Boards approve hiring independent auditor for excess cost grants
Published 11:30 am, Thursday, November 7, 2013
The boards of Finance and Selectmen unanimously voted Oct. 31 to hire an independent firm to audit the Darien Public Schools' special education department's excess cost reimbursement for potential errors.
Kate Buch, town finance director, told the boards that she and First Selectman Jayme Stevenson were contacted Oct. 26 by the Board of Education's attorneys, who said there may be an issue in the reporting of excess cost reimbursements to the state Department of Education. Buch and Stevenson were not provided with specific details, just that there potentially could be an issue.
"We don't know the magnitude of it," Buch said. "It could be very small. We know we recorded people providing services they didn't provide."
The annual audit, which is still being completed, is not designed to catch all errors, Buch said. Normally, only 25 percent of the excess cost reimbursement is audited, according to Buch. The auditors have not yet audited the excess cost grant as part of their process.
"We have nothing to indicate that there was an error in past years," Buch said.
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Selectman David Bayne asked how many years back the audit would examine.
Buch said only 2012-13 would be audited and the auditors would take 50 percent of the applications to examine.
"After sampling 50 percent, if they find significant percentage of error, they will go back further and will do more in 2013, and potentially 2012," Buch told Bayne. "If 2012 looks good, they'll stop there."
During the course of attorney Sue Gamm's investigation into the special education department, it was determined that there could be an issue relating to the excess cost grants received from the state.
If the cost to educate a special education child is four-and-a-half times more than the cost of a general education student, the town is reimbursed by the state.
"We want to make sure that the truth is being reported," Board of Education Betsy Hagerty-Ross said. "To me, it's a positive step forward that this is being done independently by the town."
Andrew Feinstein, the attorney representing the group of parents who filed the complaint that preceded the investigation, however, sees this as a serious issue.
"What's turned out to be the case is that the (Individual Education Plans) will say things like `up to 20 hours of a certain kind of service (for a student)' and Darien has billed the state for the excess costs even in the case when the service hasn't been provided," Feinstein said. "That's criminal fraud. That's going-to-jail fraud."
Hagerty-Ross said the board does not look at the excess costs line by line because they contain information about the special education children. Historically, Darien has received more money than other districts in the region.
The independent audit is not expected to delay the town audit.
"We need to know the extent of our liability and understand where the process failed us," Buch said. "The fact that the errors happened is something we want to prevent going forward."
The boards decided to maintain independence, so will hire a different auditor than the town's current one, McGladery, LLP.
"This is such a high-profile topic and it's so important to get this right," said Board of Finance member Jon Zagrodsky. The board also approved the transfer of $30,000 from the contingency fund to pay for the audit.
"I think its great that you decided to use another firm," resident Walter Casey said. "You would be out of your mind to not to. But I would bag the random sampling and use all the kids and bag this thing and find out what happened. The elephant in the room is fraud. That's what people are thinking. Bury this thing."
Board of Finance Chairman Liz Mao told Casey that if fraud did occur, they would find out.
"We're smart people here," Mao said. "We will ask questions."
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