By Michele Evans / NYweeklyRecord.com / Date: 7/24/2026
Category: Government Audits / Education / Disability / Taxpayer Accountability
NEW YORK CITY, NY – New York City Public Schools failed to collect up to $431.6 million in federal Medicaid reimbursements for special-education services over three fiscal years, according to a follow-up audit by the New York City Comptroller’s Office.
The audit, covering fiscal years 2023 through 2025, found a system still leaving major amounts of eligible money on the table while struggling to document whether students received services mandated by their individualized education programs.
Auditors identified $273.4 million in potentially unclaimed reimbursements tied to documented occupational therapy, physical therapy and speech-therapy encounters. Those were services the audit said could qualify for Medicaid reimbursement but were not fully billed.
Another $132.7 million was tied to mandated services that were not properly documented. Nearly 20 percent of the required services reviewed lacked records showing that the service was delivered, according to the audit.
That gap is bigger than bookkeeping. When a required service has no record, the city may lose reimbursement, and families are left without clear proof that a child received the support promised in an education plan.
Auditors also identified at least $25.4 million connected to services the school system chose not to seek reimbursement for, including some psychological counseling. The report said those policy choices further reduced the federal dollars available to support special education.
The findings follow a 2021 audit that issued 30 recommendations to improve Medicaid billing and service documentation. The follow-up found that only three had been fully implemented.
NYC Public Schools disputed the size and framing of the estimate. The agency said the audit relied on assumptions and misconceptions that overstated the reimbursements it could realistically obtain.
The school system also said it would continue working to maximize claims that are operationally feasible. That response leaves a central accountability question: which barriers are truly unavoidable, and which reflect policies or systems the city can change?
The audit does not establish that every dollar in the $431.6 million estimate was collectible. It does establish that hundreds of millions of dollars in potential claims, missing documentation and foregone reimbursements remain unresolved.
For students with disabilities and their families, the stakes are immediate. Better documentation can show whether mandated services happened. Better billing can bring federal money back into a system under constant pressure to meet legally required needs.
The Comptroller’s findings now put the burden on NYC Public Schools to explain how it will fix incomplete service records, revisit reimbursement policies and prove that prior audit recommendations will not be ignored again.
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