Trouble continues as forensic audit climbs $20,000 over budget

Darien Schools’ special education record-keeping has been strewn with errors and inaccuracies for years, leading to additional auditing costs to sort through the mess as the district continues to determine and implement best accounting practices.

The Board of Finance set aside $30,000 to pay CohnReznick to audit the school district’s excess cost reimbursements, which is money paid to the school district for expenses that exceed 4.5 times the per pupil cost for a child receiving special education services. However, it was learned last year that the district’s applications were strewn with errors, leading to allegations that the district applied for money to reimburse it for services it never provided.

Auditing costs are now approaching $50,000, according to Kate Buch, the town’s finance director. In its November bid, CohnReznick estimated the job would cost up to $15,000.

Jon Zagrodzky, Board of Finance member and chairman of the audit committee overseeing the firm’s work, told The Darien Times that “it’s important to get this audit exactly right.”

“Short-changing it by a few thousand bucks here or there is not worth the risk” of having an incomplete audit and findings, Zagrodzky said.

Part of the problem is that there are no records available for the firm to cross-check against submitted data. Service providers would simply note how much time they spent working in Darien and the number of children serviced, and the district would then divide the number of hours by the number of students. This would leave each student with the same number of service hours, even though some of these children might have only received an hour while others received many hours.

This practice would then enable the district to inflate the education costs of some children, making it appear their education was more costly than it was and allowing the district to reclaim expenses. However, Zagrodzky is quick to note that it does not appear any fraud has taken place.

“It’s much more a case of very poor record-keeping,” he said, adding that his board and the firm are “very mindful” of the need to look out for evidence of fraud.

Dick Huot, the former finance director who was in charge of submitting the excess cost applications during the year being audited, could not be reached for comment. The phone number listed for him has been disconnected.

On March 4, new Director Michael Feeney presented the Board of Education with the district’s updated procedures for the excess cost process.

Feeney implemented 10 changes, including some measures that appear to be basic accounting practices. For example, the district will now be reviewing monthly transportation routes on a monthly basis to ensure route accuracy. It would seem the district was not keeping track of these expenses, despite transportation costs to out-of-district schools nearly doubling since 2011.

One parent reported her monthly transportation bills exceeded $70,000 in one school year.

Problems

Inadequate record-keeping has been a problem for years in Darien Schools, according to findings from two investigations and information gleaned from Freedom of Information requests and reported by this newspaper. The district has had no formal record retention plan, and special education documents could have been illegally destroyed under the former director, Deirdre Osypuk, who retired soon after the investigations concluded.

Some parents remain concerned that something nefarious was happening with the reimbursements, especially since the investigations found systemic illegal activity within the district’s special education programming last year.

Attorney Sue Gamm found that the names of resigned employees appeared on some reimbursement forms. Some parents also claimed that a single full-time aide was included on several children’s forms. This would mean the district appeared as if it had hired several people when in fact it had only hired one.

Gamm also noted that some children’s education plans included directives to provide up to a certain number of hours of services, which is illegal, since these plans are supposed to be as specific as possible. Parents told The Darien Times that the district would either not provide the service, or provide a minimum number of hours, then submit for reimbursements for the maximum number of hours.

Attorney Andrew Feinstein recently petitioned the state to intervene and take over special education in Darien in light of continuing problems.

“There is substantial evidence that Darien filed inflated excess cost statements with the state and received reimbursement for services that were never provided,” Feinstein wrote in his letter to the state Department of Education. “The burden really rests on the state Department of Education to closely audit excess cost statements to ensure that such padding… is caught and that the money Darien was improperly paid be recovered.”

If the auditors determine that Darien got too much money, the state would withhold the extra amount in future grant allocations, according to finance director Buch.

Kelly Donnelly, a spokesman for the state education department, said the state is looking into Feinstein’s allegations, but did not indicate Darien has failed to fix its special education department.

Darien “is on track to complete the corrective actions issued as a result of our investigation and we are continuing to monitor their progress,” Donnelly stated in an email.

Finance member Zagrodzky said a state takeover would be an overreach, and would likely slow the process even further.

“The state coming in is not going to change the plan or the approach,” he said. “It doesn’t change the reality.”

Zagrodzky made waves in town at an early April Board of Finance meeting when he became the first publicly elected official to praise parents for bringing this issue to light and to encourage them to “not quit the process.”

“Don’t stop asking questions,” he said at the meeting, which included school administrators and Board of Education members in the audience. “Keep asking the irritating questions to hold these people accountable… At the same time, give them time to do their work. I don’t think you’ll be disappointed.”

Digging deeper

The auditing firm is also now being asked to randomly sample services provided by outside vendors and cross check those reports with information from parents. Zagrodzky noted that parent involvement with this audit is crucial, although few have come forward to assist.

To encourage more participation, the administration is considering sending a letter to parents asking them to reach out to the auditor if they feel their children’s education reimbursements were inaccurate. This would require legal review of such a process, and it’s unclear if the district will move ahead with that plan.

Nevertheless, Zagrodzky encourages parents to reach out to him if they would like to meet with CohnReznick. He can be reached at jzagrodzky.bof@gmail.com

It remains unclear when the audit will be complete, although Zagrodzky said he doubts it would be longer than a “few months,” noting the importance to set deadlines for parent involvement to move the process along.

The audit is examining 100% of in-district costs associated with the excess cost submissions, and 25% of out-of-district costs. Liz Mao, Board of Finance chairman, said if the auditor finds problems in more than 50% of the submissions, it would continue into past years. However, given the time and expense related to auditing a single school year, the decision to go back to previous years might have to wait until the audit is finalized, Zagrodzky said.

“I have to assume that auditing prior years will be even harder due to the passage of time, and even more costly,” he said. “In any case, we’ll really have to think about whether the additional effort and expense is warranted. My recommendation would be delay any decision about prior years until we have a chance to review the current audit findings in detail.”

Past and future

Zagrodzky noted that in the long run, the expenses being incurred to fix the program will enable the district to function more efficiently, which should save money. Specifically, he cited the need to hire the student service facilitators at each school to ensure legal compliance, as per the administration’s recommendations. Bruce Orr, Board of Finance member, focused his comments on the need to rein in spending.

“I want to see the results of adding these people, to get the costs more aligned with the enrollment and demographics of this town,” Orr said at the April 3 meeting. “It’s been troubling me for eight years.”

Orr drew ire last summer for a letter he wrote to The Darien Times wherein he chastised a parent for “attacking your elected and volunteer town officials” in an opinion article also published in The Times.

The “author and others with special needs students should be praising your elected officials and the generous taxpayers of Darien who have been funding a quality education system for all students in the district,” Orr wrote.

At that time, Orr was a member of the Representative Town Meeting. He was later chosen to fill a vacancy on the Board of Finance — a board that has also drawn scrutiny from some, including investigator Gamm, for its pressure on the school district to manage special education costs.

At the April 3 meeting, Mao noted that many people have blamed the Board of Finance for contributing to the special education crisis, but said her board has merely focused on the management of expenses and not services.

“The key is good management,” Mao said. “We did not have confidence that the money we were spending was being well spent.”

However, several Board of Finance members, including Mao and former Vice Chairman Martha Banks, expressed satisfaction with how special education was being managed, even though problems had been brewing for months. In an email obtained through the Freedom of Information Act, Banks notes how the “new special ed director is great.”

“I’m feeling very good about the way [special ed] is now being managed,” she wrote.

That hire, Deirdre Osypuk, resigned from her post as special ed director after Gamm and the Board of Education cited her as the source of the problems. Osypuk claimed she was hired to control overly demanding parents who were getting excessive services, and that the Board of Ed demanded change quickly.

It’s unclear if the Board of Education shared parents’ concerns with the finance board in the months prior to the problems surfacing publicly.

Zagrodzky encouraged people to put the problems in perspective.

“Take a step back and have some patience about this process and recognize that Rome wasn’t built in a day,” he said at the April 3 meeting. “Special education problems did not happen last year — they’ve been happening for a long time, and it’s going to take a few years to fix them.”

Time, however, is a precious thing when discussing the education of children during their early formative years, many have pointed out.

Zagrodzky declined to comment if he would recommend the district seek to reclaim auditing fees from former director Huot. The Times has requested to review the terms of Huot’s pension.

Originally published in The Darien Times.

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