Fixing East Ramapo Schools: New Fiscal Plan

East Ramapo administrators have released the district's first fiscal plan to tackle its many problems, including damaging and sometimes bizarre actions in the past decade.

The plan is an excellent step toward financial responsibility and repair of the damage done by the previous administration, Charles Szuberla, the state-appointed monitor, told Patch.

One of the strangest is the story of Johnson Controls — a company that made a deal with someone in the administration who never bothered to get a contract signed. Or, as Szuberla pointed out, get the required approvals from the state Education Department's Facilities Planning Division.

The company apparently got enough access to buildings and did enough of something that in a mediation session last month the district agreed to pay $1 million of the $1.9 million worth of work Johnson Controls said they performed.

Here's how the fiscal plan describes that fiasco:

In 2011, the School District entered into an energy performance contract with
Johnson Controls, Inc. to install numerous energy efficient controls and devices
throughout the School District's buildings. It seems that no actual contract was
signed and approved by both parties. The School District was unable to secure
financing for the project and was unaware that work had commenced. Johnson
Controls claims to have done close to $1.9 million of work. The School District
believed it should not be required to pay Johnson Controls the required amount as
funding was not secured prior to Johnson commencing work done.
This matter proceeded to mediation. The mediation session took place on
Monday, September 12, 2016. There is now a Board approved agreement between
the School District and Johnson Controls to pay $1 million over a five-year period
starting in fiscal year 2017-18. The School District’s 2017-18 proposed budget
will include the first payment of $200,000.

" I believe some work was done but whatever work was done did not achieve desired results," Szuberla said. .
"It was my understanding that the attorneys thought they were obligated to pay for work that had been done."

More bad financial news in the fiscal plan concerns the district's insurance. The district was dropped by its old insurance company in April. Administrators had to scramble to find another insurer, and the cost is higher by $900,000 a year. Here's what the plan says about that:

In April 2016 New York State Insurance Reciprocal (NYSIR) made a decision to
drop coverage for East Ramapo Central School District. This decision negatively
impacted the School District as it had to seek new insurance coverage in a very
short time notice. There was no single insurer that offered to commit in insuring
our School District. The insurance costs increased by over $900,000 on annual
basis. The School District will continue working to identify efficiencies to
accommodate this additional cost for the fiscal year 2017-18 and beyond.

The background: the school district had sued its insurance company, New York Schools Insurance Reciprocal, for the legal fees it had incurred while fighting a lawsuit brought by non-white, non-Hasidic parents in the district, which includes parts of the communities of New City, Pearl River, Nanuet, Spring Valley, Suffern, New Hempstead, Chestnut Ridge, Monsey and Wesley Hills, has 9,000 students, and is home to another 24,000 children who go to private schools—mostly yeshivas.

Now the parents' suit covered several issues, including the school trustees selling or renting district facilities to yeshivas at below-market rates; paying for religious textbooks for yeshiva students; and providing preferential special-education services for yeshiva students. And the insurance company refused to pay the legal fees, saying its contract with the district had an exclusion for fraudulent, dishonest, malicious, criminal and intentional acts.

The district sued. After motions and decisions and more motions and decisions, the courts ruled that the insurance company’s duty to defend the district ended March 12, 2014.

So the district asked the court to make the insurance company pay $2,233,485.50 to cover the legal fees it had incurred until that date. The insurance company argued that the fees were excessive, and in June 2015 the judge expressed his opinion that the fees were very, very excessive. He said a reasonable fee for the services provided was $187,500.

That isn't in the fiscal plan, because the district covered the rest.

Ten months later, the insurance company dropped the district.

"Does the district need to do a better job of managing its resources?" Szuberla said, noting it was equally problematic that the district spent down a "tremendous amount" of its fund balance. "Based on this, the answer is yes. The idea behind the fiscal plan was also to add transparency — this is what happened."

So the monitor team is digging into everything.

"Every significant contract and transaction is being looked at," he said. "The to-do list is growing daily."

However, transparency is only one part of improving the district, he said. "Obviously we're working with them to tighten up their fiscal controls."

It's more than writing a plan, he said, it's getting the numbers to balance and making sure people are doing things for the right reasons. "There's numerous ways to change behavior, show people it's a lot easier to do things right and be successful. If people don't want to do the right thing then there are other ways to change behavior."

The monitor team is also looking into what happens financially in a district with such a large population of nonpublic students, with an eye to seeing if state aid formulas should be tweaked and how.

But one of the biggest signs of improvement, he said, is that improvements are being made in the education program, and people are talking about improving instruction instead of getting distracted by the other problems.

"I certainly understand the skepticism of the parents, not only their skepticism but their anger about what has happened," he said. "If I was a parent I would be skeptical until I felt that all the changes necessary to be made have been made."