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State-funded private schools escaping financial scrutiny : Home : The Buffalo News
Privately run, state-funded schools serving the blind, deaf and disabled in New York engage in activities that would raise eyebrows if done by public schools.
Those activities include awarding contracts to firms connected with their board members and using privately raised money to make political donations, in one case to a former board member, The Buffalo News has found.
The unusual arrangement these schools enjoy — being publicly funded yet operating as private, nonprofit organizations — was questioned during the recent upheaval at St. Mary’s School for the Deaf in Buffalo.
While New York State spends $111 million annually to fund St. Mary’s and 10 other schools like it, the state and its taxpayers are largely in the dark about how their money is spent. Board meetings are held behind closed doors; most financial records are private.
Beyond that, four of these state-funded schools contend that their association with the Catholic Church exempts them from filing financial reports that most nonprofits are required to submit to the federal government. Another one of them has $82 million in stocks.
“The way we like to look at it, we are a private school and fortunate to have a public/private partnership,” said Bernadette Kappen, executive director of the New York Institute for Special Education in the Bronx.
‘It’s not about money’
St. Mary’s is among the schools whose trustees awarded a contract to a firm owned by or affiliated with one of its board members, according to a News review of documents that are available for the 11 schools.
The Buffalo school paid $80,285 to Foit-Albert Associates for architectural services in the 2005-06 fiscal year. Beverly “Bonnie” Foit-Albert, president and founder of the firm, was on the St. Mary’s board from 2000 to 2006, documents show, serving as chairwoman of the facilities committee for at least three years.
Foit-Albert said she did not know how her firm was selected for the project. St. Mary’s officials either declined to comment or said they were not familiar with details of the contract. Whenever a board she sits on selects an architectural firm, she recuses herself, Foit-Albert said. She volunteered her time for the St. Mary’s board to serve her community, she said, not to profit.
“I really think that being a community board member is a very, very important thing for people to do, and it’s not about money,” she said. “Trust me, it’s not about money; it’s about trying to be of service.”
Margaret C. McCarthy, recently appointed chairwoman of the St. Mary’s board, said she could not speak about the Foit-Albert contract specifically. She said the board adopted a conflict-of- interest policy in 2006 requiring that trustees disclose possible conflicts and abstain from action that could pose a conflict.
The News also found that for at least the last decade, the school did much of its banking with HSBC, which at one point employed as many as three St. Mary’s board members, including Carol V. Kociela, a former board chairwoman and a senior vice president of HSBC, documents show. Kociela did not return calls seeking comment. Her husband said she did not want to comment.
McCarthy said that St. Mary’s has used several banks, including HSBC, M&T, Five Star, KeyBank and Greater Buffalo Savings and that as far as she knows, “there is no evidence of an inappropriate relationship.”
There are no longer any HSBC employees on the 15-member St. Mary’s board, which recently sought bids for its banking. Five Star Bank replaced HSBC as the primary bank, although St. Mary’s continues to do business with other banks as well. No one on the current board has a relationship with Five Star Bank, McCarthy said.
The News also found that St. Mary’s Superintendent William P. Johnson’s 2006-07 salary of $145,000 was second- highest among the superintendents of the 11 schools, most of which are in the New York City area.
Johnson currently earns $159,000, and the school has announced that he is retiring this year. He declined to comment for this article.
The News obtained information on the 11 schools by reviewing annual financial summary reports filed with the state Education Department, campaign finance reports filed with the state Board of Elections, retirement reports from the state comptroller’s office and annual financial reports nonprofit organizations file with the Internal Revenue Service.
Although the 11 schools are classified as private, their faculty and administration are covered by the New York State Employee Retirement System. Three retired superintendents, including a nun from the Cleary School for the Deaf on Long Island, collect state pensions exceeding $100,000 annually, state records show.
A review by The News found that many practices of the 11 schools are typical of the way some privately funded nonprofit organizations operate but contrary to the way state-funded public schools generally do business.
Political contributions
“Many of the laws are written for public schools, so the rules [for state-funded private, nonprofit schools] are totally different,” said Harold Mowl Jr., superintendent of the Rochester School for the Deaf and chairman of the association representing the 11 schools for the deaf, blind and disabled.
Among The News’ findings:
•Like St. Mary’s, the Rochester school awarded contracts to firms associated with its board members. Stewart Davis, a longtime board member and past president, is an attorney with the Harris Beach law firm. Harris Beach received two contracts, totaling more than $160,000, from the Rochester school while Davis was on the board. The school also paid $189,522 to SWBR Architects & Engineers. Longtime board member Junius R. Judson II, also a former board president, is a senior principal of the architectural firm.
Mowl said the board members’ affiliations with those firms did not influence the board’s decisions on whether to hire them.
• Several schools have contributed to candidates and political organizations. The Cleary School for the Deaf on Long Island gave $200 in 2007 to Robert J. Creighton, who ran for the Town Board. Creighton was chairman of the board at Cleary School in 2004, according to published reports.
The Cleary School also donated $179.50 to the Long Island Association Action Committee, which supports both Democrats and Republicans. Mill Neck Manor School for the Deaf also gave $30 to the Long Island PAC. St. Francis de Sales School for the Deaf in Brooklyn gave $350 in 2003 to Carl Andrews, who ran for the State Senate.
Officials at the Cleary and St. Francis de Sales schools said the contributions came from privately raised funds, not state money. Schools typically raise private money to cover costs the state will not pay for, such as field trips and computers.
“There was a fundraising dinner for [Andrews], and we bought a ticket,” said St. Francis business manager Bob Harvey. “He was a local guy who supported the state’s schools [for the blind, deaf and disabled].”
• Several schools invest in the stock market, including New York Institute for Special Education, which has an $82 million stock portfolio that grew from an endowment the school received in the 1800s.
New York Institute and schools with lesser portfolios said private donations, not state funds, are invested in stocks. These schools, like public schools, are prohibited from buying stocks with public money.
The stock market was strong in the 1990s, but more recently, “the stock market went down,” Mowl said, “so I’m expecting our funds to go down.”
At New York Institute, Kappen said the stocks are used, like all private donations, for expenses such as summer camp programs, Braille books and capital construction that the state does not finance. About $150,000 was spent on lobbying in Washington, advocating for inclusion of blindness in the Americans with Disabilities Act and proper testing adaptations in schools for blind students.
New York State began financing private schools for the blind, deaf and disabled in the 1800s. The arrangement allows them to continue operating as private organizations — exempt from public scrutiny — although taxpayer- funded.
‘Set up as a charity’
Several of the schools were founded or taken over at some point by religious organizations. As a remnant of those times, nuns still teach classes at some of the schools and are board members at others.
The schools say, however, that because they do not teach religion and because none of their buildings are used for religious purposes, their state funding does not violate the separation of church and state.
Nonetheless, four of the schools — all downstate — remain affiliated with the Catholic Church, and say they therefore don’t have to file nonprofit financial reports with the IRS as the other seven schools do.
“We are set up as a charity under the archdiocese, so we don’t have to file [a nonprofit financial report with the IRS],” said Donna Bisignano, business manager at St. Joseph’s School for the Deaf in the Bronx.
The state Education Department declined to comment when asked about publicly financing schools that claim religious status.
Privately run, state-funded schools serving the blind, deaf and disabled in New York engage in activities that would raise eyebrows if done by public schools.
Those activities include awarding contracts to firms connected with their board members and using privately raised money to make political donations, in one case to a former board member, The Buffalo News has found.
The unusual arrangement these schools enjoy — being publicly funded yet operating as private, nonprofit organizations — was questioned during the recent upheaval at St. Mary’s School for the Deaf in Buffalo.
While New York State spends $111 million annually to fund St. Mary’s and 10 other schools like it, the state and its taxpayers are largely in the dark about how their money is spent. Board meetings are held behind closed doors; most financial records are private.
Beyond that, four of these state-funded schools contend that their association with the Catholic Church exempts them from filing financial reports that most nonprofits are required to submit to the federal government. Another one of them has $82 million in stocks.
“The way we like to look at it, we are a private school and fortunate to have a public/private partnership,” said Bernadette Kappen, executive director of the New York Institute for Special Education in the Bronx.
‘It’s not about money’
St. Mary’s is among the schools whose trustees awarded a contract to a firm owned by or affiliated with one of its board members, according to a News review of documents that are available for the 11 schools.
The Buffalo school paid $80,285 to Foit-Albert Associates for architectural services in the 2005-06 fiscal year. Beverly “Bonnie” Foit-Albert, president and founder of the firm, was on the St. Mary’s board from 2000 to 2006, documents show, serving as chairwoman of the facilities committee for at least three years.
Foit-Albert said she did not know how her firm was selected for the project. St. Mary’s officials either declined to comment or said they were not familiar with details of the contract. Whenever a board she sits on selects an architectural firm, she recuses herself, Foit-Albert said. She volunteered her time for the St. Mary’s board to serve her community, she said, not to profit.
“I really think that being a community board member is a very, very important thing for people to do, and it’s not about money,” she said. “Trust me, it’s not about money; it’s about trying to be of service.”
Margaret C. McCarthy, recently appointed chairwoman of the St. Mary’s board, said she could not speak about the Foit-Albert contract specifically. She said the board adopted a conflict-of- interest policy in 2006 requiring that trustees disclose possible conflicts and abstain from action that could pose a conflict.
The News also found that for at least the last decade, the school did much of its banking with HSBC, which at one point employed as many as three St. Mary’s board members, including Carol V. Kociela, a former board chairwoman and a senior vice president of HSBC, documents show. Kociela did not return calls seeking comment. Her husband said she did not want to comment.
McCarthy said that St. Mary’s has used several banks, including HSBC, M&T, Five Star, KeyBank and Greater Buffalo Savings and that as far as she knows, “there is no evidence of an inappropriate relationship.”
There are no longer any HSBC employees on the 15-member St. Mary’s board, which recently sought bids for its banking. Five Star Bank replaced HSBC as the primary bank, although St. Mary’s continues to do business with other banks as well. No one on the current board has a relationship with Five Star Bank, McCarthy said.
The News also found that St. Mary’s Superintendent William P. Johnson’s 2006-07 salary of $145,000 was second- highest among the superintendents of the 11 schools, most of which are in the New York City area.
Johnson currently earns $159,000, and the school has announced that he is retiring this year. He declined to comment for this article.
The News obtained information on the 11 schools by reviewing annual financial summary reports filed with the state Education Department, campaign finance reports filed with the state Board of Elections, retirement reports from the state comptroller’s office and annual financial reports nonprofit organizations file with the Internal Revenue Service.
Although the 11 schools are classified as private, their faculty and administration are covered by the New York State Employee Retirement System. Three retired superintendents, including a nun from the Cleary School for the Deaf on Long Island, collect state pensions exceeding $100,000 annually, state records show.
A review by The News found that many practices of the 11 schools are typical of the way some privately funded nonprofit organizations operate but contrary to the way state-funded public schools generally do business.
Political contributions
“Many of the laws are written for public schools, so the rules [for state-funded private, nonprofit schools] are totally different,” said Harold Mowl Jr., superintendent of the Rochester School for the Deaf and chairman of the association representing the 11 schools for the deaf, blind and disabled.
Among The News’ findings:
•Like St. Mary’s, the Rochester school awarded contracts to firms associated with its board members. Stewart Davis, a longtime board member and past president, is an attorney with the Harris Beach law firm. Harris Beach received two contracts, totaling more than $160,000, from the Rochester school while Davis was on the board. The school also paid $189,522 to SWBR Architects & Engineers. Longtime board member Junius R. Judson II, also a former board president, is a senior principal of the architectural firm.
Mowl said the board members’ affiliations with those firms did not influence the board’s decisions on whether to hire them.
• Several schools have contributed to candidates and political organizations. The Cleary School for the Deaf on Long Island gave $200 in 2007 to Robert J. Creighton, who ran for the Town Board. Creighton was chairman of the board at Cleary School in 2004, according to published reports.
The Cleary School also donated $179.50 to the Long Island Association Action Committee, which supports both Democrats and Republicans. Mill Neck Manor School for the Deaf also gave $30 to the Long Island PAC. St. Francis de Sales School for the Deaf in Brooklyn gave $350 in 2003 to Carl Andrews, who ran for the State Senate.
Officials at the Cleary and St. Francis de Sales schools said the contributions came from privately raised funds, not state money. Schools typically raise private money to cover costs the state will not pay for, such as field trips and computers.
“There was a fundraising dinner for [Andrews], and we bought a ticket,” said St. Francis business manager Bob Harvey. “He was a local guy who supported the state’s schools [for the blind, deaf and disabled].”
• Several schools invest in the stock market, including New York Institute for Special Education, which has an $82 million stock portfolio that grew from an endowment the school received in the 1800s.
New York Institute and schools with lesser portfolios said private donations, not state funds, are invested in stocks. These schools, like public schools, are prohibited from buying stocks with public money.
The stock market was strong in the 1990s, but more recently, “the stock market went down,” Mowl said, “so I’m expecting our funds to go down.”
At New York Institute, Kappen said the stocks are used, like all private donations, for expenses such as summer camp programs, Braille books and capital construction that the state does not finance. About $150,000 was spent on lobbying in Washington, advocating for inclusion of blindness in the Americans with Disabilities Act and proper testing adaptations in schools for blind students.
New York State began financing private schools for the blind, deaf and disabled in the 1800s. The arrangement allows them to continue operating as private organizations — exempt from public scrutiny — although taxpayer- funded.
‘Set up as a charity’
Several of the schools were founded or taken over at some point by religious organizations. As a remnant of those times, nuns still teach classes at some of the schools and are board members at others.
The schools say, however, that because they do not teach religion and because none of their buildings are used for religious purposes, their state funding does not violate the separation of church and state.
Nonetheless, four of the schools — all downstate — remain affiliated with the Catholic Church, and say they therefore don’t have to file nonprofit financial reports with the IRS as the other seven schools do.
“We are set up as a charity under the archdiocese, so we don’t have to file [a nonprofit financial report with the IRS],” said Donna Bisignano, business manager at St. Joseph’s School for the Deaf in the Bronx.
The state Education Department declined to comment when asked about publicly financing schools that claim religious status.