Senator Flanagan Successful In Pushing For Public Authorities Reform

John J. Flanagan

May 22, 2007

Senator John Flanagan (2nd Senate District), the Chairman of the Senate Corporations, Authorities and Commissions, announced Senate passage of legislation that will strengthen the Public Authorities Reform Act of 2005. The legislation, which Senator Flanagan sponsored, will institute important reforms that will ensure greater openness, transparency and accountability in New York State's public authorities.

"Until we enacted the Public Authorities Accountability Act of 2005, these agencies in many ways operated independent of any real external oversight. With literally hundreds of public authorities operating with multi-million dollar budgets, this legislation will build on the improvements enacted two years ago by implementing effective budget review and control procedures, strengthening the accountability of authority board members and ensuring that taxpayer money is protected."

This legislation will regulate the workings of all public authorities throughout the state of New York including the Long Island Power Authority, the Metropolitan Transportation Authority and other organizations that have tremendous effect on the lives of all New York residents. If signed into law by Governor Eliot Spitzer, Senator Flanagan's legislation would:

Create an Independent Budget Office: The Reform Act will create an independent Authority Budget Office (ABO) to review public authorities. The ABO will be headed by an independent director appointed by the committee of the Attorney General, Comptroller, Governor, Assembly Speaker and Senate Majority Leader. The director will serve a 5-year term, and the ABO will collect, distribute and assess information about the authorities' budgets and operations for the coming year, as well as make reports and provide information to the public and elected officials;

Require Public Authorities to Submit Certain Contracts to the Comptroller: The legislation will allow the comptroller to provide prior review of contracts before being executed;

Control Public Authority Debt: This Senate approved legislation will begin the process of controlling public authority debt. The boards of directors will submit limitations on public authority debt to the ABO, and the ABO will submit to the Legislature and Governor recommendations on reforming debt issuance by public authorities;

Create Needed Oversight of Subsidiary Public Corporations and Authorities: This legislation will ensure that all public authorities, including subsidiaries, are subject to oversight and approval by subjecting all public authority subsidiaries and affiliates to the provisions of the Public Authorities Law. It also prohibits the creation of new public authority subsidiaries or affiliates without legislative authorization;

Whistleblower Protections: The legislation includes a "Whistleblower Access and Assistance Program" to protect those employees of public authorities who report wrongdoing;

Toughen Laws Governing the Sale of Property by Public Authorities: This bill closes loopholes of the 2005 Reform Act regarding the sale of authority property;

Strengthen Authority Board Reforms: The legislation will add to and strengthen provisions governing the public authorities' board of directors to improve accountability. The Act will require authority boards to execute an acknowledgment confirming they understand their independence as a member and their duties to the organization; require each member of a public authority's audit committee to possess the necessary skills to carry out the duties of the committee and be familiar with corporate financial and accounting practices; and require each member of a public authority's governance committee to possess the necessary skills to carry out the duties of the committee, and expand the responsibilities of those members to include the examination of ethical issues, board self-evaluations, term limits investigations, reappointments, and developing by-laws including rules conducting board business.

The bill was sent to the Assembly, where there is a companion bill sponsored by Assemblyman Richard L. Brodsky (92nd Assembly District).

"The need to ensure that all the practices and financial dealings of public authorities are above board is important to the financial future of our state. The taxpayers deserve to know that their money is being utilized correctly and that these agencies are spending the public's money wisely," stated Senator Flanagan. "This legislation will return the control of these important authorities to the people of the state by expanding needed transparency."