Comptroller Liu Talks Waste And Fraud At Town Hall

Members of the Manhattan Beach Community Group raved about Comptroller John Liu, following a town hall meeting packed with information about Liu’s war against waste and ineffeciency.

“He asked questions. He was honest. He was very straightforward,” said MBCG President Zalcman. “We don’t know him in this part of Brooklyn, and it was a good way to get to know him.”

(Video of the town hall will be added later this evening. It has been delayed due to technical difficulties.)

The comptroller’s office is charged with protecting and enhancing the city’s fiscal health by auditing every city agency at least once every four years. Liu became the 43rd comptroller after narrowly winning a runoff last year. Before being elected comptroller, Liu served as a Queens representative to the City Council. He chose not to run for a third council term following the decision to overturn term limits.

“He’s a breath of fresh air,” said MBCG member Stan Kaplan. “The thing that impressed me is that he probably could’ve won the City Council seat again, but said he disagreed with the way term limits were overturned … Personal integrity? Definitely.”

The town hall, hosted by MBCG at its June 23 meeting, kicked off with Liu discussing the responsibilities of his office and how his financial background as a manager at PricewaterhouseCoopers has helped him uncover the “tremendous amount of waste and inefficiency in the way the city spends money.”

Among the issues Comptroller Liu has latched on to is the contracting process. Liu said he’s in the process of revamping the way contracts are awarded.

“I feel that, in a city like New York, it really shouldn’t be the same big companies getting all the contracts. Billions of dollars a year, all the time,” said Liu. “We should give some of the newer, smaller businesses a chance to get city contracts and use the city’s purchasing power to go through the smaller companies who actually create jobs in our neighborhoods and communities, and give people a fair shake.”

The pension system is also getting attention from Liu, who said he is looking to shine a light on the process to make the most out of returns. He also refinanced the city’s bonds to take advantage of lower interest rates.

“My goal in this job is to save money,” he said.

Though his jurisdiction remains in the city, Liu used the podium to throw a few barbs at Albany lawmakers, mired in the creation of a budget now almost three months late. The state has kept business going by passing emergency “extender bills” that cover programs on a week-to-week basis.

“To have 11 or 12 [budget] extenders in a row is not the way we should be conducting government,” Liu said.

When Liu finished his introductory remarks – to a round of applause from the hundred or so people in attendance – residents directed the conversation with the comptroller to issues of concern.

Asked why the city shot down proposals to offer retirement incentives to New York City school teachers instead of mass layoffs (which was ultimately avoided), Liu said it was a rare occasion that he agreed with Mayor Bloomberg. But in the current economic climate the returns on pension funds are not what they were in the past, and so retirement incentives – or buyouts – would be a “tremendous drain on the funds.”

“We’re coming off of two years of declines in the stock markets. Pension funds used to be as high as $120 billion; it went as low as $80 billion; now we’re just above [$100 billion]. So we’ve recovered somewhat, but we’re still significantly way off,” he said. “We don’t want to take an action that would hamper the future security of our pensioners.”

Facing questions about healthcare spending and systematic fraud, Liu pointed out that New York City is unique in that it’s perhaps the only municipality to pay for its residents’ health bills – around 25 percent of the Medicaid budget. Fraud accounts for a “significant percentage” of waste in that system, he said. Despite the amount of funds that come from the New York City budget, the comptroller’s purview doesn’t include going after fraudsters and waste in that part of government. Instead, it’s the State Attorney General’s job, and complaints Liu’s offices receives are forwarded to the AG.

But that’s not stopping him from exploring alternative routes to pursue waste in Medicaid.

“Even though it has not been traditionally done, we’re looking at ways in which we can go after the fraud as well,” he said. “So I don’t find myself limited by what’s been done in the past or what has not been done in the past.”

The discussion turned to the processes used in auditing. Liu said his office isn’t just responsible for financial audits, but also for operational issues from staffing levels to the manner in which decisions are made.

“We look to see not only that a city agency is spending its money appropriately, but that it is doing the best it possibly can with that amount of money,” he said.

To hammer the point home, Liu discussed his current operational audit of the Department of Education’s school progress reports. The reports are cobbled together from student performance data and then boiled down to a letter grade assigned to each school. Those grades are now being used by the city to determine which schools will face closure or conversion to a charter system. Liu, as a former member of the City Council’s Education Committee, said he frequently hears complaints from parents that they don’t understand what the grades mean or how they fluctuate. He’s also concerned about the reports being manipulated for political ends.

“Amazingly enough, last year, almost every school was graded an A or B. I’m sure the fact that it was an election year had nothing to do with it,” he said to chuckles from the crowd. “But it was an amazing coincidence that 95 percent of New York City public schools were graded so high.”

Liu said that he will be looking at the data used to create the reports, how it’s analyzed, and if it supports the conclusions of the department.

“It’s important because it’s about the fact that the DOE is making some real permanent decisions based on these school progress reports,” he said. “I think it’s a problem that such weighty decisions are being rendered on what could very well be faulty analysis.”

Moving forward, Liu vowed to continue fighting waste and inefficiencies in city government, and said he’s got the skills to foster better agency decision-making.

“As an Asian-American, I’ve spent my whole life trying to fight stereotypes, but I’m pretty good with numbers,” he said. “I’m going to be looking at those numbers very, very closely.”

Comptroller audits are publicly available at the office’s website.