Eliot Spitzer isn’t the only New York State Democrat who knows how to score political points by targeting potential conflicts of interest in the financial world. Assembly Speaker Sheldon Silver took a page from the crusading attorney general’s book last month when he derailed a no-bid contract that the state was about to award Standard & Poor’s for helping to assess how much New York City should spend on educating its public school students.
Silver’s beef: The credit rating giant already gets paid by the state and its school districts for providing bond ratings, and its parent company, textbook and test publisher McGraw-Hill, has about $24 million in active contracts with the state for various services, including educational testing, according to State Comptroller Alan Hevesi’s office. Silver fears that those ties could result in a less-than-objective analysis of proper school spending levels. Last year the New York State Court of Appeals mandated the analysis in a ruling that said the city was inadequately educating its youngsters.
“This is the same debate we’ve had over Enron, where accountants were selling auditing, consulting and other such services” to the same client, says Silver, a Democrat. “The general public and Congress found that practice unacceptable. Either you do this, or you do that, but you don’t do both.”
Silver’s attack shocked William Cox, who heads S&P’s School Evaluation Services, which is working with the federal government to help all 50 states determine whether they’re complying with the controversial No Child Left Behind Act. “Our analysts are completely separate from the credit ratings analysts,” Cox says. “None of them participate in any credit ratings activities.” But Cox’s argument didn’t sway Silver -- or Comptroller Hevesi, who killed the contract.
