dinapoli: new york was overbilled $3 million by special education contractor
DESCRIPTION
DiNapoli’s audit examined the school’s CFRs from 2008 to 2011, during which Churchill reported $43 million in reimbursable costs. Auditors determined $3 million charged by Churchill were either unsupported, inappropriate or non-program related.TRANSCRIPT
6/1/2014 DiNapoli: New York was Overbilled $3 Million by Special Education Contractor, 5/28/14
http://www.osc.state.ny.us/press/releases/may14/052814.htm 1/2
May 28, 2014, Contact: Press Office (518) 474-4015
DiNapoli: New York was Overbilled $3 Million by SpecialEducation Contractor
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The Churchill School and Center, a New York City-based special education provider, claimedreimbursement for more than $3 million in inappropriate expenses, according to an auditreleased today by State Comptroller Thomas P. DiNapoli.
“Time and again my office has uncovered special education contractors trying to evade therules,” said DiNapoli. “This taxpayer money, intended to help children with special educationneeds, was misused for inappropriate and non-educational purposes. We have forwarded ourfindings to the State Education Department for review and to recover any money that wasmisspent.”
Churchill provides special education services to nearly 400 children in grades K-12 who areclassified as having a learning disability or speech-language impairment. Under Section 853 ofthe State Education Law, the school is reimbursed by the State Education Department (SED)based on expenses it reports in its consolidated fiscal reports (CFR). Expenses have to meetwith rules set forth in SED’s Reimbursable Cost Manual.
DiNapoli’s audit examined the school’s CFRs from 2008 to 2011, during which Churchillreported $43 million in reimbursable costs. Auditors determined $3 million charged by Churchillwere either unsupported, inappropriate or non-program related.
Of this total, there were $439,000 in food, parties, gifts, and other ineligible, inappropriate orinsufficiently documented expenses, including nearly $10,000 that was spent on alcohol and$1,750 in stipends for two employees to travel to Puerto Rico with students on a seven-daysurfing trip.
The school also compensated its executive director and chief financial officer $376,000 inexcess of SED’s allowable compensation levels.
DiNapoli’s auditors also revealed that Churchill:
Provided $430,000 for employee bonuses that did not comply with requirements;Charged $1.4 million in compensation costs incurred by the center and its developmentoffice to the Churchill school inappropriately;Spent $220,000 on unnecessary transportation costs; andClaimed $144,000 in unallowable equipment depreciation expenses.
DiNapoli made several recommendations to the school and SED:
SED should review the disallowances identified in the audit, adjust Churchill’s CFRs andreimbursement rates accordingly, and recover overpayments as appropriate;SED should review the program matters pertaining to computer utilization and disposal,student-to-staff ratios, and non-certified teachers as identified. Require Churchill todevelop remedial action plans, as warranted;Churchill should ensure that costs reported on CFRs fully comply with the applicableprovisions of the Manual; andChurchill should establish effective inventory controls over computers and comply withapplicable SED guidance and approvals with respect to teacher staffing ratios and
6/1/2014 DiNapoli: New York was Overbilled $3 Million by Special Education Contractor, 5/28/14
http://www.osc.state.ny.us/press/releases/may14/052814.htm 2/2
certifications.
SED has indicated it has already begun to implement the recommendations. Churchill officialsdisagreed with several of the audit’s findings. Their response is included in the final auditreport, which can be viewed here: http://osc.state.ny.us/audits/allaudits/093014/12s20.pdf
DiNapoli encourages the public to help fight fraud and abuse. New Yorkers can reportallegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at [email protected], or by mailing acomplaint to: Office of the State Comptroller, Investigations Unit, 14th Floor, 110 State St.,Albany, NY 12236.
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