This comes from New York State Comptroller Tom Dinapoli's office.
TheraCare Preschool Services Inc, a downstate provider of preschool
special education services, overcharged state taxpayers by more than
$875,000 for improper staff bonuses and executive compensation over a
three-year period, according to an audit released today by State Comptroller Thomas P. DiNapoli.
“Audits by my office have found a continuing pattern of abuse in
the state’s preschool special education sector,”DiNapoli said. “Many
providers are continuing to take advantage of lax oversight to give
themselves excessive salaries and unearned bonuses. Taxpayer dollars
meant for children with special needs are being wasted. This has to
stop.”
TheraCare, headquartered in New York City, is a for-profit
organization that provides special education services to children
between the ages of three and five who reside in New York City as well
as Westchester, Nassau and Suffolk counties. TheraCare served 651
students during the 2010-11 school year and reported program-related
costs for reimbursement of about $50.1 million for the three fiscal
years ended June 30, 2011.
State Education Department (SED) guidelines state that the
compensation paid to specific leadership positions, and charged to an
SED program, may not exceed the “regional median compensation”for these
positions. On that basis, DiNapoli’s auditors disallowed $316,539 in
compensation paid to the executive director ($73,820), CFO ($111,796),
and assistant executive director ($130,923) for the three-year period
ended June 30, 2011.
Bonus payments to employees are reimbursable by SED only if they
are based on merit as measured and supported by employee performance
evaluations. Auditors found that TheraCare claimed $253,205 in expenses
for bonuses predicated on the organization achieving its budget, not
employee performance.
In addition, auditors found that TheraCare often awarded its
teaching staff a sign-on bonus with the agreement that they will remain
in TheraCare’s employ for at least one year. These payments are not
performance based and thus do not meet the eligibility requirements for
reimbursement by the state. TheraCare inappropriately charged SED
$220,875 for these improper bonuses.
DiNapoli’s auditors also identified $76,766 in unnecessary and
inappropriate South American recruitment-related costs and $9,513 in
other non-personal service expenses that were either unsupported or not
program-appropriate.
DiNapoli recommended:
- ED review the disallowances resulting from the audit, make the appropriate adjustments to costs reported and to TheraCare’s tuition reimbursement rates, and recover the overpayments as appropriate;
- SED work with TheraCare officials to help ensure that only eligible costs are claimed; and
- TheraCare ensure that its requests for SED reimbursement include only those expenses that are allowed.
SED agreed with the audit’s recommendations and has already made
certain adjustments to future TheraCare reimbursement rates to recover
some of the excess compensation. SED has also instituted a soon to be
mandatory training course for providers. TheraCare disputed the audit’s
findings. For a copy of the full report, including responses from SED
and TheraCare, visit: http://www.osc.state.ny.us/audits/allaudits/093014/12s21.pdf
DiNapoli has identified fraud and improper use of funds in a recent
series of audits of special education providers. His office has
completed 22 audits of preschool special education providers, finding
nearly $22 million in unsupported or inappropriate charges. There are
currently ten additional audits of preschool special education providers
in progress.
In December, Governor Cuomo signed into law legislation mandating
audits of every preschool special education services program provider in
the state by the Comptroller’s Office. The new law, a program bill of
the Office of the State Comptroller, also tightens weaknesses in the
program, including how students are evaluated and placed in programs,
and how reimbursement is calculated.
