April 06, 2011
DiNapoli: Long Island School for Disabled Overcharged State on Reimbursements
Managers at the Henry Viscardi School (HVS), a Long Island school for disabled students, overcharged the state $835,074 for unreasonable and unnecessary expenses, including a lease for a Lexus used by the president of the school's parent company, Abilities!, according to an audit released today by State Comptroller Thomas P. DiNapoli.
"Educating disabled students is a noble cause but it appears the leadership team at Abilities! took advantage of the state's taxpayers," DiNapoli said. "I'm pleased that the State Education Department has accepted our findings and is putting an end to this kind of abuse."
HVS, located in Albertson, is one of eleven state supported Chapter 4201 schools in New York that receive state operating aid to teach disabled students. The aid is provided on the basis of certain claimed expenses that the schools submit to the State Education Department (SED). To be eligible for reimbursement, the expenses must comply with SED guidelines. For the two years ended June 30, 2009, HVS claimed a total of $27.8 million in reimbursable expenses.
HVS's parent organization, Abilities!, provides various services for children and adults with disabilities. The company also provides HVS with a number of administrative and support services, and HVS reimburses Abilities! for those services. HVS then files for state reimbursement.
Auditors disallowed a total of $720,921 in claims made by the school during the audit period because the costs duplicated those already incurred by HVS, did not relate to the school's operation or were prohibited by SED.
Included in that total was $280,000 a year in additional leadership expenses for the salary and fringe benefits of the parent company's president and the company's secretary. Since HVS had its own leadership team in place, it was unclear what services the two actually provided to the school, and auditors disallowed a total of $560,000 for the two-year audit period.
Abilities! also charged the state $88,275 of the $165,000 bonus money it gave to the president and the chief financial officer in 2007-08. All management staff would have had to be eligible for the bonuses for the president and the CFO to be eligible for the money, but were not.
DiNapoli's auditors disallowed $18,276 for the lease, maintenance, gasoline and insurance payments for the Lexus and a 2007 Honda minivan used by Abilities! building operations director. Auditors further disallowed $186,392 in expenses claimed by HVS in the audit period because the expenses either were not adequately documented or were not eligible for reimbursement.
HVS also charged the state $69,600 for legal expenses incurred by Abilities!, but DiNapoli's auditors determined that only $49,005 of those expenses were related to HVS's operations. The extra funds were disallowed.
SED officials agreed with DiNapoli's recommendations and said they will make appropriate adjustments to the reported costs and require HVS to conduct a study to determine the appropriate allocation of the cost of staff.
HVS officials disagreed with some of our specific interpretations and related disallowances. However, they also said they would seek to comply fully in the future.
For a copy of the complete audit, go to: http://www.osc.state.ny.us/audits/allaudits/093011/09s70.pdf