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NEWS from the Office of the New York State Comptroller
Contact: Press Office 518-474-4015

DiNapoli: Special Education Pre-K Provider Claimed Nearly $1 Million in Ineligible Expenses

October 26, 2016

A Staten Island preschool special education provider, Gingerbread Learning Center Inc., claimed nearly $1 million in expenses that did not qualify for reimbursement from taxpayers, including bonuses that were never paid to staff, liquor store purchases and holiday parties, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. 

“This special education provider ignored the rules and abused taxpayer dollars meant to educate New York’s most vulnerable children,” DiNapoli said. “We have referred our findings to the State Education Department for recovery of this money.” 

Gingerbread is a not-for-profit organization that provides center-based (full-day, half-day and integrated) preschool programs and Preschool Special Education Services, formerly known as the Special Education Itinerant Teacher (SEIT) program, to children ages three through five years. State Education Department (SED) contracts with Gingerbread to provide these programs to children throughout Staten Island and neighboring boroughs. During the 2012-13 school year, Gingerbread served about 145 students.

The audit focused primarily on expenses claimed on Gingerbread’s Consolidated Fiscal Reports (CFRs). For the three fiscal years ended June 30, 2013, DiNapoli’s auditors found $942,998 in reported costs that did not meet the state’s requirements for reimbursement. The ineligible costs included $621,356 in personal service costs and $321,642 in other than personal service costs. 

During that same period, Gingerbread reported approximately $12.2 million in reimbursable costs for its programs. The audit initially focused on fiscal year 2012-13 but when a pattern of inappropriate expenses was uncovered, it was expanded to include earlier claims from 2010-11 and 2011-12.

The following are among Gingerbread’s expenses that DiNapoli’s auditors recommended the SED disallow:

  • $75,000 in bonuses that were never paid to employees;
  • $67,093 in bonuses and related fringe benefits that were not supported by required employee performance evaluations or were paid to ineligible administrative staff members; 
  • $46,615 in school supplies that were not properly documented;
  • $21,575 in Costco purchases that were not properly documented; 
  • $13,027 in salary and fringe benefit expenses related to a maintenance supervisor who had no evidence of a time record; and 
  • $2,777 in insurance expenses related to the Executive Director’s personal vehicle (incorrectly reported under the fringe benefits category).

SED’s rules clearly prohibit reimbursement for personal expenses including gifts of any kind, food, holiday parties provided to staff, and fees and penalties. However, DiNapoli’s auditors found Gingerbread was reimbursed for:

  • $15,222 in food purchases for staff;
  • $1,687 in liquor store purchases;
  • $1,124 for staff holiday parties;
  • $7,693 for gifts, including gift cards;
  • $5,304 in loan procurement fees;
  • $3,973 in civil penalties; and
  • $1,880 in tuition reimbursements for employees who did not provide services to the SED programs

DiNapoli recommended SED review the disallowances resulting from his audit and make the appropriate adjustments to the costs reported on Gingerbread’s CFRs and to its reimbursement rates. He also recommended the SED work with Gingerbread officials to help ensure their compliance with regulations. 
In addition, DiNapoli recommended officials at the learning center ensure that their reported costs fully comply with state guidelines.

Gingerbread officials disagreed with the audit findings and recommendations. Their response can be read in the full audit.

Read the report, or go to: http:/

In June 2012, DiNapoli announced a new special education audit initiative involving a broad look at the special education sector as well as multiple individual providers. The effort found numerous cases of waste, abuse and in some cases criminal conduct.

As a result of these findings and at the request of DiNapoli, the state enacted legislation authorizing the Comptroller to audit the expenses reported to SED by every program provider of special education services for preschool children with disabilities at least once by March 31, 2018. OSC has completed 71 audits of preschool special education providers, finding $48.4 million in unsupported or inappropriate charges. Investigations related to these audits have resulted in 10 arrests, seven criminal convictions and the recovery of more than $5 million in stolen public funds.

For access to state and local government spending and more than 50,000 state contracts, visit The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.