The war began in early October, with news reports that the Department of Education was blaming the comptroller for delaying contract approval that would allow over $500,000 in profits from new health food vending machines from being transferred to schools. Liu's office said it was probing possible "collusion" between the vending machine companies.
The dispute soon escalated over insurance contracts between the comptroller's office and DOE, which still has the potential to leave hundreds of school buses without insurance coverage after December.
Under the revised mayoral control law, DOE must register contracts with the comptroller's office before finalizing them. But a contract between insurance broker Willis Group and DOE to insure city school buses expired June 30 and has yet to be registered by Liu's office. Liu's office is refusing to approve the contract, arguing that, as it is currently written, it "usurped" the comptroller's responsibility under the City Charter to adjudicate insurance claims.
Cathie Black's replacement of Schools Chancellor Joel Klein is unlikely to ease the tension between DOE and the comptroller's office. If anything, some experts predict that Black's ascendency to the top position could heighten the perception of DOE as an agency unchecked.
"Generally, executives like to keep the power they think they inherited," said Pedro Noguera, a professor of education at New York University. "She would see this as a power loss of some of her authority, especially because she's coming from the corporate world. With only the mayor for her to report to, it really leaves no room for checks and balances."
Bloomberg has always pushed back against the idea of increased oversight by the city comptroller, arguing that DOE is more a state agency than a city one, answerable to the State Education Department. This stance led to friction between the mayor and then-Comptroller Bill Thompson, compounded by Thompson's political ambitions to run for mayor himself. Though this was exacerbated after the term limits extension, which set the two up to run against each other, Bloomberg aides felt even before the fall of 2008 that Thompson occasionally hit the education record to help lay the foundation for his own mayoral run.
Barring some massive change of heart in the referendum electorate and another recalibration of the political world from the mayor, Liu will not be running against Bloomberg at any point. But he is seen as a likely candidate for the 2013 race, when having some burnished credentials and additional exposure would be important for sticking out of a crowded field.
"There's always been tension, political and administrative, between the comptroller's office and the mayor's office," said David Bloomfield, an education professor at the City University of New York. "So it's not unusual for the comptroller, in his role as auditor and oversight manager, to hold things up, doing his due diligence, and take advantage in that situation perhaps to bring the mayor up short, to not steamroll his program through the contracting process."
After the Legislature reauthorized mayoral control in the summer of 2009, the city comptroller was given new powers to regulate and manage DOE's contracting process. Problems with the new protocol were evident almost right out of the gate.
In July, Liu's office got word that the Panel on Education Policy would seek to approve a resolution that would allow DOE to make contract purchases without the panel's approval. Liu fired off a letter arguing that the resolution would not only be in violation of state law, but was also not put up for public review, as required. The panel eventually pulled the resolution from its agenda.
But a few months later, DOE and the comptroller were back at it. With the vending machines, Liu's office refrained from approving the contracts, holding up hundreds of thousands of dollars in healthy snack profits until concluding that there was nothing improper in how the contracts were awarded. But DOE installed the vending machines anyways, before the contracts were registered by Liu's office.
The flap over school bus insurance appears to be more severe. Willis, the insurance broker, threatened to terminate the contract by Nov. 5 if it still had not been approved by Liu's office. The deadlock would have left thousands of children without rides to school had the deadline not been extended at the last moment to Dec. 31 to allow added time to work out a claims protocol with DOE and, more importantly, avoid a potential public relations nightmare.
Alan Van Capelle, deputy comptroller for public affairs, said that this is a systemic problem with DOE that needs to be addressed.
"We hope that the Department of Education uses this increased time to work with us and find a resolution to all the outstanding issues," Van Capelle said. "But I think DOE needs a study hall on procurement. And they need to understand that mayoral control of schools does not mean they control everything. There still is a procurement policy and they're required to follow it."
A DOE spokesperson declined to answer questions about the status of the insurance contract, preferring instead to highlight the procedural issue between the agency and Liu's office.
"Yellow bus service will continue to serve our children," said DOE spokesperson Margie Feinberg. "The comptroller has 30 days to register the contract and the time period is not yet over. As we do with many of our contracts, we have had discussions with the comptroller during the registration period, and we expect all issues will be addressed and that the contract will be registered."