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CUNY Finances Are 'Ripe for Abuse,' State Investigation Finds

By  Ben Fractenberg and Amy Zimmer | November 16, 2016 1:43pm | Updated on November 16, 2016 2:47pm

 A preliminary investigation of the CUNY system finances found a system that is
A preliminary investigation of the CUNY system finances found a system that is "ripe for abuse."
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MIDTOWN — The City University of New York college financial system was “ripe for abuse” due to a lack of proper oversight and the decentralization of funds, resulting in "financial waste and abuse," according to a preliminary report from the state Office of the Inspector General.

The audit was requested after City College of New York president Lisa S. Coico resigned amid a federal probe into more than $150,000 in misused funds. The audit found Presidential Discretionary Funds were used to pay $36,000 for Brooklyn College president’s part-time housekeeper and $35,000 for a retirement party for the college’s former president.

“As the allegations surrounding the former president of CCNY suggest, the Inspector General’s preliminary investigation has found that such Presidential Discretionary Funds have already led to reported abuse and are ripe for further abuse, resulting in money that could be spent on library books or failing infrastructure being used to pay portions of executive salaries and for personal benefits,” Inspector General Catherine Leahy Scott’s report stated.

Investigators pored over expenditures and policies at CUNY’s senior colleges — Brooklyn College, Queens College, Hunter, Lehman and the College of Staten Island — before reaching their conclusions.

Foundations affiliated with CUNY control about $1 billion in funds with little oversight, according to the report.

CUNY, which is America’s largest public urban system, with about 275,000 enrolled students, also spent $1.6 million since 2013 on lobbyists who “engaged in questionable and seemingly redundant tasks.”  

In another instance, Chancellor James B. Milliken asked the Queens College Foundation to approve an additional $40,000 to the college president’s salary — which was approved despite never being referenced in the president’s offer letter, nor approved by the CUNY Board, the report found.

“This construct raises several obvious concerns, not only regarding a lack of transparency, but also making the distribution of income susceptible to favoritism and outside influence without any oversight,” the reported stated.

When investigators questioned CUNY execs and other senior staff, they failed to share their knowledge of fraud and abuse in the system, as required under state law, the report said. Instead, the university system began its own internal investigations, including using outside counsel — at a cost of more than $180,000 — which is not only an “unnecessary” expenditure to CUNY, the report said, but might also be a violation of state law.

The report recommends CUNY “immediately implement centralized policies” to reduce fiscal abuse and have “stringent controls” over affiliated foundations.

CUNY professors have also been battling for $2 billion in additional funds in the state budget for free tuition and hiring more full-time faculty.

This is the latest black eye for the CUNY system, after the former president at City College came under fire for her spending back in 2011 — alleging that she obtained more than $150,000 in foundation funds for “highly questionable” personal use, including $20,000 for a security deposit on a rental home and $50,000 to furnish that home — but no CUNY employee informed the Inspector General as required by law, the report noted.  

The U.S. Attorney’s Office for the Eastern District of New York is currently investigating the former City College president’s spending and her use of foundation funds, the Inspector General said.

The report also questioned the salary of former CUNY Chancellor Matthew Goldstein, who left his position in 2013 to take a Chancellor Emeritus position, which has “vague” teaching and non-policymaking duties but earns him a salary of $300,000 a year.

His compensation package, which runs through 2019, is worth roughly $3 million, the report noted.

Chancellor Milliken promised take action after the report. 

"I take the findings and recommendations of the Inspector General very seriously, and will work with Chairperson Thompson, the Board of Trustees and the Inspector General immediately to address the recommendations," Milliken said in a statement. "CUNY must have in place the policies and practices that reflect and ensure the highest levels of integrity, accountability and transparency."