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May 19, 2014, Contact: Press Office (518) 474-4015

DiNapoli: State Education Contractor Overcharged Taxpayers $430,000

The LaSalle School, an Albany-based special education provider, overcharged state taxpayers by more than $430,000 over a three-year period, mostly for compensation for uncertified teachers, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“Special education programs fulfill a great need across New York state, but taxpayers are paying for more than they should,” DiNapoli said. “Providers like LaSalle, as well as the State Education Department, have a responsibility to make sure costs for these programs adhere to state guidelines to protect taxpayer dollars.”

LaSalle is a not-for-profit school that provides a range of community and campus-based programs, including residential and day services, to male adolescents and their families. LaSalle offers both special education and regular education curricula for students in grades 6 through 12. At the time of the audit, LaSalle had a total enrollment of about 115 students, including 84 residential and 31 day services students between the ages of 11 and 21.

LaSalle is reimbursed through rates set by the State Education Department (SED), which oversees and sets guidelines for New York’s special education program, for the services it provides to residential treatment and day service students. The school’s tuition reimbursement rate is based on the expenses it reports to SED. Costs reported by schools must fully comply with SED guidelines to qualify for reimbursement. For the three fiscal years ended June 30, 2011, LaSalle claimed approximately $11.5 million in reimbursable costs for the special education program that was audited.

DiNapoli’s auditors determined LaSalle claimed $433,968 in personal service and other than personal service costs that were unnecessary, unallowable or not correctly reported. The disallowances included $375,240 in compensation for 10 teachers who did not have the required certifications for their job titles.

LaSalle claimed $38,745 in other compensation that did not comply with SED requirements, including bonuses that were neither based on merit nor supported by employee performance evaluations. In addition, the ineligible costs included Christmas gifts and raises that exceeded prescribed employee salary scales.

During fiscal years 2008 through 2011, LaSalle owned or leased 15 vehicles. The expenses associated with these vehicles included lease payments, depreciation expenses, insurance premiums, repairs and vehicle registration. DiNapoli’s auditors disallowed $11,450 in reported vehicle costs because LaSalle did not maintain the required vehicle logs or any other documentation to support the business use of these vehicles.

Auditors also disallowed $3,135 in inadequately documented staff travel, $3,005 in inadequately documented credit card purchases and ineligible credit card fees, $1,750 in ineligible administrative costs and $643 in ineligible costs for staff conferences.

DiNapoli’s auditors further found that two of LaSalle’s board members failed to report less-than-arm’s-length business arrangements with the school. Specifically, a LaSalle board member was also an insurance broker for a company from which LaSalle obtained liability, property and automobile insurance. LaSalle also paid $5,440 for car leasing and repair to a company whose vice president was a board member during the two fiscal years ended March 31, 2010.

DiNapoli recommended SED:

  • Review the disallowances resulting from the audit and make the appropriate adjustments to the costs submitted by LaSalle.
  • Adjust LaSalle’s reimbursement rates, as appropriate. In addition, formally assess the eligibility of the reported costs associated with certain transactions identified, and adjust the school’s reimbursement as warranted; and
  • Provide LaSalle administrators and staff with training and additional guidance on reimbursement.

DiNapoli recommended LaSalle:

  • Ensure all staff providing special education instruction or administration are properly qualified and certified;
  • Comply with the requirements for eligibility and documentation of all reported program costs and ensure all reported cost are accurate;
  • Remediate the procedural weaknesses related to board approval of contracts, conflict of interest policy and disclosure and less-than-arm’s-length business transactions; and
  • Comply with SED requirements for cost allocation documentation and time and attendance records.

SED officials agreed with the recommendations and said they intend to implement them as appropriate. LaSalle officials generally did not dispute the audit’s findings, but indicated they and other special education schools have had difficulties complying with certain requirements, including those related to teacher certifications. LaSalle officials also indicated that they have and will take actions to address the audit’s findings and recommendations.

For a copy of the full report, including responses from SED and LaSalle, visit:


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