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February 26, 2010

DiNapoli: Contractors Overcharged SED $2.4 Million

Contractors overcharged the State Education Department (SED) $2.4 million dollars in one school year, according to an audit released today by State Comptroller Thomas P. DiNapoli. The audit examined SED’s reimbursement to providers of teachers for preschool children with disabilities.

“You can hire a lot of teachers and provide a lot of services with $2.4 million,” DiNapoli said. “Providing services for children with special needs is our moral imperative. We can’t allow private companies to game the system and get paid for services they didn’t provide.”

In New York, school districts assess each child’s need for special educational services. If a district determines a child should be taught by a special education itinerant teacher (SEIT), county health departments and the New York City Department of Education contract with providers to deliver those services.

DiNapoli’s auditors reviewed some of the costs reported by the ten largest SEIT providers for the school year ended June 30, 2006. Auditors determined that two of the providers inappropriately reported costs totaling $1.4 million. One provider inflated its costs by $1.3 million for support personnel who were not involved in providing SEIT services.

Additionally, SEIT providers are required to submit fiscal reports each year to SED. The reports include the number of authorized SEIT sessions along with the actual costs incurred by the provider. This information is used to set unique reimbursement rates for each SEIT provider in future years.
Auditors found that four of the ten providers examined did not report a total of 22,635 sessions, leading SED to set excessive reimbursement rates for them and pay them as much as $985,000 more than they should have.

For the school year ended June 30, 2007, municipalities across the state spent about $148 million to provide SEIT services, up from $54 million in the 2000-01 school years.

Auditors concluded there are widespread misunderstandings by providers and localities on the SED expectations for reporting sessions and reimbursing for them.

The audit recommends SED:

  • Adjust the session rates to recoup costs from the two providers that overcharged SED $1.4 million and the four providers who underreported sessions; and
  • Review the guidance being given to providers about session reporting to make sure it is consistent and clear.

SED generally agreed with the audit's recommendations.

Click here for a copy of the audit.

State Government Accountability
The Office of the State Comptroller regularly audits state agencies, public authorities and New York City agencies. Auditors ensure that programs achieve their established goals, funds are used efficiently and assets are adequately protected against fraud, waste and abuse. DiNapoli’s office completes approximately 200 state audits annually and identifies hundreds of millions in savings and fraud each year.


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