Mount Vernon Schools Shorted $11.7M Of Desperately Needed Funds

MOUNT VERNON, NY — Earlier this month, New York State Comptroller Thomas DiNapoli designated the Mount Vernon City School District as the only one in the state under "significant financial stress."

Now, the school district says that the significant financial stress is due, at least in part, to not ever receiving the tax money it is owed by the City of Mount Vernon. The district contends it is owed $11.7 million in property taxes that should have been set aside for the schools.

The city is not disputing the school district's claim to the money, but Mount Vernon Comptroller Darren Morton is asking for patience.

SEE ALSO: Mount Vernon Only School District In NY Rated 'Under Significant Financial Stress'

"The outstanding school taxes payments are matters for the Office of the Comptroller and not the Office of the Mayor," Morton said in a statement. "The Office of the Comptroller acknowledges the $11.7M in unpaid school taxes from 2017 – 2019, and we are seeking a resolve to the practicality of making payments to the School District given the City’s financial distress; coupled with the fact that the tax systems records indicate the City has not collected approximately $11M of the unpaid amount."

Morton said that admitting that the district is owed the money is one thing, but getting that money to the district's coffers is another matter, one that will take cooperation from all parties involved.

"In addition, the City not having a fund balance (reserve fund) to drawn funds from to the payments," Morton said. "Our best approach is to meet with the School District to develop a payment strategy, including but not limited to, engaging in aggressive tax collection for all unpaid taxes and prioritize payment to the School District as funds are collected. I have availed and am ready to meeting with the Board of Education trustees to discuss possibilities."

School officials, however, said that if the city can't meet its obligations, it should seek a bailout from state officials, rather than allow schoolchildren to bear the consequences.

"Yesterday, City Comptroller Morton stated that the city 'has not collected approximately $11.7 million of that amount that is currently past due to the school district,'"President Adriane Saunders said at Tuesday night's school board meeting. "The city has not filed required audits since 2015 that would show that monies were collected. Other representatives from the city have stated that there is no feasible path for the city to pay the school district. So, to be clear, the city owes the school district $11.7 million with another $13 million coming. There was no payment strategy offered. So, here's the school board's perspective: the city of Mount Vernon needs help from our state legislators to pay the school debt. The lack of these resources prevents the school district from providing much needed services for our students."

A series of Powerpoint slides at Tuesday's school board meeting expressed a less charitable view of the dispute with the city.

The first slide introduced an emergency public meeting, with a clear position on the issue,"A Mount Vernon City School District Community Summit: Fighting Back Against the Illegal & Devastating Actions of the City of Mount Vernon That Hurt Our Children & Families." The presentation presented a stark "crisis of incompetence, malfeasance, and possible criminality at City Hall that is having a significant impact on the funding of our schools."

The school district's attorney, Thomas Scapoli, explained that in addition to the $11.74 million owed to the schools and past due, an additional $13.8 million is owed over the next 18 months. The "missing" payments so far should have been made through 2020.

The board raised questions that left no doubt they do not accept the city's explanation of why the schools have not received the money they are due.

"Where is the money?" the presentation material asked. "Has it been stolen? Illegally used by the City?"

The board has officially notifed the NYS Comptroller, the NYS Attorney General, the Westchester County Executive and the Westchester County District Attorney to investigate the missing money.

Scapoli said that the school district is already at a budget disadvantage in part because of deals that Mount Vernon has cut with developers that take millions of dollars in property taxes off the tax rolls.

More urgently, school administrators say that the money missing from their budget is already affecting students.

"Our fund balance is almost gone," Assistant Superintendent for Business Kenneth Silver told those gathered."Our fund balance which should be $10 or $11 million is now down to $1 million. We are owed essentially $25 million that has not been collected or received. $11.7 right now. By the end of this year, it could go up to $30 million if we have not received anything in some way from the state or the city. What we are owed will exceed 10 percent of our budget pretty soon. That has affected our cash. That has affected our ability to provide programs. That will affect our ability next year to have programs to compete with our neighbors. Our wealthy neighbors are constantly having new innovations. We can't do that the way things stand. We will have to do no better than what we're doing now. We will not be able to have new programs. We are in the process now on cutting back on textbooks for next year."

Silver said that while the school district has been singled out for its financial situation, the responsibility lies elsewhere.

"The comptroller spoke to our fiscal situation," Silver said. "Make no mistake. If we had the tax money that was due to us, the $11.7 million, we would not be in any fiscal distress at all. We would not even be in their radar. Let alone one of the worst in the state right now. We are the only one in the state that have taxes outstanding from the municipality that haven't been paid...We have also had to put off repairs. We had $2 million in this year's budget to do major capital budgets and repairs. We have now had to stop that."

Silver said that the school district doesn't have the luxury of waiting for the missing money, insisting that the district is in dire straits now.

"We have to make sure that we have enough money to get through this year," Silver said. "The superintendent has frozen the budget for this year and only absolutely necessary expenses will be used for this year. We have to be very careful for next year... Conceivably, jobs could be lost if we don't have the money to make the budget work... We're not in fiscal trouble because of us. We're in fiscal trouble because of the city and the management of the comptroller's office during the time that these problems took place and currently now."

The Mount Vernon comptroller later bristled at any assertion that the city has misused money that belonged in the school budget.

"Currently, as of today, in the system, there is 460 properties that have unpaid school taxes for those years, amounting to about $11 million, $10.7 [million] to be exact," Morton said during public comments at the summit. "So, it's not money that is missing. It is money that is unpaid. And is unpaid because of the financial dysfunction that was going on in the city, of course, prior to my taking office. The best pathway forward to collect that money is for us to issue out the arrears notices to every taxpayer, which we aim to do in February, to receive that money from them. Now the school district is well aware that there is a two-year span, and so, because the taxes have not been collected at the mark of that two years, then the city is supposed to pay the school district the amounts that are unpaid ... The city does not have a reserve just like the school district does not have a reserve. The money is not missing. It is just unpaid, according to the system."

The comptroller's comments were made in front of a tough crowd, during a sometimes emotional, highly-charged meeting, but he did get some welcome support from the mayor of Mount Vernon.

"Thank you Comptroller Morton," Mayor Shawyn Patterson-Howard posted on Facebook Live during the comptroller's comments. "Set the record straight. No criminality, no malfeasance."