For years, Kiryas Joel, a bustling village north of New York City, has run one of the most unusual public school districts in America.
The village is almost entirely populated by Hasidic Jews, and the district was created to serve just one group: Hasidic children with disabilities. Most other children attend the community’s private religious schools, which stress the rigorous study of Jewish law and prayer but offer little instruction in secular subjects.
Created a little over 30 years ago, the unique public school system immediately drew concerns that a school district created for members of a single faith could never separate itself from their religious institutions.
Then, in 2009, New York auditors identified a glaring conflict of interest: Two of the school district’s board members had voted to use tens of millions of tax dollars to lease a building from a private religious school organization that they also helped run.
Since then, the conflicts have grown, a New York Times examination has found, with millions in public education dollars continuing to flow into the same religious school organization and its affiliates.
Based on thousands of pages of public records, the review showed that the small public school district is now paying more than $2.4 million a year — about 5 percent of its annual budget — to companies affiliated with the private school organization, the United Talmudical Academy of Kiryas Joel, a nonprofit that wields enormous influence in the cloistered community in the foothills of the Catskill Mountains.
Founded in the 1970s in Orange County by members of the Satmar Hasidic group, Kiryas Joel now has more than 30,000 residents.
The U.T.A., as the organization is known, provides schooling for most of the children in Kiryas Joel, which was founded in the 1970s by a group of Hasidic Jews who had set out to form their own religious village. (Hasidim are distinct from modern Orthodox Jews, and others who strictly follow religious law, because many of them do not integrate their lives with contemporary society, devoting themselves instead to preserving centuries-old traditions.)
The Kiryas Joel Village Union Free School District operates one school and one early childhood education center. Records show it has an annual budget of about $40 million, with about a quarter of that money coming from local property taxes.
Rather than pay for new construction, as state auditors said it should have done, the Kiryas Joel district has leased even more space from the U.T.A., which controls more than $325 million in assets, and an affiliate. It has also paid the U.T.A. and its affiliates for the use of classroom and parking lot space and a swimming pool.
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In addition, the district has used money from federal stimulus funding it received during the coronavirus pandemic to make millions of dollars in repairs to buildings owned by the U.T.A. and an affiliated nonprofit.
The decision to pay for the repairs was made by the public district’s school board. But two of its members, Harry Polatsek and Simon Kepecs, also serve on the board of the U.T.A. — the same conflict that auditors flagged more than a decade earlier. Neither board member responded to requests for comment, but the district superintendent said that they did not have to recuse themselves because the leases would last longer than the repairs.
The district is also paying one son of Mr. Polatsek, the school board president, a six-figure salary to work as a teacher’s aide and emergency medical technician. It has a multimillion-dollar contract for bus service with a company managed by another of his sons.
The district superintendent, Joel Petlin, said the school system was proud of the education it provided its students and that no district leader or board member had ever acted improperly.
“If you think our conflicts-of-interest policies and procedures need to be tightened or improved, and you think that is newsworthy, so be it,” Mr. Petlin said. “But don’t pretend that the Kiryas Joel Board of Education is directing or misappropriating federal and state dollars to private religious schools and organizations, because that is not true.”
“In my opinion,” he added, “that false narrative creates a misperception, and as a result, it directs cynicism, animus and violence towards the Jewish community.”
Federal regulators have given the Kiryas Joel school system high marks over the years for the services it offers its students. And village leaders have said the school district is essential to accommodate Hasidic children with disabilities who cannot receive aid in the community’s private schools and might become targets of ridicule in other nearby public schools.
But the money it sends to the U.T.A. and its affiliates has done more than just secure classroom space for the public school programs. It has supported private schools that provide thousands of boys with only cursory instruction in English and math, and barely any science or social studies, setting some back for life.
Representatives of the U.T.A. did not respond to several requests for comment.
Longtime opponents of the district said the conflicts of interest that have cropped up were the foreseeable consequences of forming a government agency for a single religious group.
“When you deal with small, sealed-off groups, these sorts of abuses do occur,” said Marc Stern, general counsel for the American Jewish Committee, who opposed the district as co-director of the American Jewish Congress in the 1980s. “There’s less of a check. And so it’s not surprising that it developed this way.”
The Kiryas Joel School District faced legal challenges almost from the moment that the village leaders began pushing for its creation.
In the 1980s, the leaders found a ready partner in George E. Pataki, the Republican assemblyman from Peekskill who would later become governor. Mr. Pataki co-sponsored a bill to create a breakaway school district for the village, and it was signed into law by Gov. Mario M. Cuomo in 1989.
The new district drew swift condemnation. The leader of the New York State School Boards Association filed a lawsuit seeking to invalidate it on the grounds that it represented an unlawful mixing of church and state, touching off legal battles that would span the 1990s and land in the U.S. Supreme Court — which ruled against the district in 1994.
But the Legislature passed more bills to create the district, and, eventually, opponents stopped fighting it.
In 2009, auditors with the state comptroller’s office found that the district had signed a 30-year lease with a subsidiary of the U.T.A. for the district’s public school building, even though it would have been cheaper to borrow money and build a new school. (Mr. Petlin, the district superintendent, said the auditors underestimated the construction costs.)
The auditors also noted that Mr. Polatsek and Mr. Kepecs had failed to submit a required disclosure that they held seats on the boards of both the public school district and the U.T.A.
In 2011, the inspector general of the U.S. Department of Education concluded that the district had violated federal conflict-of-interest rules and misused funds for impoverished schoolchildren by tapping the money to pay the same lease the comptroller had flagged. The district was ordered to refund more than $276,000 and refrain from using that pot of federal money for future payments.
Since then, the board members have disclosed their ties to the U.T.A. every year. They have also vowed to abstain from votes involving the organization. But the official rebukes did not discourage the board from using public money to benefit the private school company in the years that followed, The Times found.
Records show that the business of the public school district and the private school organization has been intensely intermingled over the past five years.
Some of the spending that benefits the private schools, such as that for transportation, textbooks and remedial help for low-income children, is required by state and federal laws. But with other payments, the district appears to have gone out of its way to send funding to the U.T.A.
To track the more than $2.4 million flowing to the private school system and its affiliates, The Times reviewed thousands of pages of school board meeting minutes and other documents and found:
The payments include about $1.4 million for leasing buildings; $640,000 for operating a universal pre-K program; $330,000 to rent classrooms in the private boys’ and girls’ schools; and $19,000 to run a breakfast and lunch program, records show. About another $400,000 flows to the U.T.A. from district contractors.
The district sent still more money to the U.T.A. after receiving more than twice its annual budget — some $95.3 million — in federal pandemic relief funds, qualifying for that sum based on the large numbers of low-income children in the village, including those in private schools.
Among the expenses the district planned to cover with pandemic funds were about $2 million in lease payments over a 15-month period — transactions similar to the ones the federal auditors had flagged as inappropriate when made with federal dollars meant for impoverished students. (The rules governing stimulus spending are looser, and the rent payments were permissible.)
Records show the district also used the federal money to pay for utilities, classroom furniture and photocopiers at the U.T.A. About 99 percent of the first $8.8 million the district received from the stimulus was used in the U.T.A. and other private schools, an internal memo shows.
The district also told the state it planned to spend as much as $108,000 in federal stimulus money over the next three years to rent a pool from the U.T.A. at a rate of $200 an hour.
“We were given so much,” the district’s deputy superintendent, Josh Kamensky, said of the federal pandemic funds at an October board meeting. “It’s really hard to spend all that money.”
Through it all, Mr. Polatsek and Mr. Kepecs have maintained their seats on the school district and U.T.A. boards — and helped run an affiliated organization that does still more business with the district.
On a Thursday in October, a Times reporter attending a district school board meeting watched as both men voted to spend about $5 million in federal stimulus money to replace the heating and cooling system at an early childhood education center owned by the U.T.A.-affiliated company, which Mr. Kepecs and Mr. Polatsek co-founded. Both men still sit on its board, records show.
After The Times inquired about the board members’ ties to the education center, Mr. Kepecs and Mr. Polatsek publicly disclosed their roles at the nonprofit, acknowledging a potential conflict of interest and pledging to abstain from future votes related to leases or contracts with the organization. In January, they recused themselves from a new vote related to the heating and cooling repairs.
The district has also been generous with employee salaries and benefits. Among the workers on its payroll is Aron Polatsek, the board president’s son, who earns $178,000 a year as a “teacher aide/E.M.T.,” records show. Mr. Petlin said the salary was justified because Aron Polatsek performs additional duties as a parent liaison and had worked at the district for more than 20 years.
The school system has also awarded a $4.6 million contract to a village bus company, Focus in Chinuch, managed by another son of Mr. Polatsek, Joel. That company, in turn, has donated about $300,000 a year to the U.T.A. over a recent four-year period “to promote religious education,” tax documents show.
Records show Mr. Polatsek abstained from the vote on the bus contract renewal in 2020. A representative of the bus company said Joel Polatsek worked as an operations manager at the firm and had no independent decision-making authority.
Mr. Petlin, the superintendent, said any questions about board members’ relatives were “misguided.”
“Our leases and contracts are based upon our needs for space and for the services that we are mandated to provide,” Mr. Petlin said. “Hiring and promotions at the Kiryas Joel School District are based upon merit, not by someone’s last name.”
Susan C. Beachy contributed research.