March 11, 2011

New York State Suppresses Free Speech & Denies Millions of $ Due to County Taxpayers
Dutchess Suing New York State


Poughkeepsie, NY… Tell the truth and it could cost you $5.5 million.   That is what Dutchess County Executive William R. Steinhaus found out when the New York State Education Department did not like the comments included in a jobs report submission and chose to deny monies owed to Dutchess County taxpayers.

 The County of Dutchess has sued the New York State Education Department for withholding legally obligated state payments of $5.5 million for state mandated special education services and programs for preschool children with handicapping conditions delivered by Dutchess County in the 2009-2010 school year.  Late Thursday afternoon, the presiding judge issued a temporary restraining order directing the New York State Education to preserve those owed funds for Dutchess County while the case is heard in court.

“New York State is refusing to pay what it owes to the taxpayers of Dutchess County because they did not want us to tell the truth and blew the whistle on their jobs report scam,” said County Executive Steinhaus.   “When we called them out on the hoax they are trying to perpetuate on the public about the fictional stimulus job figures, they decided to punish our taxpayers and deny millions of dollars in funding our County is owed for state mandated services Dutchess County delivered in good faith.”

What’s the issue?    County Executive Steinhaus provides an overview of the County’s struggle to be reimbursed by the State for the delivery of state mandated services:

  • Special education services and programs for preschool age children with handicapping conditions are mandated by Education Law of the State of New York to be delivered by county governments.  The law mandates county governments to pay for those services and requires the State to reimburse county governments for 59.5% of the approved costs paid by the County, with the remaining 40.5% mandated to come from local county property taxpayers

  • Instead of the state cutting spending or reforming bloated programs and bureaucracies, New York State decided to use American Recovery and Reinvestment Act (ARRA) money, also known as stimulus, to plug the state’s budget deficit hole and use ARRA stimulus funds to pay for the state’s share of the 2009-10 school program costs incurred for the mandated children’s program.

  • In October 2010, Dutchess County submitted state required job reporting information, reporting “0” jobs saved/created rather than the state’s pre-calculated entry of jobs saved/created because the program is state mandated and must continue, regardless of whether or not stimulus funds were used to supplement the cost.  Under existing state law, the state and county will still be obligated to produce monies to fund it.     The stimulus money did not create or save any jobs, the state simply intended to use those federal dollars rather than state dollars as reimbursement to the County for services already previously delivered.

  • In response, New York State officials threatened to “recover” the ARRA monies from Dutchess County taxpayers if the report was not modified falsely to show jobs retained/created, in accordance with a dictate of state and federal pre-calculated job creation formula.

  • In January 2011, NYS Education Department, for the first time, referred the County to the definition of a “retained job” as federally defined by the Executive Office of the President, Office of Management and Budget.    For the purposes of ARRA stimulus funding, the federal government is currently defining a retained job as “an existing position that is now funded by the Recovery Act.”     However, the state’s required report form still only provided for “jobs saved” and “job retained” reporting fields, rather than a “jobs funded” or “job reimbursed” reporting field.

  • On February 18, 2011, using this definition finally provided by the State, County Executive Steinhaus directed the accurate number of 89.13 “jobs funded” be reported in the “jobs retained” reporting field.   The County Executive also included a narrative about the bogus reporting requirements which creates distorted and fraudulent stimulus job totals for New York State further continuing the fantasy political story out of the White House of how many stimulus jobs were really created.

  • Within hours of the report submission on February 18th, 2011, the County received a brief email from the state stating:

         “We have reviewed your ARRA [American Recovery and Reinvestment Act] report submitted today. We have
          rejected your report,…and will proceed with withholding $5.5 million of funding from the county. We have
          rejected the report because the narrative is unacceptable.”

    This statement means the state started with a hoax and has begun a cover up to suppress information on bogus job numbers from being publicized.

The County’s lawsuit maintains this determination is an unlawful action, causing harm to the County by failing to reimburse $5.5 million in money due to the County by law and is an abuse of discretion and a violation of the State’s own Education Law Section 4410 (11)(b)(i). 

The County’s lawsuit also alleges the State violated the First Amendment right of the County Executive to free speech and expression and penalized the County by withholding $5.5 million in American Recovery and Reinvestment Act (ARRA) funding for the State’s mandated reimbursement to the County.

“NY State has a legal, binding obligation to pay their share for preschool special education program required under their own state law,” said County Executive Steinhaus.  “The county performed its’ mandated obligations; the State must pay its financial obligations.”

“Governor Andrew Cuomo has made ethics and accountability a top priority, yet the State Education Department is trying to suppress transparency in job reporting, suppressing free speech and illegally withholding money owed.    It is ridiculous that we have to take this issue to court, but this hoax about stimulus job totals by New York State should not be tolerated,” concluded County Executive Steinhaus.