Audit calls for overhaul of Yonkers schools' financial system
By DAVID MCKAY WILSON AND MICHAEL GANNON
THE JOURNAL NEWS
(Original Publication: April 7, 2006)

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Key findings

" Poor technology, cumbersome processes: Financial systems are antiquated and not integrated with other management systems. Former Schools Superintendent Angelo Petrone last year repaid the district nearly $10,000 in unused vacation time, which the Board of Education paid him but later found he was not entitled to  after he resigned and was indicted on perjury and records-tampering charges in connection with a hiring scandal involving a friend of his daughter's.

" Lack of internal controls: Policies, procedures and internal controls over financial reporting are not "sufficiently documented" or overseen. A lack of written policies and a shortcoming of internal controls in the payroll department "exposes the district to potential risk," the report said.

" Shoddy record keeping: The Audit, Budget and Finance Committee, a supposedly independent oversight board within the Board of Education, features two members who are city employees and its minutes "do not provide adequate details regarding the issues discussed and/or the resolutions made" by the committee during meetings, according to the audit.
Recommendations and cost savings

" Consolidation: Work with the city to implement an integrated control network over finance, budget, food services, procurement payroll and human resources. The district should consider coordinating its efforts with the city's.

" Automate key processes: Elimination of manual processes in payroll and food services could save significant money and time. The district should perform a cost-benefit analysis and consider privatizing the food services process, the audit said.

" Create better oversight of capital projects: The policies and procedures that guide design and construction of school facilities are not formally documented.

" Cost savings: Implementing several cost-savings controls could net the school district between $5.1 million and $12.9 million a year, KPMG found. Those figures, however, do not take into account upfront costs for implementing the changes, including plans to borrow money to pay for a consultant to draw up a plan.

YONKERS  Former Rep. Herman Badillo yesterday called for a top-to-bottom overhaul of the Yonkers schools' financial operation, saying the paper-intensive bureaucracy had little oversight and wasted resources better used in the classroom.

Badillo, who led a team of auditors from KPMG in its review of the $400 million operation, said it was time for the schools to come into the modern age with computerized systems.

"As a certified public accountant, the system needs a complete overhaul," Badillo said. "There are no internal controls that ensures checks and balances to verify exactly what is happening."

Badillo made his comments at a City Hall news conference held by Mayor Phil Amicone. The mayor announced the audit in September, a day after the school board had called on former Superintendent Angelo Petrone to repay about $10,000 in unused vacation pay that had not been properly authorized.

The KPMG audit was conducted as state Comptroller Alan Hevesi continues his look into district finances. That report is expected later in the spring.

The audit was part of Amicone's drive to show residents and state officials that Yonkers, which faced a $100 million budget gap earlier this year, was serious about getting its financial house in order. The audit discovered gross inefficiencies at the Board of Education, where attendance for 3,800 employees was recorded each day on paper, vacation time was kept on index cards, and the payroll system was vulnerable to manipulation.

Installing a computerized system would streamline the bureaucracy and free up money for the classroom, Amicone said.

"We need money for teaching going to teachers, not wasted on unnecessary administrative costs," he said.

Just how many of the district's 152 data entry clerks and typists would lose their jobs in the transition is uncertain, but the savings appear substantial. Reducing payroll costs for manual data entry by 40 percent would save $2.9 million a year.

Those savings are not expected for the fiscal year that begins in June. Amicone will hire a consultant to review the audit and draw up a plan, expected to include substantial investment in a new data-management system.

"We have seen several people handle the same piece of paper that should be handled with the pressing of a button," Amicone said. "In the end, with an investment of money, we will save money."

Schools Superintendent Bernard Pierorazio said he also would appoint a financial advisory board, to be chaired by Pace University business professor Joseph Pastore, to review the report and make recommendations. Pastore knows the Yonkers district well  he helped mediate resolution of its desegregation lawsuit.

In addition, Pierorazio plans to hire a chief financial officer and an internal auditor. The auditor will answer to the Board of Education's Audit, Budget and Finance Committee.

While the audit found that the schools' financial system lacked controls, Amicone said it turned up no evidence of fraud or wrongdoing. He declared that Yonkers was not Roslyn, referring to the scandal-plagued Long Island district that saw millions of dollars stolen by school administrators.

The auditors, however, did not look into Petrone's unauthorized vacation pay, one of the incidents that sparked the investigation. The Journal News had reported that Petrone converted 35 unused vacation days into $34,265, without approval of the Board of Education, which legal experts said his contract required. Afte an internal inquiry by the board's legal counsel, the panel asked Petrone to repay almost $10,000.

Amicone said there was no reason to revisit Petrone's vacation pay because that issue was laid to rest by the Board of Education. He was looking forward to make sure it didn't happen again.

"That kind of problem could happen again with the lack of controls," he said. "It could be done at any level, from the least paid to the highest paid."

New York State Comptroller Alan Hevesi Agrees to Audit the Books in Yonkers

Educational Malpractice and Corruption in Yonkers

Hiring Scandal in Yonkers New York: School Superintendent Angelo Petrone Resigns and is Indicted

The Yonkers Tribune Brings Justice and Ethics to the Forefront in Exposing the Crimes of Schools Superintendent Angelo Petrone

Sol Stern Writes the Truth About the Bloomberg Public School "Reforms":

AS GOES YONKERS,
SO GOES THE NATION?
By Peyton Wolcott - April 8, 2006

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Another press release from New York Comptroller Alan G. Hevesi this week
announced another audit, this one of Yonkers Public Schools, one of a string he's
conducting following the $11.2 million Roslyn scandal.

On the surface, it appears to be just another audit of just another a public school district with much the same findings as always: lack of sufficient internal controls.

But in the world of K-12 public education, things are seldom what they appear.

Mayoral takeovers of public schools:
Catching on or just catching?

From all signs readable by the Earl Grey Green Tea leaves in my cup this morning, this audit is another salvo by Yonkers Mayor Phil Amicone in his bid to take over the city's public schools, following on the heels of Bloomberg's takeover in New York City and Mayor Antonio Villaraigosa's attempt in Los Angeles.

Nobody's saying public schools are perfect. I personally believe our public ed system here in the U.S. has
grown so big and bloated--as much as any Eastern European dictatorship under Stalin--that it is about to
implode under the weight of its own corruption.

That said, centralizing control in the hands of politicians is a move in the wrong direction and will only make our public schools less accountable than they already are.

Audit Calls Yonkers School System Archaic
-- FERNANDA SANTOS, New York Times
New York: April 7, 2006 -- An examination of the city's beleaguered school system exposed a sluggish, paper-intensive bureaucracy prone to unnecessary spending, sloppy recordkeeping and inadequate oversight, according to the results of an independent audit released Thursday. The Board of Education, which manages the school district, the state's fourth largest, still does most of its business on paper, registering each purchase and personnel transaction in forms that are kept in binders and cabinets, essentially within anyone's reach, the audit says. The few functions that are automated rely on a system so obsolete that its files cannot be read by today's computers. Workers use index cards to track everything from inventory to vacation, overtime and sick days for the schools' 3,800 employees, and must fill out cumbersome forms every time someone is hired, fired, transferred or suspended. The forms are passed from person to person until they reach the one in charge of entering the information into the payroll system, a process fraught with opportunities for error and fraud.