New Rochelle Board President David Lacher and Assistant Superintendent for Business & Administration John Quinn have a lot of explaining to do following our report on Monday, Taxpayer Dollars Used to Pay Medical Insurance Premiums for New Rochelle Board of Education President.
It took six months from the initial Freedom of Information request in November until last week that records related to New Rochelle Board of Education President David Lacher’s medical insurance through the District’s Group Health Insurance was made available. At the time, Lacher was seriously delinquent on his account.
Had the requested records been provided on a timely basis in December, a follow up FOIL request would have revealed that Lacher was consistently six to eight months behind and between $10,000 and $14,000 in debt to the District. Instead, there were months of delays in turning over the records and four last minute payments made the day the records were turned over. This appears to have been an effort to avoid or delay record production to cover up what was occurring and, failing that, to give Lacher time to pay the outstanding balance on his account so that he could claim -- as he has since done -- that there is no "story" but merely a case of a person getting a little behind on their bills.
Word around town is that few are buying it.
Up until the time questions were raised publicly about his medical insurance on February 26th, Lacher had been consistently delinquent on his account with a balance due often in excess of $10,000. From February 26th until April 10th, Lacher made a series of payments totaling $15,059.68, including four payments totaling $9,202.25 on the day his records were released by the District.
He is still in arrears of $1,714.19 for the April invoice, due on April 1, which he has yet to pay.
Lacher, it would appear, now wants credit for doing "the right thing" after going on two years of not reimbursing the District for the cost of his medical insurance and then making a flurry of payments once he realized the truth was about to come out.
A better question might be, how is it that Lacher was able to come up with over $15,000 in a matter of weeks after crying poor for twenty one months.
However this went down behind the scenes, the records show, as noted in our previous article, Lacher's Medical Insurance Woes: The Story Behind the Story, that Assistant Superintendent for Business & Administration John Quinn granted Lacher what was, effectively, an unauthorized revolving line of credit funded by taxpayer dollars.
The arrangement between Quinn and Lacher raises serious questions about the board's ability to function in an oversight capacity with Lacher dependent on Quinn to repeatedly pay Lacher's insurance bills using District funds, extending Lacher credit and retaining the ability to retroactively terminate Lacher's insurance at a moment's notice, recoup the money paid to NYSHIP, and make Lacher liable for all costs paid for under the insurance.
FOIL requests sent to the New Rochelle School District are copied to the Superintendent, the Assistant Superintendent for Business & Administration and the President of the Board of Education. As a result, David Lacher and John Quinn would have known the request was made, known Lacher should have been on the list and thus that Lacher's name was omitted. The repeated failure to produce a list of persons enrolled in the District's Group Health Insurance plan with David Lacher's name on it raises serious questions about the falsification of business records subject to a Freedom of Information Law request and whether Lacher and/or Quinn may have tampered with the FOIL response in some way.
Here is what we know for sure. As a result of Lacher taking the insurance and getting himself deeper and deeper into debt, he placed himself in Quinn's back pocket, giving Quin tremendous leverage over Lacher.
So, let's consider John Quinn for a moment.
Quinn has been under increasing criticism for lax oversight and near nonexistent financial controls within the Finance Department and, in particular, his relationship with Aramark.
Quinn's relationship with Aramark began to receive greater scrutiny in March 2012 after Quinn sought to place three private consultants from Aramark on the District payroll in what appears to have been an attempt to make the three consultants eligible for a Tier 5 pension just days before the less lucrative Tier 6 pension when into effect on April 1, 2012.
For the first time, school board members, including David Lacher, began to openly discuss terminating Aramark's Facilities Management contract and putting the contract out to bid.
In June 2012, the board not only failed to end the Aramark contract but voted to extend the no-bid contract for another year. At the time, Lacher justified the move on that grounds that Quinn claimed it would take a year to prepare a Request for Proposal to bid the contract. This is not true. RFP processes typically occur over a period of weeks not years.
The Aramark extension went into effect in July 2012. The following month, Lacher obtained coverage under the District's Group Health insurance plan and almost immediately went into arrears.
In March 2013, the only bidder for the Facilities Management contract was Aramark. This may have been the result of an RFP written such that Quinn could award the bid based on his subjective judgement rather than the lowest price. Potential bidders may have felt they had no chance to win the contract and that it was not worth the trouble to submit a bid.
On June 25, 2013, Mr. Quinn appeared before the Board of Education to answer questions about the Board resolution to formally approve awarding the Facilities Management contract to Aramark.
In June 2013 the board voted to approve the contract.
Talk of the Sound recently determined through records obtained under FOIL that John Quinn never negotiated and signed a contract with Aramark.
In January, 2014, Moody's Investors Service changed to negative the outlook on the District's outstanding long term parity debt.
At a subsequent board meeting on January 28th at Columbus Elementary School, Lacher went to extraordinary lengths to defend Quinn and explain away the significance of the negative outlook on the District's debt.
Lacher tried to minimize the issue by first pointing out that Moody's did their analysis because the District was issuing Library Bonds, suggesting that the negative outlook applied to the New Rochelle Public Library not the School District and later asking, but really suggesting, that the outlook change does not effect the interest rate, that only the letter rating does. Neither of those things are true.
Quinn then says "What needs to be clear is the bond rating although it was reported as a reduction it is not a reduction, it was the outlook, based on certain factors."
The only reporting done was by Talk of the Sound. We never reported that the bond rating was reduced as is clear from our article.
A few days later, the New York State Comptroller classified the City School District of New Rochelle as under "Moderate Financial Stress", the only such District in Westchester County -- and one of just 25 in the entire State -- so classified.
At the same subsequent Columbus board meeting, John Quinn made a presentation reacting to the Comptroller Stress Test report.
Lacher went to even more extraordinary lengths to defend Quinn and excuse the poor outcome.
Over the course of a 23 minute exchange with the board, Quinn repeatedly offered axiomatic statements and platitudes but little in the way of real information. As he speaks, he is helped by Lacher who goes into several complex, meaningless digressions which fail to come to a point.
The Comptroller's report is focused heavily on the issues of District Fund Balances which Quinn accurately describes as the "accumulated excess of revenues over expenses over time". What he fails to do is break out the Fund Balance between Designated and Undesignated Fund Balance. As this is the critical legal distinction as to whether or not the District broke New York State law, Quinn's failure to provide a report that distinguishes between the two renders his report devoid of meaning.
The logic of the conversation is as muddled as the audio from the meeting. In the above video, it can be difficult to follow what is being said but the main point is that Quinn is repeatedly admitting that the District deliberately built up their fund balance but then asserting, with Lacher's repeated intervention, that he did not.
When Board Member Jeffrey Hastie attempts to call Quinn out on this contradiction, Lacher intervenes. Hastie scores anyway, getting Quinn to admit the following on the record:
The increases in New Rochelle's fund balances and subsequent decreases were a conscious plan to manage the District in a stable fashion during the worst financial crisis since the Great Depression.
Lacher went on to assure Hastie that Quinn would provide the disaggregated fund balance. No public discussion of the Comptroller report based on the disaggregated fund balance has occurred.
Quinn spends ten minutes explaining the aggregate fund balance, which has no bearing on the matter at hand, and gets himself so flustered that he describes trends in the level of revenue reductions as "good foreboding for the future".
The Merram-Webster Dictionary defines "foreboding" to mean "fearful apprehension; a feeling that something bad will happen" so "good foreboding" is an oxymoron and makes no sense. Clearly, Quinn was rattled.
As Hastie pressed Quinn further, noting that other districts face the same issues as New Rochelle, that New Rochelle is in theand bottom 5% statewide, that New Rochelle does not do as well as other districts, Lacher again stepped in to protect Quinn.
Lacher goes into a convoluted exposition, claiming that New Rochelle is unique, that other Cities do not have our problems with the assessed value of property declining, and trying to tell Hastie what he can and cannot say publicly in critiquing Quinn's remarks.
When Hastie raises the issue of the District being over the 4% legal limit on undesignated fund balance, Lacher again rises to Quinn's defense.
After Chrisanne Petrone asks a question, Quinn makes an absurd claim that directly contradicts Lacher's claim that the District did not exceed the 4% cap on Fund Balance.
Quinn states (the audio quality is poor): "the issues ____ to increase fund balance this was discussed over the last five or six budget years...further...once again called Pharaoh’s Dream...and that's why I always use this...it sticks in people's mind...we saw the lean years were coming and so we built up fund balance for the years that we had ________ and we drew it down during lean years it wasn't just taxing, some other factors which contributed to it, part of it was reduction of expenditures, part of it was not utilizing all of the _____ funds, _____ funds and part of it...those were the major factors.
In short, Quinn is claiming to have foreseen the looming financial crisis in the Fall of 2008 as early as 2006 (when the 2007-08 budget is first prepared).
The idea that John Quinn, alone of all people in the world, foresaw the "Great Recession" two years before it began, is simply ridiculous yet Lacher eagerly praises Quinn for this foresight.
Not only does Quinn claim to have predicted the market collapse two years in advance, but he is effectively admitting that he built up the fund balance.
If Quinn is working within the 4% cap, and the District is already at the 4% cap, then how can he build up the fund balance because of Pharaoh’s Dreams.
The answer is simple.
Quinn does what anyone is his position would do if he could get away with it. He squirreled away as much money as he could regardless of the 4% cap and hid the money in plain sight by claiming by fiat that undesignated funds were designated to pay tax refund claims and inflating various line items in the budget. The proof, as has been pointed out on Talk of the Sound many times, is that the District does not pay tax refund claims from the designated fund balance but rather by debiting operating budget line items like medical insurance.
Despite Quinn's increasingly untenable claims, Lacher defends Quinn. Lacher repeatedly insists that Quinn was never over the 4% cap and that it was just some people coming to board meetings that made that claim. This is false. Members of the board's own Citizen's Advisory Committee on the Budget raised this issue in 2012. The second CAC endorsed the findings of the first en toto in 2013.
Lacher closes by asserting that the auditors reviewed Quinn's approach and approved it. There is no record of an Opinion from the District's Auditors to support Lacher's claim.
These are just a few of many examples of the ways in which David Lacher has gone to great lengths to serve as an apologist for John Quinn all while being beholden to Quinn for his medical insurance.