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Sloppy Paperwork Costs NYC Schools $350 Million

Some $356 million in federal Medicaid payments for special education were lost in the last three years by New York City’s public schools due to improper accounting, the New York Daily News reported Friday.

The loss, revealed in a report by city comptroller Scott Stringer, amounts to about $300 for each of the district’s 1.1 million students.

Medicaid funds the entire cost of certain special education services like speech therapy, counseling, and transportation, but school districts are required to pay on their own first and then apply for reimbursement in a timely manner.

Officials with the New York City Department of Education simply failed to properly apply for reimbursement. As a result, huge sums of money initially earmarked for books and other school supplies were shifted into special education.

Not only is the loss dramatic, but it is ongoing. Unless the Department of Education takes immediate and drastic corrective action, the district may lose another $300 million over the next four fiscal years.

“Red tape and bureaucracy should not stand in the way of DOE being reimbursed for the vast array of services provided,” Stringer said in his report.

The revelations vindicate complaints made by the United Federation of Teachers (UFT), the main teachers union in New York City. The UFT had complained repeatedly that the city was lax in applying for federal reimbursements.

The cause of the breakdown appears to be rooted in a federal audit of the city’s reimbursement claims from the 1990s. The audit found overbilling and other bad practices by the city, which resulted in the city and state agreeing to repay several hundred million dollars and implement new procedures to cut down on fraud. Since the audit, Stringer said, the city has been exceedingly cautious in submitting any claims, even when they would clearly be covered.

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