The New York City Comptroller’s Office released an audit on July 23, 2026, indicating that the Department of Education did not receive an estimated $431 million in
A city comptroller audit reports that the Department of Education failed to claim Medicaid funds for special-education services, resulting in a $431 million shortfall for fiscal years 2023-2025.
The New York City Comptroller’s Office released an audit on July 23, 2026, indicating that the Department of Education did not receive an estimated $431 million in Medicaid reimbursements for special-education services provided to students with disabilities during fiscal years 2023, 2024, and 2025 [1]. The audit covers the city’s public school system, which serves more than 200,000 students with disabilities across the five boroughs [4].
The audit was conducted by the Comptroller’s Office under the leadership of Comptroller Brad Lander and examined records from the Department of Education, Medicaid billing systems, and service documentation [1].
The findings attribute the missed payments to insufficient documentation of therapy services and the failure to submit reimbursement claims for eligible services such as physical, occupational, and speech therapy [2].
Audit Findings and Financial Scope
The audit quantifies the unrecovered Medicaid funds at $431 million, representing the cumulative amount the city could have claimed for services rendered between July 1, 2023, and June 30, 2025 [1]. The report notes that the majority of the shortfall stems from services delivered in elementary and middle schools, where therapy sessions are most frequently provided [2].
The Comptroller’s Office identified that approximately 85 percent of the missed reimbursements relate to services documented in school-based health records but not entered into the state Medicaid billing portal [3].
Administrative Causes of the Shortfall New York City Public Schools Miss $431 Million in Medicaid Reimbursements, Audit Finds The Department of Education’s oversight involved two primary procedural gaps.
Administrative Causes of the Shortfall
New York City Public Schools Miss $431 Million in Medicaid Reimbursements, Audit Finds
The Department of Education’s oversight involved two primary procedural gaps. First, school staff responsible for recording therapy sessions did not consistently attach required provider identifiers and service codes needed for Medicaid billing [2]. Second, the district’s finance unit lacked a centralized audit mechanism to reconcile service logs with Medicaid claim submissions, resulting in unclaimed eligible dollars [3].
The audit cites a 2022 policy update that shifted claim submission responsibilities from individual schools to a centralized office, a transition that was not fully operational during the audit period [1]. Training records show that fewer than 40 percent of school health coordinators completed the mandated Medicaid billing training by the end of FY 2024 [2].
Immediate Implications for Schools and Families
The $431 million shortfall directly affects the budgetary allocations for special-education programs. Schools may need to absorb the cost of therapy services that would otherwise be reimbursed, potentially influencing staffing levels for therapists and related support personnel [4].
Secretary Linda McMahon required every U.S. college and university to publish a public statement on academic excellence, research, and national service by the end of 2026.
Families of students with disabilities could experience delayed or reduced access to services if schools reallocate resources to cover unreimbursed expenses [1]. The audit does not indicate any interruption of services to date, but the financial strain may prompt adjustments in program delivery [2].
Response and Next Steps
New York City Public Schools Miss $431 Million in Medicaid Reimbursements, Audit Finds
Comptroller Lander’s office has requested that the Department of Education develop a remediation plan within 60 days to capture outstanding claims and prevent future losses [1]. The Department of Education’s spokesperson confirmed that an internal task force will review billing procedures and implement additional training for staff handling Medicaid documentation [3].
Families of students with disabilities could experience delayed or reduced access to services if schools reallocate resources to cover unreimbursed expenses [1].
The city’s budget office is reviewing the audit’s financial impact to determine whether supplemental appropriations will be required for the 2026-2027 fiscal year [4]. No legislative action has been announced, but the Comptroller’s report recommends statutory clarification of reimbursement responsibilities for school-based health services [2].
Impact on Education Stakeholders
Students with disabilities and their families may see budgetary adjustments that influence the availability of therapy services within schools [1]. Educators, particularly school-based therapists and health coordinators, are likely to encounter new documentation requirements and oversight protocols [2].
School administrators must allocate resources to address the identified billing gaps, which could affect overall school budgets and staffing decisions [3]. The city’s financial planners will need to incorporate the unrecovered Medicaid funds into future budgeting cycles, potentially affecting other education initiatives [4].
Key Facts
What: An audit found that New York City public schools failed to claim $431 million in Medicaid reimbursements for special-education services.
Impact: Schools may need to fund therapy services without reimbursement, affecting budgets, staffing, and service availability for students with disabilities.
When: The missed reimbursements cover fiscal years 2023-2025; the audit was released July 23, 2026.
Impact: Schools may need to fund therapy services without reimbursement, affecting budgets, staffing, and service availability for students with disabilities.
Sources
N.Y.C. Schools Miss Out on $431 Million in Medicaid Payouts, Audit Finds – The New York Times
NYC schools missed out on $431M in Medicaid payouts, audit finds – SILive
NYC public schools lost out on staggering $431.6M in Medicaid payouts – New York Post
N.Y.C. Schools Miss Out on $431 Million in Medicaid Payouts, Audit Finds – Advocates for Children
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