State of New York
Office of the Inspector General

Investigation of
The City University of New York
Interim Report
November 2016

Catherine Leahy Scott
Inspector General

 STAFF FOR THIS INVESTIGATION AND REPORT
SPENCER FREEDMAN
Executive Deputy Inspector General
MICHELE HOST
Chief Counsel
PHILIP FOGLIA
Special Deputy Inspector General
(Downstate Region)
JESSICA SILVER
Deputy Inspector General
(Downstate Region)
KENNETH MICHAELS
Senior Investigative Counsel
(Downstate Region)
VAL DOUGLAS
Supervising Investigative Auditor
(Downstate Region)
DENNIS GRAVES
Supervising Investigative Auditor
(Upstate Region)
PETER AMAROSA
Investigative Auditor
(Upstate Region)

ILENE GATES
Investigative Auditor
(Downstate Region)
ANGELES OKEKE
Investigative Auditor
(Downstate Region)
JASMIN JACK
Investigative Auditor
(Downstate Region)
DONNALYNN GAZZA
Investigator
(Downstate Region)
JAMES GIBSON
Investigator
(Downstate Region)
ANNE PETERS
Investigator
(Downstate Region)
ROBERTO SANTANA
Investigator
(Downstate Region)

 EXECUTIVE SUMMARY
On October 9, 2016, William C. Thompson, Jr., Chairperson of the CUNY Board of
Trustees, formally requested that the New York State Inspector General commence a
comprehensive investigation into a number of matters, including the use of City University of
New York (CUNY) foundation funds; the relationship between CUNY’s colleges and their
affiliated foundations and potential conflicts of interest; CUNY procurement policies; the hiring,
expenses, and retention of consultants at CUNY; conflicts of interest at CUNY; and “all of the
administrative and financial oversight and controls and best practices . . . with respect to all of
the college foundations, alumni associations or other affiliated entities.” Chairperson
Thompson’s request surfaced in the wake of the publication of alleged misconduct and fiscal
mismanagement by a past President of City College of New York (CCNY).
The Inspector General’s initial review identified a number of systemic concerns largely
attributable to CUNY’s lack of oversight that have led to financial waste and abuse within the
CUNY system. CUNY administration also has failed to institute effective centralized
management policies. The impact of this decentralization and deficient oversight has been
further exacerbated by the failure to effectively operate the CUNY system for the benefit of
taxpayers and students by those who are charged with the daily operations of the CUNY system,
including but not limited to the Chancellor and General Counsel, among others.
Specifically, the preliminary investigation revealed that CUNY has expended funds on
questionable activities and that its colleges and affiliated not-for-profit foundations lack
sufficient controls to ensure the integrity of their use of non-tax levy funds. In light of the fact
that the not-for-profit foundations affiliated with CUNY as a whole maintain approximately

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 $1 billion in funds, it is imperative that significant steps are immediately taken to strengthen the
fiscal integrity and oversight of this system. In addition, CUNY is spending significant resources
in a decentralized manner on outside contracts, including for lobbyists engaged in questionable
and seemingly redundant tasks, despite also employing its own central and school-based
government relations staff. This decentralization creates an environment in which CUNY
institutions lack appropriate fiscal management, oversight and transparency. This preliminary
investigation also revealed that CUNY has failed to fulfill its legal obligation to report
misconduct to the Inspector General as required under New York Executive Law. At times,
CUNY has instead hired outside counsel to conduct internal investigations at significant cost to
the public. Consistent with New York State Executive Law 4-A, the Inspector General refers
these interim findings to CUNY for whatever disciplinary action it deems appropriate.
CUNY’s executive staff including the Chancellor, the General Counsel, and all those
employed in the CUNY system must adhere to the highest ethical standards, and conduct
themselves as financial stewards, safeguarding this public university and ensuring confidence in
the integrity of the CUNY system. Accordingly, the Inspector General has prepared this interim
report to highlight certain areas of immediate concern and enable CUNY’s Board of Trustees to
begin remedial action in consultation with the Inspector General.
As a result of this preliminary investigation, the Inspector General recommends that
CUNY immediately implement centralized policies in order to reduce the potential for fiscal
mismanagement and abuse. CUNY must also take steps such as instituting more stringent
controls for the relationships between all CUNY-based foundations and their affiliate colleges to
ensure proper fiscal oversight of funds managed by those institutions and mitigate improper or
wasteful expenditures.
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 BACKGROUND
City University of New York (CUNY)
The City University of New York (CUNY) is America’s largest public urban university.
The CUNY system includes eleven senior colleges: City College of New York (CCNY), Hunter
College, Brooklyn College, Queens College, New York City College of Technology, College of
Staten Island, John Jay College of Criminal Justice, York College, Baruch College, Lehman
College, and Medgar Evers College. The CUNY system also includes seven community
colleges, the Macaulay Honors College, and five graduate and professional schools.
CUNY was not formally established as a Ph.D. granting university and educational
corporation until 1961, though individual establishment of several of its most notable senior
colleges predated the university’s establishment by over 100 years. The first of the institutions
of what eventually comprised the university, City College of New York (originally known as the
Free Academy), was established in 1847 in Manhattan. In 1870, another Manhattan senior
college was established that would become Hunter College. Hunter expanded into the Bronx in
the early 20th Century (to what became Herbert H. Lehman College). Baruch College was
established in 1919. In 1926, a Board of Higher Education of the City of New York was created
by the State legislature. Brooklyn College was established in 1930, and Queens College in 1937.
The once-separate schools now have no individual corporate existence.
At CUNY’s founding, it served 91,000 students. By fall 2015, university enrollment
totaled more than three times that number: 274,357.

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 CUNY’s mission, set forth in the New York Education Law, reflects CUNY’s long
history as a “vehicle for the upward mobility of the disadvantaged in the City of New York.”
Under section 6201 of the Education Law:
The legislature’s intent is that the city university be supported as
an independent and integrated system of higher education on the
assumption that the university will continue to maintain and
expand its commitment to academic excellence and to the
provision of equal access and opportunity for students, faculty and
staff from all ethnic and racial groups and from both sexes.
CUNY Governance
Despite its name and the location of its schools, CUNY is a creature of New York State
law. It is governed by a seventeen-member Board of Trustees, ten of whom are appointed by the
Governor with the advice and consent of the New York State Senate, and five of whom are
appointed by the Mayor of New York City with the advice and consent of the Senate. One exofficio trustee is the chairperson of the university student senate, and one ex-officio non-voting
trustee is the chairperson of the university faculty senate. The chair and vice-chair of the Board
are appointed by the Governor.
Under New York Education Law, the CUNY Board of Trustees has broad powers
regarding curriculum planning, purchasing, and spending of revenue not derived from public
funds. The Board’s procedures surrounding meetings, voting, committee composition, and other
matters are contained in CUNY’s bylaws.
The Board appoints a Chancellor to serve as CUNY’s chief executive, educational, and
administrative officer. The Chancellor has wide-ranging duties and responsibilities that are set
forth in CUNY’s bylaws. Those duties include, but are not limited to, recommending to the
Board the appointment of college presidents and senior campus staff as well as unifying and
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 coordinating college educational planning, operating systems, business and financial procedures,
and management.
CUNY’s Financial Structure
CUNY receives the bulk of its funds from New York State, as well as funding from,
among other sources, New York City budget appropriations, gifts, and tuition, which includes
New York State’s Tuition Assistance Program and federal Pell Grants. The Board of Trustees
has the power to administer “gifts of money, endowments, fees, interest and other income not
derived from public taxation or the public credit” for collegiate or university purposes. CUNY
also derives a significant portion of its financial support from the independent 501(c)(3)
foundations affiliated with its colleges.
CUNY’s College-Affiliated Foundations and the CUNY Research Foundation
Each CUNY senior college, with rare exceptions, has established at least one non-profit
foundation to raise and provide funds separate and apart from its others sources of revenue.
These entities are legally separate from the colleges they serve, but exist to receive and hold
funds for the benefit of the colleges. While each foundation’s mission differs, they generally
solicit and accept donations, gifts, and bequests for the colleges’ use. Some of the foundations
administer grants from government entities and private foundations. The City College 21st
Century Foundation, which has been spotlighted in connection with the allegations surrounding
the former-CCNY President’s spending, serves this function for CCNY.
The Research Foundation of the City University of New York (“The Research
Foundation”) serves a slightly different function than the other CUNY foundations. The
Research Foundation was established in 1963 as a private, not-for-profit educational corporation
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 chartered by the State of New York to be governed by its own Board of directors. It operates out
of offices in Manhattan, which it owns, and issues its own independently-audited financial
statements.
The Research Foundation provides support for faculty research efforts throughout the
CUNY system, not at any one particular CUNY institution, and assists with post-award
administration of research grants and awards; management of planned giving; and capital
construction and renovation of facilities. When administering grants and awards for the specific
colleges, the Research Foundation maintains separate accounts for any overhead funding built
into the grant or award. The Inspector General’s initial investigation indicates that these
overhead funds may be available for discretionary use by certain executives at the relevant
college. For example, the Research Foundation maintains such an account for the President of
Queens College.
In addition to by-laws established by these foundations and memoranda of understanding
between the foundations and correlate schools -- when they exist -- the Research Foundation and
all CUNY-affiliated foundations are governed by New York’s Not-for-Profit Corporation Law.
In 2013, the Non-Profit Revitalization Act was signed into law, and requires the adoption by
non-profit corporations of robust financial oversight requirements, conflict-of-interest policies,
and whistleblower policies. Although the Non-Profit Revitalization Act improved the
accountability of New York’s non-profit corporations, including the CUNY college foundations,
the New York Not-for-Profit Corporation Law (which the Act amended) does not provide
specific guidance regarding how non-profit foundations use their assets.

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 Methodology
After Chairperson Thompson referred this matter to the Inspector General on October 9,
the Inspector General began an initial review of CUNY’s policies and procedures, including its
manual and by-laws. The Inspector General has also dispatched investigative teams to five of
CUNY’s senior colleges -- Brooklyn College, Queens College, Hunter College, Lehman College,
and the College of Staten Island -- to review the expenditures of each college’s affiliated
foundations and the sources of those expenditures, with a focus on discretionary spending.
INTERIM FINDINGS AND RECOMMENDATIONS
Presidential Discretionary Funds Lack Detailed Policies
CUNY has limited policies governing use of the Presidential Discretionary Funds at its
colleges, which has led to waste and misappropriation of funds meant to benefit the college.
CUNY permits each college to maintain a fund for the college presidents to use at their
discretion. The Inspector General’s preliminary investigation has uncovered that while these
funds are sometimes used for worthy and appropriate purposes, such as buying new furniture for
student group offices or paying scholarship monies, they are frequently used to provide the
colleges’ executive staff members with personal benefits – a practice that is ripe for abuse due to
the lack of sufficient proscriptions, controls, and oversight over the expenditure of these funds.
Section 3.04 of CUNY’s manual contains the university’s policy on Presidential
Discretionary Funds. The policy applies to “the use of funds that are derived from sources other
than tax-levy appropriations or student fees, and are used for college or University purposes in
accordance with this policy.” Specifically, the policy instructs that:

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 Discretionary funds may be used in support of educational, social,
and cultural events and programs of the colleges, for hospitality
extended to guests of the colleges, and attendance by members of
the University community at receptions, dinners and other events
outside of the college that are of significance to the college or
University. For such outside events, discretionary funds may be
used when the price of admission substantially represents the cost
of the meal or reception or, if the price of admission involves a
contribution beyond the cost of the occasion, the beneficiary of the
event is a not-for-profit community, charitable, cultural,
educational, or civic organization – “qualifying organization.”
When authorizing the expenditure of Presidential Discretionary Funds, the President is
entrusted with “the responsibility of applying the standard of reasonable, appropriate and
commensurate benefit to the college and University community.” The policy’s only additional
proscriptions are that the funds may not be used as campaign contributions or payment of dues or
fees to clubs that restrict their membership by race, sex or creed, and that the funds must be used
“in accordance with restrictions imposed by law, and the Bylaws and governing resolutions of
the University.”
As the allegations surrounding the former president of CCNY suggest, the Inspector
General’s preliminary investigation has found that such Presidential Discretionary Funds have
already led to reported abuse and are ripe for further abuse, resulting in money that could be
spent on library books or failing infrastructure being used to pay portions of executive salaries
and for personal benefits.
Brooklyn College, for example, uses Presidential Discretionary Funds to pay for a parttime housekeeper for the college president, who resides in a home owned by the college.

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 According to the terms of a June 2015 agreement, approximately $36,000 per year is spent by the
fund on this benefit. 1
The nearly $35,000 retirement party for Brooklyn College’s former president was also
paid out of the Presidential Discretionary Fund. In an instance of questionable accounting,
Brooklyn College appears to have steered funds generated from a licensing agreement between
the college and certain professors into the Brooklyn College Foundation so that they would be
deemed discretionary funds, and could be used for, among other things, the retirement party.
In addition, the President of Queens College received a substantial supplemental annual
salary through the Queens College Foundation that was not specifically referenced in his offer
letter nor approved by the CUNY Board. In fact, CUNY By-Laws grant the authority to award
such supplementary income to, among others, college Presidents solely to the Chancellor,
without advising the Board or obtaining its approval. 2 In this instance, lacking any transparency
and justification, it appears that Chancellor Milliken simply contacted the Queens College
Foundation to implement and fund this supplemental salary and that the Chair of the foundation
informed Milliken that trustees in attendance at the foundation Board’s Executive Committee
meeting unanimously agreed to provide a $40,000 annual supplement to the President’s salary
for the duration of his existing employment contract. This construct raises several obvious
concerns, not only regarding a lack of transparency, but also making the distribution of income
susceptible to favoritism and outside influence without any oversight.

1

As a comparison, the average annual tuition for a student to the college is $6,330. These funds could instead be
utilized to provide full scholarships for up to six students annually, or provide other benefits to the academic
programs of the college.
2
CUNY Bylaws, Article XII, Section 12.2

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 The Inspector General’s preliminary review suggests that section 3.04 of the CUNY
manual failed as a policy to control waste in the use of Presidential Discretionary Funds and that
the individual CUNY colleges and CUNY-affiliated foundations do not have their own detailed
policies for the use of Presidential Discretionary Funds.
CUNY’s policy regarding Presidential Discretionary Funds must include more stringent
direction, detailed policies regarding allowable expenditures and the purposes for those
expenditures, and detailed proscriptions regarding prohibited expenditures. Additionally,
CUNY’s institutions and affiliated foundations need to clarify how they will ensure adherence to
the central policy.
Notably, on October 18, 2016, CUNY’s General Counsel and Chief Financial Officer
circulated a memorandum to CUNY college presidents and deans of graduate and professional
schools regarding their use of non-tax levy funds. In addition to reminding the memorandum’s
recipients of CUNY’s Presidential Discretionary Funds policy, the memorandum states:
In sum, non-tax levy funds are to be used solely for college-related
purposes, including supplemental compensation of staff where
approved by the Chancellor, support of the activities of presidents
in the performance of their duties, and funding of events and
programs that benefit the College or University (these funds may
not be used to purchase or reimburse the purchase of goods or
services of a personal nature).
The October 2016 memorandum provides little in the way of additional, clarifying
guidance. Even this recent memorandum, however, leaves a vague and discretionary standard
for expenditures of these funds with no meaningful accountability of the campus Presidents.
Much more extensive policies, procedures, and oversight are clearly necessary to ensure the
integrity of these funds.

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 CUNY-Affiliated Foundations Lack Appropriate Controls
There is no effective oversight of foundation funds at CUNY. This has created the
potential for widespread waste and abuse in the utilization of these funds.
In 2006, then-Chancellor Goldstein created a CUNY-wide task force to study CUNY’s
affiliated college foundations. As set forth in “CUNY College Foundations: Management
Guidelines and Best Practices Resource Book,” which was circulated to CUNY College
Presidents and CUNY College Foundation Chairpersons and Presidents on January 1, 2007, the
goal of the task force was to “make recommendations on how to best strengthen and further
professionalize these critical entities.” Among the task force’s significant findings were the
requirement for each foundation to be guided by a memorandum of understanding between each
college and correlate foundation that creates “the appropriate clarity as to interaction,
responsibilities and duties of each party.” The task force also advised the foundations to clarify
ownership, access, and privacy of alumni information “immediately”; review their gift
restrictions; and complete items on an attached checklist within twelve months.
Although the Presidents and Vice Presidents for Institutional Advancement meet annually
to discuss key topics of the task force’s recommendations, the task force did not publish any
subsequent reports or recommendations, and it appears that the foundations may not have
implemented the recommended steps. To the extent this handbook remains in place, the
preliminary investigation indicates that its terms are not enforced.
For example, the Memorandum of Understanding between the Brooklyn College
Foundation and Brooklyn College states: “[t]he College President shall submit a plan to the
Foundation in advance of the Spring Board Meeting of each year for utilization of unrestricted
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 funds generated by the Foundation in the following fiscal year, as well as other unrestricted
income such as investment gains. The Foundation shall take into account the College’s plan
when developing its operating budget and ensure that all unrestricted funds are spent
accordingly.” When the Inspector General inquired about the plan for utilization of unrestricted
funds discussed in the memorandum of understanding, Brooklyn College inexplicably stated that
the President was not, in fact, required to submit a written plan.
The foundations, however, are not the only places where controls are lacking. Another
example of fiscal mismanagement and lack of internal controls occurred over a six-year period at
CUNY’s School of Professional Studies (SPS). This matter was highlighted in a 2015 report
issued by the Office of the State Comptroller. While SPS is not one of the five CUNY
institutions examined in this interim report, its failure to prevent, identify, and report to the
Inspector General long-term fiscal malfeasance highlights the issues the Inspector General is
addressing now and in its ongoing investigation.
On June 2, 2015, the Office of the State Comptroller released an audit report discussing
an examination of controls over bank accounts at the City University of New York School of
Professional Studies (SPS) for the period between January 1, 2008, and July 21, 2014. During
the audit, SPS informed the Comptroller’s Office that a former Director of Business and Fiscal
Operations had opened an unauthorized bank account in the college’s name in December 2011.
The Business Director, who was reassigned to a different position in 2013, had control over all
SPS bank accounts and was the sole signatory on the unauthorized account. The Business
Director opened the account with a $50,000 check drawn on SPS’s Tuition and Fees Account
and ultimately depleted it. In a breach of CUNY’s internal controls, the Business Director
opened the account under his own signature even though CUNY policy required dual signatures
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 on checks for $5,000 or more. When SPS questioned the Business Director about the account,
his answers were disingenuous. He paid back the $50,000, and SPS terminated his employment.
During the course of its review, the Comptroller’s Office discovered another
unauthorized account in the school’s name. The second unauthorized account was opened in
July 2008 using $5,000 from SPS’s Tuition and Fees Account. The Business Director ultimately
moved $31,000 from the Tuition and Fees Account to the second unauthorized funds account
and withdrew the entire $31,000. The Business Director ultimately returned $12,500 of the
money that he removed from the account, but $18,500 was never repaid to SPS. Moreover, SPS
found a $5,000 check written from the Tuition and Fees account that was cashed and
unaccounted for, with no evidence suggesting the money was ever returned.
The Inspector General will continue to investigate possible fiscal mismanagement of the
CUNY foundations, but preliminarily, lack of required controls at the foundation level and lack
of oversight policies at CUNY makes the foundations’ funds susceptible to abuse.
Lobbying Expenditures are Duplicative and Significant
The Inspector General has also found evidence of significant spending by CUNY, its
Research Foundation, individual college foundations, and its colleges on lobbying activities.
These expenses include employing government relations staff while also contracting with outside
lobbying firms for the same purpose.
CUNY as a university maintains an Office of State Relations in Albany and an Office of
City Relations in New York City. Each office consists of three management-level staff and an
administrator. Additionally, many senior and community colleges maintain offices of external
relations, media relations, and governmental relations. Community colleges also have
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 governmental relations staff. For example, Bronx Community College has a Director of
Government Relations as part of its Office of the Vice President of Strategic Initiatives. Finally,
in New York City, CUNY maintains a Legislative Action Committee with representation by
most of its colleges.
Despite the existence of many CUNY staff members in both New York City and Albany,
the University and its schools and foundations spend hundreds of thousands of dollars on outside
lobbying firms every year. The Inspector General’s review of filings to the New York State
Joint Commission of Public Ethics (JCOPE) reflects lobbying campaigns worth over $1.6
million dollars since January 2013 alone. A review of some of the publicly available lobbying
data submitted to JCOPE by CUNY and its affiliated colleges and foundations is revealing.
In 2013, the Research Foundation spent $280,500 on lobbying. This included $24,000 to
retain a firm in the first six months of the year to lobby the New York City Council to provide
funds to Bronx Community College, and $30,500 over the course of the year to lobby the City
Council and Queens Borough President on behalf of Queens College. The Research Foundation
also spent $54,000 seeking funding for CUNY’s Creative Arts Team (a separately incorporated
educational outreach program at CUNY), and $84,000 to lobby City, State and Federal officials
on behalf of LaGuardia Community College (in addition to more than $500 spent on travel to
Washington, D.C. to lobby New York’s senators). The Research Foundation also spent a total of
$88,000 on two firms to lobby members of New York State legislative and executive branches
on CUNY’s behalf.
Other CUNY representative bodies also spent money lobbying in 2013. Hunter College
spent $90,000 on two lobbying firms that year, and Brooklyn College spent $39,000. JCOPE

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 data reflects that one of the firms retained by Hunter did not engage in any lobbying activity, and
the other firm only conducted lobbying activities in the first half of the year, and even that
activity appears to have been scant, meriting only this description: “ATTEMPTED TO
SCHEDULE MEETING WITH DEPUTY MAYOR, GET STATUS OF MEETING WITH
DEPUTY MAYOR.”
The Research Foundation’s lobbying expenditures increased to $296,000 in 2014. Again,
some of the monies spent on lobbying activities were on CUNY’s behalf. The remainder of the
Research Foundation’s 2014 spending was on behalf of only two CUNY colleges, LaGuardia
Community College and Queens College, and CUNY’s Creative Arts Team. In addition,
Brooklyn College spent $46,500 on lobbying, and Hunter College spent $85,000.
In 2015, the Research Foundation expended $266,225 for lobbying activities in 2015,
approximately half of which was on behalf of CUNY and the rest on behalf of LaGuardia
Community College and Queens College, and CUNY’s Creative Arts Team
JCOPE records include spending only for the first half of 2016, but spending patterns
seem largely consistent with previous years. The Research Foundation has spent over $130,000
on lobbying on behalf of the same few colleges and the university itself. Hunter College spent
over $100,000 on lobbyists in the January to June period. The CUNY Graduate Center
Foundation spent $27,500 during the same period.
These costs are significant to CUNY, and while they may be warranted in certain
situations, appear to be duplicative in several cases. Even at this early stage of the Inspector
General’s investigation, it seems clear that these activities warrant scrutiny and that
centralization of these services should be explored.
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 Failure to Report to the Inspector General as Required by New York State Law
CUNY executive, senior and administrative staff has failed to report knowledge of fraud
and abuse in their system on several occasions to the Inspector General as required by New York
State Executive Law and have instead commenced internal investigations, including utilizing
outside counsel. This practice is not only an unnecessary expenditure to CUNY, it is also in
violation of state law.
CUNY employees are required under Executive Law Article 4-A to “report promptly to
the state inspector general any information concerning corruption, fraud, criminal activity,
conflicts of interest or abuse by another state officer or employee relating to his or her office or
employment . . . .” Those who fail to report promptly are subject to the penalties outlined in
Executive Law Article 4-A: “The knowing failure of any officer or employee to so report shall
be cause for removal from office or employment or other appropriate penalty.”
During this preliminary review, the Inspector General found two instances where CUNY
failed to report matters to the Inspector General as required by law. The first matter pertains to
the spending of the former CCNY President. The second matter, previously discussed, pertains
to an employee at CUNY’s School of Professional Studies (SPS) who engaged in theft of funds
from an unauthorized account that the employee opened, in breach of CUNY policies regarding
bank accounts.
While Chairperson Thompson did ultimately report his concerns regarding the former
CCNY President’s spending and related issues to the Inspector General on October 9, 2016, and
requested that the Inspector General conduct an investigation, CUNY had previously retained a
law firm in July 2016 to essentially investigate those matters. Moreover, publicly available
accounts of the events surrounding the former City College President’s spending suggest that
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 questions arose surrounding her spending as early as 2011. At no time prior to October 9, 2016
did any employee of CUNY with knowledge of this matter inform the Inspector General as
required by law. Specifically, it has been publically reported that the former CCNY President
obtained over $150,000 in foundation funds for highly questionable personal use, including
$20,000 for a security deposit on a rental home and $50,000 to furnish that home, as well as
housecleaning services and other personal expenses. Public reports indicate that this former
President reimbursed at least some of the expenses after they were called into question.
The United States Attorney’s Office for the Eastern District of New York is currently
conducting an investigation into the former CCNY President’s spending and her use of
foundation funds. Accordingly, and in consultation with the United States Attorney for the
Eastern District of New York, the Inspector General is not investigating the events surrounding
the former City College President’s improper spending at this time. That said, when CUNY’s
General Counsel and Senior Vice Chancellor for Legal Affairs, who is also CUNY’s Ethics
Officer, learned of the former president’s questionable spending, he should have immediately
reported the matter to the Inspector General. Instead, in 2016, CUNY chose to retain a law firm
to conduct an internal investigation. That firm’s top hourly rates of over $1,000 per hour, if
calculated on a daily basis, add up to more than a CUNY student’s annual tuition of
$6,330. From mid-July 2016 through the end of September 2016, the law firm billed CUNY for
more than $180,000.
As to the second matter regarding the embezzlement by an employee of SPS funds, at no
time did any employee of CUNY with knowledge of the events report the suspected criminal
activity to the Inspector General as required by law.

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 Further, CUNY’s retention of outside counsel in the CCNY matter may have run afoul of
at least the spirit, if not the letter, of the law. At best, it highlights a deficiency in accountability
and oversight of CUNY resources. CUNY is subject to the New York State Finance Law in
matters of procurement. CUNY acknowledges in its internal documents that it “is considered to
be an instrumentality of the State, and although it is not a State agency, it may be treated like a
State agency under certain circumstances.” New York State Finance Law section 139-k defines
an “article of procurement” to include contracts for services. Accordingly, the solicitation of
legal services in this instance may have required adherence to the same procurement procedures
that CUNY has developed for other purchases of goods and services. CUNY asserts that because
it used foundation funds to retain and pay outside counsel, as described above, the transaction
was not subject to the State Finance Law. Based on the Inspector General’s preliminary review,
CUNY’s position regarding foundation funds is problematic. CUNY’s reliance on the source of
the funds to avoid compliance with State Finance Law at the very least contradicts the spirit of
the law, which seeks to ensure fair bidding processes.
CUNY has since terminated the services of the law firm. Questions still remain,
however, regarding CUNY’s broader use of outside counsel, and its failure to take action sooner
on the issues relevant to this investigation.
While this investigation is ongoing, it appears there was a failure by certain CUNY
employees to report information to the Inspector General as required by state law. Consistent
with New York State Executive Law 4-A, the Inspector General refers this matter to CUNY for
whatever disciplinary action it deems appropriate.

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 Executive Compensation at CUNY may be Excessive and Wasteful
Actions by CUNY in increasing compensation and benefits to executives may have
resulted in excessive and wasteful spending, which could more appropriately be utilized for the
benefit of the colleges.
As required by the Executive Law, CUNY’s Executive Compensation Plan applies to all
CUNY institutions and contains descriptions of the salary plans. However, the plan does not
contain specific descriptions of additional non-base compensation components that are allegedly
“customary and appropriate for senior executives in higher education.” It contains only very
general references to these benefits.
The Inspector General found numerous instances of generous personal benefits for
CUNY senior college presidents, including housing allowances of between $60,000 and $90,000
per year, in addition to a car and driver. Some other CUNY executives may also gain the use of
a car, at the Chancellor’s discretion. Executives may also receive compensation in the form of
bonus opportunities, deferred compensation, business expenses, study leave, and memberships in
clubs or associations. Indeed, the lack of specificity as to the parameters of those memberships
resulted in a number of college presidents joining athletic clubs at the university’s expense.
The Inspector General’s preliminary review of CUNY’s non-base executive
compensation provisions suggests that many of them lack appropriate controls or are excessive
in light of CUNY’s tenuous financial situation, particularly as a public institution. For example,
the Executive Compensation Plan authorizes non-tax-levy funds for business expenses for
CUNY’s Chancellor, Presidents, and, in the Chancellor’s discretion, the Dean of a CUNY-wide
or professional school. The plan states that “appropriate documentation is required,” but neither
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 defines “business expenses” nor discusses the process for providing or approving “appropriate
documentation.”
Similarly, the plan provides that CUNY’s Chancellor, Presidents, and, in the Chancellor’s
discretion, a Dean of a CUNY-wide or professional School “may hold University-paid
memberships in a limited number of clubs, professional associations and/or organizations” in
their official capacities. The plan does not contain any guidelines regarding what clubs may be
appropriate for these CUNY employees, nor is there any process for membership approval.
An area requiring further review and meriting current comment is the appointment in
2013 of then-Chancellor Matthew Goldstein to the position of Chancellor Emeritus, and his
compensation for that position. The current Executive Compensation Plan was submitted to the
New York State Division of Budget and other required state entities in July 2012 and, for the
first time, proposed compensation for the position of Chancellor Emeritus. The plan entrusts the
CUNY Board of Trustees with the discretion to appoint an individual as Chancellor Emeritus so
long as the person has served as CUNY’s Chancellor for eight years immediately preceding his
or her appointment. The plan states that the Chancellor Emeritus’s salary “will be determined by
the Board of Trustees,” and that the Chancellor Emeritus will have a five-year term of
appointment, with the option of one five-year reappointment upon recommendation of the
Chairperson.
During Goldstein’s tenure as Chancellor, the CUNY Board of Trustees carefully
compared his compensation to that of his peers and sought expert advice on an appropriate
compensation package. By contrast, when the Board of Trustees appointed Goldstein as its firstever Chancellor Emeritus in April 2013, no comparative analysis appears to have been

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 performed. Moreover, while Chancellor Goldstein’s Emeritus appointment letter generally
outlines his duties in areas such as fundraising that could inure to CUNY’s benefit, the nature
and extent of these duties are not clearly defined.
The April 29, 2013, Board of Trustees resolution appointing Goldstein as Chancellor
Emeritus for the period December 1, 2014 through November 30, 2019, provides Goldstein with
an annual salary of $300,000, with $200,000 of his compensation coming from government
appropriated funds and $100,000 from foundation funds. 3 As referenced above, the description
of his duties is vague, at best, stating that Goldstein “shall perform such teaching and other nonpolicymaking duties as shall be determined by the Board of Trustees, including but not limited to
working with the College Presidents and others on the completion of the CUNY Capital
Campaign.” While it was within the discretion of the Board to provide Goldstein with this
compensation package under the Executive Compensation Plan, the circumstances regarding
conferring such status and the terms of such a position require more scrutiny and specific
parameters.
Essentially, the Board of Trustees approved a compensation package worth
approximately $3 million. The Board of Trustees should review and reassess the April 2013
resolution and current employment arrangement considering the lack of scrutiny at the time in
creating and defining a Chancellor Emeritus position, the lack of comparative financial analysis
of said position, the services currently being rendered, and the value of those services; and the
Board should be mindful of these issues should it consider making similar appointments in the
future.

3

Goldstein left his Chancellor position in July 2013 and was permitted to take a study year at his then-Chancellor
salary of $490,000 before assuming the Chancellor Emeritus position in 2014.

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 CONCLUSION
These preliminary findings highlight the need for significant strengthened uniform
controls and oversight to ensure the fiscal and ethical integrity of CUNY’s operations and
mitigate the misuse, waste, and abuse of resources in the CUNY system. As set forth above, the
Inspector General recommends that CUNY implement centralized spending policies to increase
organization and uniformity of action and reduce the potential for fiscal mismanagement
immediately. CUNY must also take steps such as the institution of more stringent controls over
the relationships between all CUNY-based foundations and their affiliate colleges to ensure
proper fiscal oversight of the foundation funds managed by those institutions. The Inspector
General’s investigation is ongoing, and the Inspector General will continue to make
recommendations to improve these systems, centralize CUNY’s policies and procedures, and
improve foundation oversight.

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