System-wide investigation uncovers fund misuse in CUNY colleges

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Following the discovery of misappropriated funds by CCNY’s former president, CUNY requested for a system-wide probe into the issue

After the former president of City College of New York resigned without an explanation earlier this year, it was suggested that CUNY funds were not being allocated appropriately. As a result, the CUNY board of trustees requested a system-wide probe to identify and reverse the misuse of funds in every school.

Lisa Staiano-Coico graduated from Brooklyn College and was called upon as the first female CUNY alumna to serve as president of CCNY. Coico served as the president of CCNY from 2010 until her resignation. After reporters from The New York Times questioned CUNY officials about Coico and her administration allegedly using $150,000 to fund her own personal expenses, CUNY Chancellor James B. Milliken called for her resignation.

In regards to her substitute, an article from The New York Times says, “She will be replaced temporarily by Mary Driscoll, the college’s new interim provost, pending the appointment of an interim president at the next meeting of the university’s board of trustees, which is set for Oct. 26.”

Although Coico disagrees with the allegations and claims that she has committed no wrongdoings, there currently remains an open investigation leading into the issue. She has formally asked students and faculty members in a letter to cooperate with officials who are leading the investigation.

Both Coico and her known affiliates—such as 21st Century Foundation, a nonprofit group that supports CCNY financially—are under thorough scrutiny. The same article from The Times reads, “A federal subpoena was issued shortly after The Times reported that the foundation had paid for some of Ms. Coico’s personal expenses, including furniture and fruit baskets, when she took office in 2010.” Several officials vouched firsthand that Coico had recompensed the foundation for its contributions.

Further probing, however, disclosed that Research Foundation of CUNY had instead reimbursed the foundation.

“That arrangement raised concerns among some experts on government and nonprofit ethics because there are usually strict guidelines for how federal money is used,” reported The Times.

Catherine Leahy Scott, the state inspector general of New York, released a preliminary report detailing the findings of the ongoing investigation in regard to the misallocated funds. Several nonprofit organizations were found to be connected to the scandal.

The report demonstrates similar threads among other CUNY schools. A former president of Brooklyn College, for example, had used $36,000 of the school’s money to pay a part-time housekeeper. The report also identified that the same president used $35,000 of the school’s money to fund her retirement party. The president and other administrative figures at Brooklyn College refused to comment on the issue.

According to The Wall Street Journal, Milliken approved a yearly transfer of $40,000 from the budget for Queens College to the salary of its current President Felix V. Matos Rodriguez. This money can also be traced back to generous nonprofit organizations. However, since Milliken shockingly authorized the transaction, it was easier to hide, as it did not seem to require any major supervision.

An article from The Wall Street Journal on the topic added that, “CUNY also violated state law … for failing to report fraud and abuse to the inspector general, instead launching its own internal investigation. City College retained a law firm in July to investigate Ms. Coico before it alerted the inspector general.”

After Leahy Scott reviewed CUNY’s policies and by-laws, she sent out teams to five of the senior colleges, which comprised of Brooklyn College, College of Staten Island, Hunter College, Lehman College and Queens College. The orders were to review the financial records and transactions between the individual colleges and their respective nonprofit affiliates.

The report concluded that the financial misuses across the various schools in the CUNY system occurred due to the lack of proper oversight by CUNY administration. It also called into question the integrity and competence of both the administrations of the individual schools and their affiliated nonprofit organizations. Since nonprofit organizations add roughly $1 billion to university funding, the report emphasized the need for a solution to “strengthen the fiscal integrity and oversight of this system.”

Another contributing problem that the report identified had to do with external operations, which call for funding for groups like congressional lobbyists who engage in tedious work that often creates nothing but incremental changes.

“This decentralization creates an environment in which CUNY institutions lack appropriate fiscal management, oversight and transparency,” the report said. “At times, CUNY has instead hired outside counsel to conduct internal investigations at significant cost to the public.”

The report did mention Milliken and his unethical slip, but it did not extend any punishment or reprimand to him. Rather, it encouraged Milliken and other administrative staff and faculty members to act with “the highest ethical standards, and conduct themselves as financial stewards.”

In order to curb any future financial misallocations and waste, Leahy Scott advised CUNY administration to increase organizational efforts within the system and enforce spending limits on outside groups.

The intention behind these two initiatives is to create more room for efficient and proper fiscal oversight. The report says, “The Inspector General’s investigation is ongoing, and the Inspector General will continue to make recommendations to improve these systems, centralize CUNY’s policies and procedures and improve foundation oversight.”

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