Transcript: Need to Know Rochester for January 29, 2010

COMING UP ON NEED TO KNOW

 

WHAT WENT WRONG ON FORMER ROCHESTER CITY SCHOOL SUPERINTENDENT MANUEL RIVERA'S WATCH? HAS IT BEEN CORRECTED? AND WHAT CAN TAXPAYERS DO TO GET THEIR MONEY BACK?  WE'LL SIT DOWN WITH STATE COMPTROLLER THOMAS DINAPOLI TO ASK THOSE QUESTIONS - AND FIND OUT MORE ABOUT NEW YORK'S BUDGET WOES.  ALSO, GOVERNOR PATERSON WAS IN OUR STUDIOS THIS WEEK, AS WAS GWEN IFILL OF WASHINGTON WEEK AND PBS NEWSHOUR.  WE'LL SHOW YOU WHAT THEY HAD TO SAY.

 

HI I'M WXXI NEWS DIRECTOR JULIE PHILIPP.  THANKS FOR JOINING ME FOR THIS EDITION OF NEED TO KNOW.

 

THIS WEEK, NEW YORK STATE COMPTROLLER THOMAS DINAPOLI RELEASED AN AUDIT OF THE ROCHESTER CITY SCHOOL DISTRICT.  THE REPORT FOUND THE DISTRICT PAID OUT TENS OF MILLIONS OF DOLLARS WORTH OF CONTRACTS WITHOUT REVIEWING WHERE THE MONEY WAS SPENT.  IT ALSO FOUND FORMER SUPERINTENDENT MANUEL RIVERA WAS GIVING OUT THOUSANDS IN UNDOCUMENTED BONUSES AND SALARIES TO HIS SENIOR STAFF.  FINDINGS LIKE THESE CREATED A NEGATIVE TONE FROM THE TOP DOWN ACCORDING TO COMPTROLLER DINAPOLI.

 

 (Thomas) we are really talking about accountability making sure there is proper oversight and we found with some of the payments, there wasn't adequate documentation, some of the bonuses and raises, for administrative personal, some of the issues with some of the consultant contracts as well It indicated that this was an atmosphere where the right questions weren't being asked. We made a series of recommendations in tightening up the operations at the district,  the current administration generally speaking agreed with our recommendations.

 

(Julie) we'll talk about that in a minute.  But first,  You do these audits in every school district in the state,  how egregious were these problems in the Rochester city school district in comparison?

 

(Thomas) Well, you're right we've been doing audits in every school district, In fact shortly we're going to have completed all 733 of the school districts in the nation. it is a lot of work in response to some real problems that were out there, Rochester is a big district and an important community in our state I think that elevates what our finding are,I think that they were significant in terms of areas where there is clearly a need for improvement but just as significant we did find acceptance to the recommendations, sometimes we will come into the district and we might have even more minor recommendations in terms of changing operations, the district is arguing and it won't be open to improving their operations.  So the findings were significant I think it should be of concern to the larger community but in this case the current administration has embraced our recommendations and in fact pasted a resolution asking for more contemporaneously auditing of operations which usually doesn't happen.

 

(Julie)  the school board says for the most part these are old issues as there's a new school superintendent, there's new people in charge of finance, they did a new independent audit that showed no problems , That these are old issues by in large a few warrant but you're not  completely satisfied with this response?

 

(Thomas) Keep in mind, when we audit, We are auditing the District we aren't auditing individuals and while there may be some new people in place and some of the practices may be different , in terms of policies and procedures we think there's an opportunity to tighten them up,  no district stays the same there will be new people  in charge, and if you haven't updated your policy, in a formal way,  it can lapse back to some of the mistakes of the past. so we do think we made specific recommendations on where they can tighten up their operation, so that on an ongoing basis whoever is on the noard whoever is the superintendent that the best interest of the taxpayers' dollars will be preserved that's something that came out in not only our audit report but in a lot of questions. its not just about any point in time it's about the overall need for the District to be more professional and having manage oversight and having update in policies and procedures, follow appropriate guidelines and have that be part of the culture of how the school district is run for the future.

 

(Julie)  What's the next step for the future once an audit has been released and both sides have sort of gone back-and-forth about the results?

 

(Thomas) What we've been doing with a number of our school audits is going back to see what the response has been.   a follow-up report  on the audit, what we have found so far in the district when we've  done follow-ups is that about 82% of our recommendations have been incorporated in the district operations with Rochester as I'd mentioned the had actually asked us to do additional auditing we'll take a look at that request we obviously have alot of audits to doo in different school districts but city special districts and so on, so we will certainly consider that.  At a certain point we may come back and do a follow-up report perhaps we will take a look at their request and look at some of those additional areas to audit but that has to be factored in to all the requests that we get. so the main point is we've made recommendations they generally have been embraced by the district and the real accountability is the large of the community. look at our audit,  it's available on the web .  Hear how the press is covering this,  go to school meetings, ask how they're complying with that,  I found that the best follow up is the community accountability that comes when taxpayers in the school community take a look at what we say and then at the follow up board meetings on the next budgets put together,  they ask the questions, have you improved operations  based on what the comptroller recommended?

 

(Julie) As you know Mayoral control is an issue that's being talked about here with the school district does it make sense to have one person accountable for the districts finances?

 

(Thomas) It's an issue that's been debated in other communities in New York City it was a big issue.  first of all this audit was done because it was part of our plan to do every school district and Rochester was due, so it's not tied to that issue it's not something that we looked at.It would seem to me that it's an issue that the  Rochester Community should debate and consider in a thoughtful way.   every community is going to make their own decision about it.  Obviously it's already started a spirited discussion here, I've got a sense of that and being in town but that really should be a locally driven decision I just hope that there will be thoughtful decision and something  that will have the students and taxpayers in mind. I don't think there's a one size fit's all answer to that question, each community has to make its own decision.

 

(Julie) So you don't have an opinion?

 

(Thomas) You know, it really is up to the people of Rochester to work out what they think is best.

 

(Julie) Do City tax payers have any recourse

to get back that money that might have been fraudulently spent during the period that you audited ?

 

(Thomas)  Sometimes that's hard to do but we certainly think there is an opportunity where there should be  recovery, where the district should pursue that.I think moving forward this climate that were in when every taxpayer's dollar is so precious it really requires us to be so much more careful, Anybody in government,  to avoid having to worry about recovering money I know in some of these instances that we pointed out, there were some recoveries already, there might be some instances where the district has to pursue it.   that's really the obligation of the local district to see if they can follow through with that.

 

(Julie) Let's turn now to the state budget the governor has put out his 2010-2011 budget proposal, but let's look at the current fiscal year first and where you think that we will end up in March, when the current fiscal year ends?

 

(Thomas) Will we still have a very tight budget situation, we ended up in December with a general fund in the red 5.77 million dollares thats the first time in anybody's memory that we ended up with a general fund in deficit.  we're able to cover that with other funds for the moment, but it really underscore what we've been sayig for a long time, we have to monitor carefully spending in revenue becausewe continue to have weak revenues coming into the state and the current budget was built on overly optimistic projections of what revenue would be, there had to be the mid-year correction which dealt with some of the problem but not all of it, we need to manage this  carefully so we end March 31st in balance.  The Governor is  projecting a 500 million dollar deficit for this year, it could be even higher.  We  continue to see a very sluggish economic recovery.

(Julie) how much higher do have a projection?

 

(Thomas) Our numbers have generally been higher, prior to the DRP we were projecting a $4.1 billion deficit being out of balance. governors DRP originally proposed to deal with 3.2 Billion, the DRP  actually dealt with about 2.7 billion, so if our numbers hold up it could be double what the governor is currently projecting.  DRP took care of some of it but we think it could be higher.  One of the difficult points right now for us to analyze is you know at the beginning of the year is when Wall Street does its business bonus activity because of all the pressure rightfully so, compensation cahnges and reform,  we're not sure how that's going to play out and probably it means that the kind of boost in  revenue that we'd expectbecause Wall Street has came back stronger and faster and all these stories about the bonus pool growing and coming back to prerecession numbers, if it's paid out not so much as cash but as stock and in other differnt ways we're not gowing to see the boost in revenue so that's one of the big unknowns right now in terms of how we're gonna close out the current fiscal year.  so we're not sure how we're gonna end this year and next year we have 7.5-8 billion dollar hole to deal with right off the bat.  so we have weak revenues and we have still that structural budget gap we have to deal with in New York.

 

(Julie) are you concerned about the Governor's budget proposal in the sense that he might not be estimating where we're going to end this fiscal year properly, in making this budget for next year?

 

(Thomas) The governor certainly has understood how weak this economy is.  he's been very forthright in saying to the legislature we have to update our numbers, the concern that I had had at the begining of this process is we were too optimistic when we put the budget together. we called it a by time budget and what we meant by that is, that if your going to be putting a budget together based on a hope and a prayer that the recovery is going to be strong and fast,  that's no way to do a budget and sure enough Midway through we have cutbacks in programs under threat of reduction what that really has done is created crisis management  at the local level.  look at how all these schools districts expected certain money,  not-for-profit,  hospitals or delayed payment states short on cash so to match cash flow payment are delayed it really transfers our crisis to the local level we need to get away from that so my real concern is not only managing the cash to close up this year but going to this budget negotiation that's been kicked off by the executive proposal, that we come up with realistic numbers even if they're gonna be tough numbers let's give those that depend on state funding real numbers that will hold up for an entire year to go another year, the third year in a row that we would have made midyear cuts, communities make commitments on hiring, on spending, the city of Rochester Irondequiot school district, hospitals in the area, not-for-profit when they hear a number from Albany and that's what they're basing their budget on.   if they find out halfway through its not going to be there the dislocation really creates a crisis that we should avoid . So my mantra has been be tougher more realistic about the numbers at the start  of the process recognize that long-term we need a sound budget. so we can manage our affairs we are going to get through this tough time but we need to get through it by making tougher choices and not spending. New York's  problems are not just about the current recession there about poor choice's that we have made in the past and that made commitments on spending that might have seemed okay at the moment but the reality was that the revenue was not there to back it up. and in the years prior to '07 when we had wall Street profits money did come in at greater levels than expected but that doesn't exist anymore and were not going to go back to those days anytime soon so we need to make those tough choices about spending so long term  we have a balanced budget, that's goingt o be the real challenge.

 

(Julie) the governor's budget proposal is balanced. There's a couple things, one, there's significant cuts the other arehe's adding taxes. he's getting a lot of push back from the legislature on those revenue raisers.  how worried are you that we will not have a budget that looks at revenue and related?

 

(Thomas) It's a concern because some of those proposals have been around before and they haven't been enacted

the obligation of the legislature is if they're not going to embrace what the governors proposed, Come up with something else. Either you have a revenue raiser or you do a cut somewhere , I know there has been an aversion to follow that simple equation but we need to get back to the basics  if you don't have the money, you can't spend it so if you  don't have the revenue and you're not going to substitute the revenue that the governor's proposed you need to get some other revenue or do a cut.  what we're trying to do to be helpful is we're really trying to step up our audit with state agencies Medicaid being a big expense.  we just had a series of audits at the end of '09 that identified 92 million dollars in savings if we would manage that more efficiently.

if we could be more accountable more responsible on how we spend money and save money in a more appropriate  way, that's one way to help get away from the issue of raising taxes or cuts, Our audits aren't gonna solve any billion dollar gap, but the pointis we should be very careful about spending and revenue but we should also make decisions in regard to the budget that start to incorporate reforms that will have a reoccuring positive impact on our budget.  And medicaid is one area were we need to do more of that, but the Governor has put forth a challenging document, he's not wrong to say that we have to make some very tough choices.  so I urge the legislature if you have to reject parts of it be responsible, suggest something else as an alternative and we can;t get away from the fact that we have a budget gap this coming year we're going to have a gap after that , federal stimulus money, tax increases, those are going to start to go up.

 

(Julie) Do you see many other alteratives for the legislature to turn to?

 

(Thomas) I think the first issue is to control spending, it means tougher choices about where we are spending our money.I don't see too many other alternatives to that.

 

 

(JULIE) NEW YORK STATE COMPTROLLER THOMAS DINAPOLI, COMMENTING ON THE STATE'S BUDGET AND MAYORAL CONTROL OF ROCHESTER CITY SCHOOLS.  AS YOU MIGHT EXPECT, MAYORAL CONTROL ALSO CAME UP DURING AN EDITORIAL BOARD MEETING WITH GOVERNOR DAVID PATERSON THIS WEEK AT WXXI.  EDITORS FROM THE DEMOCRAT AND CHRONICLE QUIZZED THE GOVERNOR - AND HE WAS MUCH MORE FORTHCOMING WITH HIS OPINION COMPARED TO DINAPOLI.

 

 

(Jane) Governor, I'd like to ask you about mayoral control of public schools. As you know here in Rochester Mayor Duffy is activley persuing that and I understand that you're going to be involved in legislation, taking a look at that. I'd like to ask you what do you envision that legislation to look like?

 

(Patterson) Mayoral control has been tried in other cities with a great degree of effectivness and the first thing it accomplishes is the diminished replication of services that we talk about in terms of local governments. We also think that education budgets in Rochester constitute basically 25% of the overall budget that the mayor is actually administering. I find in government that it is a lot easier when there is one accountable figure. Whether it's a board or some amorphous figure, it's kind of like the legislature. Everybody gets mad at the legislature but no one gets mad at anyone they know. When you have a central figure, that becomes accountable for the system, I think that

it's preferable at this point. We know that the city of Syracuse is contemplating it, but they have a different set of circumstances. We will address them when they come to our desk. But for now, we feel that mayor Duffy has made the case that would require mayoral control. There's some education advocates that talked to me right outside this studio right before I came in. They have some issues with how the entire education system is run, but we think that they would be applicable under a mayoral control system as well as if there wasn't one.

 

(Jane) Do you anticipate having the Rochester system set up similar to the way it is in New York City with a mayoral appointed commision answering to the mayor?

 

(Patterson) You're talking about two separate cities with different types of needs. We would taylor legislation more to what Rochester's needs are and I can't be as specific as I'd like to be with you. We haven't put that together. We hope to in the next two weeks.

 

(James) So what about the whole issue of voter disenfranchisement given the fact that we're hearing a lot from voters throughout the Rochester area who are concerned and, as you know, many of those voters are people of color and the whole issue of voting rights and it's bubbling up and it's becoming a real hot potato? What do you say to those folks?

 

(Patterson) On the issue of voting rights?

 

(James) On the issue of suddenly if you take away their right to vote and elect their school board members then the mayor has power and and their voice is not a direct link to the board as far as accountability is concerned.

 

(Patterson) I think that right now, there is a very low percentage of turnout for these types of school board races. There aren't really oppertunities to really distinguish what the policy differences are necessarily of the candidates, but we do think that any system, and this was the complaint about mayoral control in New York City, was that it did diminish parenental participation. We would try to enhance it. I don't think the mayor is trying to take decision making capasity away. I think he's trying to transfer accountability because there have certainly been a number of acusations by black elected officals that many of the boards have not discharged their duties properly. 

 

 

(JULIE) NEW YORK GOVERNOR DAVID PATERSON APPEARING ON ANSWERING TO UPSTATE  AN EDITORIAL BOARD MEETING PRODUCED BY WXXI AND THE DEMOCRAT AND CHRONICLE.  THAT ENTIRE 90-MINUTE MEETING IS AVAILABLE TO WATCH ON DEMAND AT OUR WEB SITE.  GO TO WXXI DOT ORG AND CLICK ON ANSWERING TO UPSTATE. WXXI HAD ANOTHER VISITOR THIS WEEK - GWEN IFILL OF WASHINGTON WEEK AND PBS NEWSHOUR.  I HAD AN OPPORTUNITY TO SIT DOWN AND TALK WITH IFILL ABOUT HER CAREER.  WE'LL BRING YOU THAT ENTIRE INTERVIEW IN A FUTURE NEED TO KNOW…BUT FOR TODAY WE SHOW YOU WHAT SHE HAD TO SAY ABOUT PRESIDENT BARACK OBAMA AFTER HIS FIRST YEAR IN OFFICE.

 

(Julie) Canidate Obama was very effective at getting people to think that he understood the connection between what he would do in office and their lives. Is president Obama as successful at that.

 

(Gwen) He's clearly not. He's having a really hard time. Especially lately where he is running up against an anger in the nation which is rooted in things he feels he cannot control which is the Economy. He's been there a year now. You can no longer say, which he has been saying, that it's really hard. Yeah, but you're the president. You wanted to be the president. You spent a lot of money to be elected president. So, we're not going to have a pity party about that. And he does pull himself up short before he gets to that. but the frustrations are that, and I think they are basic political frustrations, everyone doesn't agree with his approach. and everyone doesn't think that it's the right way to do it. Everyone has different drivers at home that make their decision on whether to support him or not.  Now that he is dealing with two wars, he's dealing with international crisis like Haiti which was never on anyone's radar.  He's trying to figure out how to get us out of an economic collapse and then take on a healthcare bill and climate change and who knows if illegal immigration is part of it too. It's a lot, and he made a judgement early on that he was going to take it all on. There was nothing he couldn't afford to address. Maybe there's a few things like gay marraige. He decided not to address that. But as a result, it's all a lot of juggling and sometimes balls crash to the floor.

 

 

(JULIE) GWEN IFILL, OF WASHINGTON WEEK AND PBS NEWSHOUR.  DURING HER RECENT VISIT TO WXXI  SHE ALSO GAVE A LECTURE - AND YOU CAN WATCH THAT THIS SUNDAY EVENING AT EIGHT ON Digital Cable 524- Digital 21.2 IT'S TIME NOW FOR THE BUSINESS SECTION WITH THE DEMOCRAT AND CHRONICLE.

 

IT'S TIME NOW FOR THE BUSINESS SECTION WITH THE DEMOCRAT AND CHRONICLE.

 

(Julie) Matt Daneman Business reporter for the Democrat and Chronicle joins us.

Good to see you.As you wrote in your report this week that Kodak is starting to show signs of life 

 

(Matt) It's an interesting sort of time for Kodak Let's flash back to mid-2008 the had a couple of profitable quarters and then the recession comes, and the last quarter of 2008 the wheels fall off the the cart they've been losing mone, losing money,  four consecutive quarters of loses, like alot of companies around the country it's not just Kodak,  they started in a tough spot to begin with and having four years prior to that spending billions of dollars in construction. we come tot he last quarter of 2009 and Kodak actually breaks into the black again, it's most profitable

A cautionary note one of the major reasons why they were profitable this quarter is because they got a huge $400 million injection of cash from some intellectual property that is not a payment that is going to be happening every year, this is a one time thing this does not mean Kodak has turned the corner but there were some hopeful signs too, Digital equipment,  like cameras and printers, those are growing, the decline in film has slowed down somewhat, at least the decline that they had seen during the recession is bottoming out and then they can start looking at rebounding from there, all remains to be seen.

 

(Julie) I'm sure it's what they'll be talking about next week you're heading to NY for their investor meeting.

 

(Matt) Exactly, once a year they talk with Wall Street analysts and basically say 'here's what we're going  to be doing in 2010' where we see the company going,  here's our goals, and here's some of the products that we will be heavily focusing on, once again the ink jet printers it's a huge part of the future Kodak.

 

(Julie) Let's talk about Kodak trying to do some rezoneing?

 

(Matt) Kodak has a proposal before city council to get rezoning about 170 acres of land in Kodak. What this will do is allow for redevelopment of that land alot of it is zoned right now for parking lots and you can't do anything else but park on it, Kodak has been selling off land to make their manufacturing space into a more industrial park with outside tenants with the rezoning and the opening of Eastman Drive the whole goal is to try to make that this more amenable and accessable to companies X or Y , that want to build there or come and occupy Kodak building.

 

MATT DANEMAN BUSINESS REPORTER FOR THE DEMOCRAT AND CHRONICLE.  FOR NEED TO KNOW, I'M JULIE PHILIPP.  I'LL SEE YOU NEXT WEEK.

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