News & Notes from NYS Comptroller Tom DiNapoli...

COMPTROLLER DiNAPOLI PROPOSES LEGISLATION TO MAKE HIS BAN ON PLACEMENT AGENTS PERMANENT

June 2, 2011

State Comptroller Thomas P. DiNapoli has proposed legislation to codify his ban on the involvement of placement agents, paid intermediaries and registered lobbyists in investments with the New York State Common Retirement Fund (CRF). The CRF became the first public pension fund in the nation to ban placement agents when Comptroller DiNapoli issued his Executive Order in April 2009. His proposed legislation would make the ban part of state law.

If enacted, it would be the first time such a ban on placement agents was codified into law in the United States.

“Since I took office, we’ve worked to implement reforms that will help restore integrity and trust in this office and the pension fund,” DiNapoli said. “Banning placement agents and lobbyists from involvement in investments was a big step. Now it’s time to make that ban a permanent part of New York State law.”

“As long as I’m in office, I will never allow placement agents in CRF deals. But we have to eliminate any potential for abuse in the future. This bill will make sure that the Fund is protected no matter who is comptroller.”

Immediately after he took office, Comptroller DiNapoli began instituting a series of reforms to address the misdeeds of the previous administration. He has increased transparency, enhanced ethics reporting and worked with the Insurance Department to strengthen oversight of the pension fund. Among his top priorities has been to restore the public’s confidence in the integrity of the Fund’s investment decision making process and in the operations of the Retirement System.

The legislation, which would add a new Section 425 to the Retirement and Social Security Law, is sponsored by Assemblyman Peter Abbate. The bill defines a “placement agent or intermediary” as any person or entity, including a registered lobbyist, that is directly or indirectly engaged and compensated by an investment manager to promote investments to or solicit investment by the CRF, whether compensated on a flat fee, a contingent fee, or any other basis.

COMPTROLLER DiNAPOLI: RISING GAS PRICES COULD HURT FRAGILE ECONOMY

Supports Probe of Possible Energy Market Speculation

May 31, 2011

New York State Comptroller Thomas P. DiNapoli repeated his warning to New Yorkers that another gas price hike this summer will stall an “already slow” economic recovery. DiNapoli said: “There’s no question it will cause a setback.”

Speaking to Susan Arbetter on The Capitol Pressroom radio show Monday morning, DiNapoli said that government regulators should rule out improper speculation in oil commodities that could further harm the economy. New York Sen. Charles Schumer recently called on the Federal Trade Commission to investigate the possible manipulation of gas prices.

A report released Friday by the Comptroller details the effect of price hikes on residents, government and businesses.

DiNapoli is the sole trustee of the $140 billion New York State Common Retirement Fund. He noted that his approach to energy investing is to protect the state’s fund while also working for the greater public good. Last year, DiNapoli helped secure the resignation of Massey Energy Company Chairman Don L. Blankenship for his “callous disregard” of employee safety prior to the disaster at West Virginia’s Upper Big Branch mine which killed 29 miners. New York’s Common Retirement Fund holds about $14 million in Massey stock.

COMPTROLLER DiNAPOLI: HIGHER ENERGY PRICES MAY SLOW RECOVERY

May 27, 2011

Paying more at the pump may slow New York’s fragile economic recovery, according to a report issued today by New York State Comptroller Thomas P. DiNapoli. The rising price of oil—which tripled to over $100 per barrel since hitting a $30-per-barrel low in December 2008—has driven up food, transportation and heating costs for consumers, businesses and government agencies.

“The sprouts of economic growth we’ve seen recently may be mowed down by high energy costs,” said DiNapoli. “It’s costing a lot more to fill up your tank, and price hikes for oil and gas also mean more expensive food and rising heating costs. If the current upward trend holds, it’s also going to cost more to run basic government services like the MTA. All this could put another chill on the economy just as it’s starting to thaw. If we need another reminder, here it is: we need to find alternatives to the expensive, pollution-heavy fossil fuel energy we rely on.”

DiNapoli’s report estimates that the average cost of driving a car in New York totaled $1,646 during the April 1, 2010 to March 31, 2011 period, which was $288 more than during the prior twelve-month period. If current prices are maintained over the next twelve months, the cost of driving a car could increase by another $523 to $2,169. This would represent a two-year cumulative increase of $811, or 60 percent. The increase would be even higher for SUVs and light trucks.

Similarly, the statewide average cost to heat a home by oil was $2,757 during the April 1, 2010 to March 31, 2011 period, which was $492 more than the prior twelve-month period. If current prices are maintained over the next twelve months, the cost of heating a home by oil could increase by another $535 to $3,784. This would represent a two-year cumulative increase of $1,027, or 45 percent. The cost increase would be higher in colder regions of upstate New York.

DiNapoli’s report cites a New York State Energy Research and Development Authority study that named New York the most energy-efficient state in the nation, due to a widespread public transportation system and the state’s highly-urbanized population. Despite its efficient use of power, New York remains the fifth largest consumer of energy in the nation.

COMPTROLLER DiNAPOLI AUDIT RECOMMENDS STRENGTHENING
ENFORCEMENT OF VETERAN HOUSING PREFERENCES

New DHCR Commissioner Darryl Towns Supports Recommendations

May 26, 2011

Mitchell-Lama housing companies in New York City failed to provide disabled war veterans with priority consideration for housing as required by state law, according to an audit released by New York StateComptroller Thomas P. DiNapoli at a news conference today. DiNapoli was joined by Darryl Towns, Commissioner of New York State Homes and Community Renewal (NYSHCR).

“By law, disabled veterans are supposed to be given a preference to Mitchell-Lama housing,” DiNapoli said. “What has happened is unconscionable. These vets have made unimaginable sacrifices for our nation; they shouldn’t be penalized when they come home.

“So many New Yorkers are serving in Iraq and Afghanistan. NYSHCR has to make and enforce immediate changes to ensure these men and women – and their families – aren’t turned away from the housing that they deserve and the law says they should have. Commissioner Towns has only been on the job a short while, but he’s already stepping up to implement our recommendations and protect veterans’ rights.”

Commissioner Towns said: “NYS Homes and Community Renewal is dedicated to increasing transparency and accountability in our programs and procedures. The audit released today indicated that practices that occurred in this agency under previous administrations did not adequately relay information about housing preferences to some disabled veterans on housing waiting lists. Actions that our administration has already initiated, and steps that we have since developed with the Comptroller’s office, will fix this problem.”

According to the law sponsored by Towns, a former assemblyman, housing companies must provide disabled veterans with a preference in admission to Mitchell-Lama housing developments. In advance of that law’s enactment, NYSHCR issued a memorandum in 2007 instructing housing companies on how they should implement the law. Since then, NYSHCR has required housing companies to revise their tenant selection procedures, marketing advertisements, outreach letters, and apartment applications to give disabled veterans, and their families, priority consideration for available housing.

In addition, the housing companies were to notify existing waiting list applicants of this new priority.

The audit covered the period November 2007 to September 2010. The law was subsequently expanded to include all wartime veterans and their spouses.

Auditors examined 18 housing facilities in the New York City area. Among the findings:

· Of eight developments required to have a tenant selection plan, three had not updated their plans to include a veteran preference.
· Of six that had placed advertisements for vacancies, five did not mention the veteran preference, even though NYSHCR approved the ads.
· Eight of the 17 developments that had open waiting lists had not updated their applications to include the veteran preference.
· NYSHCR reviewed tenant selection plans and prepared reports on 14 of the developments. These reports failed to mention deficiencies at 13 of those developments that DiNapoli’s auditors later discovered.

DiNapoli recommended that NYSHCR:

· Train Housing Management Representatives to properly review housing company compliance with applicable laws and division guidance; and
· Increase monitoring of housing company compliance with applicable laws and division guidance.

DHCR generally agreed with DiNapoli’s findings and indicated they would take corrective action.

The full audit can be read here:

Currently, there are 175 DHCR-supervised Mitchell-Lama developments in New York State, with approximately 73,000 units. There are approximately 695,000 wartime veterans who are residents of New York State, according to the U.S. Department of Veteran Affairs.

COMPTROLLER DINAPOLI SUPPORTS LEGISLATION TO LEGALIZE SAME-SEX MARRIAGE IN AN HRC VIDEO

May 26, 2011

The Human Rights Campaign (HRC) today released a video featuring New York State Comptroller Thomas P. DiNapoli expressing his strong support for legislation to legalize same-sex marriage.

“Common decency, human dignity and basic equality are still in short supply in New York,”

DiNapoli said. “Until the relationships of gay men and lesbians are respected and recognized by New York State, we cannot call New York a true democracy. Gay couples should not have to jump through legal hoops just to protect their loved ones and their property. New York should legalize same-sex marriage now.”

“We’re very grateful to Comptroller DiNapoli for joining the mainstream majority of New Yorkers who endorse marriage equality,” said HRC’s Senior Strategist for New York, Brian Ellner. “Now is the time to get this done and let all loving and committed couples marry the person that they love."

DiNapoli is a long time supporter of marriage equality and has repeatedly demonstrated his support since becoming comptroller in 2007. The New York State Common Retirement System recognized same-sex marriages conducted in Canada under the principle of comity, a legal doctrine that has been followed by New York State for many years. In September 2007, DiNapoli directed the Retirement System to recognize same-sex marriages conducted in any jurisdiction where they are legal.

As Comptroller, DiNapoli is sole trustee of the New York State Common Retirement Fund. He has consistently advocated for corporate recognition of same-sex partner rights in the work place and protection from corporate discrimination based on sexual orientation and gender. In addition, DiNapoli created a section of his Your Money New York Web site that provides lesbian, gay, bisexual and transgender (LGBT) New Yorkers with essential resources to help achieve financial stability. The section offers access to reliable information on legal rights, on domestic partnerships and programs of interest to the LGBT community, and on other resources that can support individuals through tough economic situations.

The Human Rights Campaign represents a force of more than one million members and supporters nationwide. As the largest national lesbian, gay, bisexual and transgender civil rights organization, HRC envisions an America where LGBT people are ensured of their basic equal rights, and can be open, honest and safe at home, at work and in the community. The DiNapoli video is part of an on-going series featuring prominent Americans promoting marriage-equality.

COMPTROLLER DiNAPOLI TO CHEVRON: RESOLVE AMAZON LAWSUIT

Standoff on Poor Ecological Record Bad for Business

May 25, 2011

New York State Comptroller Thomas P. DiNapoli and a coalition of investors today released a letter to oil giant Chevron urging the company to settle its 20-year legal battle with indigenous populations in the Amazon rainforest. The long-running court case alleges that Texaco, which merged with Chevron 10 years ago, destroyed huge tracts of the rainforest by dumping billions of gallons of oil waste products over several decades. Citing the “grave reputational damage” Chevron has suffered due to the lawsuit, DiNapoli and other investors called on the company to promptly negotiate a reasonable settlement to prevent further shareholder damage.

“It’s time for Chevron to face reality,” said DiNapoli, trustee of the $140.6 billion New York StateCommon Retirement Fund (Fund), which owns 7.5 million Chevron shares worth an estimated $780 million. “The effects of this horrific, uncontrolled pollution of the Amazon rainforest are still being felt today. Investors don’t derive any benefit from this never-ending courtroom drama.

“The entire case is looming like a hammer over shareholders’ heads. Chevron should start fresh with a new approach that embraces environmental responsibility and risk management as part of its corporate culture. More legal proceedings will only delay the inevitable.”

For nearly 25 years, beginning in 1964, Texaco and its joint venture partner Petroecuador dumped nearly 16 billion gallons of oil waste products into the Amazon rainforest. The two companies also spilled nearly 17 million gallons of oil from their trans-Ecuadorian pipeline operation between 1971 and 1991 —50 percent more oil than was spilled by the Exxon Valdez crash.

In a letter sent in November 2008, DiNapoli called on Chevron’s board of directors to come to an equitable settlement in order to avoid substantial penalties in an Ecuadorian court. Chevron refused to negotiate, and in February, 2011 the Ecuadorian Provincial Court awarded plaintiffs nearly $18 billion in compensatory and punitive damages. The Ecuadorian court judgment is the second-largest of its kind, topped only by BP’s $20 billion fund established to settle claims stemming from the 2010 Gulf of Mexico oil spill. DiNapoli is co-lead plaintiff in an ongoing class action lawsuit filed against BP last year.

In an effort to improve Chevron’s environmental policies, DiNapoli has co-sponsored a proposal calling for the appointment an independent board director with a high level of environmental expertise. Shareholders are expected to vote on the resolution at Chevron’s annual meeting today (May 25).

NYS Comptroller Tom DiNapoli Audit Recommends Strengthening Enforcement of Veteran Housing Preferences

New DHCR Commissioner Towns Supports Recommendations

Mitchell-Lama housing companies in New York City failed to provide disabled war veterans with priority consideration for housing as required by state law, according to an audit released by New York State Comptroller Thomas P. DiNapoli at a news conference today. DiNapoli was joined by Darryl Towns, Commissioner of New York State Homes and Community Renewal (NYSHCR).


“By law, disabled veterans are supposed to be given a preference to Mitchell-Lama housing,” DiNapoli said. “What has happened is just unacceptable. These vets have made unimaginable sacrifices for our nation; they should get every benefit they’re entitled to when they come home.


“So many New Yorkers are serving in Iraq and Afghanistan. NYSHCR has to make and enforce immediate changes to ensure these men and women – and their families – aren’t turned away from the housing that they deserve and the law says they should have. Commissioner Towns has only been on the job a short while, but he’s already stepping up to implement our recommendations and protect veterans’ rights.”


Commissioner Towns said: “NYS Homes and Community Renewal is dedicated to increasing transparency and accountability in our programs and procedures. The audit released today indicated that practices that occurred in this agency under previous administrations did not adequately relay information about housing preferences to some disabled veterans on housing waiting lists. Actions that our administration has already initiated, and steps that we have since developed with the Comptroller’s office, will fix this problem.”


According to the law sponsored by Towns, a former assemblyman, housing companies must provide disabled veterans with a preference in admission to Mitchell-Lama housing developments. In advance of that law’s enactment, NYSHCR issued a memorandum in 2007 instructing housing companies on how they should implement the law. Since then, NYSHCR has required housing companies to revise their tenant selection procedures, marketing advertisements, outreach letters, and apartment applications to give disabled veterans, and their families, priority consideration for available housing.


In addition, the housing companies were to notify existing waiting list applicants of this new priority.


The audit covered the period November 2007 to September 2010. The law was subsequently expanded to include all wartime veterans and their spouses.


Auditors examined 18 housing facilities in the New York City area. Among the findings:

• Of eight developments required to have a tenant selection plan, three had not updated their plans to include a veteran preference.
• Of six that had placed advertisements for vacancies, five did not mention the veteran preference, even though NYSHCR approved the ads.
• Eight of the 17 developments that had open waiting lists had not updated their applications to include the veteran preference.
• NYSHCR reviewed tenant selection plans and prepared reports on 14 of the developments. These reports failed to mention deficiencies at 13 of those developments that DiNapoli’s auditors later discovered.

DiNapoli recommended that NYSHCR:

• Train Housing Management Representatives to properly review housing company compliance with applicable laws and division guidance; and
• Increase monitoring of housing company compliance with applicable laws and division guidance.

DHCR generally agreed with DiNapoli’s findings and indicated they would take corrective action.


The full audit can be read at: http://www.osc.state.ny.us/audits/allaudits/093011/10s42.pdf.

Currently, there are 175 DHCR-supervised Mitchell-Lama developments in New York State, with approximately 73,000 units. There are approximately 695,000 wartime veterans who are residents of New York State, according to the U.S. Department of Veteran Affairs.

NYS Comptroller Tom DiNapoli Proposal Will Catch Pension Abusers

New York State Comptroller Thomas P. DiNapoli proposed legislation today to greatly enhance his ability to catch those who abuse the pension system. The bill would grant the Comptroller access to New York State Department of Taxation and Finance’s wage reporting system to identify New York State and Local Retirement System retirees working for local governments who exceed post-retirement earnings limitations. If a state or local government employee earns more than those limits, the Comptroller has the authority to suspend and recoup any excess pension payments.

“This legislation sends a message to anyone who tries to game the retirement system: if you don’t play by the rules, we will find you and make you pay,” said DiNapoli. “Government agencies should be enabled to work together to reduce waste, fraud and abuse. This legislation will do just that. We have half the puzzle and Tax and Finance has the other half. Together, we’ll solve this problem and stop this kind of abuse.”

Currently, the Retirement and Social Security Law (RSSL) places limits on the amount that may be earned by a retiree who returns to public employment without it affecting his or her pension payments. Most retirees are covered by Section 212 of the RSSL, which allows retirees under age 65 to earn up to $30,000 per calendar year without any pension penalty.

The Retirement System annually compares information for state employees with the State Comptroller’s Office Division of Payroll to identify retirees who have obtained employment with the state. In addition, a law passed in 2008 requires school districts and BOCES to annually report all public retirees, including independent contractors and consultants, on their payrolls during the previous calendar year. If retirees are found to have exceeded the wage earnings limitations, the Retirement System suspends and recoups excess pension payments.

However, there currently isn’t a mechanism for a similar comparison for retirees employed by the thousands of local public employers in the state. DiNapoli’s legislation would amend Section 171-a of the Tax Law to grant the Comptroller’s Office access to Tax and Finance’s wage reporting system to match the Retirement System’s records with information reported by local governments to Tax and Finance. This match would allow the Comptroller’s Office to identify retirees improperly collecting a state pension and a local government salary.

In February, Comptroller DiNapoli and Oneida County District Attorney Scott McNamara announced that former Rome police officer Thomas C. Hubal had been convicted of third-degree larceny for earning more than his pension legal limit over a nine-year period. Hubal must repay more than $88,000 and serve six-months incarceration for defrauding the system. If this legislation had been in effect, Mr. Hubal would have been caught in the first year that his salary exceeded his pension limitation.

Under current law, it is the responsibility of retirees to report any post-retirement income to the Retirement System. Each year, all retirees are mailed a Report of Post-Retirement Employment Form, which must be filled out and returned to the State Comptroller’s Office if the retiree received any earnings from public employment.

NYS Comptroller Tom DiNapoli: Economic Recovery Uneven Across New York State

New York State has taken the first steps down the road of economic recovery, but that recovery has been slow going and uneven across the regions of the State, according to a report issued today by New York State Comptroller Thomas P. DiNapoli.


“The recession didn’t hit New York as hard as other states,” DiNapoli said. “But there’s still a lot of pain. Our economic recovery is headed in the right direction, but the road out of recession is still winding and potentially perilous.”


“The recovery so far has been a mixed bag. Private sector employment is up while public sector employment is down. Home values in the major metropolitan upstate areas rose sharply in the fourth quarter of 2010, but have begun to decline again in the New York City metropolitan area. Rising oil and gas prices, disruptions due to the crisis in Japan, and
low consumer confidence could hold back economic activity. Our economy is improving, but the pace of the recovery is clearly slower than we’d like.”


New York’s Gross State Product grew at an annual rate of 2.2 percent during 2010, after two consecutive years of decline. Economic output in all metropolitan areas rebounded in the past year, with Ithaca leading the way with a 3.3 percent change, followed by the Mid-Hudson Valley at 3.1 percent, Buffalo at 2.9 percent and Rochester and the Utica-Rome regions at 2.4 percent. IHS Global Insight predicts that the Gross Metropolitan Products of most New York cities will slow during 2011.


Job losses during the recession were less severe in New York State (3.8 percent) than in the nation (6.1 percent). Despite this, New York State lost nearly 336,700 jobs. Overall, unemployment in New York State doubled during the recession, and by March 2011 had only eased to 8 percent from a recent peak of 8.9 percent in September 2009. DiNapoli
noted that private sector employment, led by tourism, health services and education, grew by 95,100 jobs during 2010 and by another 27,600 jobs in the first quarter of 2011. Public sector employment declined by 28,200 jobs (1.9 percent) between December 2009 and March 2011.


Personal income rose by 4.1 percent during 2010, the second-highest rate of growth among the states behind only New Mexico, which reflects modest job growth and higher Wall Street bonuses. Wall Street, which earned $27.6 billion in 2010, the second-best year on record, has regained 9,700 of the 28,200 jobs the securities industry lost during the
recession.


Home values in the downstate region have begun to decline again and foreclosures will continue to hold down prices. Home values in the New York City metropolitan area peaked in May 2006 and fell by more than 20 percent through April 2009. Between October 2009 and February 2011, home values in the New York metropolitan area fell by 4 percent.
However, median home values in the five major upstate metropolitan regions rebounded strongly in the fourth quarter of 2010 over their values in 2009 with Binghamton (15.6 percent) leading the way, followed by Buffalo (14.3 percent), Syracuse (7.9 percent), Albany (7.6 percent) and Rochester (5.2 percent).


While the share of mortgages that are at least 90 days delinquent eased to 3.6 percent in the fourth quarter of 2010, the share of mortgages in the foreclosure process has continued to rise, reaching 5.2 percent in that same time period.


For a copy of the report visit: http://www.osc.state.ny.us/reports/economic/nys_econ_rpt2-2012.pdf

Comptroller Tom DiNapoli Statement on the Sentencing of Alan Hevesi

Today’s sentencing of Alan Hevesi is a welcome and just conclusion to a years-long saga. Mr. Hevesi betrayed the trust of all New Yorkers. His sentence is clear evidence that this type of criminal behavior will not be tolerated.

Since taking office, I have changed the way the pension fund does business so history cannot repeat itself. I have banned placement agents and pay-to-play practices, and I have increased transparency in pension fund transactions. But there is more that can be done.

The punishment for breaking the law while performing a public duty must include pension forfeiture and increased fines and sentencing. The pension forfeiture bill I proposed earlier this year would do just that. No public official who violates the public trust should be allowed to receive a taxpayer-funded pension. Passage of my bill would be a much-needed step in rebuilding the public’s confidence in its government.

NYS Comptroller DiNapoli: Hispanic Businesses Grew Three Times Faster than All Businesses in New York, Generating $18.2 Billion in Sales in 2007

New York State was home to over 193,200 Hispanic-owned businesses in 2007 (the most recent year for which data is available), according to a report on Hispanic-owned businesses in the state released today by New York State Comptroller Thomas P. DiNapoli. the report found the number of Hispanic businesses grew by 85 percent over a ten-year period, almost three times faster than the total number of businesses in the state. During the entire reported ten year period, sales for all Hispanic-owned firms in New York increased by almost 77 percent, to $18.2 billion.

“Hispanic-owned businesses account for nearly 10 percent of all businesses in New York State, and that number continues to grow,” DiNapoli said. “The Hispanic business community is a force to be reckoned with and an important source of new jobs, particularly in New York City. We have to make sure these businesses are given every opportunity to grow, thrive and create new jobs.”

DiNapoli’s report found that Hispanic businesses have a high concentration in the services industry, specifically in the professional, personal, health and social service sectors. Although the numbers of Hispanic businesses in the finance and information sectors are low, they continue to show a rapid growth trend.

DiNapoli’s report also shows that in 2002, about 73,000 Hispanic firms in New York were owned by women. This accounted for 45 percent of all Hispanic-owned businesses in the state. Although data on the number of woman-owned Hispanic businesses is not available for 2007, the number of firms owned by women in general grew by 17.7 percent between 2002 and 2007.

The report also highlights:

· Most Hispanic-owned firms in New York are small, family owned businesses. Nearly 91 percent had no employees other than their owners in 2007;
· The total number of employees increased by nearly 53 percent between 1997 and 2007 for the other 9 percent;
· New York City was home to 143,000 Hispanic-owned firms in 2007 which is 74 percent of the statewide total;.
· The number of Hispanic-owned firms in New York City grew by 89 percent since 1997, slightly faster than in New York State overall.

For a copy of the report visit:
http://www.osc.state.ny.us/press/releases/apr11/Hispanic_businesses_Rpt1-2012.pdf

NYS Comptroller Tom DiNapoli Audit Identifies Discrepancies in Dropout Rate Reported by NYC Department of Education

The dropout rate among New York City public school students is higher than claims made by the city Department of Education (DoE), according to an audit released by State Comptroller Thomas P. DiNapoli. DiNapoli’s auditors found that for the 2004 through 2008 school years, the dropout rate may have been as high as 16.5 percent, rather than the 13 percent cited by DoE. As a result, the graduation rate may have been as low as 62.9 percent, rather than the 65.5 percent reported by DoE.

“The city school system needs to sharpen its pencils when it comes to knowing which kids are dropping out and which kids are transferring to another school,” said DiNapoli. “DoE should be doing its homework and making sure the right papers are turned in to back up the reasons why students are leaving school.”

High school graduation and dropout rates are regarded as important indicators of a school’s effectiveness.


While the audit considered reported rates within 5 percent of audited rates to be generally accurate, the difference means that the graduation rate and discharge rate include thousands of students who actually dropped out.

DiNapoli’s auditors attribute the discrepancy to DoE’s erroneous classification of dropout students as having been “discharged” from high school. Discharged students should only be categorized as such when they transfer to another school or another educational program, leave the country, or are deceased.

DiNapoli’s auditors examined DoE’s discharge records for its 2004-08 general education cohort (the group of students who entered ninth grade in 2004 and were expected to graduate four years later), and found that in a random sample of 500 “discharged” students, 74 (14.8 percent) didn’t have the required documentation. As a result, all 74 should have been classified as dropouts.

Projecting the results of the sample to the entire cohort, DiNapoli’s auditors found that the correct graduation rate for the cohort was between 62.9 and 63.6 percent, rather than the 65.5 percent reported by DoE, and the correct dropout rate was between 15.5 and 16.5 percent, rather than the 13.0 percent reported by DoE. At some individual high schools, the correct graduation rates could be lower, and the correct dropout rates higher, than DoE reported.

According to DoE, the city’s 2004-08 general education cohort had a total of 88,612 students, of whom 46,896 graduated, 15,368 were still enrolled after four years, 17,025 were discharged, and 9,323 dropped out.

DiNapoli’s auditors also examined DoE’s discharge classifications for its 2004-08 special education cohort and identified similar errors. Auditors estimated that the correct graduation rate for this cohort was between 8.9 and 9.3 percent, rather than the 9.7 percent reported by DoE, and the correct dropout rate was between 20.6 and 23.8 percent, rather than the 17.2 percent reported by DoE. Even with the identified error rate, the NYC graduation rate is trending upwards as reported by DoE.

DiNapoli recommended that DoE officials:

• Ensure that DoE discharge guidelines fully align with New York State Education Department (SED) regulations;
• Instruct all schools to adhere to the SED regulations for discharge classifications, and provide training in the regulations for school staff who administer discharges; and
• Conduct periodic reviews of discharge classifications to determine whether they are being made and documented in accordance with SED regulations.

DoE officials generally agreed with DiNapoli’s recommendations and indicated they have taken action or will be taking action to implement them. Most notably, DoE’s guidelines were amended before the 2009-10 school year to better align with SED’s guidelines on required documentation to support a discharge classification. Click here for a copy of the report.

NYS Comptroller Tom DiNapoli Statement on NYC Consultants

“The City’s decision to reduce its use of consultants makes sense. There’s a time and a place for outsourcing projects, but it seems that time and time again, we’ve seen that using consultants drives the price up and the quality down.

“Government policy should not be driven by the profit margins of a private sector consultant, especially when there are qualified public employees who often can do the job better and cheaper. My office has done a number of studies that have consistently found overuse of consultants for state contracts. We’ve reduced the use of consultants in the Comptroller’s office, and I’m encouraging other state agencies to review their policies regarding consultants.

“In-sourcing should be considered before outsourcing.”

Progress Report: The MTA Capital Security Program - New York State Comptroller Tom DiNapoli

Improvements Made Despite Delays and Cost Overruns

Despite significant delays and unplanned costs, the MTA has greatly improved its security through capital improvements, operational initiatives and enhanced cooperation with other security agencies, according to a report released today by New York State Comptroller Thomas P. DiNapoli.

“The capital security program the MTA has implemented since 9-11 has made New Yorkers more secure,” said DiNapoli. “The MTA has made progress, particularly in the last two years. But the mass transit system is still inherently vulnerable. Individual projects in this program are months if not years behind schedule and well over budget, and additional capital improvements are needed. My office will continue to track MTA management of this program.”

The projects in Phase 1 of the MTA’s capital security program target the system’s most vulnerable and heavily used assets, including stations, transit hubs, bridges and tunnels. Each project involves one or more facilities and security improvements to elements such as electronic security and surveillance, fire, life and safety and evacuation enhancements, perimeter protection and structural hardening. This phase, originally scheduled for completion by September 2008, will not be completed until June 2012.

After more than nine years, the MTA has completed 11 of the original 16 security projects as well as elements of the five remaining projects. The MTA has hardened all 14 facilities planned for Phase 1; improved lighting, communication systems, and smoke and fire detection equipment in 15 facilities; installed perimeter protection around four facilities; and despite significant setbacks, the electronic security program.

As of December 2010, the MTA had completed 31 of 38 planned construction tasks and the remaining seven tasks were all in the process of construction, though more than 60 percent of the 38 tasks were behind their established schedules, including 11 that were behind by more than one year (five tasks were more than 30 months late). The cost of Phase 1 (including two facilities that were deferred from Phase 1 to Phase 2) has grown from $591 million to $851 million, an increase of 44 percent.

Electronic security projects in particular have encountered significant problems. The cost of this program has nearly doubled, growing from $265 million to $515 million. The MTA has continued work on the electronic security program by hiring other contractors, but full implementation is not scheduled to be completed until June 2011. A lawsuit between the MTA and Lockheed Martin, the original contractor responsible for the electronic security program, is still ongoing.

The MTA has also implemented a number of operational initiatives that have improved the system’s safety: security personnel have been increased, coordination with other security agencies has been enhanced and the MTA has implemented a public relations campaign to encourage the public to report suspicious activity.

The Comptroller noted that additional capital improvements are needed to improve overall security. Phase 2 will fund some of the remaining 33 security projects of the original 57 that were identified through a risk-based assessment. However, the MTA will not begin work on the remaining 16 projects until the scope is determined and funding becomes available.

Comptroller DiNapoli maintains a comprehensive approach to oversight of the MTA. Since 2007, DiNapoli has issued 27 reports on the MTA, including 14 audit reports and 13 reports examining MTA finances and operations. There are currently eight audits underway in various stages of completion, including a forensic audit of MTA use of overtime and one audit that is being performed jointly with the New York City Comptroller’s Office.

Click here for the report: http://www.osc.state.ny.us/press/releases/mar11/MTASecurityRpt12-2011.pdf

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NY Pension Fund Posts 6% Rate of Return | The Business Review

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New York state’s pension fund posted a 6 percent rate of return in its most recent quarter, a $7.8 billion net gain in value, officials said Tuesday.

The fund’s assets are now worth $140.6 billion, as of the end of 2010, said Comptroller Thomas DiNapoli. The fund’s assets have not been that large since mid-2008.

The fund remains the third-largest public pension system in the nation, behind two in California.


DiNapoli said the fund benefited from a rally in the equities market experienced during the final three months of 2010. The pension fund runs on the same fiscal year as the state, ending March 31.

The fund pays $7.7 billion of benefits every year. There are 1.06 million state or local government workers, retirees and beneficiaries who belong to the system.

The state pension fund, combined with the teachers’ retirement system, pays $1 billion of benefits a year to residents in the four core Capital Region counties of Albany, Rensselaer, Schenectady and Saratoga.

Comptroller Tom DiNapoli Proposes Pension Forfeiture Bill

Calls for Severe Penalties for Abuse of Public Trust

Public officials stand to lose pension benefits if they commit a felony related to the performance of their duties under a bill proposed today by State Comptroller Thomas P. DiNapoli. DiNapoli’s bill also imposes a penalty up to twice the amount a public official benefitted from the commission of a crime committed in the course of his or her public duty.

“When public officials break the law while performing their public duty, they should forfeit their public pension, plain and simple,” DiNapoli said. “It’s time to take away the pension of anyone found guilty of committing a felony in the course of his or her official duties. No one who violates the public trust should be allowed to receive a taxpayer-funded pension. And the tough sanctions I’m pushing will remind every public official that violating the public trust will not be tolerated.

“Public confidence in government has been bruised and battered. This bill will be a strong step toward rebuilding trust.”

“New York’s pension system needs to be reformed and this is a logical first step,” said Stephen J. Acquario, executive director of the New York State Association of Counties. “This proposal ensures government officials who violate the public trust are accountable for their misdeeds, not rewarded for them.”

DiNapoli noted that while the state constitution prohibits any diminishment of retirement benefits for current public officials and public servants, the new felony provisions would apply to all current and future public officials and public servants.

Fulfilling a pledge made last fall, DiNapoli’s legislation provides for the revocation of the pension benefits of future Retirement System members who are state or local elected officials, officers and appointees, including directors and members of public authorities and public benefit corporations, who are convicted of or plead to the commission of a job-related felony.

DiNapoli’s bill also enhances penalties by elevating Official Misconduct to a felony and increasing the penalties for any abuse of the public trust by public employees in New York state. An abuse of the public trust entails committing a felony and using one’s position as a public servant to commit or conceal a felony or to conspire to commit a felony.

Public officials who abuse the public trust would be forced to pay a penalty up to twice the amount they benefitted from the commission of the crime. In addition, Class A-1 and Class B felons would face increased incarceration time by four to 20 years depending on the severity of the crime. The monetary penalty and enhanced sentencing would be in addition to any other sanctions imposed by existing law. This portion of the bill would be applicable to all public servants in the state regardless of whether they are a member of the New York State and Local Retirement System.

The pension forfeiture provisions in DiNapoli’s bill apply only to prospective members of the Retirement System so the bill will withstand legal challenges.

To view DiNapoli’s proposed bill, visit: http://osc.state.ny.us/press/releases/jan11/forfeiture.pdf.

New York State Comptroller Tom DiNapoli: MTA Bus Fleet Maintenance Too Expensive

Nearly half of the Metropolitan Transportation Authority (MTA) bus fleet—including virtually all of the fleet’s hybrid-engine buses—have not been properly inspected according to an audit released today by New York State Comptroller Thomas P. DiNapoli. In addition, 62 percent of the MTA’s buses failed to meet reliability goals despite maintenance costs that topped $777.7 million in 2008. That amount was double the maintenance costs of other comparable transportation agencies around the nation.

“New Yorkers aren’t getting what they pay for when it comes to bus service,” said DiNapoli. “Other cities across the nation spend much less on maintenance and get better results. The MTA needs to step up bus maintenance performance and bring down maintenance costs.”

Three of the MTA’s seven constituent agencies provide bus service in New York City and Long Island. The MTA’s Regional Bus Operations oversees the authority’s 6,200-bus fleet and maintenance services at 29 depots and two overhaul facilities. DiNapoli’s audit examined records from the MTA’s Regional Bus Operations division between 2007 and 2009.

Auditors found that:

• Nearly two-thirds of the 29 bus depots did not meet their performance goals;
• Maintenance costs per mile of operation were much higher than other bus fleets around the nation;
• 584 of the MTA’s 1,255 required maintenance inspections were performed poorly, or not at all; and;
• Mechanical failures were more frequent than expected. One depot had a goal of 4,674 miles between failures, but its actual distance traveled between failures was 3,581 miles.

DiNapoli’s auditors recommended the MTA:

• Improve the reliability of its bus fleet;
• Identify reasons why maintenance costs are so high and develop a plan to reduce them, and;
• Prepare a comprehensive maintenance plan that includes information on maintenance program objectives and unscheduled maintenance operations.

MTA officials agreed with DiNapoli’s recommendations. Click here to read the full audit, or visit www.osc.state.ny.us.

New York State Comptroller Tom DiNapoli Releases Audits

New York State Comptroller Thomas P. DiNapoli announced today the following audits have been issued:

New York City Department of Education, Non-Competitively Awarded Contracts (Follow-Up) (2010-F-26)
The New York City Department of Education must comply with applicable procurement requirements when awarding non-competitively bid contracts. In audit report 2008-N-1, DiNapoli’s auditors examined whether the department complied with requirements and found that it didn’t. When auditors followed up, they found that department officials had made significant progress in correcting the problems identified in the initial report.

Department of Health, Inappropriate Medicaid Payments for Dental Services Provided to Patients With Dentures (Follow-Up) (2010-F-33)
The Department of Health administers the Medicaid program. In audit 2008-S-125, DiNapoli’s auditors reviewed claims for a five-year period and found that dentists may have been overpaid as much as $2.9 million for services provided to patients with dentures. Auditors determined that the Medicaid claims processing system, eMedNY, lacked the controls necessary to detect and prevent such overpayments. Auditors recommended that appropriate controls be developed and implemented. When they followed up, auditors determined that department officials made some progress in correcting the problems they identified but improvements were still needed.

City University of New York, Kingsborough Community College: Selected Financial Management Practices (Follow-Up) (2010-F-39)
The City University of New York consists of eleven senior colleges, six community colleges, and several other specialized and professional schools. In audit report 2008-N-9, DiNapoli’s auditors examined whether one of the community colleges (Kingsborough) complied with requirements relating to payroll, procurement and waiving of tuition, and found certain instances of non-compliance in all three areas. When auditors followed-up, they found that officials had made progress in correcting the problems they identified.

State Education Department, St. Francis de Sales School for the Deaf: Selected Financial Management Practices (Follow-Up) (2010-F-40)
St. Francis de Sales School for the Deaf is one of 11 private schools that receive operating aid directly from the state to provide educational services to disabled students. In audit report 2008-S-160, auditors identified a number of internal control weaknesses in the areas of procurement, cash disbursements and payroll. Auditors also found that the school’s board of trustees was not providing effective oversight of financial operations. When auditors followed up, they found that officials had made significant progress in correcting the problems identified, but improvements were still needed.

Office of Parks, Recreation and Historic Preservation, Natural Heritage Trust, Sources of Trust Revenues (2009-S-11)
The Natural Heritage Trust maintains over 200 custodial accounts for account holders, including the Office of Parks, Recreation and Historic Preservation. DiNapoli’s auditors examined whether Office of Parks revenue was incorrectly deposited into the custodial accounts of the trust. They found that more than $3.5 million in revenue was deposited into trust accounts incorrectly. Auditors recommended the Office of Parks recover the funds and improve controls over revenue.

Metropolitan Transportation Authority, Minority and Women’s Business Enterprise Reporting (2010-S-9)
State agencies and public authorities are required to promote the participation of minority-owned business enterprises (MBEs) and women-owned business enterprises (WBEs) in state contracts and procurement opportunities. Specifically, agencies must establish annual goals for such participation and make a “good faith” effort to achieve these goals. DiNapoli’s auditors examined the Metropolitan Transportation Authority’s performance and found that it was establishing annual goals and making a good faith effort to reach them. However, the MTA’s goals were unreasonable, and as a result, they have consistently fallen short of their goals. Auditors also found that the MTA was not accurately reporting results of its efforts and was overstating its procurements. Auditors recommended improvements to comply with contract requirements.

Tom DiNapoli Picks Former DEC Chief Pete Grannis to Top Deputy Spot by Celeste Katz - New York Daily News

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So this was the fresh start that Controller Thomas DiNapoli wanted to make with his office?

DiNapoli this afternoon named one-time Assembly colleague and former state Environmental Commissioner Alexander "Pete" Grannis to serve as his first deputy controller. He also announced that current First Deputy Comptroller Mary Louise Mallick will serve as a senior policy advisor.

Both appointments are effective January 20.

“Pete Grannis has built a life-long reputation for vision, leadership, integrity and the ability to get things done,” DiNapoli said in a statement. “We’re facing some of the toughest times in New York State history. Pete's skills, leadership and expertise will help us face those challenges. New York is fortunate that Pete Grannis chose to continue his public service career with the Office of the State Comptroller."

Grannis was unceremoneously dumped by Gov. Paterson's administration in October after he complained about the impact of planned job cuts on his department. His selection as DiNapoli's top deputy is surprising since he doesn't seem to have a financial background.

"Bottom line is he knows state government," said DiNapoli spokesman Dennis Tompkins, who also argued that Grannis served on the Assembly Ways and Means Committee and has expertise in running a large state agency.

Grannis, Tompkins added, was among the candidates for controller when the Legislature chose DiNapoli to replace discgraced ex-Controller Alan Hevesi.

Grannis’s salary will be $165,000. Mallick will be paid $162,000 in her new position.

Troubled Company Denied $100(M) Contract by State Comptroller - Rejected MTA Contract with SAIC - Mocker Blog – WPIX-TV

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NY State Comptroller [Tom DiNapoli] rejects MTA contract for subway radio upgrades based on current controversy between city and company. State asks MTA to provide an explanation of company's role, if any, in current city payroll system problem.

What happens next? Info and video below: click here

MTA has some homework before the contract could be resubmitted. Here's theletter from the NY State Comptroller to NYCTransit:

http://www.osc.state.ny.us/press/releases/dec10/Schaffner122110.pdf

This has to be the most reviewed contract in MTA history. MTA says it did several reviews. NYC Comptroller John Liu urged caution and several NY Council Members, including Letitia James [and Joe Addabbo].

Here's the MTA's statement to me tonight:

"We share the Comptroller's concerns, and in light of the gravity of recent developments it is essential that we pursue additional review before proceeding with this contract."

State Controller Thomas DiNapoli Asks for Resignations of 15 High-level Aides by Ken Lovett - NY Daily News

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State Controller Thomas DiNapoli has asked for resignation letter of 15 senior-level aides.

State Controller Thomas DiNapoli, who narrowly won election last month, is planning a major shakeup in his office, the Daily News has learned.

DiNapoli has asked for resignation letters from 15 senior-level aides. Among them are top deputy Mary Louise Mallick, chief investment officer Raudline Etienne and spokesman Dennis Tompkins.

Not everyone who submits a letter will automatically be gone, though one source said Mallick, who used to work for former Senate Majority Leader Joe Bruno, is on the chopping block.

Tompkins admitted a shakeup is coming, but wouldn't elaborate.

"He's looking to strengthen the operations and get a team in place for the next four years," Tompkins said.

While it's not uncommon to ask for letters of resignation upon taking office, it usually happens only when an office changes hands.

DiNapoli put in place nine of the 15 people he asked to submit resignation letters. The rest date back to disgraced former Controller Alan Hevesi's regime.

Stung by campaign attacks that he did not aggressively go after waste and fraud, DiNapoli is prepared to "step up the intensity" of state agency audits, a source said.

The Legislature appointed DiNapoli, a longtime lawmaker close to Assembly Speaker Sheldon Silver, in 2007, after Hevesi pleaded guilty to using state workers to drive his sick wife around.

DiNapoli spent his first term in office dealing with the fallout from a massive pay-to-play scandal that erupted under Hevesi's watch. Hevesi and key aides eventually pleaded guilty in the scandal.