CM Dinowitz on procurement accountability and SCI investigations

I'm going to pass it to Chair Dynowitz.

Thank you, Chair Lee.

Thank you, Chancellor.

I have a few questions about a few different topics, but I want to start where one of the things Speaker Menon brought up.

Which is the stories that have come out recently about the procurement and the contracts and Mariela Graham when you were superintendent.

And, you know, of course, I think you've shown time and again over the past few months your ability to confront an issue and say, hey,

There were mistakes made, but it's exactly what we want our students to do.

But we also want students and adults alike to be held accountable and know that moving forward, changes are going to be made and also look back to actually discuss what actually happened.

This is the largest school system in the country.

This is the largest agency in the city.

It's about a third of our budget.

Parents throughout

Throughout the city, there's a deep level of trust, whether you're a parent or a taxpayer, that we must have in our school system.

Parents send their kids to school every day and trust that the teachers in the school system are going to do right by their kids.

And we pay taxes, and we trust that those tax dollars are going to go to where they need to go.

So this is a question about accountability at the top, because it's critical that people are held accountable and that the culture of accountability is set from the very top, because all the safeguards

are all well and good, but they're meaningless unless they're instituted and demonstrated at the top.

And just to make sure everyone knows what we're talking about, according to SCI, it's $386 million in fiscal year 25

were from these individual contracts that were below $25,000 or $15,000, which don't hold the same scrutiny as those above their amount.

So that is a significant sum of money.

And over the years, SCI has...

Done investigations, and this is all online for anyone to see, about how people have circumvented these rules in order to be below that $25,000 mark.

And so, you know, in 2024, a principal knowingly approved multiple purchase orders below $25,000.

Provided by two separate companies that had common ownership.

Another principle circumvented the DOE bidding process by approving purchases separated into $5,000 increments for two vendors.

There were manipulations of bids, artificial competing bids.

Another principle circumvented DOE procurement policy.

And of course, in the case of Mariela Graham, we all saw the articles.

As SCI said,

violated several DCB rules by improperly entering into a non-bid negotiated services contract valued at $180,000

with a non-DOE contracted vendor for the purpose of circumventing DCB bid thresholds and DOE's multiple task award contract processes.

So there's a lot of layers of this, but I first, if you could tell the committee and the public what your role was during that time.

So, again, I regret the lapses in policy and procedure that took place while I was the superintendent, and the actions in question were all meant

in the pursuit of educational opportunity.

Chair Denowitz, I think you, and I'm sure the committee can appreciate that when there is active speculation going on in the press about

past investigations, prospective investigations, as counsel, it is

unfortunately sometimes my job to curb the instincts of our very open and forthcoming chancellor and counsel and advise that we are not going to comment on

questions involving law enforcement.

SCI, of course, is a law enforcement agency that are actively open and stirring in the press.

Okay, so I'm going to assume, please.

If I could just finish, though, because I do want to speak to the broader points that you made.

Again, I think some of the answer to your question is embedded in the question itself.

When SCI talks about $386 million in non-contracted spending, that is across 1,600 schools

and however many, 35 district offices and all of the staff and superintendents.

And so it's critically important that we identify when someone has engaged in criminal activity or misconduct.

We work closely with law enforcement, as I mentioned earlier, when those things happen.

But it's just unfortunately the case that there are bad actors out in the world who see our

budget and see an opportunity.

So I don't just want to talk about just bad actors.

There are systemic problems that I am going to ask about.

Agreed, but I think what I'm trying to say is it's important to make those distinctions, right?

That there's a very important difference between some of the examples in the report you're referring to where people were indicted and went to jail and examples where we discover at the central level that we need to strengthen training.

We need to recalibrate how much of discretion or decision-making about spending happens at the school or the district level as opposed to at central.

Thank you.

Thank you for that.

I want to talk about accountability.

It sounds like this may currently still be under investigation, so I won't ask about that.

But I will ask about the decision.