Dear Members of the Board of Education,

Good evening, my name is Walter Gaipa and I have lived in East Marion for 33 years.

I would like to address the Board tonight, primarily about the increased tax levy that was recently imposed.

There are several issues here. First is the cause of the estimated $370,000 shortfall. We have been advised that it is due to a shortage of estimated revenues for the 2007/2008 budget. In addition there is the question of how it was discovered. Apparently the external auditor became aware of this shortfall and advised the Board. Why was this not discovered by the Administration and District Business Office? What would have happened if the external auditor did not discover this shortfall? As a related question, please provide the detail of the $320,281 (40.55%) decrease of the fund balance.

Secondly is the response of the Board of Education to the shortfall. While I realize it is not the responsibility of the Board to uncover the shortfall, it is certainly their responsibility to address it. The Board could handle this several ways. If I understand it correctly the Board chose to pass the entire $370,000 onto the taxpayer at the last minute just before the tax bills were sent out. Why didn’t you take a multifaceted approach and share the cost equitably? Could you have spread a portion over more than one year? Could you have made cuts in the budget to offset some of the increase? Could you have called an urgent public hearing to explain all of this and your options to the community? Yes, you sent a flyer to the public, but it was after the fact. I think the effect was counterproductive. Your Superintendent, Stuart Rachlin was quoted on February 21, 2008 as saying “this is probably the leanest budget I’ve had to deal with” and “In order to keep the tax rate low we have to dig deeper”. Yet you approved a 13.4% tax levy increase. You can attempt to justify your reasoning anyway you like, but the reality is you raised taxes 13.4%!

I fear you have caused serious harm to your best ally. That is the “trust” of your taxpayers who expect you to provide the best education you can coupled with what the public can afford. During your budget process last year we were told the tax rate increase would be 5.93% What reaction would you expect when residents opened their tax bills and saw the actual increase is 13.4%? School districts from New Suffolk to Greenport have tax increases of 2.2%-4.5% Frankly I am flabbergasted that you could be so out of touch with reality as to act so irresponsibly. As a side note if you were presented with a $370,000 line item increase during your annual budget process I am sure that you would scrutinize it thoroughly. So, why in a time of severe economic crisis, when every level of government is cutting expenses, and reducing programs, do you take such a callous action towards your very neighbors who have put their trust in you?

Now, since we really do not know the detailed cause of the shortfall let me share a perception that is circulating throughout the community. Some wonder if the miscalculation was done intentionally, as it would have doomed the budget if included in May. Is there also a relation to the intital public reports of a double digit budget increase last year? Why did this increase mysteriously change?

On a spreadsheet I am including with this letter you can see that the estimated state aid reimbursement for 07/08 was $636,167. This is $393,036 more than in 08/09. In addition it is $371,209 more than in 06/07. Furthermore when comparing all the school districts in Southold Town for the last five years the $636,167 estimated state aid figure for 07/08 is out of proportion to the increases the other schools received. Does this correlate to the shortfall and the tax levy increase and why? Furthermore Dr. Rachlin was quoted in the January 24, 2008 Suffolk Times saying “ I’m not even sure about a ream of paper” when referring to the .01% increase in state aid. That comment certainly does not sync with what was recorded in Town Assessor’s documents and what I just mentioned.

Upon reviewing the Management comments from the June 30, 2008 external audit I became very concerned of the deficiencies in the financial operations of the school district. There exists 4 ½ pages of “Comments from Prior Year Still Open”. The issues still unresolved to the auditor’s satisfaction include budget transfers, computer controls, cash management, purchasing, internal auditing and procurement, among others. Referring to cash management the auditor noted that bank reconciliations were not done for the entire year. The auditor noted that you hired an outside agency to complete this process. Frankly, I am dumbfounded that the most simple and most important aspect of secure financial management was not completed.

In preparing this letter I have found it difficult to decimate accurate information. All of the documents I have reviewed seem to have different numbers. While I realize estimates are used at times, there seems a wide disparity of reliable information. Based on the appearance of your business operations, the perception would certainly bear this out. While I must stress there appears to be no misuse of public funds, the auditor’s comments clearly state that the controls are not sufficient to prevent misuse.

The Oysterponds tax levy increases over the last four years total of 39.16% or $ 1,738,973. Do you realize that you have increased the base starting point for future budgets? Whatever increase you add each year will cost more dollars as the percentage is on a higher number. With this current rate of spending you certainly will burden your taxpayers with more than they can handle. As you plan your budget for next year please realize that we are at the breaking point. Don’t try to fool the public with only a minimal increase. The only way to rein in this exorbitant spending is to reduce costs. While not pleasant, once you realize this is the only way to go then you can do so effectively. Every other level of government is doing it. As a model why don’t you look at the staff levels and offerings of four years ago and work from there. I am sure some part-time positions were made full-time or other positions created. Past Board of Educations have dealt with similar crisis’ by “building from the bottom up” examining what is absolutely required and working from that point.

Our children have always done well here at Oysterponds. And that includes the time when we only had one employee parking lot.

Finally, please provide accurate information in your budget newsletters. Your newsletter for 08/09 lists the budget increase of 2.81%. Budget numbers and revenue estimates are just that, estimates. They can be manipulated to appear differently. A tax levy is real dollars. There is no information to show the estimated tax levy increase, which I believe was 5.93% and now 13.4%. I would suggest the Board make extra effort to communicate fairly to the community. As stated in your budget newsletter you asked the public for permission to spend $6,155,678. When in reality your 07/08 tax levy was only $4,933,098. That makes your actual available tax levy increase closer to 20% if you take more money from us. Never in the history of the Oysterponds School District do I believe there has been such a blatant disregard for spending. This has happened on your “watch” and my challenge to you is to take the responsibility you are charged with and deal with this wisely. Otherwise this will be your legacy. You will be remembered as the Board of Education who “duped the public and broke our financial backs”.

While I can personally appreciate your dedication to the community, you must realize that you have a definitive responsibility to represent all parties involved and do so with a diligence without reproach.

Thank you for your time, and I look forward to receiving written responses to my questions in a timely fashion.

Very truly yours,

Walter Gaipa