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09/21/06 14:21

News from Civil Service Employees Association

For more information: Stephen A. Madarasz, 518-257-1270;
madarasz@cseainc.org

FULL DISCLOSURE AT ISSUE IN QUESTIONS ABOUT NYSARC CHAPTER FINANCES
RAISED IN BOND APPLICATION REVIEW

ALBANY, NY -- (09/21/2006; 1345)(EIS) -- Nine of thirteen chapters
listed in NYSARC's Series 2006 Revenue Bond application to the
Dormitory Authority of New York State may be financially at risk
according to a review conducted by Locker Associates, a firm with more
than 30 years experience in financial analysis and due diligence. Even
more shocking is NYSARC may not have fully disclosed adequate
information.

NYSARC, Inc., is the state's largest contractor of services for people
with developmental disabilities with 49 chapters across the state and
$1.4 billion in revenues, most of it from public funds.

The review shows NYSARC chapters in Monroe, Herkimer, Putnam,
Saratoga, Warren-Washington, Otsego, Steuben, Ontario and Montgomery
counties have a seriously high level of liabilities relative to total
assets.

These chapters along with chapters in Westchester, Essex, Chemung and
Schoharie counties last spring applied for a nearly $30 million, state
taxpayer guaranteed bond to expand their operations. Following
questions raised by CSEA about the application, the Dormitory
Authority has twice tabled action on the application. The state Office
of Mental Retardation and Developmental Disabilities is also
conducting its own review.

"The issue is full disclosure," said CSEA President Danny Donohue.
"It's no surprise that some not-for-profits operate close or over the
edge of solvency but NYSARC should be upfront about that information
when they.re asking for a public authority to put its stamp of
approval on their bond application. We all support improved services
and quality care. But it will fall to state taxpayers if the NYSARC
chapters' are unable to meet their obligations or deliver needed
services."

The Locker Associates' report also raises questions about NYSARC's
potential liability in a Medicaid Risk Assessment study that the
organization has not been made public. There are also unanswered
questions about NYSARC restructuring of chapter and parent liability
obligations and how this might affect bond security.

The Locker Associates review was provided to Gail H. Gordon, Chair of
the Dormitory Authority, with a request that the information be fully
assessed before any approval to the application is granted.

Last winter, CSEA launched the Quality Care campaign seeking to secure
a better future for developmental disabilities services in New York.
The campaign is aimed at improving the delivery of services,
addressing low pay and high turnover rates among employees of
not-for-profit contractors and ensuring that quality standards are met
statewide.

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Attached is the Locker Associates, Inc. Press Release:

Locker Associates, Inc.

225 Broadway, Suite 2625 New York, NY 10007 Tel: 212-962-2980 Fax:
212-608-3077

FOR IMMEDIATE RELEASE:

Locker Associates Voices Disclosure Concerns to DASNY on NYSARC, Inc.
Bond Offering

New York, NY, September 20, 2006: Locker Associates Inc, a New
York-based business consulting firm, today raised financial and
operating disclosure concerns with the Dormitory Authority of the
State of New York (DASNY) over a proposed bond issue by NYSARC, Inc.
to be considered at a DASNY hearing next week. NYSARC, Inc is the
largest provider of services for people with developmental
disabilities in New York State, with 49 chapters and $1.4 billion in
revenues. This follows the Authority.s decision to put aside a
proposal to issue $30 million in bonds during their July 26, 2006
board meeting after a state public employees union, Civil Service
Employees Union (CSEA), alleged numerous violations and
quality-of-care issues at NYSARC, Inc. Locker Associates, a firm that
has more than 25 years of experience in performing financial analysis
and due diligence, requested that the Authority delay the issue after
being commissioned by CSEA to investigate the transaction. In a letter
to Gail Gordon, Chair of the DASNY Board, Mr. Michael Locker,
President of Locker Associates, detailed the concerns that he and his
firm have regarding adequacy of financial and operating disclosure by
NSYARC, Inc.

"As financial experts and members of the business community, we well
understand that investors are entitled to any 'material' information
on the financial condition and operations of an issuer," Mr. Locker
commented. "Regarding NYSARC, Inc. we understand that there may be
considerable operating and regulatory irregularities at one or more
NYSARC chapters which could have a significant impact on NYSARC,
Inc.'s operations and financial profile. And these issues could result
in the restructuring of NYSARC, Inc.'s corporate structure, and limit
its liability for obligations at individual NYSARC chapters. Our own
financial analysis on the thirteen NYSARC Chapters which will be
obligors of the bond issue indicates that there are real questions
about their ability to service these bonds on their own. Therefore, we
are calling for additional disclosure on any irregularities or
operating problems which could impact the organization.s ability to
service these bonds, as well as further disclosure on a possible
restructuring at NYSARC, Inc. and more financial data on the
individual Chapter obligors."

The Locker Associates investigation comes during a time when New York
State is in the process of revamping the way Authorities are operated
and structured. Recently, the New York State Commission on Public
Authority Reform, a bipartisan commission created by Governor George
E. Pataki, called for a broad overhaul of the state's secretive public
authorities, saying they must be regulated more like publicly traded
companies. Locker Associates. investigation and letter to the
Authority are effectively serving notice to DASNY's Board to embrace
the new culture of greater disclosure and due diligence that is being
mandated by the Commission on Public Authority Reform. Locker
Associates is a New York-based business consulting firm that
specializes in enhancing the competitiveness of businesses and
industries on behalf of corporate, union and government clients.
Locker Associates has more than twenty-five years of experience in
performing financial analysis and due diligence on a wide variety of
projects, including feasibility studies, restructurings, mergers and
acquisitions, buyouts, and business and marketing plan reviews.

CONTACT: Michael Locker, President, Locker Associates 212-962-2980

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