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Written by Traci Dutton Ludwig

Published: 14 April 2022

Created: 14 April 2022

Last Updated: 14 April 2022

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Scarsdale author David Arnow connects with Scarsdale10583.com to discuss his new book: Choosing Hope: The Heritage of Judaism, published by the Jewish Publication Society, Essential Judaism Series. Arnow, a psychologist, is also the author of Creating Lively Passover Seders, a co-editor of My People’s Passover Haggadah, and a co-author of Leadership in the Bible.

The title of your book, ”Choosing Hope: The Heritage of Judaism,” is so inspiring. Can you please tell us how you define hope and how you define hope’s importance in today’s world?

My thinking definition of hope is based on the thinking of the philosopher Gabriel Marcel (1889-1973) and the psychologist Charles R. Snyder (1944-2006):

Hope reflects our embrace of the possibility of a particular, deeply desired future, and hope fuels our actions to help bring it about.

The main take away from this definition is that hope is active, that it requires work. This differentiates hope from optimism which is simply tendency to predict that things will turn out well, as opposed to a commitment to make them turn out well.
Optimism demands very little of you. Hope can demand everything.

From Covid and climate change to the erosion of democratic norms and the decline of a shared sense of truth (and the list could go on), two things are clear. First, we are living in an age that tests our ability to sustain hope. Second, if despair dominates hope, we will be unable to meet the challenges that beset us.

Based on your research, how has hope been cultivated and used in the past?

Erik Erikson, the great developmental psychologist, wrote that the capacity to hope derives from early childhood and the dominance of experiences that breed trust rather than mistrust. He also believed that religion was the cultural institution that served as the repository of these experience of basic trust. Religion can also strengthen hope when it is challenged by difficult circumstances in later life.

So in the monotheistic religions there’s traditionally been a close relationship between faith in God and hope. Many traditional theologies look to God as the One who fulfills our hopes.

Contemporary Jewish theologians stress the idea that human beings are created in the divine image and that we possess the creative ability and have the responsibility to fulfill our own hopes. In prayer God may convey a subtle inkling as to the worthiness of our hopes—because not all our hopes are truly so noble—but the work of fulfilling those hopes falls to us.

Elie Wiesel put it this way: "Created in the image of [God] who has no image, it is incumbent upon our contemporaries to invoke and create hope where there is none. For just as only human beings can push me to despair, only they can help me vanquish it and call it hope."

Hope seems to be forward-thinking, similar to goals. Thinking both theoretically and personally, how are “hope” and “goals” different from each other, and how do they overlap?

The psychologist Charles Snyder who pioneered research on hope believed that the ability to formulate clear goals was a critical element of hope. But he also believed that hope involved more than simply having a goal. For Snyder hope involves two additional things: first the conviction that you can realize your goals, and second an ability to generate new strategies to reach them when you hit a brick wall. So having goals is part of hope, but not the whole story.

Taking these ideas into a practical realm, how do we actualize the concept of hope and use it as a tool in our lives?

Hope in this active sense is something you can strengthen by reminding yourself of times when you’ve solved problems and overcome obstacles and by reminding yourself that big goals always require readjustments in the strategies you use to reach them. There’s no embarrassment in that. To admit that it’s time to try a new approach is not weakness, it’s a sign of maturity and hope.

Here’s where are religious narratives come in. For example, think about God who creates the world, repeatedly says how good it is, and then destroys it because mankind turns out to be such a disappointment. The second time around God learns from God’s mistakes as it were. Before the flood God punished Cain for his murder of Abel. After the flood God makes it the responsibility of human beings to punish crimes of murder. The message is that human beings are responsible for righting the wrongs of this world, for building a better world. If God’s hopes were disappointed the first time around, we can expect that ours might be too. But God learned a few things from went wrong the first time and so can we when we try to fulfill our hopes after a set back.

So our religious narratives, when viewed through the lens of hope, can be enormous sustainers of hope.

Or take the story of the Exodus. This story of a people moving from slavery to freedom is full of hope and has inspired struggles for freedom over the ages. When you read that story it reminds you that change is possible. That’s a key element of hope.

What might be the function of hope in this particular cultural/historical moment, which is filled with so many events that cause anxiety, fear, despair, etc…?

The message of hope in our time is that we need to be activists in shaping the future we want. Despair is a recipe for disaster because to despair is to throw in the towel, to give up. And we know that if we don’t struggle to solve the problems we face, if we think others will do that for us, or that there’s no point in trying, things will only get worse.

Part of maintaining hope in our time is to remind ourselves that as a nation we’ve gotten through some very difficult times and we can now as well.

Rebecca Solnit said something about hope that strikes me as very relevant for our times:

To hope is to gamble. It’s to bet on the future, on your desires, on the possibility that an open heart and uncertainty is better than gloom and safety. To hope is dangerous, and yet it is the opposite of fear, for to live is to risk. I say all this because hope is not like a lottery ticket you can sit on the sofa and clutch, feeling lucky. I say it because hope is an ax you break down doors with in an emergency; because hope should shove you out the door, because it will take everything you have to steer the future away from endless war, from the annihilation of the earth’s treasures and the grinding down of the poor and marginal. Hope just means another world might be possible, not promised, not guaranteed. Hope calls for action; action is impossible without hope.
— Rebecca Solnit, Hope in the Dark, 2004

Sustaining hope in our era also requires that we work with others to build the future we want. Working with others makes gives us strength to go on, because when one of use feels ready to give up, another sees a bit of light from the end of the tunnel.

Finally we have to admit that a lot of the problems we face will take a long time to solve, generations. This means that we need to see ourselves a transmitters of hope to the next generation so the struggle to fulfill our greatest hopes will continue—for as long as it takes.

Getting back to your new book, hope is positioned as a central part of Jewish identity. Can you comment on the cultural nature of hope in relation to Judaism?

My feeling is that there are many resources out there to strengthen hope and that for Jews, Judaism is or can be one of the big ones. The trouble is that finding hope in Judaism requires looking at many of our narratives, practices, and prayers in a new light. And that’s what my book tries to do.

Let’s talk about the process of writing (editing/publishing) this book. How was the idea born? How did the idea grow?

Here’s a lot of info about what led me to write the book.

Here is the beginning of the intro:

When I was seven, my mother survived what were thought to be fatal complications when giving birth to her third child. Doctors told my father to prepare himself to tell his two sons that their mother had died. My father prayed. Later, I remember him saying, “I prayed to my God and He answered me.” He responded with a lifelong devotion to God and Judaism which changed his life and ours as well.
Attributing my mother’s survival to God’s munificence never sat well with me. What about all the other wives and mothers who didn’t pull through? Still, the incident left me with an indelible sense that Judaism and hope were connected in the deepest possible ways.

Many years later, when reading Sketch of a Phenomenology and a Metaphysic of Hope, one of the twentieth-century’s most influential works on hope, by the French philosopher and theologian Gabriel Marcel (1889-1973), I would often think about my father’s reaction to what he faced. My father was not optimistic about the prospects of his wife’s survival, but his degree of optimism or pessimism would have been irrelevant to Marcel’s understanding of hope. Since there was seemingly nothing my father could do to save his wife, he did the only thing he could. His prayer, poured out with all his heart and with all his might, embodied Marcel’s understanding of hope. “Hope,” Marcel wrote, “is situated within the framework of the trial, not only corresponding to it, but constituting our being’s veritable response.”

There are other reasons as well.
As a therapist I was struck by the fact that the question of hope always comes up in treatment. Invariably clients struggle with doubts about whether there is hope that they can work out the issues that brought them into therapy. Often when clients loose hope that change is possible, they drop out of treatment. So it’s a critical point treatment.

Beginning in the 1990’s I began writing annual supplements to the Passover Haggadah (supplements for the liturgy for the home based celebration of Passover) for an organization I was involved with. The Exodus is our master story, and it is definitely a story of hope, that things can change, that leaders can make a difference, that human beings can take actions that can have a positive impact on their future.

Those Haggadah supplements led to my first book, Creating Lively Passover Seders: A Sourcebook of Engaging Tales, Texts, and Activities (2004) and that was followed by My People’s Passover Haggadah (co-edited, 2008).

So almost 20 years of writing about the Exodus, was a deep immersion in one of Judaism’s key sources of hope. But of course there is more to Judaism that the Exodus, and Judaism contains many more sources of hope which I wanted to explore and write about. So all that led to this book.

And, how did the challenges/context of the past few years impact both your writing process and the development of content for the book?

The book was written before Covid, but there was a lot of editing during that first year or so. And the publishers did not want a book about Jewish approaches to coping with the pandemic. The pandemic and the political situation in this country, the erosion of democratic norms etc., really sharpened the sense that we are living through time of trial. The philosopher Marcel defined hope for an individual or groups a response to the trial. So I felt that what I was working on was becoming more and more relevant as the sense of trial grew more and more acute.

Describe a typical day of writing. Where do you work? How do you work? How do you stay productive?

When I’m involved with a book project there’s a long period of research on the ideas in each chapter. For my first book that meant spending almost a year in the Jewish Division of the New York Public Library. Now a lot more resources are on line so my time in the library is a lot less.

I have a study in the attic with a lot of books, and a computer with two good sized screens and I can sometimes spend six or more hours a day working—when I’m in the middle of a project, especially when there are deadlines etc.

I don’t have a problem feeling productive even though a fair number of things that I research may not make it into a book. When I get interested in something and have questions I like to go as far as I can in trying to find answers and sometimes that leads to some interesting finds or you might even call them discoveries. A lot of my research for this book required exploring Jewish texts ranging over 2000 years. So that meant looking through a lot of things, trying to work my way through a lot of pretty inaccessible Hebrew texts. But when it came to finding texts about hope the result was finding a lot of real diamonds.

What do you like about your process of writing? What, if anything, do you find challenging; and how, as a writer, do you overcome it?

I generally feel that if I keep working on something I’ll find something original to say or if not completely original at least interesting. It may take a long time, but sticking with my curiosity and seeing where it leads has proven productive most of the time.

A lot of my research is in Hebrew texts and I’ve not had a lot formal training in the language, although I’ve been working on the language for a long time. It’s one thing to speak which I can do fairly comfortably, but another thing to understand texts written in very different historical periods. Often understanding texts from the medieval period is not just a matter of understanding the words, but understanding the philosophical context of those times. So I’ve been working with teachers weekly for more than 20 years, studying the texts that I’m researching. That’s been a wonderful process and one that I hope to continue for the rest of my life!

Being a Scarsdale native, what connections to Scarsdale appear in this book (if any)? Or what experiences related to your life in Scarsdale helped to inspire or inform this book?

Can’t say that my life in Scarsdale per se has shaped the book. Although I live about ten minutes away from where I grew up and I do have a sense of rootedness which in some way makes it easier to feel a little less buffeted by all the changes and challenges that often threated to swamp the deck.

Please share some important details about the promotion of your book. Tell us about the launch. Tell us if you have any engagements/readings coming up? Tell us where the book can be purchased?

The book launch was a great conversation with Sarah Hurwitz, the author of an important recent book on Judaism, and former chief speech writer for Michelle Obama. Sarah’s book is Here All Along: Finding Meaning, Spirituality, and a Deeper Connection to Life -- in Judaism (After Finally Choosing to Look There)  My older son, Noah, a rabbi in St. Louis moderated the conversation. I’ll be putting a video of the launch up on my website davidarnowauthor.com.

The book is available at Bronx River Books in Scarsdale, or through the publisher, The Jewish Publication Society at Choosing Hope with promo code 6AS22 for a 40% discount on this and all Jewish Publication Society’s Spring Books or order at Bookshop.org or Amazon

My next big event is a program sponsored by Seventy Faces Media, UJA/Federation of New York and the Jewish Week. I’ll be in dialogue with Erin Leib Smokler, editor of an amazing book that came out in 2021: Torah in a Time of Plague: Historical and Contemporary Responses. That will be a virtual program on May 19 at 6 PM ET and info about that will be available on my website soon.

Thinking about the book and the ideas informing it, what is the most important thing you’d like people to understand? …. And what is the most important thing you learned/discovered in the process of wiring it?

Hope is a critical component of a meaningful life and the narratives, practices, and texts of Judaism is great place to find hope and strengthen it.

One chapter of the book includes interviews I conducted with many Israeli activists, Jewish and Arab, about how their work sustains hope for themselves and their communities. I learned that these activists had had surprisingly few conversations about hope in general and their hopes in particular sharing their hopes was often a very emotional experience for them and for me.

So one takeaway form that is that it’s important that we talk more frankly about our hopes and struggles to sustain hope in challenging times. That itself can strengthen hope.

I also realized that it’s important that we expand our identities a bit and to see ourselves as transmitters of hope to our colleagues, friends, family, and so forth. When we preserve to fulfill our hopes we set a powerful example for others.

What kind of feedback, from readers, have your received thus far? What would you like the impact of the book to be?

The feedback so far has been quite positive. Readers are not only learning a lot about Judaism and hope, but they are experiencing a fresh way of looking at familiar aspects of Judaism that feels exciting and very relevant for our times.

People have actually told me that reading the book makes them feel hope in a new and stronger way.

It makes me think of something the late Shane Lopez, an important researcher on the psychology of hope wrote in his Making Hope Happen. He was explaining what happens when a community shares narratives of hope.

We draw on our memories of the most hopeful people we know, of our own hopeful pursuits, and of our successes at getting out of tight spots in the past. These thoughts and feelings may help us see pathways where others see brick walls. We persevere when others give up; we work harder when it would be easier to quit. And the whole time, we are carried along on a current of energy to a better place in the future... Hopeful narratives steeped with meaning provide survival tools for the storyteller and for the audience… The most hopeful stories trigger positive emotions in others, making them feel lifted up, joyful, or curious, and ultimately drawing them closer to us.

If some of that happens for readers of Choosing Hope I would be more than delighted!

David, this has been such a wonderful e-conversation, is there anything else you’d like to share that we haven’t discussed? If so, please use this space to share.

Even though this is a book about Judaism and hope the biblical narratives that I discuss—the story of Abraham and Sarah, the Exodus, and the book of Jonah, the book of Job, for example—are part of Christian Scripture as well. There’s a chapter on the world to come and resurrection of the dead as well that would be of interest to Christian readers too. The chapters on Jewish humor and on Israel would likewise be of interest to an audience other than Jews.

Thanks, Traci. It’s always a pleasure to talk with you, even virtually!

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Written by Joanne Wallenstein

Published: 19 April 2022

Created: 19 April 2022

Last Updated: 21 April 2022

Hits: 6960

(Updated April 20, 2022) Concerns about the tax issue in Scarsdale reached Scarsdale School Superintendent Thomas Hagerman’s next employer, the Latin School of Chicago, last week. Latin School’s Chair of the Board of Trustees, David Koo, emailed the Latin School community and offered Dr. Hagerman the Board’s “full and ongoing support.”

Koo shared a letter of explanation that Dr. Hagerman wrote to the school community that sought to explain the IRS issue. In Hagerman’s letter he asserts his belief in “addressing issues directly and openly.” He explains that the Scarsdale School “district has been working diligently with the IRS since we learned of clerical errors on payroll taxes made in 2020-21,” and says, “we are still working toward resolution.” What he doesn’t say is why he failed to alert the Board of Education after the first notice from the IRS in June 2021 and even after the IRS imposed a $1,309,000 tax lien against the district in October 2021.

By way of an explanation he says, “the District has been advised by our attorneys that we should only share information that will not interfere with our ongoing negotiations with the IRS.” Is he implying that he did not disclose the errors, penalties and lien until March 25, 2022 because they posed a risk to the negotiations? And if so, why did the Scarsdale Board of Education immediately share the issue with the community when they learned about in March2022? Did transparency no longer impede negotiations?

In his explanation to the Latin School community, Hagerman excerpted a good portion of a statement from Scarsdale Board of Education’s President Karen Ceske that she reade at the Ap[ril 4, 2022 meeting of the Board of Education. However, he left out three paragraphs and added a few sentences at the end that imply that the Board of Education was aware of the issue, which they were not.

The first point that was omitted from Ceske’s statement said, “the Board and District are working with legal counsel and other appropriate advisors to resolve the current IRS payroll tax issue.”

The second omission was the fact that refunds from the IRS are uncertain. That paragraph says, “This issue does not impact the 2022-2023 budget, and the District is seeking a full refund and abatement of all assessed penalties, and if successful, payment of these penalties will not be owed. The exact timing and outcome of such refunds are uncertain. To reiterate, the District has filed for an abatement of these Q1 and Q3 penalties and, if successful, the penalties will be abated and interest will be adjusted, resulting in an approximate $861,320 refund to the District, which can then be applied to the receivable.”

The last point that was left out was that the Board is planning do an investigation of the administration. It says, “In concert with the District, our auditors, and the IRS, corrective measures and additional internal controls have been instituted to ensure these errors do not occur again. The Board has also called for an audit of the District’s payroll tax processes, including a review of internal controls with the District’s Administration and further investigation into this matter.”

In addition he added three sentences to the end of the Board President's statement that she did not say, Here is what was added: "As I indicated before, we have been in regular communication with the IRS, working towards a resolution. We have submitted all materials for abatements and refunds at this time. The Board's role in this work has been to approve a Q4 tax payment so that this resolution process could continue."

Why this addition is significant is that the Board was not aware of the issue and was not in communication with the IRS to negotiate a resolution. The administration was doing that work without informing the Board.

Dr. Hagerman provided no plausible scenario of why this issue was kept under wraps for almost a year. In fact his excuse for burying the issue is sounding more and more like Trump’s excuse for his failure to disclose his tax returns, claiming that his taxes are being audited by the IRS.

What we do know is that Dr. Hagerman is openly admitting to being aware of the issue and working diligently to resolve it. What he is not saying to the Scarsdale community or the Latin School community is why he hid the $1.7 million mistake from the Board of Education and the public.

Here is the letter from the Latin School

Date: April 12, 2022 at 8:11:30 PM CDT Subject: A Note from Dr. Thomas Hagerman Reply-To: David Koo | Latin School of Chicago <info@latinschool.org>; Latin School of Chicago

Dear Latin Community, I want to share the note below from our new Head of School Dr. Thomas Hagerman. As you may already be aware, the Scarsdale School District has recently received some scrutiny from their community and the media related to an ongoing issue with the IRS. Dr. Hagerman contacted me as this matter evolved, and we agreed it was important to acknowledge it with the Latin community. He shared this note with the Board of Trustees as well as all faculty and staff on Friday. Further, Dr. Hagerman met with the Executive Committee of the Board of Trustees to openly and transparently discuss the situation. The Executive Committee was comforted by this discussion. Dr. Hagerman has a strong track record of service and leadership built over the many years of his career. We are fully confident in and excited to welcome him as our next Head of School. We appreciate Dr. Hagerman's proactive and thoughtful consideration of the Latin community at this time, and we have assured him our full and ongoing support. Best, David Koo Chair, Board of Trustees

(From Dr. Hagerman)

Dear Families, While I hoped my initial engagement with all of you would be more celebratory, I am reaching out now because I believe in addressing issues directly and openly. I want to acknowledge the recent media regarding an IRS issue in my current District and provide you with some background. My District has been working diligently with the IRS since we learned of clerical errors on payroll taxes made in 2020-21. Although it has taken some time, the IRS has been forthcoming about the steps we need to take in order to rectify the situation and receive appropriate abatements and refunds.

For additional details, you can read excerpts from my Board President's last opening comments at the end of this note. Our intentions and work have both been aligned around the following areas: correcting the clerical errors that were made, ensuring all payroll tax obligations were paid, and resolving penalties that were issued as a result of these mistakes.

As we are still working toward resolution on these issues, the District has been advised by our attorneys that we should only share information that will not interfere with our ongoing negotiations with the IRS. I deal with the media frequently in my role and understand the need for information to be shared publicly about important matters. We continue to work with both the community and the media to share factual information. My intent in reaching out today is to be proactive, clear, and direct on these events, and I appreciate your understanding and support. Very best, Thomas Hagerman

Excerpts from the Scarsdale District Board President's opening comments from our last Board meeting: "The primary issue before us is one of timing. To be clear, all tax payments were made in 2020. However, when keying a Q1 deposit into the payment system, an error occurred, resulting in part of the Q1 payment being paid late and, thus, a corresponding IRS "failure to deposit" penalty was assessed. Moreover, a Q3 deposit was applied to Q2 and a Q4 deposit was applied to Q3, resulting in two further IRS "failure to deposit" penalties being assessed in Q3 and Q4, respectively. In addition, because Q2 and Q3 had been fully paid at the time the Q3 and Q4 misapplied deposits were made, respectively, the Q3 and Q4 deposits were therefore deemed "overpayments" in Q2 and Q3. The penalties assessed in Q1 and Q3 totaled $861,320. The penalty in Q4 totaled $448,316.81. Because of the IRS's penalty structure, instead of being refunded to the District, the District's Q3 and Q4 tax payments, which had been misallocated and deemed "overpayments" in Q2 and Q3, were applied by the IRS to pay this $861,320 penalty; as a result, a tax shortfall of $843,558 occurred in Q4. The District has already filed an abatement request and refund claim for the funds used by the IRS to pay the Q1 and Q3 penalties. The District has been advised, verbally, by the IRS Office of Appeals that the Q4 penalty may be abated when the Q4 taxes are satisfied. In addition, the IRS has also assessed a penalty of approximately $412,837, plus interest, pertaining to an unrelated error with respect to the District's filing of its Q2 2021 payroll tax return. The District has already filed a request for abatement of this penalty.

In June of 2021, the IRS sent the District a notice of intent to levy and notice of rights to a hearing. Over the next several months, District officials had several communications with the IRS regarding the clerical errors in an attempt to clarify what had occurred and to request abatement of all penalties. Despite verbal assurances by the IRS to District employees on several occasions that it would not impose a lien on the District while it was cooperating in an effort to resolve the matter, a federal tax lien was filed by the IRS in October 2021 in the amount $1,309,118.34. Our lawyers are working towards getting this lien released.

The Board was informed about this situation on Friday, March 25th, held an Executive Session with our tax attorneys from BSK on March 28th to discuss the legal consequences, including the potential likelihood of litigation, and disclosed the details of the situation to the public and took action at the March 30th Special Meeting to authorize payment of the outstanding Q4 taxes. We held a Special Meeting on March 30th because we were required to take this action by this date. In consultation with our auditors, we have confirmed that the $843,558 payment to the IRS for taxes that are due (not penalties or interest) can be deferred and recorded as an account receivable in the General Fund. It will simultaneously be recorded as an allowance against the accounts receivable in the Government-Wide financial statements, along with a footnote disclosure providing more information for the readers of the financial statements.

To reiterate, the District has filed for an abatement of these Q1 and Q3 penalties and, if successful, the penalties will be abated, which will result in the $843,558 tax payment becoming an overpayment that can then be refunded… We acknowledge that the community has the right to answers, and we will continue to update the community as and when additional factual details become available, but for now, we cannot comment or elaborate further because of the legal implications. As I indicated before, we have been in regular communication with the IRS, working towards a resolution. We have submitted all materials for abatements and refunds at this time. The Board's role in this work has been to approve a Q4 tax payment so that this resolution process could continue."

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Written by Joanne Wallenstein

Published: 05 April 2022

Created: 05 April 2022

Last Updated: 05 April 2022

Hits: 5928

Seeking to clarify what went wrong with the School District’s tax payments in 2020 and 2021, School Board President Karen Ceske read a statement about the issue at the school board meeting on Monday April 4, 2022. (see below)

The meeting was livestreamed on the district website. However, due to an internet connectivity issue, the community was unable to hear her comments.

The statement revealed some new information:

Timing: Though the previous memo from the Board said that the district had been dealing with the tax issue for “several months,” this memo says that the district learned about the errors in June 2021. It says, “In June of 2021, the IRS sent the District a notice of intent to levy and notice of rights to a hearing.” The Board of Education continues to maintain that they first learned of this issue on March 25, 2022.

Tax Lien: Also revealed was the fact that in October 2021, the IRS filed a federal tax lien against the school district in the amount of $1,309,118 which remains in place.

However, there is lots more that needs to be explained.

-How/where did this keying error occur?

-Were similar errors made with the filing of NYS taxes and are there any issues with the state?

-Who is representing the district in negotiations with the IRS?? Who is filing the appeals on behalf of the district? Did the Board of Education approve any payments to tax attorney’s in connection with this issue?

-If the outstanding $843,558 payment to the IRS is not booked as an account receivable, is the proposed 2022-23 school budget over the tax cap? Should it require a 60% approval rate? The budget vote is planned for Tuesday May 17, 2022.

-What is the unrelated error in Q2 of 2022 that resulted in an additional penalty of $412,837?

-Why did the entire issue slip by the auditors?

Here is the statement from Board President Karen Ceske followed by comments and more questions from several residents.

(From Karen) The other important matter this evening is assuring the community that the Board and District are working with legal counsel and other appropriate advisors to resolve the current IRS payroll tax issue. We understand that the community seeks additional information on this issue and timely answers to its questions. I will add more context to the factual information shared at the March 30th Special Meeting and provide some further clarification. We do ask that the community understand that this is presently a matter requiring consultation with and advice from legal counsel, and therefore the Board is still limited in what it can disclose. The Board is committed to providing transparency, and we will update the community as we are able.

The primary issue before us is one of timing. To be clear, all tax payments were made in 2020. However, when keying a Q1 deposit into the payment system, an error occurred, resulting in part of the Q1 payment being paid late and, thus, a corresponding IRS “failure to deposit” penalty was assessed. Moreover, a Q3 deposit was applied to Q2 and a Q4 deposit was applied to Q3, resulting in two further IRS “failure to deposit” penalties being assessed in Q3 and Q4, respectively.

In addition, because Q2 and Q3 had been fully paid at the time the Q3 and Q4 misapplied deposits were made, respectively, the Q3 and Q4 deposits were therefore deemed “overpayments” in Q2 and Q3.

The penalties assessed in Q1 and Q3 totaled $861,320. The penalty in Q4 totaled $448,316.81. Because of the IRS’s penalty structure, instead of being refunded to the District, the District’s Q3 and Q4 tax payments, which had been misallocated and deemed “overpayments” in Q2 and Q3, were applied by the IRS to pay this $861,320 penalty; as a result, a tax shortfall of $843,558 occurred in Q4.

The District has already filed an abatement request and refund claim for the funds used by the IRS to pay the Q1 and Q3 penalties. The District has been advised, verbally, by the IRS Office of Appeals that the Q4 penalty may be abated when the Q4 taxes are satisfied.

In addition, the IRS has also assessed a penalty of approximately $412,837, plus interest, pertaining to an unrelated error with respect to the District's filing of its Q2 2021 payroll tax return. The District has already filed a request for abatement of this penalty.

In June of 2021, the IRS sent the District a notice of intent to levy and notice of rights to a hearing. Over the next several months, District officials had several communications with the IRS regarding the clerical errors in an attempt to clarify what had occurred and to request abatement of all penalties. Despite verbal assurances by the IRS to District employees on several occasions that it would not impose a lien on the District while it was cooperating in an effort to resolve the matter, a federal tax lien was filed by the IRS in October 2021 in the amount $1,309,118.34. Our lawyers are working towards getting this lien released.

The Board was informed about this situation on Friday, March 25th, held an Executive Session with our tax attorneys from BSK on March 28th to discuss the legal consequences, including the potential likelihood of litigation, and disclosed the details of the situation to the public and took action at the March 30th Special Meeting to authorize payment of the outstanding Q4 taxes. We held a Special Meeting on March 30th because we were required to take this action by this date.

In consultation with our auditors, we have confirmed that the $843,558 payment to the IRS for taxes that are due (not penalties or interest) can be deferred and recorded as an account receivable in the General Fund. It will simultaneously be recorded as an allowance against the accounts receivable in the Government-Wide financial statements, along with a footnote disclosure providing more information for the readers of the financial statements. To reiterate, the District has filed for an abatement of these Q1 and Q3 penalties and, if successful, the penalties will be abated, which will result in the $843,558 tax payment becoming an overpayment that can then be refunded.

This issue does not impact the 2022-2023 budget, and the District is seeking a full refund and abatement of all assessed penalties, and if successful, payment of these penalties will not be owed. The exact timing and outcome of such refunds are uncertain. To reiterate, the District has filed for an abatement of these Q1 and Q3 penalties and, if successful, the penalties will be abated and interest will be adjusted, resulting in an approximate $861,320 refund to the District, which can then be applied to the receivable.

In concert with the District, our auditors, and the IRS, corrective measures and additional internal controls have been instituted to ensure these errors do not occur again. The Board has also called for an audit of the District’s payroll tax processes, including a review of internal controls with the District’s Administration and further investigation into this matter.

We acknowledge that the community has the right to answers, and we will continue to update the community as and when additional factual details become available, but for now, we cannot comment or elaborate further because of the legal implications.

A few residents spoke during public comments or sent us their comments for publication after the meeting.

Mayra Kirkendall Rodriguez said, “Last week, I emailed questions about the payroll errors. Dr. Hagerman responded and stated the he was responding on behalf of the Administration and the Board. The Board and the Administration are not the same body. The Board is supposed to be independent and its role is to provide oversight. The payroll errors occurred in 2020 and 2021, while Dr. Hagerman has been superintendent. Is it not a conflict of interest that he decides what to answer about this issue and that you the Board do not respond to taxpayers' questions? What oversight did you as a Board provide on audits and accounting documentation when these errors occurred and what oversight are you providing now? In publicly available documents on your BOE website, you are the audit committee signing off on audits and risk assessments. Additionally, in July 2021 you the Board authorized the Assistant Superintendent for Business to certify all payroll registers. What are those registers and did you see those registers? In your Board policy #6800 on payroll procedures, it states that a periodic test will be conducted to verify accuracy and appropriateness of District payrolls. How often is that test conducted, by whom, and when was the last time that this was done? This evening we are learning that the Administration has known about these errors since June 2021. So why was the Board only notified March 25th? The District has been talking to the IRS and auditors since June 2021, how is it possible that the Board was not notified?

I urge you to provide a clear explanation of the recordkeeping and accounting. In my decades of working as a financial risk analyst with private sector and government entities, I have never seen a tax payment be declared an account receivable unless there is proof that tax funds are being reimbursed within twelve months. Once the tax payment is authorized, which you all did unanimously on Wednesday, it is recorded as a payable on the balance sheet. On the revenue/income statement, the payment is labeled as an expense and is subtracted from the revenues. When a company/organization has confirmation that the IRS will reduce some or all of an expense or a penalty, that amount becomes a receivable on the asset side of the balance sheet. And for a pending incoming amount to be labeled a receivable, it should be measurable, collectible and due within twelve months. So, if the District does not know what amount the IRS might refund you and/or when, what part of GASB allows it to be called a receivable? Please point us to the GASB rule that allows a tax expense to now become an account receivable.
And what about the tax penalties, will the District now record those as payables on the balance sheet?

And now that the District has larger payables, how does that affect how Moody’s might score you on leverage, which as it is, that part of the rating methodology is not a AAA, but about one-to-two notches lower?

Also, please tell us what the cost will be of additional counsel, auditors, and maybe improvements in tech systems to detect errors.

Does the District need restate financials or files a notice with the SEC, since the financials are now different than what you filed previously?

Does the District need to restate the financials to submit to NYSED of the State Comptroller?

You just authorized payment of over $843,000, what impact does this payment have on net revenues and the tax cap? Will the decrease in cash affect our rating?

Did these payroll errors surface in an internal or external audit?

Do you need a new auditor?

What are the new controls you have put in place?

We are about to be looking for a fulltime superintendent, how does this scandal attract a qualified professional?

Rachana Singh called in via Zoom and said, “Why did the meeting notice (for the March 30 Board meeting) not include any notice of a tax issue? At that meeting the board again failed to allow public comment. Who are the districts auditors? How much will the legal and accounting fees be? How can they (the Board of Education) do oversight if they were not informed? When was the abatement filed? What is the unrelated effort of $412,000 for Q2 2021?

Will the board disclose the result of an audit? Once paid, it (the taxes and penalties) will reduce the cash at hand – it is a significant burden on taxpayers. It might affect students. Please disclose as many details as possible without jeopardizing the outcome. I urge you to be more transparent to the school community.

Bob Berg spoke at length and you can see his edited comments here:

Bob Harrison said, “This is serious – how did it happen? Who goofed? $800,000. We pride ourselves in our triple AAA rating? Some heads should roll. This is a serious mistake. (Turning to Dr. Hagerman he said, “I think you’re being paid about $459,000 this year. You were supposed to give us 12 months notice and you put us in a difficult spot. Maybe you should resign. How much does the district have in in its bank accounts – what interest rates are you getting? Or is the cash in treasury bills? I would like to get some answers. Let the community know what you are doing with our money.”