New York City public schools failed to collect an estimated $431.6 million in federal Medicaid reimbursements for services rendered to students with disabilities over a three-year period, according to an audit by the city's comptroller.
The report, covering fiscal years 2023-2025, found that the school system left approximately $273.4 million—about 46% of total provided services in occupational therapy, physical therapy, and speech therapy for students—unclaimed. An additional $132.7 million in mandated services for disabled students was not properly documented, preventing reimbursement.
City Comptroller Mark Levine stated that the failure to collect these entitled funds raises "serious questions about whether the government is operating as effectively as New Yorkers need it to." This audit follows a 2021 report that first identified the city's public schools were not seeking Medicaid reimbursement for eligible services.
The new audit revealed that in some instances, the school system deliberately chose not to seek repayment for federally covered services, including psychological counseling, resulting in at least an additional $25.4 million in lost revenue during the three-year span.
According to the audit, New York City Public Schools (NYCPS) continues to forgo reimbursement for a significant percentage of eligible encounters. In some cases, this is due to a choice not to seek reimbursement, while in others, ineffective processes for collecting necessary documentation hinder the collection of funds from Medicaid.
The audit also found that nearly 20% of all services mandated for eligible students were not documented, meaning there is no record of their provision. The Department of Education (DOE) has only implemented three of the 30 recommendations made in the 2021 audit, with 19 actionable steps remaining unaddressed.
A spokesperson for the DOE contested the comptroller's findings, arguing that the report contains "assumptions and misconceptions" and overstates the agency's potential for reimbursement under the current structure. The spokesperson added that the DOE's priority is to provide high-quality services and that the department will "continue pursuing every operationally feasible reimbursement opportunity to maximize available resources and ensure every student receives the resources they deserve."