TheraCare Preschool Services Inc., which provides preschool special education services in New York City and Westchester, Nassau and Suffolk counties — overcharged state taxpayers more than $875,000 for improper staff bonuses and executive compensation over three years, according to an audit released today by state Comptroller Thomas DiNapoli.
The audit covers the three fiscal years ending June 30, 2011 for TheraCare, a New York City-based nonprofit that serves special-needs children 3 to 5. The organization served 651 students during the 2010-11 school year. For the three fiscal years ending in June 2011, it reported about $50.1 million in program-related costs.
State auditors disallowed a total of $316,539 in compensation for executive director ($73,820), chief financial officer ($111,796), and assistant executive director ($130,923).
“Audits by my office have found a continuing pattern of abuse in the state’s preschool special education sector,” DiNapoli said in a statement. “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.”
In 22 audits DiNapoli’s office has done on special education providers, it has found nearly $22 million in unsupported or inappropriate charges. There are 10 additional audits of preschool special education providers in progress. Gov. Andrew Cuomo signed a law in December that mandates the Comptroller’s Office to audit every preschool special education provider in the state.
New York is the only state in the country that requires counties to pay for preschool special education, the New York State Association of Counties said in a November 2012 report. The report estimated the total annual cost at $2 billion.
DiNapoli said state Education Department guidelines prohibit compensation for specific leadership positions from exceeding the “regional median compensation” for the positions. Bonus payments are reimbursable by the state if based on merit and measured and supported by performance evaluations. State auditors found that TheraCare claimed $253,205 in expenses for bonuses predicated on the organization achieving its budget, not employee performance.
The organization was found to have inappropriately charged the state $220,875 for teacher sign-on bonuses, which required staff to stay at TheraCare for at least a year. 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 unsupported or not program-appropriate.
The state Education Department agreed with the audit’s recommendations and has already made adjustments to future TheraCare reimbursement rates to recover some of the extra compensation. It also instituted what will soon become a mandatory training course for providers. TheraCare, however, disputed the audit’s findings, including that the comptroller disallowed compensation for the executive director and CFO. The state Education Department had reviewed and already adjusted the compensation, the organization’s attorney wrote. TheraCare also disagreed with the disallowance for bonuses.