Main Banner

NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015


DiNapoli: Pre-K Special Education Schools Took $1.4 Million in Unallowed Expenses

Comptroller’s Audits Call for Repayment to State Education Dept.

November 22, 2016

Aim High Children’s Services and the Hebrew Institute for the Deaf and Exceptional Children, two Brooklyn preschool special education providers, claimed nearly $1.4 million in taxpayer reimbursements for ineligible costs, according to audits released today by New York State Comptroller Thomas P. DiNapoli.

“Our audits continue to find special education providers that make poor financial decisions like awarding excessive executive pay or failing to document and justify the taxpayer dollars they spend,” DiNapoli said. “The children in our special education programs need every dollar available to them and they are the ones who lose out when the schools fail to follow the rules for receiving taxpayer reimbursements.”

Both Aim High and the Hebrew Institute offer special education services to children from 3 to 5 years of age. The city’s Dept. of Education (DOE) refers students to the schools based on clinical evaluations and pays for their services. The schools report their expenses to the State Education Department (SED), which partially reimburses DOE based on the schools’ annual claims.

Hebrew Institute for the Deaf and Exceptional Children

The not-for-profit Hebrew Institute served about 170 students during the 2013-2014 school year. It reported $11 million in costs for reimbursement in the three fiscal years ended June 30, 2014.

DiNapoli’s audit recommended that SED disallow the school’s claims for reimbursement on $774,122 in ineligible expenses. These included:

  • $194,438  in lump sum bonuses for staff that did not have required performance justification;
  • $132,846 in salary to employees who worked for other programs operated by the school. Hebrew Institute did not keep required records to support the work hours it reported for reimbursement.
  • $132,377 in excessive executive compensation. Hebrew Institute reported paying its executive director salaries ranging from $310,000 to more than $350,000 over the three fiscal years ended June 30, 2014. State rules require that executive director pay be comparable to regional median pay which was significantly lower, ranging from $267,000 to $281,000.
  • $30,629 in car lease payments for vehicles that seemed to be for the personal use of the executive director.

DiNapoli’s audit also disallowed excessive 401k contributions given to the executive director and the school’s curriculum coordinator. Over the three years, the Hebrew Institute contributed from 16 percent to 52 percent of the executives’ gross salaries to their 401k accounts. By contrast, other employees received contributions that ranged from 4 percent to 9 percent. DiNapoli’s auditors determined that $189,017 should be disallowed, including $107,025 in payments to the curriculum coordinator and $81,992 given to the executive director (inclusive in the excessive executive compensation disallowance).

Aim High Children’s Services

The not-for-profit Aim High served 202 students with disabilities during the 2013-2014 school year. It reported $9.7 million in public funding reimbursements for the three fiscal years that ended June 30, 2014.

DiNapoli’s audit found that Aim High claimed $616,906 in costs that were not eligible for reimbursement under the state program. Most of this ($501,085), was money that Aim High paid to other schools with which it had “collaboration agreements” to integrate special education students into mainstream classrooms. Such agreements are required by DoE and come with rules for ensuring expenses are “reasonable and well-documented.” Moreover, the Reimbursable Cost Manual clearly requires that costs be supported by “adequate substantiating documentation.” The Manual does not exempt charges related to collaborative school agreements from this requirement. Aim High did not properly document or show that the payments were reasonable.

In one example, a collaborative school official provided evidence that her school, located on public property owned by the Port Authority of New York and New Jersey (Port Authority), charged Aim High $550 in monthly space rental costs, although the school was using the Port Authority’s space at no cost. It is egregious that the collaborative school (a private entity) paid no rent to the Port Authority space, yet took state and local reimbursement funds for the use of the space. Over the three fiscal years ended June 30, 2014, Aim High paid the private school $19,800 in taxpayer funds to use the Port Authority space.

DiNapoli’s auditors also determined that some payments to collaborative schools were set through verbal negotiations with little or no documentation.

In another instance, Aim High paid a consultant $8,745 but could not provide itemized invoices to show what services were provided, or when, or the number of hours billed and at what rate per hour.

DiNapoli’s auditors spoke to the consultant, who told them that an Aim High executive directed her to alter the invoices for the $8,745 in charges and to resubmit them. Further, the consultant told the auditors that she did not provide services to the Aim High SED Programs, but helped prepare Aim High proposals for other State, federal, and New York City grants.

Except for the costs claimed pursuant to the collaborative agreements, SED agreed with the audit recommendations and stated it would make adjustments to recover any overpayments. SED further stated that it would issue additional guidance regarding collaborative agreements to clarify the standards for reimbursements and supporting documentation for these payments.

Read the reports on the Hebrew Institute for the Deaf and Exceptional Children and Aim High Children’s Services or go to

For access to state and local government spending and more than 50,000 state contracts, visit The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.