and formulas changed and why you think the cost per student for increased enrollment was higher than the total cost per student in the budget submitted to the voters.
If you believe simply padding the budget "for the children" is acceptable, we will post that as well. To date no one has taken us up. No one has written to explain or defend the padded budget.

Last month we all got a letter from the district, mailed at our expense claiming that despite the findings of the New York State Comptroller's audit, the Valhalla School District alone did nothing wrong in allowing unknown contractors to dump undocumented fill on school property, did nothing wrong in leasing, then buying an unneeded artificial turf field at a higher interest rate than market, not bidding for any of the work done and not seeking required voter approval or obtaining required New York State permits. You remember, the lawyers made them do it?

As reported in the Journal News and confirmed at the town meeting? The fields are absolutely contaminated. No further tests are necessary, but it is only taxpayer money. The board and adminstration all knew about this since 2004. That is why the fields are locked. Or are they in use? No they are locked and should be. The not so superintendent says "We have time. The baseball season doesn't begin until April." Is she for real? I really don't think parents are that stupid.

They let children play on soil they knew was contaminated with carcenogens. Think about that and think about the absolute control they have over your children every day.

Here is another fact you may not know. Back in 1997. The president of the school board, Mr. Mcguinn brought in a very similiar fill for fields deal to then Superintentent Frank Ehrhart. Mr. Ehrhart consulted both the school's attorney and the Westchester County Board of Health. They both advised against it and Mr. Ehrhart told to board not to do the deal.

Four years later, with a new attorney, and the boy wonder at the helm, with four of the same board members on the board. Valhalla did the same deal the board of health warned against.

They knew they were putting the children at risk and they did it anyway. Then, when they were sure the fields were contaminated they put children from Valhalla and several other school districts on those fields. They put adult coaches, teachers and umpires on those fields and maintenance workers as well.

What will it take for the parents to stand up and call for the resignation of Brian Wolfson, and any board member who knew that those fields were contaminated? Two left last spring along with Tom Kelly, at two more are leaving in June.

If the Valhalla parents don't stop worrying about whether their kid will get a PTA scholarship or the lead in a play, then they deserve what they get.

We have also obtained the Comptroller's Department response reprimanding the New Dr. Kelly for writing such a letter and sending it distriwide at taxpayer expense. Calling the impression district's letter gave untrue and misleading, the Comptroller again stated that the district did not comply with the law, should have known the requirements for bidding, voter approval and permits. It is more than misleading it was an out and out lie. Those fields are contaminated with cancer causing elements. So how about the New Dr. Kelly sending this New Letter district wide at her own expense and admit the district acted outside the law in its fill for fields scam, that the board knew the fields were contaminated. Then the board members could contribute their own money to pay for the false and misleading mailing they approved sending.

Better still how about every board member who knew the fields were contaminated when they put children on those fields resigning.

To see the Comptroller's reprimand, just click the Got Ethics button on the right.

Had enough? Keep the pressure on the old board. Call Hugh McLean of the NY State Attorney General's Office 212-416-8435 and demand a criminal investigation. Construction contractors walked away with almost three million dollars in profits from the illegal Valhalla dump, the school district padded their budget to hide the illegal dump and turf lease. The district is giving away the Columbus Avenue School for $1 a year, costing taxpayers two and a hafl million dollars in the first eight years of the lease. The school board refuses to televise public meetings, refuses to produce minutes of executive sessions refuses to be accountable for any of their actions. They rely on the fact that there is no controlling legal authority overseeing them and the facts the the parents are afraid of recriminations and the taxpayers are apathetic.

The school board understands that there is no controlling legal authority to which they answer. They thumb their nose at State Comptroller Hevisi. Their districtwide mailing says that despite the findings of the state Comptroller, they did nothing wrong. The mess our facilities is in is their responsibilty and they will certainly, then do it again if given the opportunity. The next charleton or climbing wall saleman that comes along will have their ear, your tax dollars and the safety of your children for their profit. If you want accountability, you must contact

Hugh McLean at the NY State Attorney General's Office 212-416-8435

An investigation is underway and like the Comptroller's Depatment, the AG wants your input. Even if you believe the district simple bumbled its was through this scam you owe it to your children to ask for a full investigation to be sure their acts were simple incompetance and not criminal. One thing for sure, the administration and school board did not act within the law in the best interest of the residents and children of the Valhalla School district. So join the school board president who told the Journal News "Valhalla was waiting for word from the comptroller's legal team" That legal team is the Attorney General's office, let them know Valhalla is waiting. Call Hugh McLean of the NY State Attorney General's Office 212-416-8435

Now we know the board knew the fields were contaminated a year ago and made the children play on the contaminated fields. Is that criminal? Yes it is. Did the lawyers make them do it? Did they do it for the children? Are they responsible for exposing children to cancer causing elements? This illegal contaminated dump is on the edge of the Kensico watershed. They made a conscious decision to put children at risk and to hide this information. When we asked to see the results of the 2004 tests, the snoking gun letter proving that they were told that the fiels was with held. You can see the smoking gun link below.