senate Bill S1781A

2013-2014 Legislative Session

Enacts the New York state school taxpayers' protection act

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Mar 25, 2014 print number 1781a
amend and recommit to education
Jan 08, 2014 referred to education
Jan 09, 2013 referred to education

Bill Amendments

Original
A (Active)
Original
A (Active)

S1781 - Bill Details

See Assembly Version of this Bill:
A1328A
Current Committee:
Law Section:
Education Law
Laws Affected:
Amd Ed L, generally; add Art 4-B §§57 - 59, Exec L; amd §33, Gen Muni L; add §742, amd §740, Lab L; add §190.73, Pen L; amd §211, R & SS L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S1802, A1939
2009-2010: A7280, S3567

S1781 - Bill Texts

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Enacts the NYS school taxpayers' protection act; requires the reporting of suspected corruption or conflicts of interest within the operation of a school district; requires the treasurer of each district to issue an annual report of all moneys received by the board and any expenditures; creates a compensation committee to oversee proposed contracts of all school district bargaining units, administrators and superintendents; creates the office of the state inspector general for education; prohibits retaliation by public school district employers where employees have made complaints of malfeasance; creates crime of defrauding a public pension plan.

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BILL NUMBER:S1781

TITLE OF BILL: An act to amend the education law, the executive law,
the general municipal law, the labor law, the penal law and the
retirement and social security law, in relation to enacting the "New
York state school taxpayers' protection act"

PURPOSE: Create an independent state agency, the New York state
inspector general for education, to investigate allegations of
corruption, financial improprieties, unethical misconduct or other
criminal conduct within school districts outside of New York City that
are causing waste and abuse of school taxpayers' hard-earned dollars,
Also incorporates extensive financial safeguards and sanctions for
violations of school district finance laws.

SUMMARY OF PROVISIONS: Section 1 provides that this legislation shall
be entitled the "New York state school taxpayers' protection act".

Section 2 sets forth the legislative findings that public school
districts in the state have recently experienced numerous instances of
financial scandals and contains the legislative intent behind this
measure as seeking to curb and eventually eliminate such scandals
through creation of a New York state inspector general for education
and by establishing new school district financial safeguards with
sanctions for violations of school district finance laws.

Section 3 creates a mandatory reporting scheme for public school
district officials and employees to report any cases of suspected
corruption, other criminal activity or conflicts of interest occurring
within a school district. Any mandated reporter who willfully fails to
make such a report would be guilty of a class A misdemeanor with
possible civil liability for violations. Any mandated reporter who in
good faith participates in making a report shall have immunity from
liability.

Sections 4 and 5 shall require the treasurer of either a common school
district or union free school district, whichever is applicable, to
issue an annual report concerning all money received and disbursed by
the district with such treasurer certifying that they have reviewed
the annual report. In addition, the treasurer shall certify that based
on their knowledge, the report does not contain any untrue statement
of a material fact and the financial statements and other information
in such report fairly presents in all material respects the financial
condition of the school district.

Section 6 requires a public school district superintendent to certify
in the annual financial report that they have reviewed the annual
report. Furthermore, the superintendent shall certify that based on
their knowledge, the financial statements and other financial
information fairly presents in all material respects the financial
condition of the school district and the report does not contain any
untrue statement of a material fact.

Section 7 requires all public school districts outside of New York
City, except those with less than eight teachers, to establish a local
school district compensation committee to oversee and report on


proposed employment contracts between school districts and those
districts' bargaining units, administrators and superintendents. Only
one of the three compensation committee members is allowed to be from
a school board and no school district employees may serve on such
committee.

Section 8 mandates school districts to give notice of the availability
of proposed employment contracts or agreements at public libraries,
the school district office(s) and on the school district web site (if
one exists) at least five weeks prior to the vote on whether to
approve such contract.

Sections 9 and 10 amend the current Education Law to require annual
school district budget administrative components to contain a section
outlining all compensation and fringe benefits to which school
district teachers, administrators and superintendents are entitled
under existing employment contracts.

Section 11 and 12 provide for the annual school district budget
statement to be placed on the school district web site (if one exists)
and notice be given to the availability of such statement at public
libraries and school district offices at least thirty days prior to
any school budget vote.

Section 13 stipulates that a school district who prepared a corrective
action plan in response to any findings contained in a State
Comptroller-issued audit report shall notify residents of the
availability of such plan at public libraries, the school district
office(s) and on any existing school district web site. Failure to
comply with this requirement shall subject a school district to a
civil penalty of up to $5,000.

Section 14 would amend the Education law to prohibit any unfunded
mandate on a school district which creates a yearly net additional
cost to any school district greater than $5,000 or imposes an
aggregate yearly.net additional cost to all school districts greater
than $500,000.

Section 15 establishes a new, independent office called the "Office of
the State Inspector General for Education". This office would be
charged with receiving and investigating complaints from any source,
or on its own initiative, regarding allegations of corruption,
financial improprieties, unethical conduct, misconduct or other
criminal conduct within public school districts. The Inspector General
for Education would also issue a yearly report to the Legislature,
Comptroller and the Board of Education that details the results of the
Education Inspector General's investigations and contain detailed
analysis of the current financial status of those school districts
that have been reviewed.

Section 16 amends the General Municipal Law to require the State
Comptroller to audit federal and state grant program expenditures in
all school districts, BOCES and charter schools.

Section 17 amends the General Municipal Law to require the State
Comptroller to report any final audit report findings from audits
performed on the grant program expenditures of school districts, BOCES


and charter schools to the Office of the State Inspector General for
Education.

Sections 18 and 19 amend the Labor Law to enact protections for any
public school district employee who in good faith acts as a
"whistle-blower" by reporting an activity, policy or practice of a
public school district (or agent of such district) that the employee
reasonably believes constitutes fraud, criminal activity or other
malfeasance.

Section 20 amends the Penal Law to create the crime of "defrauding a
public pension plan", a class 8 felony, whenever a person engages in a
scheme of an ongoing course of conduct with intent to obtain a benefit
or asset, or assist a third party to obtain a benefit or asset, from a
public pension plan to which the person or the third Party is not
otherwise entitled to pursuant to the restriction of Retirement and
social Security Law section 211.

Section 21 amends the Retirement and Social Security Law by expressly
providing that a retired person receiving a retirement allowance who
is employed and earning compensation in a public service position with
total compensation exceeding the applicable Retirement and Social
Security Law section 212 limit yet without having receiving the
requisite legal waiver of such limit, as well as any person who
knowingly assists another person the above mentioned conduct, is
guilty of larceny and is punishable for such as Provided in the penal
law.

Section 22 provides for this act to take effect on January 1, 2014.

EXISTING LAW: Creates a comprehensive statutory scheme for complete
review and oversight of New York State school districts' entire
financial operations with new safeguards and penalties to deter fiscal
wrongdoing, waste and abuse of any kind.

JUSTIFICATION: Although Suffolk County has recently experienced a
series of public school district financial scandals, such scandals are
not unique to Suffolk County but could occur anywhere in the state and
in fact recently did in Nassau County as well. In fact, a Suffolk
County grand jury recently issued a thorough and comprehensive set of
recommendations concerning the numerous public school financial
misdeeds that occurred in that county. The grand jury found that each
episode involved malfeasance by individuals or small groups in an
environment where strong internal financial controls in school
business offices were lacking and viewed as optional luxuries.

The bill arises out of that grand jury investigation and reflects
virtually all of the legislative recommendations made by such grand
jury. One of the most important findings made by that grand jury was
the need for a new, independent state agency charged with
investigating allegations of corruption or other financial criminal
conduct within public school districts because of the magnitude and
frequency of the financial crimes occurring in the public school
system. This measure seeks to address this by creating an office of
the Inspector General for Education and giving it broad authority to
investigate financial wrongdoing in the schools, refer cases to the
appropriate law enforcement authorities when warranted and issue


recommendations to assist school districts in avoiding such problems
in the future.

LEGISLATIVE HISTORY: 2011-12: A.1939/S.1902- Remained in Education
Committee 2009-10: A.7280/S.3567- Remained in Education Committee
2007-08: S.2681- Remained in Education Committee

FISCAL IMPLICATIONS: Possibly slightly increased administrative costs
that should be offset by the reduction in illegal and fraudulent
public school district spending that should occur as a result of this
bill.

EFFECTIVE DATE: This act shall take effect January 1, 2014.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 1781                                                  A. 1328

                       2013-2014 Regular Sessions

                      S E N A T E - A S S E M B L Y

                               (PREFILED)

                             January 9, 2013
                               ___________

IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
  ed, and when printed to be committed to the Committee on Education

IN  ASSEMBLY  -- Introduced by M. of A. THIELE -- read once and referred
  to the Committee on Education

AN ACT to amend the education law, the executive law, the general munic-
  ipal law, the  labor law, the penal law and the retirement and  social
  security  law,  in  relation  to  enacting  the "New York state school
  taxpayers' protection act"

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Short  title. This act shall be known and may be cited as
the "New York state school taxpayers' protection act".
  S 2. Legislative findings and intent. Public school districts  in  New
York  state  have  recently  experienced numerous instances of financial
scandals. These scandals have been unprecedented in both the number  and
diversity of financial malfeasance. Furthermore, such scandals result in
the diversion of hard-earned property taxpayers' money from their proper
use  in  school instruction to improper and illegal purposes that do not
further the school districts' essential mission of  educating  New  York
children.    Therefore,  the  legislature  finds that it is necessary to
establish a new, independent state agency charged with the  function  of
investigating allegations of corruption, financial improprieties, uneth-
ical  conduct, misconduct or other criminal conduct within public school
districts outside of New York city. In addition, the legislature further
finds that the current  laws  must  be  amended  to  incorporate  school
district  financial safeguards and establish sanctions for violations of
school district finance laws.
  S 3. The education law is amended by adding a new  section  2116-d  to
read as follows:

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01690-01-3

S. 1781                             2                            A. 1328

  S  2116-D. PERSONS AND OFFICIALS REQUIRED TO REPORT CASES OF SUSPECTED
CORRUPTION, OTHER CRIMINAL ACTIVITY OR CONFLICT  OF  INTEREST  OCCURRING
WITHIN THE OPERATIONS OF A SCHOOL DISTRICT. 1. THE FOLLOWING PERSONS AND
OFFICIALS ARE REQUIRED TO REPORT OR CAUSE A REPORT TO BE MADE IN ACCORD-
ANCE WITH THIS SECTION WHEN THEY DISCOVER INFORMATION CONCERNING CONDUCT
WHICH  IS  KNOWN  OR SHOULD REASONABLY BE KNOWN TO INVOLVE CORRUPTION OR
OTHER CRIMINAL ACTIVITY OR CONFLICT  OF  INTEREST  BY  EITHER  A  PUBLIC
SCHOOL  DISTRICT  EMPLOYEE  THAT  RELATES  TO  THEIR  EMPLOYMENT OR BY A
PERSON, PERSONS OR ENTITIES DOING BUSINESS WITH A PUBLIC SCHOOL DISTRICT
WITH RESPECT TO THEIR TRANSACTIONS WITH THE SCHOOL DISTRICT, ANY  SCHOOL
DISTRICT OFFICER, AND ANY SCHOOL DISTRICT EMPLOYEE.
  2.  ANY  PERSON  OR  OFFICIAL  MANDATED  TO  REPORT CASES OF SUSPECTED
CORRUPTION, OTHER CRIMINAL ACTIVITY OR CONFLICT OF INTEREST PURSUANT  TO
SUBDIVISION ONE OF THIS SECTION SHALL IMMEDIATELY REPORT THE INFORMATION
THEY  HAVE  TO  THE  NEW  YORK STATE INSPECTOR GENERAL FOR EDUCATION, AS
ESTABLISHED IN ARTICLE FOUR-B OF THE EXECUTIVE LAW.
  3. ANY SCHOOL  DISTRICT  WHICH  EMPLOYS  PERSONS  MANDATED  TO  REPORT
SUSPECTED  INCIDENTS  OF CORRUPTION, OTHER CRIMINAL ACTIVITY OR CONFLICT
OF INTEREST PURSUANT TO SUBDIVISION ONE OF THIS  SECTION  SHALL  PROVIDE
SUCH  CURRENT  AND NEW EMPLOYEES WITH WRITTEN INFORMATION EXPLAINING THE
REPORTING REQUIREMENTS SET OUT IN SUBDIVISION ONE OF THIS SECTION.
  4. ANY PERSON OR OFFICIAL REQUIRED BY THIS SECTION TO  REPORT  CERTAIN
INFORMATION  AS  SPECIFIED  IN THIS SECTION WHO WILLFULLY FAILS TO DO SO
SHALL BE GUILTY OF A CLASS A MISDEMEANOR.
  5. ANY PERSON OR OFFICIAL REQUIRED BY THIS SECTION TO  REPORT  CERTAIN
INFORMATION  AS  SPECIFIED  IN  THIS SECTION WHO KNOWINGLY AND WILLFULLY
FAILS TO DO SO SHALL BE  CIVILLY  LIABLE  FOR  THE  DAMAGES  PROXIMATELY
CAUSED BY SUCH FAILURE.
  6. ANY PERSON OR OFFICIAL PARTICIPATING IN GOOD FAITH IN THE MAKING OF
A  REPORT  UNDER  THIS  SECTION  SHALL HAVE IMMUNITY FROM ANY LIABILITY,
CIVIL OR CRIMINAL,  THAT  MIGHT  OTHERWISE  RESULT  BY  REASON  OF  SUCH
ACTIONS.  FOR THE PURPOSE OF ANY PROCEEDING, CIVIL OR CRIMINAL, THE GOOD
FAITH OF ANY SUCH PERSON OR  OFFICIAL  REQUIRED  TO  REPORT  UNDER  THIS
SECTION  SHALL  BE PRESUMED, PROVIDED SUCH PERSON OR OFFICIAL WAS ACTING
IN DISCHARGE OF THEIR DUTIES AND WITHIN THE SCOPE OF  THEIR  EMPLOYMENT,
AND  THAT  SUCH  LIABILITY DID NOT RESULT FROM THE WILLFUL MISCONDUCT OR
GROSS NEGLIGENCE OF SUCH PERSON OR OFFICIAL.
  S 4. Subdivision 6 of section 2122 of the education law is amended  to
read as follows:
  6.  Such treasurer shall[, whenever required by such trustees,] report
to [them] SUCH TRUSTEES a detailed  [statement]  ANNUAL  REPORT  of  the
moneys  received  by  him OR HER and of his OR HER disbursements, and at
the annual meeting of such district  he  OR  SHE  shall  render  a  full
account  of  all moneys received by him OR HER and from what source, and
when received, and all disbursements made by him OR HER and to whom  and
the  dates of such disbursements respectively, and the balance of moneys
remaining in his OR HER hands.   THE TREASURER  SHALL  CERTIFY  IN  SUCH
ANNUAL  REPORT  THAT  HE  OR SHE HAS:   REVIEWED THE ANNUAL REPORT; THAT
BASED ON THE TREASURER'S KNOWLEDGE, THE  REPORT  DOES  NOT  CONTAIN  ANY
UNTRUE  STATEMENT  OF  A  MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT
NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE  CIRCUM-
STANCES UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEADING; AND BASED
ON  SUCH  TREASURER'S  KNOWLEDGE,  THE  FINANCIAL  STATEMENTS, AND OTHER
FINANCIAL INFORMATION INCLUDED IN THE  REPORT,  FAIRLY  PRESENT  IN  ALL
MATERIAL  RESPECTS  THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE SCHOOL DISTRICT AS OF, AND FOR, THE PERIODS PRESENTED IN THE REPORT.

S. 1781                             3                            A. 1328

  S 5. Section 1720 of the education law is  amended  by  adding  a  new
subdivision 3 to read as follows:
  3.  THE  TREASURER OF THE DISTRICT SHALL ISSUE AN ANNUAL REPORT WITH A
FULL AND DETAILED ACCOUNT OF ALL MONEYS RECEIVED BY THE  BOARD  OR  SUCH
TREASURER,  FOR  ITS  ACCOUNT  AND  USE,  AND OF ALL THE MONEYS EXPENDED
THEREFOR, GIVING THE ITEMS OF EXPENDITURE IN FULL. THE  TREASURER  SHALL
CERTIFY  IN  SUCH  ANNUAL REPORT THAT HE OR SHE HAS: REVIEWED THE ANNUAL
REPORT; THAT BASED ON THE TREASURER'S KNOWLEDGE,  THE  REPORT  DOES  NOT
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATE-
RIAL  FACT  NECESSARY  IN ORDER TO MAKE THE STATEMENTS MADE, IN LIGHT OF
THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEADING;
AND BASED ON SUCH TREASURER'S KNOWLEDGE, THE FINANCIAL  STATEMENTS,  AND
OTHER  FINANCIAL  INFORMATION  INCLUDED IN THE REPORT, FAIRLY PRESENT IN
ALL MATERIAL RESPECTS THE FINANCIAL CONDITION AND RESULTS OF  OPERATIONS
OF  THE  SCHOOL  DISTRICT  AS  OF, AND FOR, THE PERIODS PRESENTED IN THE
REPORT.
  S 6. Section 2215 of the education law is  amended  by  adding  a  new
subdivision 17 to read as follows:
  17.  TO CERTIFY IN THE ANNUAL REPORT ISSUED PURSUANT TO EITHER SECTION
SEVENTEEN HUNDRED TWENTY OF THIS CHAPTER OR SECTION  TWENTY-ONE  HUNDRED
TWENTY-TWO  OF  THIS  CHAPTER  THAT  HE  OR SHE HAS: REVIEWED THE ANNUAL
REPORT; THAT BASED ON THE SUPERINTENDENT'S KNOWLEDGE,  THE  REPORT  DOES
NOT  CONTAIN  ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A
MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE,  IN  LIGHT
OF THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEAD-
ING;  AND BASED ON SUCH SUPERINTENDENT'S KNOWLEDGE, THE FINANCIAL STATE-
MENTS, AND OTHER FINANCIAL INFORMATION INCLUDED IN  THE  REPORT,  FAIRLY
PRESENT  IN ALL MATERIAL RESPECTS THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE SCHOOL DISTRICT AS OF, AND FOR, THE PERIODS  PRESENTED
IN THE REPORT.
  S  7.  The  education law is amended by adding a new section 2116-e to
read as follows:
  S 2116-E. COMPENSATION COMMITTEES. 1. EVERY  SCHOOL  DISTRICT,  EXCEPT
THOSE  EMPLOYING  FEWER THAN EIGHT TEACHERS, SHALL ESTABLISH BY A RESOL-
UTION OF THE TRUSTEES OR BOARD OF  EDUCATION  A  LOCAL  SCHOOL  DISTRICT
COMPENSATION COMMITTEE TO OVERSEE AND REPORT TO THE TRUSTEES OR BOARD ON
THE PROPOSED CONTRACTS OF ALL SCHOOL DISTRICT BARGAINING UNITS, ADMINIS-
TRATORS AND SUPERINTENDENTS.
  2. THE COMPENSATION COMMITTEE SHALL BE ESTABLISHED NO LATER THAN JANU-
ARY  FIRST,  TWO  THOUSAND  FOURTEEN  AS  A COMMITTEE OF THE TRUSTEES OR
BOARD, AS AN ADVISORY COMMITTEE, OR AS A COMMITTEE OF THE WHOLE.
  3. THE COMPENSATION COMMITTEE SHALL CONSIST OF AT LEAST THREE MEMBERS,
AT LEAST TWO OF WHOM SHALL NOT BE A TRUSTEE OR BOARD MEMBER. THE COMPEN-
SATION COMMITTEE MEMBERS SHALL SERVE WITHOUT COMPENSATION.  EMPLOYEES OF
THE SCHOOL DISTRICT ARE PROHIBITED  FROM  SERVING  ON  THE  COMPENSATION
COMMITTEE. A MEMBER OF A COMPENSATION COMMITTEE SHALL BE DEEMED A SCHOOL
DISTRICT OFFICER FOR THE PURPOSES OF SECTIONS THIRTY-EIGHT HUNDRED ELEV-
EN  THROUGH THIRTY-EIGHT HUNDRED THIRTEEN OF THIS CHAPTER, BUT SHALL NOT
BE REQUIRED TO BE A RESIDENT OF THE SCHOOL DISTRICT.
  4. THE ROLE OF A COMPENSATION COMMITTEE  SHALL  BE  ADVISORY  AND  ANY
RECOMMENDATIONS  IT  PROVIDES TO THE TRUSTEES OR BOARD UNDER SUBDIVISION
FIVE OF THIS SECTION SHALL NOT SUBSTITUTE FOR ANY  REQUIRED  REVIEW  AND
ACTION BY THE TRUSTEES OR BOARD OF EDUCATION.
  5. IT SHALL BE THE RESPONSIBILITY OF THE COMPENSATION COMMITTEE TO:

S. 1781                             4                            A. 1328

  (A)  REVIEW  EVERY  CONTRACT  BETWEEN  THE DISTRICT AND ANY BARGAINING
UNITS, EMPLOYEES, ADMINISTRATORS AND  SUPERINTENDENTS  NEGOTIATED  AFTER
JANUARY FIRST, TWO THOUSAND FOURTEEN;
  (B) RECEIVE AND REVIEW PROPOSED CONTRACTS BETWEEN THE DISTRICT AND ANY
BARGAINING UNITS, EMPLOYEES, ADMINISTRATORS AND SUPERINTENDENTS PRIOR TO
SUCH CONTRACTS' APPROVAL; AND
  (C)  PROVIDE  RECOMMENDATIONS  TO  THE TRUSTEES OR BOARD REGARDING THE
SALARY, FRINGE BENEFITS  AND  OTHER  FORMS  OF  COMPENSATION  GIVEN  AND
PROPOSED  TO  BE  GIVEN TO ALL SCHOOL DISTRICT EMPLOYEES, ADMINISTRATORS
AND SUPERINTENDENTS.
  6. NOTWITHSTANDING ANY PROVISION OF ARTICLE SEVEN OF THE PUBLIC  OFFI-
CERS  LAW  OR  ANY  OTHER LAW TO THE CONTRARY, A SCHOOL DISTRICT COMPEN-
SATION COMMITTEE MAY CONDUCT AN EXECUTIVE SESSION  PURSUANT  TO  SECTION
ONE HUNDRED FIVE OF THE PUBLIC OFFICERS LAW PERTAINING TO ANY MATTER SET
FORTH IN PARAGRAPHS (A) AND (B) OF SUBDIVISION FIVE OF THIS SECTION.
  7.  THE  COMMISSIONER  IS  AUTHORIZED  TO  PROMULGATE REGULATIONS WITH
RESPECT TO COMPENSATION COMMITTEES  AS  ARE  NECESSARY  FOR  THE  PROPER
PERFORMANCE OF THEIR DUTIES.
  8.   AS LONG AS THE CHANCELLOR OF A SCHOOL DISTRICT IN A CITY HAVING A
POPULATION OF ONE MILLION OR MORE INHABITANTS SHALL ANNUALLY CERTIFY  TO
THE  COMMISSIONER  THAT  SUCH  DISTRICT  HAS  A  PROCESS FOR REVIEW BY A
COMPENSATION COMMITTEE OF THE DISTRICT'S CONTRACTS WITH  ANY  BARGAINING
UNITS,  EMPLOYEES, ADMINISTRATORS AND SUPERINTENDENTS, THE PROVISIONS OF
THIS SECTION SHALL NOT APPLY TO SUCH SCHOOL DISTRICT.
  S 8. The education law is amended by adding a new  section  2009-a  to
read as follows:
  S  2009-A. ADDITIONAL REQUIREMENTS OF NOTICE PRIOR TO AUTHORIZATION OF
SCHOOL DISTRICT EMPLOYMENT CONTRACTS. WHERE  ANY  COLLECTIVE  BARGAINING
AGREEMENT,  EMPLOYMENT  CONTRACT  OR  AMENDMENTS  TO  SUCH  AGREEMENT OR
CONTRACT IS TO BE SUBMITTED TO A DISTRICT MEETING FOR A VOTE, THE SCHOOL
DISTRICT BOARD OR TRUSTEES SHALL GIVE NOTICE, AT LEAST FIVE WEEKS  PRIOR
TO  SUCH MEETING, THROUGH A DISTRICT-WIDE MAILING OF THE AVAILABILITY OF
THE AGREEMENT, CONTRACT OR AMENDMENT  AT  PUBLIC  LIBRARIES  WITHIN  THE
DISTRICT,  AT  THE  SCHOOL DISTRICT OFFICES AND ON THE SCHOOL DISTRICT'S
INTERNET WEBSITE, IF ONE EXISTS.
  S 9. Subdivision 4 of section 1608 of the education law, as amended by
chapter 640 of the laws of 2008, is amended to read as follows:
  4. Commencing with the proposed budget for the nineteen hundred  nine-
ty-eight--ninety-nine   school  year,  such  proposed  budget  shall  be
presented in three components: a program component, a capital  component
and  an administrative component which shall be separately delineated in
accordance with regulations of the commissioner after consultation  with
local  school  district  officials.  The  administrative component shall
include, but need not be limited to, office and  central  administrative
expenses, traveling expenses and all compensation, salaries and benefits
of  all school administrators and supervisors, including business admin-
istrators, superintendents of schools and deputy,  assistant,  associate
or  other  superintendents  under  all  existing employment contracts or
collective bargaining agreements, AND TEACHERS UNDER EXISTING EMPLOYMENT
CONTRACTS, any and all expenditures associated with the operation of the
office of trustee or board of trustees, the office of the superintendent
of schools, general administration, the school business office, consult-
ing costs not directly related to direct student services and  programs,
planning  and all other administrative activities. The program component
shall include, but need not be limited to, all program  expenditures  of
the school district, including the salaries and benefits of teachers and

S. 1781                             5                            A. 1328

any  school  administrators or supervisors who spend a majority of their
time  performing  teaching  duties,  and  all  transportation  operating
expenses.   The capital component shall include, but need not be limited
to,  all  transportation  capital, debt service, and lease expenditures;
costs resulting from judgments in  tax  certiorari  proceedings  or  the
payment of awards from court judgments, administrative orders or settled
or  compromised claims; and all facilities costs of the school district,
including facilities lease expenditures, the  annual  debt  service  and
total  debt for all facilities financed by bonds and notes of the school
district, and the costs of  construction,  acquisition,  reconstruction,
rehabilitation  or  improvement  of school buildings, provided that such
budget shall include a rental, operations and maintenance  section  that
includes  base  rent  costs, total rent costs, operation and maintenance
charges, cost per square foot for each facility  leased  by  the  school
district,  and  any and all expenditures associated with custodial sala-
ries and benefits, service contracts, supplies, utilities,  and  mainte-
nance and repairs of school facilities. For the purposes of the develop-
ment  of  a  budget  for  the nineteen hundred ninety-eight--ninety-nine
school year, the  trustee  or  board  of  trustees  shall  separate  the
district's  program,  capital  and administrative costs for the nineteen
hundred ninety-seven--ninety-eight school year in the manner as  if  the
budget for such year had been presented in three components.
  S  10.  Subdivision 4 of section 1716 of the education law, as amended
by chapter 640 of the laws of 2008, is amended to read as follows:
  4. Commencing with the proposed budget for the nineteen hundred  nine-
ty-eight--ninety-nine   school  year,  such  proposed  budget  shall  be
presented in three components: a program component, a capital  component
and  an administrative component which shall be separately delineated in
accordance with regulations of the commissioner after consultation  with
local  school  district  officials.  The  administrative component shall
include, but need not be limited to, office and  central  administrative
expenses, traveling expenses and all compensation, salaries and benefits
of  all school administrators and supervisors, including business admin-
istrators, superintendents of schools and deputy,  assistant,  associate
or  other  superintendents  under  all  existing employment contracts or
collective bargaining agreements, AND TEACHERS UNDER EXISTING EMPLOYMENT
CONTRACTS, any and all expenditures associated with the operation of the
board of education, the office of the superintendent of schools, general
administration, the school business office, consulting costs not direct-
ly related to direct student services and  programs,  planning  and  all
other  administrative activities.   The program component shall include,
but need not be limited to,  all  program  expenditures  of  the  school
district, including the salaries and benefits of teachers and any school
administrators  or  supervisors  who  spend  a  majority  of  their time
performing teaching duties, and all transportation  operating  expenses.
The  capital  component  shall  include, but need not be limited to, all
transportation capital, debt  service,  and  lease  expenditures;  costs
resulting from judgments in tax certiorari proceedings or the payment of
awards from court judgments, administrative orders or settled or compro-
mised claims; and all facilities costs of the school district, including
facilities  lease  expenditures,  the annual debt service and total debt
for all facilities financed by bonds and notes of the  school  district,
and  the  costs  of construction, acquisition, reconstruction, rehabili-
tation or improvement of school buildings,  provided  that  such  budget
shall include a rental, operations and maintenance section that includes
base  rent  costs,  total rent costs, operation and maintenance charges,

S. 1781                             6                            A. 1328

cost per square foot for each facility leased by  the  school  district,
and  any  and  all  expenditures  associated with custodial salaries and
benefits, service contracts, supplies, utilities,  and  maintenance  and
repairs  of  school facilities. For the purposes of the development of a
budget for the nineteen hundred ninety-eight--ninety-nine  school  year,
the  board  of  education shall separate the district's program, capital
and administrative costs for the nineteen hundred  ninety-seven--ninety-
eight  school year in the manner as if the budget for such year had been
presented in three components.
  S 11. Subdivision 2 of section 1608 of the education law,  as  amended
by chapter 640 of the laws of 2008, is amended to read as follows:
  2.  Such  statement  shall be completed at least seven days before the
budget hearing at which it is to be presented and copies  thereof  shall
be  prepared  and  made  available[,  upon  request  and]  at the school
district offices, at any public  library  or  free  association  library
within  the  district  and on the school district's internet website, if
one exists, to residents within the district during the period of [four-
teen] THIRTY days immediately preceding the annual meeting and  election
or  special  district meeting at which the budget vote will occur and at
such meeting or hearing. The board shall also as a part  of  the  notice
required  by  section  two thousand three of this chapter give notice of
the date, time and place of the budget hearing and that a copy  of  such
statement  may  be  obtained  by  any  resident  in the district at each
schoolhouse in the district in which school is maintained during certain
designated hours on each day other than a Saturday,  Sunday  or  holiday
during  the  [fourteen]  THIRTY days immediately preceding such meeting.
The board shall include notice of the availability of such statement  at
least  once during the school year in any district-wide mailing distrib-
uted.
  S 12. Subdivision 2 of section 1716 of the education law,  as  amended
by chapter 640 of the laws of 2008, is amended to read as follows:
  2.  Such  statement  shall be completed at least seven days before the
budget hearing at which it is to be presented and copies  thereof  shall
be  prepared  and  made  available[,  upon  request  and]  at the school
district offices, at any public  library  or  free  association  library
within  the  district  and on the school district's internet website, if
one exists, to residents within the district during the period of [four-
teen] THIRTY days immediately preceding the annual meeting and  election
or  special  district meeting at which the budget vote will occur and at
such meeting or hearing. The board shall also as a part  of  the  notice
required by section two thousand four of this chapter give notice of the
date,  time  and  place  of  the  budget hearing and that a copy of such
statement may be obtained by  any  resident  in  the  district  at  each
schoolhouse in the district in which school is maintained during certain
designated  hours  on  each day other than a Saturday, Sunday or holiday
during the [fourteen] THIRTY days immediately  preceding  such  meeting.
The  board shall include notice of the availability of such statement at
least once during the school year in any district-wide mailing  distrib-
uted.
  S  13.  Paragraph (c) of subdivision 3 of section 2116-a of the educa-
tion law, as added by chapter 263 of the laws of  2005,  is  amended  to
read as follows:
  (c)  Notwithstanding  the  provisions of subparagraph one of paragraph
(b) of subdivision four of section thirty-five of the general  municipal
law,  each school district shall (i) prepare a corrective action plan in
response to any findings contained in the annual external  audit  report

S. 1781                             7                            A. 1328

or  management  letter,  or  any  final audit report issued by the state
comptroller, within ninety days of receipt of such report or letter, and
(ii) to the extent practicable, begin implementation of such  corrective
action  plan no later than the end of the next fiscal year.  EACH SCHOOL
DISTRICT SHALL NOTIFY THE DISTRICT RESIDENTS OF THE AVAILABILITY OF  THE
CORRECTIVE  ACTION  PLAN AT PUBLIC LIBRARIES WITHIN THE DISTRICT, AT THE
SCHOOL DISTRICT OFFICES AND ON THE SCHOOL DISTRICT'S  INTERNET  WEBSITE,
IF  ONE  EXISTS.  ANY  SCHOOL  DISTRICT  WHICH  FAILS TO COMPLY WITH THE
REQUIRED NOTIFICATION OF AVAILABILITY  OF  THE  CORRECTIVE  ACTION  PLAN
SHALL  BE SUBJECT TO A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS
UPON AN ADMINISTRATIVE DETERMINATION BY THE COMMISSIONER.
  S 14. The education law is amended by adding a new section  1527-a  to
read as follows:
  S  1527-A.  FUNDING OF MANDATES IMPOSED ON SCHOOL DISTRICTS. 1.  DEFI-
NITIONS. AS USED IN THIS SECTION, THE FOLLOWING  TERMS  SHALL  HAVE  THE
FOLLOWING MEANINGS UNLESS THE CONTEXT SHALL OTHERWISE REQUIRE:
  (A) "MANDATE" SHALL MEAN:
  (I)  ANY  STATE LAW, RULE OR REGULATION WHICH CREATES A NEW PROGRAM OR
REQUIRES A HIGHER LEVEL OF SERVICE  FOR  AN  EXISTING  PROGRAM  WHICH  A
SCHOOL  DISTRICT  ORGANIZED  EITHER  BY  SPECIAL LAWS OR PURSUANT TO THE
PROVISIONS OF A GENERAL LAW, IS REQUIRED TO PROVIDE; OR
  (II) ANY GENERAL LAW WHICH GRANTS A  NEW  PROPERTY  TAX  EXEMPTION  OR
INCREASES  AN  EXISTING  PROPERTY  TAX  EXEMPTION  WHICH ANY SUCH SCHOOL
DISTRICT IS REQUIRED TO PROVIDE.
  (B) "UNFUNDED MANDATE" SHALL MEAN:
  (I) ANY STATE LAW, RULE OR REGULATION WHICH CREATES A NEW  PROGRAM  OR
REQUIRES  A  HIGHER   LEVEL OF SERVICE FOR AN EXISTING PROGRAM WHICH ANY
SUCH SCHOOL DISTRICT IS REQUIRED TO PROVIDE AND WHICH RESULTS IN  A  NET
ADDITIONAL COST TO SUCH SCHOOL DISTRICT;
  (II)  ANY  ALTERATION  IN FUNDING PROVIDED TO ANY SUCH SCHOOL DISTRICT
FOR THE PURPOSE OF DEFRAYING THE COSTS OF A PROGRAM WHICH IT IS REQUIRED
TO PROVIDE, THEREBY RESULTING IN A NET ADDITIONAL COST  TO  SUCH  SCHOOL
DISTRICT; OR
  (III)  ANY  GENERAL  LAW  WHICH GRANTS A NEW PROPERTY TAX EXEMPTION OR
INCREASES AN EXISTING PROPERTY  TAX  EXEMPTION  WHICH  ANY  SUCH  SCHOOL
DISTRICT  IS  REQUIRED TO PROVIDE, THEREBY RESULTING IN A NET ADDITIONAL
COST TO SUCH SCHOOL DISTRICT.
  (C) "NET ADDITIONAL COST" MEANS THE COST OR COSTS INCURRED  OR  ANTIC-
IPATED  TO  BE INCURRED WITHIN A ONE YEAR PERIOD BY A SCHOOL DISTRICT IN
PERFORMING OR ADMINISTERING A MANDATE AFTER  SUBTRACTING  THEREFROM  ANY
REVENUES RECEIVED OR RECEIVABLE BY THE SCHOOL DISTRICT ON ACCOUNT OF THE
MANDATED PROGRAM OR SERVICE, INCLUDING BUT NOT LIMITED TO:
  (I) FEES CHARGED TO THE RECIPIENTS OF THE MANDATED PROGRAM OR SERVICE;
  (II)  STATE  OR  FEDERAL  AID  PAID  SPECIFICALLY  OR CATEGORICALLY IN
CONNECTION WITH THE  PROGRAM OR SERVICE; AND
  (III) AN OFFSETTING SAVINGS RESULTING FROM THE  DIMINUTION  OR  ELIMI-
NATION  OF  ANY  OTHER  PROGRAM  OR SERVICE DIRECTLY ATTRIBUTABLE TO THE
PERFORMANCE OR ADMINISTRATION OF THE MANDATED PROGRAM.
  2. FUNDING OF SCHOOL  DISTRICT  MANDATES.  NOTWITHSTANDING  ANY  OTHER
PROVISION OF LAW, NO  UNFUNDED MANDATE SHALL BE ENACTED WHICH CREATES AN
ANNUAL  NET  ADDITIONAL  COST TO ANY   SCHOOL DISTRICT IN EXCESS OF FIVE
THOUSAND DOLLARS OR AN AGGREGATE ANNUAL NET  ADDITIONAL    COST  TO  ALL
SCHOOL DISTRICTS IN EXCESS OF FIVE HUNDRED THOUSAND DOLLARS.
  3.  EXEMPTIONS TO THE FUNDING OF SCHOOL DISTRICT MANDATES REQUIREMENT.
(A) THE STATE SHALL NOT BE REQUIRED TO FUND ANY NEW OR EXPANDED PROGRAMS
FOR SCHOOL DISTRICTS IF: (I) THE  MANDATE IS REQUIRED BY A  COURT  ORDER

S. 1781                             8                            A. 1328

OR  JUDGMENT;  (II) THE MANDATE IS PROVIDED AT THE  OPTION OF THE SCHOOL
DISTRICT UNDER A LAW, REGULATION, RULE,  OR  ORDER  THAT  IS  PERMISSIVE
RATHER  THAN  MANDATORY; (III) THE MANDATE RESULTS FROM THE PASSAGE OF A
HOME  RULE  MESSAGE    WHEREBY  A  SCHOOL DISTRICT REQUESTS AUTHORITY TO
IMPLEMENT THE PROGRAM OR SERVICE   SPECIFIED IN  THE  STATUTE,  AND  THE
STATUTE  IMPOSES COSTS ONLY UPON THAT SCHOOL DISTRICT WHICH REQUESTS THE
AUTHORITY TO IMPOSE THE PROGRAM OR SERVICE; (IV) THE MANDATE IS REQUIRED
BY, OR ARISES FROM, AN EXECUTIVE ORDER OF THE GOVERNOR EXERCISING HIS OR
HER EMERGENCY POWERS; OR (V) THE MANDATE IS REQUIRED BY STATUTE OR EXEC-
UTIVE ORDER THAT IMPLEMENTS A FEDERAL LAW OR REGULATION AND RESULTS FROM
COSTS MANDATED BY THE FEDERAL GOVERNMENT TO BE BORNE AT THE LOCAL LEVEL,
UNLESS THE STATUTE OR EXECUTIVE ORDER RESULTS IN COSTS WHICH EXCEED  THE
COSTS MANDATED BY THE FEDERAL GOVERNMENT.
  (B) EACH ACT ESTABLISHING A MANDATE SHALL PROVIDE THAT  THE  EFFECTIVE
DATE  OF ANY SUCH MANDATE  IMPOSED ON SCHOOL DISTRICTS SHALL BE CONSIST-
ENT WITH THE NEEDS OF THE STATE AND SCHOOL DISTRICTS TO PLAN IMPLEMENTA-
TION THEREOF, AND ALSO CONSISTENT  WITH  THE  AVAILABILITY  OF  REQUIRED
FUNDS.
  S 15. The executive law is amended by adding a new article 4-B to read
as follows:
                                ARTICLE 4-B
           OFFICE OF THE STATE INSPECTOR GENERAL FOR EDUCATION

SECTION 57. ESTABLISHMENT AND ORGANIZATION.
        58. FUNCTIONS AND DUTIES.
        59. POWERS.
  S  57. ESTABLISHMENT AND ORGANIZATION.  1. THERE IS HEREBY ESTABLISHED
THE OFFICE OF THE STATE INSPECTOR GENERAL FOR EDUCATION. THE HEAD OF THE
OFFICE SHALL BE THE EDUCATION INSPECTOR GENERAL, WHO SHALL BE  APPOINTED
BY  THE  BOARD OF THE   OFFICE OF THE STATE INSPECTOR GENERAL FOR EDUCA-
TION. SUCH OFFICE SHALL BE INDEPENDENT OF THE  DEPARTMENT  OF  EDUCATION
AND OF ANY OTHER OFFICE, AGENCY, BOARD OR COMMISSION OF THE STATE OR ANY
OF ITS POLITICAL SUBDIVISIONS.
  2.  THE  EDUCATION  INSPECTOR GENERAL MAY EMPLOY AND AT THEIR PLEASURE
REMOVE SUCH PERSONNEL AS  THEY DEEM NECESSARY FOR THE PERFORMANCE OF THE
OFFICE, AND MAY FIX THEIR COMPENSATION WITH AMOUNTS AVAILABLE THEREFOR.
  3. THERE IS HEREBY ESTABLISHED THE BOARD OF THE OFFICE  OF  THE  STATE
INSPECTOR  GENERAL  FOR EDUCATION WHICH SHALL CONSIST OF ELEVEN MEMBERS,
AND SHALL HAVE AND EXERCISE THE POWERS AND DUTIES OF THE  OFFICE OF  THE
STATE INSPECTOR GENERAL FOR EDUCATION.
  4. THE BOARD MEMBERS SHALL BE APPOINTED AS FOLLOWS:
  (A)  THREE  MEMBERS  SHALL  BE  APPOINTED BY THE GOVERNOR, ONE OF WHOM
SHALL BE DESIGNATED BY THE  GOVERNOR AS THE CHAIR OF THE BOARD;
  (B) THREE MEMBERS SHALL BE APPOINTED BY THE TEMPORARY PRESIDENT OF THE
SENATE;
  (C) THREE MEMBERS SHALL BE APPOINTED BY THE SPEAKER OF THE ASSEMBLY;
  (D) ONE MEMBER SHALL BE APPOINTED BY THE MINORITY LEADER OF THE ASSEM-
BLY; AND
  (E) ONE MEMBER SHALL BE  APPOINTED  BY  THE  MINORITY  LEADER  OF  THE
SENATE.
  5. THE BOARD MEMBERS SHALL SERVE FOR TERMS OF FIVE YEARS.
  6. THE CHAIR OF THE BOARD OR ANY FIVE MEMBERS THEREOF MAY CALL A MEET-
ING OF THE BOARD.
  7.  ANY  VACANCY  OCCURRING  ON THE BOARD SHALL BE FILLED WITHIN SIXTY
DAYS OF ITS OCCURRENCE, IN THE  SAME MANNER AS THE MEMBER WHOSE  VACANCY
IS  BEING  FILLED  WAS  APPOINTED. A PERSON APPOINTED  TO FILL A VACANCY

S. 1781                             9                            A. 1328

OCCURRING OTHER THAN  BY  EXPIRATION  OF  A  TERM  OF  OFFICE  SHALL  BE
APPOINTED FOR THE  UNEXPIRED TERM OF THE MEMBER HE OR SHE SUCCEEDS.
  8.  SIX  MEMBERS  OF THE BOARD SHALL CONSTITUTE A QUORUM AND THE BOARD
SHALL HAVE THE POWER TO ACT BY MAJORITY VOTE  OF  THE  TOTAL  NUMBER  OF
MEMBERS OF THE BOARD WITHOUT VACANCY.
  9. THE BOARD MEMBERS SHALL NOT RECEIVE COMPENSATION BUT SHALL BE REIM-
BURSED  FOR  REASONABLE  EXPENSES  INCURRED  IN THE PERFORMANCE OF THEIR
OFFICIAL DUTIES.
  10. THE BOARD SHALL APPOINT AN EDUCATION INSPECTOR GENERAL  WHO  SHALL
PERFORM  THE  POWERS  AND  DUTIES  SET FORTH IN SECTIONS FIFTY-EIGHT AND
FIFTY-NINE OF THIS ARTICLE, AND WHO SHALL SERVE FOR  A  TERM    OF  FIVE
YEARS AND MAY ONLY BE DISMISSED FOR CAUSE OR BY A THREE-QUARTERS VOTE OF
THE  BOARD. THE  BOARD MAY FIX THE COMPENSATION OF THE EDUCATION INSPEC-
TOR GENERAL.
  11. NO BOARD MEMBER, NOR THE EDUCATION INSPECTOR GENERAL,  SHALL  HOLD
ANY  ELECTED  PUBLIC  OFFICE OR OFFICE IN ANY POLITICAL PARTY, NOR SHALL
ANY MEMBER BE AN EMPLOYEE OF OR UNDER THE SUPERVISION OF ANY PERSON  WHO
HOLDS  SUCH  ELECTED  PUBLIC  OFFICE  OR OFFICE OF A POLITICAL PARTY. NO
MEMBER OF THE  BOARD SHALL SERVE IN ANY PUBLIC OR POLITICAL OFFICE WITH-
IN FIVE YEARS OF THE MEMBER'S PERIOD OF SERVICE.
  12. THE EDUCATION INSPECTOR GENERAL SHALL, PRIOR TO THEIR APPOINTMENT,
HAVE HAD AT LEAST TEN YEARS EXPERIENCE IN AUDITING OR LAW ENFORCEMENT OR
INVESTIGATION, OR IN PROSECUTING OR AIDING IN THE PROSECUTION OF FRAUD.
  13. MEMBERS OF THE BOARD SHALL, PRIOR TO THEIR APPOINTMENT,  HAVE  HAD
AT  LEAST THREE YEARS EXPERIENCE IN AUDITING OR INVESTIGATION OF GOVERN-
MENTAL OR SCHOOL DISTRICT OPERATIONS, OR IN THE  PRACTICE  OF  LAW,  LAW
ENFORCEMENT  OR  IN  SERVICES  RELATED  TO DEVELOPMENT AND MANAGEMENT OF
INFORMATION TECHNOLOGY OR DATABASE CREATION AND MAINTENANCE.
  S 58. FUNCTIONS AND DUTIES.   THE EDUCATION  INSPECTOR  GENERAL  SHALL
HAVE THE FOLLOWING DUTIES AND RESPONSIBILITIES:
  1.  TO RECEIVE AND INVESTIGATE COMPLAINTS FROM ANY SOURCE, OR UPON HIS
OR HER OWN INITIATIVE, CONCERNING ALLEGATIONS OF  CORRUPTION,  FINANCIAL
IMPROPRIETIES,  UNETHICAL  CONDUCT, MISCONDUCT OR OTHER CRIMINAL CONDUCT
WITHIN PUBLIC SCHOOL DISTRICTS OUTSIDE OF A CITY WITH  A  POPULATION  OF
ONE MILLION OR MORE;
  2.  TO  INVESTIGATE AND REPORT ON CORRUPTION AND OTHER CRIMINAL ACTIV-
ITY, SCHOOL BOARD ELECTION FRAUD,  BIDDING IRREGULARITIES AND  CONFLICTS
OF INTEREST BY PUBLIC SCHOOL DISTRICT EMPLOYEES WHOSE ACTIONS  RELATE TO
THEIR  EMPLOYMENT,  PERSONS  OR  ENTITIES  DOING  BUSINESS WITH A PUBLIC
SCHOOL DISTRICT CONCERNING THEIR TRANSACTIONS WITH THE SCHOOL  DISTRICT,
AND SCHOOL BOARD MEMBERS WHOSE ACTIONS  RELATE TO THEIR OFFICE;
  3.  TO DETERMINE WITH RESPECT TO SUCH ALLEGATIONS WHETHER DISCIPLINARY
ACTION, CIVIL OR CRIMINAL  PROSECUTION, OR FURTHER INVESTIGATION  BY  AN
APPROPRIATE  FEDERAL,  STATE OR LOCAL AGENCY IS WARRANTED, AND TO ASSIST
IN SUCH INVESTIGATIONS;
  4. TO REVIEW AND EXAMINE PERIODICALLY THE POLICIES AND  PROCEDURES  OF
PUBLIC  SCHOOL  DISTRICTS WITH REGARD TO THE PREVENTION AND DETECTION OF
CORRUPTION, FINANCIAL IMPROPRIETIES,  UNETHICAL  CONDUCT,    MISCONDUCT,
OTHER CRIMINAL CONDUCT, SCHOOL BOARD ELECTION FRAUD, BIDDING IRREGULARI-
TIES AND CONFLICTS OF INTEREST OR ABUSE;
  5.  TO  RECOMMEND  REMEDIAL ACTION TO PREVENT OR ELIMINATE CORRUPTION,
FINANCIAL IMPROPRIETIES, UNETHICAL CONDUCT, MISCONDUCT,  OTHER  CRIMINAL
CONDUCT,  SCHOOL BOARD ELECTION FRAUD, BIDDING IRREGULARITIES, CONFLICTS
OF INTEREST OR ABUSE BY PUBLIC SCHOOL DISTRICT OFFICIALS AND EMPLOYEES;
  6. TO ESTABLISH PROGRAMS FOR  TRAINING  PUBLIC  SCHOOL  OFFICIALS  AND
EMPLOYEES REGARDING THE PREVENTION AND ELIMINATION OF CORRUPTION, FINAN-

S. 1781                            10                            A. 1328

CIAL   IMPROPRIETIES,  UNETHICAL  CONDUCT,  MISCONDUCT,  OTHER  CRIMINAL
CONDUCT,  SCHOOL  BOARD  ELECTION  FRAUD,  BIDDING  IRREGULARITIES   AND
CONFLICTS OF INTEREST OR ABUSE;
  7. TO PREPARE AN ANNUAL REPORT THAT PROVIDES THE RESULTS OF THE EDUCA-
TION  INSPECTOR  GENERAL'S FINDINGS   WITH RESPECT TO ALL INVESTIGATIONS
AND DETAILED ANALYSIS OF THE CURRENT FINANCIAL STATUS  OF  THOSE  SCHOOL
DISTRICTS THAT HAVE BEEN REVIEWED;
  8.  TO  INCLUDE  IN  SUCH  REPORT ANY FINDINGS REGARDING THE FINANCIAL
PRACTICES OF THE SCHOOL DISTRICT THAT THE  EDUCATION  INSPECTOR  GENERAL
BELIEVES  VIOLATED,  OR  COULD POTENTIALLY VIOLATE, EXISTING STATE RULES
OR REGULATIONS OR MAY BE OF CONCERN IN  THAT  INCOMPETENCE  OR  LACK  OF
TRAINING MAY RESULT IN  FINANCIAL PRACTICES THAT VIOLATE STATE RULES AND
REGULATIONS;
  9.  TO  ISSUE  THE  REPORT TO THE LEGISLATURE, THE COMPTROLLER AND THE
DEPARTMENT OF EDUCATION WITH EACH  ANNUAL  REPORT  POSTED  ON  A  PUBLIC
INTERNET WEBSITE FOR AT LEAST FIVE YEARS FROM THE DATE OF ISSUANCE.
  S  59.  POWERS.   THE EDUCATION INSPECTOR GENERAL SHALL HAVE THE POWER
TO:
  1. SUBPOENA AND ENFORCE THE ATTENDANCE  OF  WITNESSES,  INCLUDING  THE
POWER  TO  SUBPOENA DOCUMENTS AND RECORDS NECESSARY TO ANY INVESTIGATION
FROM ANY PUBLIC SCHOOL DISTRICT OUTSIDE OF A CITY WITH A  POPULATION  OF
ONE  MILLION  OR  MORE AND FROM VENDORS WHO DO BUSINESS WITH SUCH PUBLIC
SCHOOL DISTRICTS;
  2. ADMINISTER OATHS OR AFFIRMATIONS AND EXAMINE WITNESSES UNDER OATH;
  3. REQUIRE THE PRODUCTION OF ANY BOOKS AND PAPERS DEEMED  RELEVANT  OR
MATERIAL TO ANY INVESTIGATION, EXAMINATION OR REVIEW;
  4. NOTWITHSTANDING ANY LAW TO THE CONTRARY, EXAMINE AND COPY OR REMOVE
DOCUMENTS  OR  RECORDS  OF  ANY KIND PREPARED, MAINTAINED OR HELD BY ANY
PUBLIC SCHOOL DISTRICT COVERED BY THIS ARTICLE;
  5. REQUIRE ANY PUBLIC SCHOOL DISTRICT  EMPLOYEE  TO  ANSWER  QUESTIONS
CONCERNING  ANY MATTER RELATED TO THE PERFORMANCE OF HIS OR HER OFFICIAL
DUTIES. NO STATEMENT OR OTHER EVIDENCE DERIVED  THEREFROM  MAY  BE  USED
AGAINST  SUCH OFFICER OR EMPLOYEE IN ANY SUBSEQUENT CRIMINAL PROSECUTION
OTHER THAN FOR PERJURY OR CONTEMPT  ARISING  FROM  SUCH  TESTIMONY.  THE
REFUSAL  OF  ANY  OFFICER OR EMPLOYEE TO ANSWER QUESTIONS SHALL BE CAUSE
FOR REMOVAL FROM OFFICE OR EMPLOYMENT OR OTHER APPROPRIATE PENALTY;
  6. MONITOR THE IMPLEMENTATION BY PUBLIC SCHOOL DISTRICTS OF ANY RECOM-
MENDATIONS MADE BY THE EDUCATION INSPECTOR GENERAL;
  7. PERFORM ANY OTHER FUNCTIONS THAT ARE NECESSARY  OR  APPROPRIATE  TO
FULFILL THE DUTIES AND RESPONSIBILITIES OF THE OFFICE.
  S 16. Subparagraphs 2 and 3 of paragraph b of subdivision 2 of section
33  of  the general municipal law, as amended by section 24 of subpart F
of part C of chapter 97 of the laws of  2011,  are  amended  and  a  new
subparagraph 4 is added to read as follows:
  (2)  assessing  the  current  financial practices of school districts,
BOCES and charter schools to ensure that they are consistent with estab-
lished standards, including whether any  school  district  that  uses  a
risk-based  or  sampling methodology to determine which claims are to be
audited in lieu of auditing all claims has adopted  a  methodology  that
provides  reasonable  assurance  that  all the claims represented in the
sample are proper charges against the school district; [and]
  (3) determining that school  districts,  BOCES,  and  charter  schools
provide  for  adequate  protections against any fraud, theft, or profes-
sional misconduct[.]; AND
  (4) AUDITING FEDERAL AND  STATE  GRANT  PROGRAM  EXPENDITURES  IN  ALL
SCHOOL DISTRICTS, BOCES AND CHARTER SCHOOLS.

S. 1781                            11                            A. 1328

  S 17. Paragraph d of subdivision 2 of section 33 of the general munic-
ipal  law,  as  added  by chapter 267 of the laws of 2005, is amended to
read as follows:
  d.  The office of the state comptroller shall upon making a finding of
misconduct refer any findings of fraud, abuse or other  conduct  consti-
tuting  a  crime  that  are  uncovered during the course of an audit, as
appropriate, to the  commissioner  of  education,  THE  NEW  YORK  STATE
INSPECTOR GENERAL FOR EDUCATION, the charter entity, the attorney gener-
al,  United States attorney or district attorney having jurisdiction for
appropriate action, together with any documents supporting the auditors'
findings.
  S 18. The labor law is amended by adding a new section 742 to read  as
follows:
  S  742.  PROHIBITION;  PUBLIC  SCHOOL  DISTRICT EMPLOYER WHO PENALIZES
EMPLOYEES BECAUSE OF COMPLAINTS  OF  EMPLOYER  MALFEASANCE.  1.    DEFI-
NITIONS.  AS  USED  IN  THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS:
  (A) "EMPLOYEE" MEANS ANY PERSON WHO PERFORMS SERVICES  FOR  AND  UNDER
THE  CONTROL  AND DIRECTION   OF ANY PUBLIC SCHOOL DISTRICT OUTSIDE OF A
CITY WITH A POPULATION OF ONE MILLION OR MORE FOR WAGES  OR OTHER REMUN-
ERATION.
  (B) "EMPLOYER" MEANS ANY PUBLIC SCHOOL DISTRICT OUTSIDE OF A CITY WITH
A POPULATION OF ONE  MILLION OR MORE.
  (C) "AGENT" MEANS ANY  INDIVIDUAL,  PARTNERSHIP,  ASSOCIATION,  CORPO-
RATION, OR GROUP OF PERSONS  ACTING ON BEHALF OF AN EMPLOYER.
  (D) "PUBLIC BODY" MEANS:
  (1)  THE UNITED STATES CONGRESS, ANY STATE LEGISLATURE, OR ANY ELECTED
LOCAL GOVERNMENTAL BODY, OR ANY MEMBER OR EMPLOYEE THEREOF;
  (2) THE NEW YORK STATE INSPECTOR GENERAL FOR EDUCATION;
  (3) THE STATE COMPTROLLER;
  (4) THE ATTORNEY GENERAL;
  (5) ANY FEDERAL, STATE OR LOCAL REGULATORY, ADMINISTRATIVE  OR  PUBLIC
AGENCY OR AUTHORITY, OR INSTRUMENTALITY THEREOF;
  (6)  ANY FEDERAL, STATE OR LOCAL LAW ENFORCEMENT AGENCY, PROSECUTORIAL
OFFICE, OR POLICE OR PEACE  OFFICER;
  (7) ANY FEDERAL, STATE OR LOCAL DEPARTMENT OF AN EXECUTIVE  BRANCH  OF
GOVERNMENT; OR
  (8)  ANY  DIVISION,  BOARD, BUREAU, OFFICE, COMMITTEE OR COMMISSION OF
ANY OF THE PUBLIC BODIES   DESCRIBED IN SUBPARAGRAPH  ONE,  TWO,  THREE,
FOUR, FIVE, SIX OR SEVEN OF THIS PARAGRAPH.
  (E)  "RETALIATORY  ACTION"  MEANS THE DISCHARGE, SUSPENSION, DEMOTION,
PENALIZATION OR DISCRIMINATION AGAINST AN  EMPLOYEE,  OR  OTHER  ADVERSE
EMPLOYMENT  ACTION TAKEN AGAINST AN EMPLOYEE IN THE TERMS AND CONDITIONS
OF EMPLOYMENT.
  (F) "SUPERVISOR" MEANS ANY PERSON WITHIN  AN  EMPLOYER'S  ORGANIZATION
WHO  HAS THE AUTHORITY TO  DIRECT AND CONTROL THE WORK PERFORMANCE OF AN
EMPLOYEE, OR WHO HAS THE AUTHORITY TO TAKE CORRECTIVE  ACTION  REGARDING
FRAUD,  CRIMINAL  ACTIVITY  OR  OTHER  MALFEASANCE  TO WHICH AN EMPLOYEE
SUBMITS A COMPLAINT.
  2. RETALIATORY ACTION PROHIBITED. NOTWITHSTANDING ANY OTHER  PROVISION
OF  LAW, NO EMPLOYER SHALL  TAKE RETALIATORY ACTION AGAINST ANY EMPLOYEE
BECAUSE THE EMPLOYEE DOES ANY OF THE FOLLOWING:
  (A) DISCLOSES OR THREATENS TO DISCLOSE TO A SUPERVISOR, OR TO A PUBLIC
BODY AN ACTIVITY, POLICY OR PRACTICE OF THE EMPLOYER OR AGENT  THAT  THE
EMPLOYEE,  IN GOOD FAITH, REASONABLY BELIEVES  CONSTITUTES FRAUD, CRIMI-
NAL ACTIVITY OR OTHER MALFEASANCE; OR

S. 1781                            12                            A. 1328

  (B) OBJECTS TO, OR REFUSES TO PARTICIPATE IN ANY ACTIVITY,  POLICY  OR
PRACTICE  OF  THE  EMPLOYER  OR  AGENT THAT THE EMPLOYEE, IN GOOD FAITH,
REASONABLY  BELIEVES  CONSTITUTES  FRAUD,  CRIMINAL  ACTIVITY  OR  OTHER
MALFEASANCE.
  3.  ENFORCEMENT.  AN  EMPLOYEE  MAY  SEEK  ENFORCEMENT OF THIS SECTION
PURSUANT TO PARAGRAPH (E) OF SUBDIVISION FOUR OF SECTION  SEVEN  HUNDRED
FORTY OF THIS ARTICLE.
  4.  RELIEF.  IN  ANY  COURT ACTION BROUGHT PURSUANT TO THIS SECTION IT
SHALL BE A DEFENSE THAT THE PERSONNEL ACTION WAS PREDICATED UPON GROUNDS
OTHER THAN THE EMPLOYEE'S EXERCISE OF ANY  RIGHTS    PROTECTED  BY  THIS
SECTION.
  S  19.  Subdivision  4  of  section 740 of the labor law is amended by
adding a new paragraph (e) to read as follows:
  (E) NOTWITHSTANDING THE PROVISIONS OF PARAGRAPHS (A) AND (C)  OF  THIS
SUBDIVISION,  AN  EMPLOYEE  WHO  HAS  BEEN  THE SUBJECT OF A RETALIATORY
ACTION BY AN EMPLOYER IN VIOLATION OF SECTION SEVEN HUNDRED FORTY-TWO OF
THIS ARTICLE MAY INSTITUTE A CIVIL ACTION IN A COURT OF COMPETENT JURIS-
DICTION FOR RELIEF AS SET FORTH IN  SUBDIVISION  FIVE  OF  THIS  SECTION
WITHIN  TWO  YEARS  AFTER  THE  ALLEGED RETALIATORY PERSONNEL ACTION WAS
TAKEN. IN ADDITION TO THE RELIEF SET FORTH IN SUCH SUBDIVISION FIVE, THE
COURT, IN ITS DISCRETION, BASED UPON A FINDING THAT THE  EMPLOYER  ACTED
IN BAD FAITH IN THE RETALIATORY ACTION, MAY ORDER THE EMPLOYER TO TERMI-
NATE THE SUPERVISOR WHO RETALIATED AGAINST THE EMPLOYEE.
  S  20. The penal law is amended by adding a new section 190.73 to read
as follows:
S 190.73 DEFRAUDING A PUBLIC PENSION PLAN.
  A PERSON IS GUILTY OF DEFRAUDING A PUBLIC PENSION PLAN WHEN HE OR  SHE
ENGAGES  IN A SCHEME CONSTITUTING A SYSTEMATIC ONGOING COURSE OF CONDUCT
WITH INTENT TO OBTAIN A BENEFIT OR ASSET, OR ASSIST  A  THIRD  PARTY  TO
OBTAIN A BENEFIT OR ASSET, FROM A PUBLIC PENSION PLAN TO WHICH HE OR SHE
OR  THE  THIRD  PARTY  IS  NOT  OTHERWISE  ENTITLED  TO  PURSUANT TO THE
RESTRICTION OF SECTION TWO HUNDRED ELEVEN OF THE RETIREMENT  AND  SOCIAL
SECURITY LAW.
  DEFRAUDING A PUBLIC PENSION PLAN IS A CLASS E FELONY.
  S 21. Section 211 of the retirement and social security law is amended
by adding a new subdivision 9 to read as follows:
  9.  A  RETIRED PERSON RECEIVING A RETIREMENT ALLOWANCE WHO IS EMPLOYED
AND EARNING COMPENSATION IN A PUBLIC SERVICE POSITION OR POSITIONS  WITH
THE  TOTAL  COMPENSATION  EXCEEDING THE LIMITATIONS SET FORTH IN SECTION
TWO HUNDRED TWELVE OF THIS ARTICLE AND SUCH PERSON HAS NOT OBTAINED  THE
REQUISITE  WAIVER  SET  FORTH IN THIS SECTION, AS WELL AS ANY PERSON WHO
KNOWINGLY ASSISTS ANOTHER PERSON IN  RECEIVING  A  RETIREMENT  ALLOWANCE
WHILE RECEIVING TOTAL COMPENSATION IN A PUBLIC SERVICE POSITION OR POSI-
TIONS EXCEEDING THE LIMITS OF SECTION TWO HUNDRED TWELVE OF THIS ARTICLE
AND  NOT  HAVING OBTAINED THE REQUISITE WAIVER, IS GUILTY OF LARCENY AND
PUNISHABLE AS PROVIDED IN THE PENAL LAW.
  S 22. This act shall take effect January 1, 2014.

S1781A (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A1328A
Current Committee:
Law Section:
Education Law
Laws Affected:
Amd Ed L, generally; add Art 4-B §§57 - 59, Exec L; amd §33, Gen Muni L; add §742, amd §740, Lab L; add §190.73, Pen L; amd §211, R & SS L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S1802, A1939
2009-2010: A7280, S3567

S1781A (ACTIVE) - Bill Texts

view summary

Enacts the NYS school taxpayers' protection act; requires the reporting of suspected corruption or conflicts of interest within the operation of a school district; requires the treasurer of each district to issue an annual report of all moneys received by the board and any expenditures; creates a compensation committee to oversee proposed contracts of all school district bargaining units, administrators and superintendents; creates the office of the state inspector general for education; prohibits retaliation by public school district employers where employees have made complaints of malfeasance; creates crime of defrauding a public pension plan.

view sponsor memo
BILL NUMBER:S1781A

TITLE OF BILL: An act to amend the education law, the executive law,
the general municipal law, the labor law, the penal law and the
retirement and social security law, in relation to enacting the "New
York state school taxpayers' protection act"

PURPOSE:

Create an independent state agency, the New York state inspector
general for education, to investigate allegations of corruption,
financial improprieties, unethical misconduct or other criminal
conduct within school districts outside of New York City that are
causing waste and abuse of school taxpayers' hard-earned dollars.
Also incorporates extensive financial safeguards and sanctions for
violations of school district finance laws.

SUMMARY OF PROVISIONS:

Section 1 provides that this legislation shall be entitled the "New
York state school taxpayers' protection act".

Section 2 sets forth the legislative findings that public school
districts in the state have recently experienced numerous instances of
financial scandals and contains the legislative intent behind this
measure as seeking to curb and eventually eliminate such scandals
through creation of a New York state inspector general for education
and by establishing new school district financial safeguards with
sanctions for violations of school district finance laws.

Section 3 creates a mandatory reporting scheme for public school
district officials and employees to report any cases of suspected
corruption, other criminal activity or conflicts of interest occurring
within a school district. Any mandated reporter who willfully fails to
make such a report would be guilty of a class A misdemeanor with
possible civil liability for violations. Any mandated reporter who in
good faith participates in making a report shall have immunity from
liability.

Sections 4 and 5 shall require the treasurer of either a common school
district or union free school district, whichever is applicable, to
issue an annual report concerning all money received and disbursed by
the district with such treasurer certifying that they have reviewed
the annual report. In addition, the treasurer shall certify that based
on their knowledge, the report does not contain any untrue statement
of a material fact and the financial statements and other information
in such report fairly presents in all material respects the financial
condition of the school district.

Section 6 requires a public school district superintendent to certify
in the annual financial report that they have reviewed the annual
report. Furthermore, the superintendent shall certify that based on
their knowledge, the financial statements and other financial
information fairly presents in all material respects the financial
condition of the school district and the report does not contain any
untrue statement of a material fact.


Section 7 requires all public school districts outside of New York
City, except those with less than eight teachers, to establish a local
school district compensation committee to oversee and report on
proposed employment contracts between school districts and those
districts' bargaining units, administrators and superintendents. Only
one of the three compensation committee members is allowed to be from
a school board and no school district employees may serve on such
committee.

Section 8 mandates school districts to give notice of the availability
of proposed employment contracts or agreements at public libraries,
the school district office(s) and on the school district web site (if
one exists) at least five weeks prior to the vote on whether to
approve such contract.

Sections 9 and 10 amend the current Education Law to require annual
school district budget administrative components to contain a section
outlining all compensation and fringe benefits to which school
district teachers, administrators and superintendents are entitled
under existing employment contracts.

Section 11 and 12 provide for the annual school district budget
statement to be placed on the school district web site (if one exists)
and notice be given to the availability of such statement at public
libraries and school district offices at least thirty days prior to
any school budget vote.

Section 13 stipulates that a school district who prepared a corrective
action plan in response to any findings contained in a State
Comptroller-issued audit report shall notify residents of the
availability of such plan at public libraries, the school district
office(s) and on any existing school district web site. Failure to
comply with this requirement shall subject a school district to a
civil penalty of up to $5,000.

Section 14 would amend the Education law to prohibit any unfunded
mandate on a school district which creates a yearly net additional
cost to any school district greater than $5,000 or imposes an
aggregate yearly net additional cost to all school districts greater
than $500,000.

Section 15 establishes a new, independent office called the "Office of
the State Inspector General for Education". This office would be
charged with receiving and investigating complaints from any source,
or on its own initiative, regarding allegations of corruption,
financial improprieties, unethical conduct, misconduct or other
criminal conduct within public school districts. The Inspector General
for Education would also issue a yearly report to the Legislature,
Comptroller and the Board of Education that details the results of the
Education Inspector General's investigations and contain detailed
analysis of the current financial status of those school districts
that have been reviewed.

Section 16 amends the General Municipal Law to require the State
Comptroller to audit federal and state grant program expenditures in
all school districts, BOCES and charter schools.


Section 17 amends the General Municipal Law to require the State
Comptroller to report any final audit report findings from audits
performed on the grant program expenditures of school districts, BOCES
and charter schools to the Office of the State Inspector General for
Education.

Sections 18 and 19 amend the Labor Law to enact protections for any
public school district employee who in good faith acts as a
"whistleblower" by reporting an activity, policy or practice of a
public school district (or agent of such district) that the employee
reasonably believes constitutes fraud, criminal activity or other
malfeasance.

Section 20 amends the Penal Law to create the crime of "defrauding a
public pension plan", a class E felony, whenever a person engages in a
scheme of an ongoing course of conduct with intent to obtain a benefit
or asset, or assist a third party to obtain a benefit or asset, from a
public pension plan to which the person or the third party is not
otherwise entitled to pursuant to the restriction of Retirement and
social Security Law section 211.

Section 21 amends the Retirement and Social Security Law by expressly
providing that a retired person receiving a retirement allowance who
is employed and earning compensation in a public service position with
total compensation exceeding the applicable Retirement and Social
Security Law section 212 limit yet without having receiving the
requisite legal waiver of such limit, as well as any person who
knowingly assists another person the above mentioned conduct, is
guilty of larceny and is punishable for such as provided in the penal
law.

Section 22 amends the Retirement and Social Security Law by requiring
any public school district BOCES and college or university to report
all money earned by a retired person in their employ that exceeds the
aforementioned section 212 limit to the applicable retirement system
from whom such retired person is receiving their retirement allowance.
Additionally, a school district employing a retired person eligible to
collect, or already collecting, a retirement allowance from a
state/local school retirement system shall report on a monthly basis
to both the applicable retirement system and the New York state
inspector general for education. The report shall list the re-employed
retiree's name, date of birth, place of employment, current position
and all earnings.

Section 23 provides for this act to take effect on January 1, 2015.

EXISTING LAW:

Creates a comprehensive statutory scheme for complete review and
oversight of New York State school districts' entire financial
operations with new safeguards and penalties to deter fiscal
wrongdoing, waste and abuse of any kind.

JUSTIFICATION:

Although Suffolk County has recently experienced a series of public
school district financial scandals, such scandals are not unique to


Suffolk County but could occur anywhere in the state and in fact
recently did in Nassau County as well. In fact, a Suffolk County grand
jury recently issued a thorough and comprehensive set of
recommendations concerning the numerous public school financial
misdeeds that occurred in that county. The grand jury found that each
episode involved malfeasance by individuals or small groups in an
environment where strong internal financial controls in school
business offices were lacking and viewed as optional luxuries.

The bill arises out of that grand jury investigation and reflects
virtually all of the legislative recommendations made by such grand
jury. One of the most important findings made by that grand jury was
the need for a new, independent state agency charged with
investigating allegations of corruption or other financial criminal
conduct within public school districts because of the magnitude and
frequency of the financial crimes occurring in the public school
system. This measure seeks to address this by creating an office of
the Inspector General for Education and giving it broad authority to
investigate financial wrongdoing in the schools, refer cases to the
appropriate law enforcement authorities when warranted and issue
recommendations to assist school districts in avoiding such problems
in the future.

LEGISLATIVE HISTORY:

2011-12 S.1802;
2009-10 S.3567;
2007-08 S.2681.

FISCAL IMPLICATIONS:

Possibly slightly increased administrative costs that should be offset
by the reduction in illegal and fraudulent public school district
spending that should occur as a result of this bill.

EFFECTIVE DATE:

This act shall take effect January 1, 2015.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

    S. 1781--A                                            A. 1328--A

                       2013-2014 Regular Sessions

                      S E N A T E - A S S E M B L Y

                               (PREFILED)

                             January 9, 2013
                               ___________

IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
  ed,  and when printed to be committed to the Committee on Education --
  recommitted to the Committee on Education in  accordance  with  Senate
  Rule  6,  sec.  8  --  committee  discharged,  bill  amended,  ordered
  reprinted as amended and recommitted to said committee

IN ASSEMBLY -- Introduced by M. of A. THIELE -- read once  and  referred
  to  the  Committee  on  Education  --  recommitted to the Committee on
  Education in accordance with Assembly Rule  3,  sec.  2  --  committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the education law, the executive law, the general munic-
  ipal  law, the  labor law, the penal law and the retirement and social
  security law, in relation to  enacting  the  "New  York  state  school
  taxpayers' protection act"

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Short title. This act shall be known and may  be  cited  as
the "New York state school taxpayers' protection act".
  S  2.  Legislative findings and intent. Public school districts in New
York state have recently experienced  numerous  instances  of  financial
scandals.  These scandals have been unprecedented in both the number and
diversity of financial malfeasance. Furthermore, such scandals result in
the diversion of hard-earned property taxpayers' money from their proper
use in school instruction to improper and illegal purposes that  do  not
further  the  school  districts' essential mission of educating New York
children.   Therefore, the legislature finds that  it  is  necessary  to
establish  a  new, independent state agency charged with the function of
investigating allegations of corruption, financial improprieties, uneth-
ical conduct, misconduct or other criminal conduct within public  school

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01690-02-4

S. 1781--A                          2                         A. 1328--A

districts outside of New York city. In addition, the legislature further
finds  that  the  current  laws  must  be  amended to incorporate school
district financial safeguards and establish sanctions for violations  of
school district finance laws.
  S  3.  The  education law is amended by adding a new section 2116-d to
read as follows:
  S 2116-D. PERSONS AND OFFICIALS REQUIRED TO REPORT CASES OF  SUSPECTED
CORRUPTION,  OTHER  CRIMINAL  ACTIVITY OR CONFLICT OF INTEREST OCCURRING
WITHIN THE OPERATIONS OF A SCHOOL DISTRICT. 1. THE FOLLOWING PERSONS AND
OFFICIALS ARE REQUIRED TO REPORT OR CAUSE A REPORT TO BE MADE IN ACCORD-
ANCE WITH THIS SECTION WHEN THEY DISCOVER INFORMATION CONCERNING CONDUCT
WHICH IS KNOWN OR SHOULD REASONABLY BE KNOWN TO  INVOLVE  CORRUPTION  OR
OTHER  CRIMINAL  ACTIVITY  OR  CONFLICT  OF  INTEREST BY EITHER A PUBLIC
SCHOOL DISTRICT EMPLOYEE THAT  RELATES  TO  THEIR  EMPLOYMENT  OR  BY  A
PERSON, PERSONS OR ENTITIES DOING BUSINESS WITH A PUBLIC SCHOOL DISTRICT
WITH  RESPECT TO THEIR TRANSACTIONS WITH THE SCHOOL DISTRICT, ANY SCHOOL
DISTRICT OFFICER, AND ANY SCHOOL DISTRICT EMPLOYEE.
  2. ANY PERSON OR  OFFICIAL  MANDATED  TO  REPORT  CASES  OF  SUSPECTED
CORRUPTION,  OTHER CRIMINAL ACTIVITY OR CONFLICT OF INTEREST PURSUANT TO
SUBDIVISION ONE OF THIS SECTION SHALL IMMEDIATELY REPORT THE INFORMATION
THEY HAVE TO THE NEW YORK STATE  INSPECTOR  GENERAL  FOR  EDUCATION,  AS
ESTABLISHED IN ARTICLE FOUR-B OF THE EXECUTIVE LAW.
  3.  ANY  SCHOOL  DISTRICT  WHICH  EMPLOYS  PERSONS  MANDATED TO REPORT
SUSPECTED INCIDENTS OF CORRUPTION, OTHER CRIMINAL ACTIVITY  OR  CONFLICT
OF  INTEREST  PURSUANT  TO SUBDIVISION ONE OF THIS SECTION SHALL PROVIDE
SUCH CURRENT AND NEW EMPLOYEES WITH WRITTEN INFORMATION  EXPLAINING  THE
REPORTING REQUIREMENTS SET OUT IN SUBDIVISION ONE OF THIS SECTION.
  4.  ANY  PERSON OR OFFICIAL REQUIRED BY THIS SECTION TO REPORT CERTAIN
INFORMATION AS SPECIFIED IN THIS SECTION WHO WILLFULLY FAILS  TO  DO  SO
SHALL BE GUILTY OF A CLASS A MISDEMEANOR.
  5.  ANY  PERSON OR OFFICIAL REQUIRED BY THIS SECTION TO REPORT CERTAIN
INFORMATION AS SPECIFIED IN THIS SECTION  WHO  KNOWINGLY  AND  WILLFULLY
FAILS  TO  DO  SO  SHALL  BE  CIVILLY LIABLE FOR THE DAMAGES PROXIMATELY
CAUSED BY SUCH FAILURE.
  6. ANY PERSON OR OFFICIAL PARTICIPATING IN GOOD FAITH IN THE MAKING OF
A REPORT UNDER THIS SECTION SHALL  HAVE  IMMUNITY  FROM  ANY  LIABILITY,
CIVIL  OR  CRIMINAL,  THAT  MIGHT  OTHERWISE  RESULT  BY  REASON OF SUCH
ACTIONS. FOR THE PURPOSE OF ANY PROCEEDING, CIVIL OR CRIMINAL, THE  GOOD
FAITH  OF  ANY  SUCH  PERSON  OR  OFFICIAL REQUIRED TO REPORT UNDER THIS
SECTION SHALL BE PRESUMED, PROVIDED SUCH PERSON OR OFFICIAL  WAS  ACTING
IN  DISCHARGE  OF THEIR DUTIES AND WITHIN THE SCOPE OF THEIR EMPLOYMENT,
AND THAT SUCH LIABILITY DID NOT RESULT FROM THE  WILLFUL  MISCONDUCT  OR
GROSS NEGLIGENCE OF SUCH PERSON OR OFFICIAL.
  S  4. Subdivision 6 of section 2122 of the education law is amended to
read as follows:
  6. Such treasurer shall[, whenever required by such trustees,]  report
to  [them]  SUCH  TRUSTEES  a  detailed [statement] ANNUAL REPORT of the
moneys received by him OR HER and of his OR HER  disbursements,  and  at
the  annual  meeting  of  such  district  he  OR SHE shall render a full
account of all moneys received by him OR HER and from what  source,  and
when  received, and all disbursements made by him OR HER and to whom and
the dates of such disbursements respectively, and the balance of  moneys
remaining  in  his  OR  HER hands.   THE TREASURER SHALL CERTIFY IN SUCH
ANNUAL REPORT THAT HE OR SHE HAS:   REVIEWED  THE  ANNUAL  REPORT;  THAT
BASED  ON  THE  TREASURER'S  KNOWLEDGE,  THE REPORT DOES NOT CONTAIN ANY
UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO  STATE  A  MATERIAL  FACT

S. 1781--A                          3                         A. 1328--A

NECESSARY  IN ORDER TO MAKE THE STATEMENTS MADE, IN LIGHT OF THE CIRCUM-
STANCES UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEADING; AND BASED
ON SUCH TREASURER'S  KNOWLEDGE,  THE  FINANCIAL  STATEMENTS,  AND  OTHER
FINANCIAL  INFORMATION  INCLUDED  IN  THE  REPORT, FAIRLY PRESENT IN ALL
MATERIAL RESPECTS THE FINANCIAL CONDITION AND RESULTS OF  OPERATIONS  OF
THE SCHOOL DISTRICT AS OF, AND FOR, THE PERIODS PRESENTED IN THE REPORT.
  S  5.  Section  1720  of  the education law is amended by adding a new
subdivision 3 to read as follows:
  3. THE TREASURER OF THE DISTRICT SHALL ISSUE AN ANNUAL REPORT  WITH  A
FULL  AND  DETAILED  ACCOUNT OF ALL MONEYS RECEIVED BY THE BOARD OR SUCH
TREASURER, FOR ITS ACCOUNT AND USE,  AND  OF  ALL  THE  MONEYS  EXPENDED
THEREFOR,  GIVING  THE ITEMS OF EXPENDITURE IN FULL. THE TREASURER SHALL
CERTIFY IN SUCH ANNUAL REPORT THAT HE OR SHE HAS:  REVIEWED  THE  ANNUAL
REPORT;  THAT  BASED  ON  THE TREASURER'S KNOWLEDGE, THE REPORT DOES NOT
CONTAIN ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT TO STATE A MATE-
RIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS MADE,  IN  LIGHT  OF
THE CIRCUMSTANCES UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEADING;
AND  BASED  ON SUCH TREASURER'S KNOWLEDGE, THE FINANCIAL STATEMENTS, AND
OTHER FINANCIAL INFORMATION INCLUDED IN THE REPORT,  FAIRLY  PRESENT  IN
ALL  MATERIAL RESPECTS THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF THE SCHOOL DISTRICT AS OF, AND FOR,  THE  PERIODS  PRESENTED  IN  THE
REPORT.
  S  6.  Section  2215  of  the education law is amended by adding a new
subdivision 18 to read as follows:
  18. TO CERTIFY IN THE ANNUAL REPORT ISSUED PURSUANT TO EITHER  SECTION
SEVENTEEN  HUNDRED  TWENTY  OR  SECTION TWENTY-ONE HUNDRED TWENTY-TWO OF
THIS TITLE THAT HE OR SHE HAS: REVIEWED THE ANNUAL REPORT; THAT BASED ON
THE SUPERINTENDENT'S KNOWLEDGE, THE REPORT DOES NOT CONTAIN  ANY  UNTRUE
STATEMENT  OF A MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY
IN ORDER TO MAKE THE STATEMENTS MADE,  IN  LIGHT  OF  THE  CIRCUMSTANCES
UNDER WHICH SUCH STATEMENTS WERE MADE, NOT MISLEADING; AND BASED ON SUCH
SUPERINTENDENT'S  KNOWLEDGE,  THE FINANCIAL STATEMENTS, AND OTHER FINAN-
CIAL INFORMATION INCLUDED IN THE REPORT, FAIRLY PRESENT IN ALL  MATERIAL
RESPECTS THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE SCHOOL
DISTRICT AS OF, AND FOR, THE PERIODS PRESENTED IN THE REPORT.
  S  7.  The  education law is amended by adding a new section 2116-e to
read as follows:
  S 2116-E. COMPENSATION COMMITTEES. 1. EVERY  SCHOOL  DISTRICT,  EXCEPT
THOSE  EMPLOYING  FEWER THAN EIGHT TEACHERS, SHALL ESTABLISH BY A RESOL-
UTION OF THE TRUSTEES OR BOARD OF  EDUCATION  A  LOCAL  SCHOOL  DISTRICT
COMPENSATION COMMITTEE TO OVERSEE AND REPORT TO THE TRUSTEES OR BOARD ON
THE PROPOSED CONTRACTS OF ALL SCHOOL DISTRICT BARGAINING UNITS, ADMINIS-
TRATORS AND SUPERINTENDENTS.
  2. THE COMPENSATION COMMITTEE SHALL BE ESTABLISHED NO LATER THAN JANU-
ARY FIRST, TWO THOUSAND FIFTEEN AS A COMMITTEE OF THE TRUSTEES OR BOARD,
AS AN ADVISORY COMMITTEE, OR AS A COMMITTEE OF THE WHOLE.
  3. THE COMPENSATION COMMITTEE SHALL CONSIST OF AT LEAST THREE MEMBERS,
AT LEAST TWO OF WHOM SHALL NOT BE A TRUSTEE OR BOARD MEMBER. THE COMPEN-
SATION COMMITTEE MEMBERS SHALL SERVE WITHOUT COMPENSATION.  EMPLOYEES OF
THE  SCHOOL  DISTRICT  ARE  PROHIBITED  FROM SERVING ON THE COMPENSATION
COMMITTEE. A MEMBER OF A COMPENSATION COMMITTEE SHALL BE DEEMED A SCHOOL
DISTRICT OFFICER FOR THE PURPOSES OF SECTIONS THIRTY-EIGHT HUNDRED ELEV-
EN THROUGH THIRTY-EIGHT HUNDRED THIRTEEN OF THIS CHAPTER, BUT SHALL  NOT
BE REQUIRED TO BE A RESIDENT OF THE SCHOOL DISTRICT.
  4.  THE  ROLE  OF  A  COMPENSATION COMMITTEE SHALL BE ADVISORY AND ANY
RECOMMENDATIONS IT PROVIDES TO THE TRUSTEES OR BOARD  UNDER  SUBDIVISION

S. 1781--A                          4                         A. 1328--A

FIVE  OF  THIS  SECTION SHALL NOT SUBSTITUTE FOR ANY REQUIRED REVIEW AND
ACTION BY THE TRUSTEES OR BOARD OF EDUCATION.
  5. IT SHALL BE THE RESPONSIBILITY OF THE COMPENSATION COMMITTEE TO:
  (A)  REVIEW  EVERY  CONTRACT  BETWEEN  THE DISTRICT AND ANY BARGAINING
UNITS, EMPLOYEES, ADMINISTRATORS AND  SUPERINTENDENTS  NEGOTIATED  AFTER
JANUARY FIRST, TWO THOUSAND FIFTEEN;
  (B) RECEIVE AND REVIEW PROPOSED CONTRACTS BETWEEN THE DISTRICT AND ANY
BARGAINING UNITS, EMPLOYEES, ADMINISTRATORS AND SUPERINTENDENTS PRIOR TO
SUCH CONTRACTS' APPROVAL; AND
  (C)  PROVIDE  RECOMMENDATIONS  TO  THE TRUSTEES OR BOARD REGARDING THE
SALARY, FRINGE BENEFITS  AND  OTHER  FORMS  OF  COMPENSATION  GIVEN  AND
PROPOSED  TO  BE  GIVEN TO ALL SCHOOL DISTRICT EMPLOYEES, ADMINISTRATORS
AND SUPERINTENDENTS.
  6. NOTWITHSTANDING ANY PROVISION OF ARTICLE SEVEN OF THE PUBLIC  OFFI-
CERS  LAW  OR  ANY  OTHER LAW TO THE CONTRARY, A SCHOOL DISTRICT COMPEN-
SATION COMMITTEE MAY CONDUCT AN EXECUTIVE SESSION  PURSUANT  TO  SECTION
ONE HUNDRED FIVE OF THE PUBLIC OFFICERS LAW PERTAINING TO ANY MATTER SET
FORTH IN PARAGRAPHS (A) AND (B) OF SUBDIVISION FIVE OF THIS SECTION.
  7.  THE  COMMISSIONER  IS  AUTHORIZED  TO  PROMULGATE REGULATIONS WITH
RESPECT TO COMPENSATION COMMITTEES  AS  ARE  NECESSARY  FOR  THE  PROPER
PERFORMANCE OF THEIR DUTIES.
  8.   AS LONG AS THE CHANCELLOR OF A SCHOOL DISTRICT IN A CITY HAVING A
POPULATION OF ONE MILLION OR MORE INHABITANTS SHALL ANNUALLY CERTIFY  TO
THE  COMMISSIONER  THAT  SUCH  DISTRICT  HAS  A  PROCESS FOR REVIEW BY A
COMPENSATION COMMITTEE OF THE DISTRICT'S CONTRACTS WITH  ANY  BARGAINING
UNITS,  EMPLOYEES, ADMINISTRATORS AND SUPERINTENDENTS, THE PROVISIONS OF
THIS SECTION SHALL NOT APPLY TO SUCH SCHOOL DISTRICT.
  S 8. The education law is amended by adding a new  section  2009-a  to
read as follows:
  S  2009-A. ADDITIONAL REQUIREMENTS OF NOTICE PRIOR TO AUTHORIZATION OF
SCHOOL DISTRICT EMPLOYMENT CONTRACTS. WHERE  ANY  COLLECTIVE  BARGAINING
AGREEMENT,  EMPLOYMENT  CONTRACT  OR  AMENDMENTS  TO  SUCH  AGREEMENT OR
CONTRACT IS TO BE SUBMITTED TO A DISTRICT MEETING FOR A VOTE, THE SCHOOL
DISTRICT BOARD OR TRUSTEES SHALL GIVE NOTICE, AT LEAST FIVE WEEKS  PRIOR
TO  SUCH MEETING, THROUGH A DISTRICT-WIDE MAILING OF THE AVAILABILITY OF
THE AGREEMENT, CONTRACT OR AMENDMENT  AT  PUBLIC  LIBRARIES  WITHIN  THE
DISTRICT,  AT  THE  SCHOOL DISTRICT OFFICES AND ON THE SCHOOL DISTRICT'S
INTERNET WEBSITE, IF ONE EXISTS.
  S 9. Subdivision 4 of section 1608 of the education law, as amended by
chapter 640 of the laws of 2008, is amended to read as follows:
  4. Commencing with the proposed budget for the nineteen hundred  nine-
ty-eight--ninety-nine   school  year,  such  proposed  budget  shall  be
presented in three components: a program component, a capital  component
and  an administrative component which shall be separately delineated in
accordance with regulations of the commissioner after consultation  with
local  school  district  officials.  The  administrative component shall
include, but need not be limited to, office and  central  administrative
expenses, traveling expenses and all compensation, salaries and benefits
of  all school administrators and supervisors, including business admin-
istrators, superintendents of schools and deputy,  assistant,  associate
or  other  superintendents  under  all  existing employment contracts or
collective bargaining agreements, AND TEACHERS UNDER EXISTING EMPLOYMENT
CONTRACTS, any and all expenditures associated with the operation of the
office of trustee or board of trustees, the office of the superintendent
of schools, general administration, the school business office, consult-
ing costs not directly related to direct student services and  programs,

S. 1781--A                          5                         A. 1328--A

planning  and all other administrative activities. The program component
shall include, but need not be limited to, all program  expenditures  of
the school district, including the salaries and benefits of teachers and
any  school  administrators or supervisors who spend a majority of their
time  performing  teaching  duties,  and  all  transportation  operating
expenses.   The capital component shall include, but need not be limited
to, all transportation capital, debt service,  and  lease  expenditures;
costs  resulting  from  judgments  in  tax certiorari proceedings or the
payment of awards from court judgments, administrative orders or settled
or compromised claims; and all facilities costs of the school  district,
including  facilities  lease  expenditures,  the annual debt service and
total debt for all facilities financed by bonds and notes of the  school
district,  and  the  costs of construction, acquisition, reconstruction,
rehabilitation or improvement of school buildings,  provided  that  such
budget  shall  include a rental, operations and maintenance section that
includes base rent costs, total rent costs,  operation  and  maintenance
charges,  cost  per  square  foot for each facility leased by the school
district, and any and all expenditures associated with  custodial  sala-
ries  and  benefits, service contracts, supplies, utilities, and mainte-
nance and repairs of school facilities. For the purposes of the develop-
ment of a budget  for  the  nineteen  hundred  ninety-eight--ninety-nine
school  year,  the  trustee  or  board  of  trustees  shall separate the
district's program, capital and administrative costs  for  the  nineteen
hundred  ninety-seven--ninety-eight  school year in the manner as if the
budget for such year had been presented in three components.
  S 10. Subdivision 4 of section 1716 of the education law,  as  amended
by chapter 640 of the laws of 2008, is amended to read as follows:
  4.  Commencing with the proposed budget for the nineteen hundred nine-
ty-eight--ninety-nine  school  year,  such  proposed  budget  shall   be
presented  in three components: a program component, a capital component
and an administrative component which shall be separately delineated  in
accordance  with regulations of the commissioner after consultation with
local school district  officials.  The  administrative  component  shall
include,  but  need not be limited to, office and central administrative
expenses, traveling expenses and all compensation, salaries and benefits
of all school administrators and supervisors, including business  admin-
istrators,  superintendents  of schools and deputy, assistant, associate
or other superintendents under  all  existing  employment  contracts  or
collective bargaining agreements, AND TEACHERS UNDER EXISTING EMPLOYMENT
CONTRACTS, any and all expenditures associated with the operation of the
board of education, the office of the superintendent of schools, general
administration, the school business office, consulting costs not direct-
ly  related  to  direct  student services and programs, planning and all
other administrative activities.  The program component  shall  include,
but  need  not  be  limited  to,  all program expenditures of the school
district, including the salaries and benefits of teachers and any school
administrators or  supervisors  who  spend  a  majority  of  their  time
performing  teaching  duties, and all transportation operating expenses.
The capital component shall include, but need not  be  limited  to,  all
transportation  capital,  debt  service,  and  lease expenditures; costs
resulting from judgments in tax certiorari proceedings or the payment of
awards from court judgments, administrative orders or settled or compro-
mised claims; and all facilities costs of the school district, including
facilities lease expenditures, the annual debt service  and  total  debt
for  all  facilities financed by bonds and notes of the school district,
and the costs of construction,  acquisition,  reconstruction,  rehabili-

S. 1781--A                          6                         A. 1328--A

tation  or  improvement  of  school buildings, provided that such budget
shall include a rental, operations and maintenance section that includes
base rent costs, total rent costs, operation  and  maintenance  charges,
cost  per  square  foot for each facility leased by the school district,
and any and all expenditures  associated  with  custodial  salaries  and
benefits,  service  contracts,  supplies, utilities, and maintenance and
repairs of school facilities. For the purposes of the development  of  a
budget  for  the nineteen hundred ninety-eight--ninety-nine school year,
the board of education shall separate the  district's  program,  capital
and  administrative costs for the nineteen hundred ninety-seven--ninety-
eight school year in the manner as if the budget for such year had  been
presented in three components.
  S  11.  Subdivision 2 of section 1608 of the education law, as amended
by chapter 640 of the laws of 2008, is amended to read as follows:
  2. Such statement shall be completed at least seven  days  before  the
budget  hearing  at which it is to be presented and copies thereof shall
be prepared and  made  available[,  upon  request  and]  at  the  school
district  offices,  at  any  public  library or free association library
within the district and on the school district's  internet  website,  if
one exists, to residents within the district during the period of [four-
teen]  THIRTY days immediately preceding the annual meeting and election
or special district meeting at which the budget vote will occur  and  at
such  meeting  or  hearing. The board shall also as a part of the notice
required by section two thousand three  of  this  [chapter]  TITLE  give
notice of the date, time and place of the budget hearing and that a copy
of  such  statement  may  be obtained by any resident in the district at
each schoolhouse in the district in which school  is  maintained  during
certain  designated  hours  on each day other than a Saturday, Sunday or
holiday during the [fourteen] THIRTY  days  immediately  preceding  such
meeting.  The  board  shall  include  notice of the availability of such
statement at least once during the  school  year  in  any  district-wide
mailing distributed.
  S  12.  Subdivision 2 of section 1716 of the education law, as amended
by chapter 640 of the laws of 2008, is amended to read as follows:
  2. Such statement shall be completed at least seven  days  before  the
budget  hearing  at which it is to be presented and copies thereof shall
be prepared and  made  available[,  upon  request  and]  at  the  school
district  offices,  at  any  public  library or free association library
within the district and on the school district's  internet  website,  if
one exists, to residents within the district during the period of [four-
teen]  THIRTY days immediately preceding the annual meeting and election
or special district meeting at which the budget vote will occur  and  at
such  meeting  or  hearing. The board shall also as a part of the notice
required by section two thousand  four  of  this  [chapter]  TITLE  give
notice of the date, time and place of the budget hearing and that a copy
of  such  statement  may  be obtained by any resident in the district at
each schoolhouse in the district in which school  is  maintained  during
certain  designated  hours  on each day other than a Saturday, Sunday or
holiday during the [fourteen] THIRTY  days  immediately  preceding  such
meeting.  The  board  shall  include  notice of the availability of such
statement at least once during the  school  year  in  any  district-wide
mailing distributed.
  S  13.  Paragraph (c) of subdivision 3 of section 2116-a of the educa-
tion law, as added by chapter 263 of the laws of  2005,  is  amended  to
read as follows:

S. 1781--A                          7                         A. 1328--A

  (c)  Notwithstanding  the  provisions of subparagraph one of paragraph
(b) of subdivision four of section thirty-five of the general  municipal
law,  each school district shall (i) prepare a corrective action plan in
response to any findings contained in the annual external  audit  report
or  management  letter,  or  any  final audit report issued by the state
comptroller, within ninety days of receipt of such report or letter, and
(ii) to the extent practicable, begin implementation of such  corrective
action  plan no later than the end of the next fiscal year.  EACH SCHOOL
DISTRICT SHALL NOTIFY THE DISTRICT RESIDENTS OF THE AVAILABILITY OF  THE
CORRECTIVE  ACTION  PLAN AT PUBLIC LIBRARIES WITHIN THE DISTRICT, AT THE
SCHOOL DISTRICT OFFICES AND ON THE SCHOOL DISTRICT'S  INTERNET  WEBSITE,
IF  ONE  EXISTS.  ANY  SCHOOL  DISTRICT  WHICH  FAILS TO COMPLY WITH THE
REQUIRED NOTIFICATION OF AVAILABILITY  OF  THE  CORRECTIVE  ACTION  PLAN
SHALL  BE SUBJECT TO A CIVIL PENALTY NOT TO EXCEED FIVE THOUSAND DOLLARS
UPON AN ADMINISTRATIVE DETERMINATION BY THE COMMISSIONER.
  S 14. The education law is amended by adding a new section  1527-a  to
read as follows:
  S  1527-A.  FUNDING OF MANDATES IMPOSED ON SCHOOL DISTRICTS. 1.  DEFI-
NITIONS. AS USED IN THIS SECTION, THE FOLLOWING  TERMS  SHALL  HAVE  THE
FOLLOWING MEANINGS UNLESS THE CONTEXT SHALL OTHERWISE REQUIRE:
  (A) "MANDATE" SHALL MEAN:
  (I)  ANY  STATE LAW, RULE OR REGULATION WHICH CREATES A NEW PROGRAM OR
REQUIRES A HIGHER LEVEL OF SERVICE  FOR  AN  EXISTING  PROGRAM  WHICH  A
SCHOOL  DISTRICT  ORGANIZED  EITHER  BY  SPECIAL LAWS OR PURSUANT TO THE
PROVISIONS OF A GENERAL LAW, IS REQUIRED TO PROVIDE; OR
  (II) ANY GENERAL LAW WHICH GRANTS A  NEW  PROPERTY  TAX  EXEMPTION  OR
INCREASES  AN  EXISTING  PROPERTY  TAX  EXEMPTION  WHICH ANY SUCH SCHOOL
DISTRICT IS REQUIRED TO PROVIDE.
  (B) "UNFUNDED MANDATE" SHALL MEAN:
  (I) ANY STATE LAW, RULE OR REGULATION WHICH CREATES A NEW  PROGRAM  OR
REQUIRES  A  HIGHER   LEVEL OF SERVICE FOR AN EXISTING PROGRAM WHICH ANY
SUCH SCHOOL DISTRICT IS REQUIRED TO PROVIDE AND WHICH RESULTS IN  A  NET
ADDITIONAL COST TO SUCH SCHOOL DISTRICT;
  (II)  ANY  ALTERATION  IN FUNDING PROVIDED TO ANY SUCH SCHOOL DISTRICT
FOR THE PURPOSE OF DEFRAYING THE COSTS OF A PROGRAM WHICH IT IS REQUIRED
TO PROVIDE, THEREBY RESULTING IN A NET ADDITIONAL COST  TO  SUCH  SCHOOL
DISTRICT; OR
  (III)  ANY  GENERAL  LAW  WHICH GRANTS A NEW PROPERTY TAX EXEMPTION OR
INCREASES AN EXISTING PROPERTY  TAX  EXEMPTION  WHICH  ANY  SUCH  SCHOOL
DISTRICT  IS  REQUIRED TO PROVIDE, THEREBY RESULTING IN A NET ADDITIONAL
COST TO SUCH SCHOOL DISTRICT.
  (C) "NET ADDITIONAL COST" MEANS THE COST OR COSTS INCURRED  OR  ANTIC-
IPATED  TO  BE INCURRED WITHIN A ONE YEAR PERIOD BY A SCHOOL DISTRICT IN
PERFORMING OR ADMINISTERING A MANDATE AFTER  SUBTRACTING  THEREFROM  ANY
REVENUES RECEIVED OR RECEIVABLE BY THE SCHOOL DISTRICT ON ACCOUNT OF THE
MANDATED PROGRAM OR SERVICE, INCLUDING BUT NOT LIMITED TO:
  (I) FEES CHARGED TO THE RECIPIENTS OF THE MANDATED PROGRAM OR SERVICE;
  (II)  STATE  OR  FEDERAL  AID  PAID  SPECIFICALLY  OR CATEGORICALLY IN
CONNECTION WITH THE  PROGRAM OR SERVICE; AND
  (III) AN OFFSETTING SAVINGS RESULTING FROM THE  DIMINUTION  OR  ELIMI-
NATION  OF  ANY  OTHER  PROGRAM  OR SERVICE DIRECTLY ATTRIBUTABLE TO THE
PERFORMANCE OR ADMINISTRATION OF THE MANDATED PROGRAM.
  2. FUNDING OF SCHOOL  DISTRICT  MANDATES.  NOTWITHSTANDING  ANY  OTHER
PROVISION OF LAW, NO  UNFUNDED MANDATE SHALL BE ENACTED WHICH CREATES AN
ANNUAL  NET  ADDITIONAL  COST TO ANY   SCHOOL DISTRICT IN EXCESS OF FIVE

S. 1781--A                          8                         A. 1328--A

THOUSAND DOLLARS OR AN AGGREGATE ANNUAL NET  ADDITIONAL    COST  TO  ALL
SCHOOL DISTRICTS IN EXCESS OF FIVE HUNDRED THOUSAND DOLLARS.
  3.  EXEMPTIONS TO THE FUNDING OF SCHOOL DISTRICT MANDATES REQUIREMENT.
(A) THE STATE SHALL NOT BE REQUIRED TO FUND ANY NEW OR EXPANDED PROGRAMS
FOR SCHOOL DISTRICTS IF: (I) THE  MANDATE IS REQUIRED BY A  COURT  ORDER
OR  JUDGMENT;  (II) THE MANDATE IS PROVIDED AT THE  OPTION OF THE SCHOOL
DISTRICT UNDER A LAW, REGULATION, RULE,  OR  ORDER  THAT  IS  PERMISSIVE
RATHER  THAN  MANDATORY; (III) THE MANDATE RESULTS FROM THE PASSAGE OF A
HOME RULE MESSAGE   WHEREBY A  SCHOOL  DISTRICT  REQUESTS  AUTHORITY  TO
IMPLEMENT  THE  PROGRAM  OR  SERVICE   SPECIFIED IN THE STATUTE, AND THE
STATUTE IMPOSES COSTS ONLY UPON THAT SCHOOL DISTRICT WHICH REQUESTS  THE
AUTHORITY TO IMPOSE THE PROGRAM OR SERVICE; (IV) THE MANDATE IS REQUIRED
BY, OR ARISES FROM, AN EXECUTIVE ORDER OF THE GOVERNOR EXERCISING HIS OR
HER EMERGENCY POWERS; OR (V) THE MANDATE IS REQUIRED BY STATUTE OR EXEC-
UTIVE ORDER THAT IMPLEMENTS A FEDERAL LAW OR REGULATION AND RESULTS FROM
COSTS MANDATED BY THE FEDERAL GOVERNMENT TO BE BORNE AT THE LOCAL LEVEL,
UNLESS THE STATUTE OR EXECUTIVE ORDER RESULTS IN COSTS WHICH EXCEED  THE
COSTS MANDATED BY THE FEDERAL GOVERNMENT.
  (B)  EACH  ACT ESTABLISHING A MANDATE SHALL PROVIDE THAT THE EFFECTIVE
DATE OF ANY SUCH MANDATE  IMPOSED ON SCHOOL DISTRICTS SHALL BE  CONSIST-
ENT WITH THE NEEDS OF THE STATE AND SCHOOL DISTRICTS TO PLAN IMPLEMENTA-
TION  THEREOF,  AND  ALSO  CONSISTENT  WITH THE AVAILABILITY OF REQUIRED
FUNDS.
  S 15. The executive law is amended by adding a new article 4-B to read
as follows:
                                ARTICLE 4-B
           OFFICE OF THE STATE INSPECTOR GENERAL FOR EDUCATION

SECTION 57. ESTABLISHMENT AND ORGANIZATION.
        58. FUNCTIONS AND DUTIES.
        59. POWERS.
  S 57. ESTABLISHMENT AND ORGANIZATION.  1. THERE IS HEREBY  ESTABLISHED
THE OFFICE OF THE STATE INSPECTOR GENERAL FOR EDUCATION. THE HEAD OF THE
OFFICE  SHALL BE THE EDUCATION INSPECTOR GENERAL, WHO SHALL BE APPOINTED
BY THE BOARD OF THE  OFFICE OF THE STATE INSPECTOR  GENERAL  FOR  EDUCA-
TION.  SUCH  OFFICE  SHALL BE INDEPENDENT OF THE DEPARTMENT OF EDUCATION
AND OF ANY OTHER OFFICE, AGENCY, BOARD OR COMMISSION OF THE STATE OR ANY
OF ITS POLITICAL SUBDIVISIONS.
  2. THE EDUCATION INSPECTOR GENERAL MAY EMPLOY AND  AT  THEIR  PLEASURE
REMOVE SUCH PERSONNEL AS  THEY DEEM NECESSARY FOR THE PERFORMANCE OF THE
OFFICE, AND MAY FIX THEIR COMPENSATION WITH AMOUNTS AVAILABLE THEREFOR.
  3.  THERE  IS  HEREBY ESTABLISHED THE BOARD OF THE OFFICE OF THE STATE
INSPECTOR GENERAL FOR EDUCATION WHICH SHALL CONSIST OF  ELEVEN  MEMBERS,
AND  SHALL HAVE AND EXERCISE THE POWERS AND DUTIES OF THE  OFFICE OF THE
STATE INSPECTOR GENERAL FOR EDUCATION.
  4. THE BOARD MEMBERS SHALL BE APPOINTED AS FOLLOWS:
  (A) THREE MEMBERS SHALL BE APPOINTED BY  THE  GOVERNOR,  ONE  OF  WHOM
SHALL BE DESIGNATED BY THE  GOVERNOR AS THE CHAIR OF THE BOARD;
  (B) THREE MEMBERS SHALL BE APPOINTED BY THE TEMPORARY PRESIDENT OF THE
SENATE;
  (C) THREE MEMBERS SHALL BE APPOINTED BY THE SPEAKER OF THE ASSEMBLY;
  (D) ONE MEMBER SHALL BE APPOINTED BY THE MINORITY LEADER OF THE ASSEM-
BLY; AND
  (E)  ONE  MEMBER  SHALL  BE  APPOINTED  BY  THE MINORITY LEADER OF THE
SENATE.
  5. THE BOARD MEMBERS SHALL SERVE FOR TERMS OF FIVE YEARS.

S. 1781--A                          9                         A. 1328--A

  6. THE CHAIR OF THE BOARD OR ANY FIVE MEMBERS THEREOF MAY CALL A MEET-
ING OF THE BOARD.
  7.  ANY  VACANCY  OCCURRING  ON THE BOARD SHALL BE FILLED WITHIN SIXTY
DAYS OF ITS OCCURRENCE, IN THE  SAME MANNER AS THE MEMBER WHOSE  VACANCY
IS  BEING  FILLED  WAS  APPOINTED. A PERSON APPOINTED  TO FILL A VACANCY
OCCURRING OTHER THAN  BY  EXPIRATION  OF  A  TERM  OF  OFFICE  SHALL  BE
APPOINTED FOR THE  UNEXPIRED TERM OF THE MEMBER HE OR SHE SUCCEEDS.
  8.  SIX  MEMBERS  OF THE BOARD SHALL CONSTITUTE A QUORUM AND THE BOARD
SHALL HAVE THE POWER TO ACT BY MAJORITY VOTE  OF  THE  TOTAL  NUMBER  OF
MEMBERS OF THE BOARD WITHOUT VACANCY.
  9. THE BOARD MEMBERS SHALL NOT RECEIVE COMPENSATION BUT SHALL BE REIM-
BURSED  FOR  REASONABLE  EXPENSES  INCURRED  IN THE PERFORMANCE OF THEIR
OFFICIAL DUTIES.
  10. THE BOARD SHALL APPOINT AN EDUCATION INSPECTOR GENERAL  WHO  SHALL
PERFORM  THE  POWERS  AND  DUTIES  SET FORTH IN SECTIONS FIFTY-EIGHT AND
FIFTY-NINE OF THIS ARTICLE, AND WHO SHALL SERVE FOR  A  TERM    OF  FIVE
YEARS AND MAY ONLY BE DISMISSED FOR CAUSE OR BY A THREE-QUARTERS VOTE OF
THE  BOARD. THE  BOARD MAY FIX THE COMPENSATION OF THE EDUCATION INSPEC-
TOR GENERAL.
  11. NO BOARD MEMBER, NOR THE EDUCATION INSPECTOR GENERAL,  SHALL  HOLD
ANY  ELECTED  PUBLIC  OFFICE OR OFFICE IN ANY POLITICAL PARTY, NOR SHALL
ANY MEMBER BE AN EMPLOYEE OF OR UNDER THE SUPERVISION OF ANY PERSON  WHO
HOLDS  SUCH  ELECTED  PUBLIC  OFFICE  OR OFFICE OF A POLITICAL PARTY. NO
MEMBER OF THE  BOARD SHALL SERVE IN ANY PUBLIC OR POLITICAL OFFICE WITH-
IN FIVE YEARS OF THE MEMBER'S PERIOD OF SERVICE.
  12. THE EDUCATION INSPECTOR GENERAL SHALL, PRIOR TO THEIR APPOINTMENT,
HAVE HAD AT LEAST TEN YEARS EXPERIENCE IN AUDITING OR LAW ENFORCEMENT OR
INVESTIGATION, OR IN PROSECUTING OR AIDING IN THE PROSECUTION OF FRAUD.
  13. MEMBERS OF THE BOARD SHALL, PRIOR TO THEIR APPOINTMENT,  HAVE  HAD
AT  LEAST THREE YEARS EXPERIENCE IN AUDITING OR INVESTIGATION OF GOVERN-
MENTAL OR SCHOOL DISTRICT OPERATIONS, OR IN THE  PRACTICE  OF  LAW,  LAW
ENFORCEMENT  OR  IN  SERVICES  RELATED  TO DEVELOPMENT AND MANAGEMENT OF
INFORMATION TECHNOLOGY OR DATABASE CREATION AND MAINTENANCE.
  S 58. FUNCTIONS AND DUTIES.   THE EDUCATION  INSPECTOR  GENERAL  SHALL
HAVE THE FOLLOWING DUTIES AND RESPONSIBILITIES:
  1.  TO RECEIVE AND INVESTIGATE COMPLAINTS FROM ANY SOURCE, OR UPON HIS
OR HER OWN INITIATIVE, CONCERNING ALLEGATIONS OF  CORRUPTION,  FINANCIAL
IMPROPRIETIES,  UNETHICAL  CONDUCT, MISCONDUCT OR OTHER CRIMINAL CONDUCT
WITHIN PUBLIC SCHOOL DISTRICTS OUTSIDE OF A CITY WITH  A  POPULATION  OF
ONE MILLION OR MORE;
  2.  TO  INVESTIGATE AND REPORT ON CORRUPTION AND OTHER CRIMINAL ACTIV-
ITY, SCHOOL BOARD ELECTION FRAUD,  BIDDING IRREGULARITIES AND  CONFLICTS
OF INTEREST BY PUBLIC SCHOOL DISTRICT EMPLOYEES WHOSE ACTIONS  RELATE TO
THEIR  EMPLOYMENT,  PERSONS  OR  ENTITIES  DOING  BUSINESS WITH A PUBLIC
SCHOOL DISTRICT CONCERNING THEIR TRANSACTIONS WITH THE SCHOOL  DISTRICT,
AND SCHOOL BOARD MEMBERS WHOSE ACTIONS  RELATE TO THEIR OFFICE;
  3.  TO DETERMINE WITH RESPECT TO SUCH ALLEGATIONS WHETHER DISCIPLINARY
ACTION, CIVIL OR CRIMINAL  PROSECUTION, OR FURTHER INVESTIGATION  BY  AN
APPROPRIATE  FEDERAL,  STATE OR LOCAL AGENCY IS WARRANTED, AND TO ASSIST
IN SUCH INVESTIGATIONS;
  4. TO REVIEW AND EXAMINE PERIODICALLY THE POLICIES AND  PROCEDURES  OF
PUBLIC  SCHOOL  DISTRICTS WITH REGARD TO THE PREVENTION AND DETECTION OF
CORRUPTION, FINANCIAL IMPROPRIETIES,  UNETHICAL  CONDUCT,    MISCONDUCT,
OTHER CRIMINAL CONDUCT, SCHOOL BOARD ELECTION FRAUD, BIDDING IRREGULARI-
TIES AND CONFLICTS OF INTEREST OR ABUSE;

S. 1781--A                         10                         A. 1328--A

  5.  TO  RECOMMEND  REMEDIAL ACTION TO PREVENT OR ELIMINATE CORRUPTION,
FINANCIAL IMPROPRIETIES, UNETHICAL CONDUCT, MISCONDUCT,  OTHER  CRIMINAL
CONDUCT,  SCHOOL BOARD ELECTION FRAUD, BIDDING IRREGULARITIES, CONFLICTS
OF INTEREST OR ABUSE BY PUBLIC SCHOOL DISTRICT OFFICIALS AND EMPLOYEES;
  6.  TO  ESTABLISH  PROGRAMS  FOR  TRAINING PUBLIC SCHOOL OFFICIALS AND
EMPLOYEES REGARDING THE PREVENTION AND ELIMINATION OF CORRUPTION, FINAN-
CIAL  IMPROPRIETIES,  UNETHICAL  CONDUCT,  MISCONDUCT,  OTHER   CRIMINAL
CONDUCT,   SCHOOL  BOARD  ELECTION  FRAUD,  BIDDING  IRREGULARITIES  AND
CONFLICTS OF INTEREST OR ABUSE;
  7. TO PREPARE AN ANNUAL REPORT THAT PROVIDES THE RESULTS OF THE EDUCA-
TION INSPECTOR GENERAL'S FINDINGS   WITH RESPECT TO  ALL  INVESTIGATIONS
AND  DETAILED  ANALYSIS  OF THE CURRENT FINANCIAL STATUS OF THOSE SCHOOL
DISTRICTS THAT HAVE BEEN REVIEWED;
  8. TO INCLUDE IN SUCH REPORT  ANY  FINDINGS  REGARDING  THE  FINANCIAL
PRACTICES  OF  THE  SCHOOL DISTRICT THAT THE EDUCATION INSPECTOR GENERAL
BELIEVES VIOLATED, OR COULD POTENTIALLY VIOLATE,  EXISTING  STATE  RULES
OR  REGULATIONS  OR  MAY  BE  OF CONCERN IN THAT INCOMPETENCE OR LACK OF
TRAINING MAY RESULT IN  FINANCIAL PRACTICES THAT VIOLATE STATE RULES AND
REGULATIONS;
  9. TO ISSUE THE REPORT TO THE LEGISLATURE,  THE  COMPTROLLER  AND  THE
DEPARTMENT  OF  EDUCATION  WITH  EACH  ANNUAL  REPORT POSTED ON A PUBLIC
INTERNET WEBSITE FOR AT LEAST FIVE YEARS FROM THE DATE OF ISSUANCE.
  S 59. POWERS.  THE EDUCATION INSPECTOR GENERAL SHALL  HAVE  THE  POWER
TO:
  1.  SUBPOENA  AND  ENFORCE  THE ATTENDANCE OF WITNESSES, INCLUDING THE
POWER TO SUBPOENA DOCUMENTS AND RECORDS NECESSARY TO  ANY  INVESTIGATION
FROM  ANY  PUBLIC SCHOOL DISTRICT OUTSIDE OF A CITY WITH A POPULATION OF
ONE MILLION OR MORE AND FROM VENDORS WHO DO BUSINESS  WITH  SUCH  PUBLIC
SCHOOL DISTRICTS;
  2. ADMINISTER OATHS OR AFFIRMATIONS AND EXAMINE WITNESSES UNDER OATH;
  3.  REQUIRE  THE PRODUCTION OF ANY BOOKS AND PAPERS DEEMED RELEVANT OR
MATERIAL TO ANY INVESTIGATION, EXAMINATION OR REVIEW;
  4. NOTWITHSTANDING ANY LAW TO THE CONTRARY, EXAMINE AND COPY OR REMOVE
DOCUMENTS OR RECORDS OF ANY KIND PREPARED, MAINTAINED  OR  HELD  BY  ANY
PUBLIC SCHOOL DISTRICT COVERED BY THIS ARTICLE;
  5.  REQUIRE  ANY  PUBLIC  SCHOOL DISTRICT EMPLOYEE TO ANSWER QUESTIONS
CONCERNING ANY MATTER RELATED TO THE PERFORMANCE OF HIS OR HER  OFFICIAL
DUTIES.  NO  STATEMENT  OR  OTHER EVIDENCE DERIVED THEREFROM MAY BE USED
AGAINST SUCH OFFICER OR EMPLOYEE IN ANY SUBSEQUENT CRIMINAL  PROSECUTION
OTHER  THAN  FOR  PERJURY  OR  CONTEMPT ARISING FROM SUCH TESTIMONY. THE
REFUSAL OF ANY OFFICER OR EMPLOYEE TO ANSWER QUESTIONS  SHALL  BE  CAUSE
FOR REMOVAL FROM OFFICE OR EMPLOYMENT OR OTHER APPROPRIATE PENALTY;
  6. MONITOR THE IMPLEMENTATION BY PUBLIC SCHOOL DISTRICTS OF ANY RECOM-
MENDATIONS MADE BY THE EDUCATION INSPECTOR GENERAL;
  7.  PERFORM  ANY  OTHER FUNCTIONS THAT ARE NECESSARY OR APPROPRIATE TO
FULFILL THE DUTIES AND RESPONSIBILITIES OF THE OFFICE.
  S 16. Subparagraphs 2 and 3 of paragraph b of subdivision 2 of section
33 of the general municipal law, as amended by section 24 of  subpart  F
of  part  C  of  chapter  97  of the laws of 2011, are amended and a new
subparagraph 4 is added to read as follows:
  (2) assessing the current financial  practices  of  school  districts,
BOCES and charter schools to ensure that they are consistent with estab-
lished  standards,  including  whether  any  school district that uses a
risk-based or sampling methodology to determine which claims are  to  be
audited  in  lieu  of auditing all claims has adopted a methodology that

S. 1781--A                         11                         A. 1328--A

provides reasonable assurance that all the  claims  represented  in  the
sample are proper charges against the school district; [and]
  (3)  determining  that  school  districts,  BOCES, and charter schools
provide for adequate protections against any fraud,  theft,  or  profes-
sional misconduct[.]; AND
  (4)  AUDITING  FEDERAL  AND  STATE  GRANT  PROGRAM EXPENDITURES IN ALL
SCHOOL DISTRICTS, BOCES AND CHARTER SCHOOLS.
  S 17. Paragraph d of subdivision 2 of section 33 of the general munic-
ipal law, as added by chapter 267 of the laws of  2005,  is  amended  to
read as follows:
  d.  The office of the state comptroller shall upon making a finding of
misconduct refer any findings of fraud, abuse or other  conduct  consti-
tuting  a  crime  that  are  uncovered during the course of an audit, as
appropriate, to the  commissioner  of  education,  THE  NEW  YORK  STATE
INSPECTOR GENERAL FOR EDUCATION, the charter entity, the attorney gener-
al,  United States attorney or district attorney having jurisdiction for
appropriate action, together with any documents supporting the auditors'
findings.
  S 18. The labor law is amended by adding a new section 742 to read  as
follows:
  S  742.  PROHIBITION;  PUBLIC  SCHOOL  DISTRICT EMPLOYER WHO PENALIZES
EMPLOYEES BECAUSE OF COMPLAINTS  OF  EMPLOYER  MALFEASANCE.  1.    DEFI-
NITIONS.  AS  USED  IN  THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
FOLLOWING MEANINGS:
  (A) "EMPLOYEE" MEANS ANY PERSON WHO PERFORMS SERVICES  FOR  AND  UNDER
THE  CONTROL  AND DIRECTION   OF ANY PUBLIC SCHOOL DISTRICT OUTSIDE OF A
CITY WITH A POPULATION OF ONE MILLION OR MORE FOR WAGES  OR OTHER REMUN-
ERATION.
  (B) "EMPLOYER" MEANS ANY PUBLIC SCHOOL DISTRICT OUTSIDE OF A CITY WITH
A POPULATION OF ONE  MILLION OR MORE.
  (C) "AGENT" MEANS ANY  INDIVIDUAL,  PARTNERSHIP,  ASSOCIATION,  CORPO-
RATION, OR GROUP OF PERSONS  ACTING ON BEHALF OF AN EMPLOYER.
  (D) "PUBLIC BODY" MEANS:
  (1)  THE UNITED STATES CONGRESS, ANY STATE LEGISLATURE, OR ANY ELECTED
LOCAL GOVERNMENTAL BODY, OR ANY MEMBER OR EMPLOYEE THEREOF;
  (2) THE NEW YORK STATE INSPECTOR GENERAL FOR EDUCATION;
  (3) THE STATE COMPTROLLER;
  (4) THE ATTORNEY GENERAL;
  (5) ANY FEDERAL, STATE OR LOCAL REGULATORY, ADMINISTRATIVE  OR  PUBLIC
AGENCY OR AUTHORITY, OR INSTRUMENTALITY THEREOF;
  (6)  ANY FEDERAL, STATE OR LOCAL LAW ENFORCEMENT AGENCY, PROSECUTORIAL
OFFICE, OR POLICE OR PEACE  OFFICER;
  (7) ANY FEDERAL, STATE OR LOCAL DEPARTMENT OF AN EXECUTIVE  BRANCH  OF
GOVERNMENT; OR
  (8)  ANY  DIVISION,  BOARD, BUREAU, OFFICE, COMMITTEE OR COMMISSION OF
ANY OF THE PUBLIC BODIES   DESCRIBED IN SUBPARAGRAPH  ONE,  TWO,  THREE,
FOUR, FIVE, SIX OR SEVEN OF THIS PARAGRAPH.
  (E)  "RETALIATORY  ACTION"  MEANS THE DISCHARGE, SUSPENSION, DEMOTION,
PENALIZATION OR DISCRIMINATION AGAINST AN  EMPLOYEE,  OR  OTHER  ADVERSE
EMPLOYMENT  ACTION TAKEN AGAINST AN EMPLOYEE IN THE TERMS AND CONDITIONS
OF EMPLOYMENT.
  (F) "SUPERVISOR" MEANS ANY PERSON WITHIN  AN  EMPLOYER'S  ORGANIZATION
WHO  HAS THE AUTHORITY TO  DIRECT AND CONTROL THE WORK PERFORMANCE OF AN
EMPLOYEE, OR WHO HAS THE AUTHORITY TO TAKE CORRECTIVE  ACTION  REGARDING
FRAUD,  CRIMINAL  ACTIVITY  OR  OTHER  MALFEASANCE  TO WHICH AN EMPLOYEE
SUBMITS A COMPLAINT.

S. 1781--A                         12                         A. 1328--A

  2. RETALIATORY ACTION PROHIBITED. NOTWITHSTANDING ANY OTHER  PROVISION
OF  LAW, NO EMPLOYER SHALL  TAKE RETALIATORY ACTION AGAINST ANY EMPLOYEE
BECAUSE THE EMPLOYEE DOES ANY OF THE FOLLOWING:
  (A) DISCLOSES OR THREATENS TO DISCLOSE TO A SUPERVISOR, OR TO A PUBLIC
BODY  AN  ACTIVITY, POLICY OR PRACTICE OF THE EMPLOYER OR AGENT THAT THE
EMPLOYEE, IN GOOD FAITH, REASONABLY BELIEVES  CONSTITUTES FRAUD,  CRIMI-
NAL ACTIVITY OR OTHER MALFEASANCE; OR
  (B)  OBJECTS  TO, OR REFUSES TO PARTICIPATE IN ANY ACTIVITY, POLICY OR
PRACTICE OF THE EMPLOYER OR AGENT THAT  THE  EMPLOYEE,  IN  GOOD  FAITH,
REASONABLY  BELIEVES  CONSTITUTES  FRAUD,  CRIMINAL  ACTIVITY  OR  OTHER
MALFEASANCE.
  3. ENFORCEMENT. AN EMPLOYEE  MAY  SEEK  ENFORCEMENT  OF  THIS  SECTION
PURSUANT  TO  PARAGRAPH (E) OF SUBDIVISION FOUR OF SECTION SEVEN HUNDRED
FORTY OF THIS ARTICLE.
  4. RELIEF. IN ANY COURT ACTION BROUGHT PURSUANT  TO  THIS  SECTION  IT
SHALL BE A DEFENSE THAT THE PERSONNEL ACTION WAS PREDICATED UPON GROUNDS
OTHER  THAN  THE  EMPLOYEE'S  EXERCISE OF ANY RIGHTS   PROTECTED BY THIS
SECTION.
  S 19. Subdivision 4 of section 740 of the  labor  law  is  amended  by
adding a new paragraph (e) to read as follows:
  (E)  NOTWITHSTANDING  THE PROVISIONS OF PARAGRAPHS (A) AND (C) OF THIS
SUBDIVISION, AN EMPLOYEE WHO HAS  BEEN  THE  SUBJECT  OF  A  RETALIATORY
ACTION BY AN EMPLOYER IN VIOLATION OF SECTION SEVEN HUNDRED FORTY-TWO OF
THIS ARTICLE MAY INSTITUTE A CIVIL ACTION IN A COURT OF COMPETENT JURIS-
DICTION  FOR  RELIEF  AS  SET  FORTH IN SUBDIVISION FIVE OF THIS SECTION
WITHIN TWO YEARS AFTER THE  ALLEGED  RETALIATORY  PERSONNEL  ACTION  WAS
TAKEN. IN ADDITION TO THE RELIEF SET FORTH IN SUCH SUBDIVISION FIVE, THE
COURT,  IN  ITS DISCRETION, BASED UPON A FINDING THAT THE EMPLOYER ACTED
IN BAD FAITH IN THE RETALIATORY ACTION, MAY ORDER THE EMPLOYER TO TERMI-
NATE THE SUPERVISOR WHO RETALIATED AGAINST THE EMPLOYEE.
  S 20. The penal law is amended by adding a new section 190.73 to  read
as follows:
S 190.73 DEFRAUDING A PUBLIC PENSION PLAN.
  A  PERSON IS GUILTY OF DEFRAUDING A PUBLIC PENSION PLAN WHEN HE OR SHE
ENGAGES IN A SCHEME CONSTITUTING A SYSTEMATIC ONGOING COURSE OF  CONDUCT
WITH  INTENT  TO  OBTAIN  A BENEFIT OR ASSET, OR ASSIST A THIRD PARTY TO
OBTAIN A BENEFIT OR ASSET, FROM A PUBLIC PENSION PLAN TO WHICH HE OR SHE
OR THE THIRD  PARTY  IS  NOT  OTHERWISE  ENTITLED  TO  PURSUANT  TO  THE
RESTRICTION  OF  SECTION TWO HUNDRED ELEVEN OF THE RETIREMENT AND SOCIAL
SECURITY LAW.
  DEFRAUDING A PUBLIC PENSION PLAN IS A CLASS E FELONY.
  S 21. Section 211 of the retirement and social security law is amended
by adding a new subdivision 9 to read as follows:
  9. A RETIRED PERSON RECEIVING A RETIREMENT ALLOWANCE WHO  IS  EMPLOYED
AND  EARNING COMPENSATION IN A PUBLIC SERVICE POSITION OR POSITIONS WITH
THE TOTAL COMPENSATION EXCEEDING THE LIMITATIONS SET  FORTH  IN  SECTION
TWO  HUNDRED TWELVE OF THIS ARTICLE AND SUCH PERSON HAS NOT OBTAINED THE
REQUISITE WAIVER SET FORTH IN THIS SECTION, AS WELL AS  ANY  PERSON  WHO
KNOWINGLY  ASSISTS  ANOTHER  PERSON  IN RECEIVING A RETIREMENT ALLOWANCE
WHILE RECEIVING TOTAL COMPENSATION IN A PUBLIC SERVICE POSITION OR POSI-
TIONS EXCEEDING THE LIMITS OF SECTION TWO HUNDRED TWELVE OF THIS ARTICLE
AND NOT HAVING OBTAINED THE REQUISITE WAIVER, IS GUILTY OF  LARCENY  AND
PUNISHABLE AS PROVIDED IN THE PENAL LAW.
  S 22. This act shall take effect January 1, 2015.

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