STATE OF NEW YorK EXECUTIVE CHAMBER Aupany (2224 DAVID A. PATERSON. April 26, 2010 Board of Directors ‘New York State Theatre Institute 37 First Street ‘Troy, New York 12180 Dear Board Members: ‘The Inspector General has brought to light an egregious pattern of improper spending, conflicts of interest and nepotism in the actions and operations of the New York State Theater Institute (“NYSTI”).! His April 2010 report provides the final and troubling conclusion to a long investigation of NYSTI’s management and finances. The Inspector General found that NYSTI and its Producing Director (“Producing Director”), Patricia Snyder, failed to meet ethical responsibilities and withheld and manipulated records during the Inspector General’s inquiry. The Inspector General’s report determines that the Producing Director hired family members, ‘creating conflicts of interest for NYSTI, and executed questionable agreements solely to benefit, herself. The Inspector General also found that NYSTI and its Producing Director engaged in improper spending, which was facilitated by a lack of internal fiscal controls. These and other findings call into question the level of oversight of NYSTI officers by the Board of Directors (“Board”) Based on the findings of the Inspector General, I urge the Board to take decisive action to protect NYSTI and its taxpayer-funded assets by immediately removing the Producing Director. The Inspector General has concluded that the Producing Director failed to recognize NYSTI's status as a public entity subject to the state's ethics rules. Further, he found that over a long period that continues to the present, the Board has permitted the Producing Director to exercise sole and final decision-making authority over nearly every aspect of NYSTI's activities. Asa result, the Producing Director has been able to use her authority to engage in a pattern of activities from which she and members of her family benefitted, in contravention of the Public Officers Law. Under NYSTI’s enabling statute, the Producing Director serves at the pleasure of ‘the Board. Accordingly, as the first step to restoring the public trust, the Board should regain direct control over the management and operations of NYSTI by removing the Producing Director. ' Investigation of the New York: tute, April 2010, by Joseph Fisch, tate Inspector General. vrwny.govUnder the landmark Public Authorities Reform Act (“PARA”), which became effective March 1, 2010, Board members have a fiduciary duty to act in the best interest of NYSTI, its mission and the public. I signed this law because in my view, a duty-bound, principled board of directors can best ensure that a public corporation acts ethically, in accordance with its mission, the public interest, and the highest standards of corporate governance. Indeed, PARA is intended to serve as a bulwark against precisely the kind of malfeasance detailed in the Inspector General’s report. Board members must be prepared to undertake their roles and responsibilities in fulfillment of this fiduciary duty. Indeed, itis critical that Board members intemalize NYSTI’s corporate mission, understand the responsibilities and expectations of their appointed position, and be willing and able to invest the time and effort to attend and actively participate in Board meetings. Based upon the Inspector General’s findings, such imperatives do not appear to have guided NYSTI in the immediate past. I am confident, however, that you will move swiftly to address this situation in light of the higher standard set by PARA. It is your legal duty and professional obligation. I look forward to your prompt response. Very truly yours, ed A. Potert0t David A. Paterson