Hagerman Resigns Again Under the Cloud of an Investigation
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- Written by Joanne Wallenstein
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Exactly seven weeks to the day after the Board of Education learned that there was a tax lien, fines and penalties against the Scarsdale School District due to errors in payment of payroll taxes in 2020 and 2021, the embattled Schools Superintendent, Dr. Thomas Hagerman, has resigned for the second time in just five months.
Hagerman surprised the Board of Education and the community with his first resignation on January 24, 2022 when he announced that he would be leaving Scarsdale at the end of the school year, breaking the terms of his recently extended contract which stipulated that he give 12 months notice before resigning.
In the intervening weeks, the Board launched two searches: one for an interim superintendent and another for the permanent replacement of the superintendent.
In the midst of this work came more stunning news. On March 25, 2022 the Board of Education learned that the school district had failed to pay the correct amount of payroll taxes in 2020 and 2021, resulting in penalties and interest totaling $1,722,473 and a call for a back tax payment of $843,558 for the fourth quarter of 2020.
On March 30 they shared that news with the public when they called a special meeting to approve an $843,558 payment to the IRS for taxes due for the fourth quarter of 2020. The somber Board attested that though the district had learned of the tax problems in June 2021, they had failed to inform the Board until nine months later on March 25, 2022. On April 4, they offered more information about the issue and revealed that there was a $1,309,118 tax lien against the school district. At the time, it was not clear who in the administration was aware of the penalties and lien, and why they had failed to share this information with the Board.
Things did not improve after this revelation.
On April 20, 2022, Dr. Hagerman offered an explanation of what had occurred to his new employer, the Latin School of Chicago. However, in that letter he excerpted comments from Scarsdale Board of Education President Karen Ceske, but misrepresented her statements by omitting three paragraphs and adding some wording of his own. He left out the fact that the Board was “working with legal counsel and other appropriate advisors,” to resolve the current IRS payroll tax issue, and the fact that “the Board is planning to do an investigation of the administration.” He added text to indicate that the Board had been in communication with the IRS, working towards a resolution.
However, the Board was not aware of the issue and was not in communication with the IRS.
He later issued a correction which was emailed to the Scarsdale community and the Board of Education also sent out an email acknowledging the error.
In hindsight, many speculated that Dr. Hagerman had tendered his resignation in January, knowing that the tax problems with the IRS were not going away very quickly.
In order to determine what had transpired, on April 20, the Board of Education held yet another special meeting. After two hours in executive session, they passed a resolution to retain Attorney Anthony J. Brock to “to conduct an investigation of the IRS payroll tax issue beginning Monday, April 25th.”
The Board also considered hiring an accounting firm to do an audit of the district’s payroll processing procedures but has not as yet announced that they have been hired.
After several more special meetings were announced, and some cancelled, the Board scheduled another Friday surprise. At 1:51 pm on Friday May 6, they scheduled a meeting in executive session at 4:30 that same day.
This one ended quickly. Shortly after 5 pm, the Board came out of executive session and announced that Dr. Hagerman had resigned. In his statement he said that “the IRS issue has become a major distraction,” and “although I have already resigned my position as superintendent of schools effective June 30, I now feel it is best to do so more immediately in order for the district to keep its focus on students and a successful ending to the school year.”
The Board accepted his resignation and appointed Dr. Andrew Patrick as interim superintendent for the 2022-23 school year. In their announcement about Patrick they said, “We are confident that he is the best individual to lead our schools at this time and provide important continuity in the months and year ahead. He possesses a deep knowledge of, and true passion for, education, along with leadership expertise, a collaborative nature, and exceptional interpersonal and communication skills. He understands the culture and values of our schools and is dedicated to the success of all of our students in addition to the members of our faculty and staff.”
Shortly afterwards, the Board posted Dr. Hagerman’s separation agreement with the district. In it, the district agrees to pay him for 25 vacation days, $3,357 toward his annuity, $8,319 to the SUNY Optional Retirement Plan and to continue his health and dental insurance through June 30. 2022. He will not receive any salary for the balance of the contract.
It limits any further comment on the matter, saying, "The parties have agreed to only provide the statements hereto as "Exhibit A" and "Exhibit B" in response to inquiries regarding this Agreement."
In exchange, he relinquishes, releases and waives all possible claims and causes of action against the district and the district agrees not to file any claim or bring any lawsuit against him. See the entire agreement here.
Community members we reached were happy to see this chapter of Scarsdale history come to an end. A parent who is active in the schools said, “As I listened to the Resolution being read, I felt a huge sense of relief. I feel that this moment will help the morale of the district; it certainly made me feel better and I’m glad that the Board was able to get it done. I think that Dr. Patrick is an asset to the district and that he will bring forward some positive momentum for the Scarsdale Schools.”
Others wondered if the Board had already received the investigator’s report. A reader commented, “What a quick resignation. There must have been some VERY damaging things in the investigator’s findings. I truly hope we all get to see that report.” She also noticed that the Board accepted Hagerman’s resignation without a thank you or the long goodbyes that are customary for other departing administrators.
Another observer said, “I speculate that the BOE was only willing to make a deal this generous to avoid a lengthy, expensive counter-suit being filed against the district by Dr. Hagerman’s lawyer in the future. The agreement allows him to step down vs. being fired, in exchange for the guarantee that he cannot sue.”
Mayra Kirkendall Rodriguez, a keen observer of Board matters offered the following: "I have no schadenfreude that he resigned. Sadly, Dr. Hagerman leaves under a dark cloud with a tarnished legacy. Now, he will never have to answer any of Scarsdale residents' questions. And we are still in the dark about what happened. Will the BOE now finally start answering at least our budget and accounting questions? The IRS lien and penalties have not gone away. I am worried about the health of Scarsdale schools' finances, because I want to make sure that our children receive the needed academic, mental, and emotional development resources that they need to thrive.”
On everyone's mind is what is in the investigator's report? Will the District release it? Will the Latin School of Chicago stick to their deal with the embattled superintendent? Did Dr. Hagerman resign in order to pre-empt being fired or sanctioned?
Proposal to Light Crossway Field to be Considered at Planning Board Meeting on May 4
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- Written by Joanne Wallenstein
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The Scarsdale Little League campaign to install lights on a baseball diamond at Crossway Field continues with a hearing of the Scarsdale Planning Board scheduled for Wednesday May 4 at 7 pm via Zoom.
The Planning Board will consider a proposed $455,000 gift from the league to finance the installation of lights on Crossway 1 and in the parking lot to allow for night games in the spring and fall. In addition to underwriting the cost of the installation, they have offered to fund the utility and maintenance costs for 25 years.
They estimate that the lights would be used for a total of 88 days for five out of seven days per week during the fall and spring. The proposal has received the endorsement of the Scarsdale Advisory Council on Parks and Recreation.
At the hearing, the Planning Board will consider the location of the lights, the type of lights, the potential for light spillage and “the potential impacts on adjacent land uses, including but not limited to potential increase in noise and traffic created by athletic events, including practices and contests conducted after sundown.”
Once they consider the questions above, they have been charged with making a recommendation on the proposal to the Village Board.
The proposal has both supporters and objectors.
A group called the “Crossway Lights Committee of the West Quaker Ridge Neighborhood Association” are among those who are seeking to turn down the proposal. Here is a letter from that group forwarded to us by Gerald Antell:
Crossway Lights are an Unnecessary Luxury
Night games would be fun. Night games would be cool. This is how Little League Board member, Steve Pass frames the motivation to offer a $ 500,000 gift to the Village to install 80 foot steel poles at Crossway Field. A permanent change to a neighborhood that has historically opposed lighted fields and is fighting them now. Our Petition to Oppose this thoughtless proposal has been joined by nearly 200 residents and is growing by the day.
Field availability is not the issue here. In fact, the Little League's own website states:
“many travel teams from other towns have been club teams without reliable access to their town fields, so more games than usual have been played in Scarsdale........we expect that trend to continue.”.
It is also well known that Scarsdale baseball fields have been used by teams from other towns for years.
As our Petition makes clear, the Crossway/Boulder Brook Sports “Complex” is already saturated with more sports activity on weekends and afternoons than anywhere else in the Village. Loads of traffic, noise, players, spectators, ice cream trucks, police cars and trash for hours on end. But this outrageous lighting project proposes to make it worse, disrupting the neighbors until 10 PM, by the time all the cars drive off.
The lighting project estimates 88 nights of use per year. And that's just for Little League games. As the Recreation Department publicity acknowledges, if Crossway were lighted, requests are anticipated from many teams and leagues including Men's Softball, Varsity/JV/Freshman Baseball and Softball, Recreation League Softball and Travel Softball. A lighted field could be allocated seven (7) nights a week, from April through October. That's quite a change for a neighborhood that has never allowed night-time activity in its history.
Supporters of the lighting project point to a similar installation at Butler Field at the High School. This is a laughable comparison. The Butler Field area has had lighted facilities for at least four (4) decades. And since the 2019 installation, the lights at Butler Field have been used, on average, once every two weeks. No wonder there has been mostly favorable reaction from the Butler neighbors----those lights are barely used!!!
But not all Butler neighbors are happy. In fact, our Petition now includes some. It turns out that many Butler neighbors felt ignored during the planning of that project and they are still unhappy about it now.
$500,000 is a lot of money. And the Little League is generous to offer it. The Village and the Recreation Dept. would love to accept it. But their answer should be: Thanks. But No Thanks.
Please join:
Petition to Oppose the Crossway Lighting Project
[email protected]
Gerald Antell
Alan Garfunkel
John Lofaso
Co-Chairs ----Crossway Lighting Committee
West Quaker Ridge Neighborhood Association
LWVS Voices Support for the Proposed 2022-23 Village Budget
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- Written by Joanne Wallenstein
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(This statement was forwarded to us by Alissa Baum, President of the League of Women Voters of Scarsdale)
The League of Women Voters of Scarsdale (the “League”) thanks members of the Village Administration (the “Administration”) and members of the Village Board of Trustees (the “Board”) for participating in a panel at the League’s General Membership Meeting and Village Budget Information Session and addressing questions related to the 2022-23 Tentative Village Budget (the “Budget”) on March 29, 2022 via Zoom. The League thanks Village Manager Rob Cole, Treasurer Ann Scaglione, Assistant Village Manager Alex Marshall, Mayor Jane Veron, Deputy Mayor Justin Arest, Trustee Sameer Ahuja, Trustee Karen Brew, and Trustee Lena Crandall, for addressing our specific questions related to the Budget as well as regarding potential issues going forward. The statement below reflects the consensus of League members at a Consensus Meeting held immediately after the Information Session.
Position
The League supports the 2022-23 Village Tentative Budget. The League offers its comments and recommendations regarding certain budgetary items as well as the budget process, with the hope they will be considered as this year’s Budget is revised and finalized, and in the future.
New Budget Strategy
The League notes and appreciates that the process for developing the Budget was significantly different from that used in previous years. This year, department heads were asked to establish goals and objectives and link funding requests to their attainment. Ultimately, department heads ranked priorities (high, medium, and low), and Village staff combined all requests into a single spreadsheet to allow items to be compared and evaluated, thereby providing a comprehensive picture of the costs involved.
In addition, several budgeting practices were revised to provide more accuracy and transparency, including:
Moving recurring equipment and capital expenses incurred in the ordinary course of business into the annual operating budget rather than the capital projects fund;
Itemizing all projects and purchases intended to be completed during FY 2022-23, rather than relying on surplus to fund previously unspecified projects at year end;
Accurately identifying and maintaining an adequate level of unassigned fund balance;
Justifying the tax levy increase with data outlining historical tax rates and projections for future budgets;
Identifying needed and, in some instances, long-deferred capital projects and providing a forward thinking multi-year plan to fund them.
The League commends the Administration and the Board for implementing a new methodology that better allows the public to understand the costs of funding versus deferring investment in identified projects. The League applauds the Administration and Board in looking not only at where the Village of Scarsdale is now but at where we want it to be in the future.
Budget Overview
LWVS President Alissa Baum
The Budget includes a tax levy increase of 3.7%, which is under the New York State Tax Cap of 4.7%. The total tax levy is $44.66 million. The average assessed property will see an increase this year of $216.67. The corresponding tax rate is 4.9535%. The current operation projections for 2022-23 shows operating expenses of $62.26 million, and operation revenue of $61.09 million, which results in a deficit of $1.17 million. The deficit will be covered by a transfer from the general fund balance.
The Budget also includes a proposed capital expenditure of $24.85 million, with $15.21 million earmarked for the pool complex renovation, if authorized. The projected sources of funds come from a combination of $19.2 million from debt, $1.8 million from American Rescue Plan Act Funds, $1.7 million transfer from the General Fund balance, and various monies from an intra-agency transfer, sanitary sewer rent, and the Parkland Trust Fund.
Tax Levy
The League acknowledges the necessity of the proposed tax levy increase of 3.7%. The League commends the Village for providing a clear explanation and justification for the increase, with comprehensive discussion at Board meetings and the distribution of easy-to-understand visual supplementary materials that showed how the strategy of keeping taxes artificially low over the last 20 years by deferring needed capital improvements will eventually result in a sharp tax increase in future budget years. The League has repeatedly expressed concern about the deferral of needed capital improvements and appreciates the effort made this year to set a timeline for addressing some of them.
The League notes that the Village has included a $430,000 reserve in the Budget to reduce by 1% the tax increase that will be required in the following budget year and appreciates the Village’s effort to stabilize the tax impact on residents.
Unassigned Fund Balance Policy
The League supports the revision of the fund balance policy, which now calls for unassigned fund balance to be maintained between 15-20% (up from 10-15%) of the ensuing year’s appropriations, pursuant to GFOA best practices.
In response to written League questions and questions presented at our information session, the Administration explained that the new unassigned fund balance policy is not a significant departure from the previous policy. The Village explanation being that “there were obligated funds parked in accounts that were not being spent down, thus constituting unrestricted fund balance not captured in the reported percentage, i.e., our reported unrestricted fund balance was historically higher than our reporting suggested.”
The League supports the maintenance of sufficient unassigned fund balance, especially in these uncertain times of continued potential disruptions from Covid-19 and the specter of rising inflation. The League is pleased by the more accurate and transparent reflection of unassigned fund balance in the Budget, thereby allowing the public to understand the real status of Village finances.
Capital Investment
The League strongly commends the Village for adopting a CAPEX planning approach to set forth a schedule in which to fund needed capital projects now and over the next five years. The Capital Plan details the projects intended to be completed in the FY 2022-23 year and indicates the source of funding for each project.
Notable Major Capital Projects (and Source of Funding) Include:
Pool Complex Study (Borrowing)
Village Center Transportation & Mobility Study (Borrowing)
Replacement of High Priority Vehicles (General Fund Transfer and Borrowing)
Highway Improvements (Road Resurfacing Pathway Improvement, Priority Curbing Programs (General Fund Transfer)
Storm Drainage, Catherine Road Culverts (Borrowing)
The League encourages the Village to adopt this long-term approach for other major capital expenditures and to engage and inform the public in the endeavor.
Although we are pleased that the Administration and Board have finally sought to address many of the Village’s critical infrastructure needs, the League remains concerned about deferral of other important infrastructure needs, such as Village Hall and Freightway Garage, and hopes that both projects can be considered as early as next year’s budget process.
Water Rate
The League appreciates the Village’s explanations during the Budget working sessions regarding the rise in water rates. As per the Village’s responses to League questions, the Budget includes a 1% increase in water rates and doubles the ready-to-serve charge. The Village states that the increase is needed to cover not only water purchases and ongoing maintenance costs but also $2 million of capital expenses to begin rehabilitation work identified in the 2021 Water System Master Plan.
The League recognizes the need to maintain the financial integrity of the Water Enterprise Fund. The League looks forward to the future discussion of water rates and whether additional tiers of usage are advisable to more fairly charge residents based on their water consumption.
Staffing
The League supports the addition of four full-time employment positions (code enforcement officer, Weinberg Nature Center naturalist, pool and park maintenance mechanic, and tree trimmer) and appreciates the identification of the proposed salaries as well as the fully-loaded cost of these positions in the Budget documents. The addition of full-time staff is a recurring cost and should be considered with care; however, the League recognizes the importance of hiring and retaining the staff necessary to fully support the services that residents expect and ensure the smooth operation of Village affairs.
Sources of Revenue
Property tax is the largest source of revenue for the Village. The League appreciates the graph provided by the Village in its response to LWVS Questions detailing the top non-property tax revenues which shows that parking revenues have not returned to pre-pandemic levels. Given the uncertainty of future daily commuting patterns, the League encourages the Village to find creative ways to generate other revenue opportunities and thereby decrease the tax burden. Such opportunities might include increased code enforcement and penalties sufficient to deter violations as well as the further adjustment of fees and charges beyond those already raised as part of next year’s Budget.
The League looks forward to the continued discussion regarding who should bear the costs of various Village services such as recreation programs. For example, whether costs associated with certain activities like tennis should be funded, in part, by all taxpayers or passed on fully in the form of fees and permit costs only to end users. We encourage the Village to include the public in these important philosophical discussions.
Process and Communication
The League strongly commends the Board for embracing the technology used during the pandemic and continuing to conduct meetings in a hybrid format. By maintaining the remote option after resuming in-person meetings, the Board has enhanced the public’s ability to view and/or to participate and comment during Board working sessions (which were not previously accessible by remote means) and during regular Board meetings. The League believes fervently in the importance of regular, easily accessible dialogues with the community, and hybrid meetings are one way to achieve that goal. The League encourages the Board to continue to find additional ways to engage a larger portion of residents to enable greater participation in important Village decisions.
The League commends the scheduling of additional Board working sessions in order to better implement this year’s new budget strategy and to more thoroughly explain the key decisions about taxes and the funding of capital projects. The League further commends the Board and Administration for posting online budget materials in advance of meetings and for providing explanatory memoranda and other simplified materials, such as the FY 2022-2023 Budget Brief. Publication of this Budget Brief allows the public to better understand the Budget and explanations for various decisions which are not readily accessible in the full 187 page Budget document.
The League thanks the Administration and Board for their professionalism and dedication to our Village. We would especially like to thank the new Village Manager, Robert Cole, who has filled his new position seamlessly as well as Village Treasurer, Ann Scaglione. Both have been so thorough, kind and responsive to our League questions on the Village Budget.
Thank you for taking our comments into consideration.
Are You Entitled to a Property Tax Exemption? Here's How to Apply
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- Written by Joanne Wallenstein
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Scarsdale Assessor Victoria Sirota has prepared a presentation of available tax exemptions and how to apply for them if you’re entitled. The presentation can be viewed on the Village website here:
A complete list of real property tax exemptions, applications, and instructions can be downloaded from the New York State Department of Taxation and Finance website
• Star Exemption. Homeowners currently receiving the Basic STAR property tax exemption may upgrade to the Enhanced Star if one of the owners is 65 years of age by December 31, 2022 and the household 2020 income is equal to or below $92,000. One may also visit the online NYS Star Resource Center for more information.
• STAR credit. New applicants may apply online through the NYS Department of Taxation and Finance, or by calling 518-457-2036. The May 02 filing deadline does not apply to the STAR credit.
• War Veteran’s Exemptions. Eligible war veterans must submit the initial exemption application form and separation papers to the Assessor’s Office by the filing deadline.
• Low Income Senior Exemption. Under this program, property owners at least 65 years of age by May 01 whose income is less than $37,399.99 may be eligible for exemption benefits on a sliding scale.
• Persons with Disabilities and Limited Incomes. To qualify, persons with disabilities must submit documented evidence of their disability and meet income limitation requirements not to exceed $37,399.99.
The exemption application deadline is typically May 01. However, since May 01, 2022 falls on a Sunday, both new and renewal exemption applications must be received in the Scarsdale Assessor’s Office or postmarked no later than Monday, May 02, 2022. If you have any questions or need copies of the exemption applications, please call the Assessor’s Office at 914-722-1133 or e-mail the Assessor at [email protected].
IRS Assesses Penalties to Scarsdale School District for Errors in Payroll Tax Payments
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- Written by Joanne Wallenstein
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A somber Scarsdale Board of Education gathered for a hastily called special meeting at 6 pm on March 30, 2022 to deal with surprising news that they had apparently only learned about on March 25, 2022.
Earlier that day, it was revealed in a board meeting agenda, that the school district had failed to pay the correct amount of payroll taxes in 2020 and 2021, resulting in penalties and interest totaling $1,722,473 and a call for a back tax payment of $843,558 for the fourth quarter of 2020. The March 29 email from the district clerk did not say what the meeting was about, and since it said the board would meet in executive session, some assumed the meeting pertained to the search for a new school superintendent or interim school superintendent.
However, it turned out that the purpose of the meeting was to approve a resolution to pay $843,558 to the Internal Revenue Service (“IRS”) for outstanding fourth quarter 2020 federal withholding taxes. The district was advised that by paying their fourth quarter 2020 taxes the IRS might abate a penalty payment for that quarter of $448,316.
A close reading of the carefully crafted memo from the Board reveals that the troubles are far deeper.
The memo says, “Errors resulted in a late payment in the first quarter of 2020 and misallocating certain third and fourth quarter 2020 payments to the second and third quarters 2020, respectively. This series of events has resulted in penalties and interest being assessed against the District as well as a tax shortfall for the fourth quarter of 2020.” In addition, penalties have been assessed for an “unrelated” error in the second quarter of 2021.
What’s the total damage?
Penalties and Interest:
Q1 and Q3 2020: $861,320
Q4 2020: $448,316
Q2 2021: $412,837
Total penalties and interest: $1,722,473
Apparently the district has already filed an appeal to get a refund for the $816,320 in penalties for the first and third quarters of 2020 and the second quarter of 2021. The memo does not say whether or not the district has already paid these penalties. They also hope to recoup the fourth quarter 2020 penalties of $448,316. The memo says they are fully cooperating with the IRS and hopeful that the penalties and interests will be refunded and abated. If not, they can appeal the decision to U.S. Federal District Court.
Neither the Board nor administration offered a detailed explanation of how and why these errors occurred. It was also not clear why the administration did not let the Board know about the errors when they were notified, which was according to the memo “over the past several months.” When exactly did the district receive notification from the IRS?
Residents speculated that the errors could have been due to COVID, as district employees were working from home and may have lost track of the details. Some were puzzled by why the district’s auditors did not notice missed and reduced payments to the IRS. But others were not surprised that the Board had been shielded from this information for so many months as the administration has been marked by secrecy and control of information.
The news comes at an awkward time for the Scarsdale School district. Superintendent Thomas Hagerman announced his resignation in January, after he had negotiated a five year contract in June 2021. District Treasurer Jeff Martin will also retire in June.
Board turnover is also a factor, leaving more inexperienced members to exercise oversight. The President of the Board of Education, Karen Ceske, announced that she would not run for a second term in February and Carl Finger, also a three-year member of the Board declined to run for a second term as well. The Board of Education will have two new members in May to add to a group that is rather green.
At the meeting, no public comment was permitted. But Assistant Suprintendent for Business Stuart Mattey offered responses to a few questions that were emailed to the district that day. He said that this news would not impact the 2022-23 school budget proposal which is scheduled to be adopted by the Board of Education on April 4, 2022.
Mattey said, “We are in ongoing negotiations with the IRS and we have already met with our legal counsel. There is no timeframe for an IRS decision. We might not have a decision even in time for the 2023-24 school budget. The district has a right to appeal. The financial impact would be to our unreserved fund balance and will have no impact on our current budget. This will be a footnote in our financial statement.” He also noted that the $843,558 penalty payment for the first and third quarters of 2020 will be booked as an account receivable until such time a final determination is made by the IRS or the judicial system.
