New York Moves to Require Audits of Preschool Special-Education Contractors The New York Legislature is trying to tighten controls over the state's preschool program for disabled children, the cost of which has soared to $2 billion annually. The State Senate and Assembly unanimously approved a bill last week that would require audits of every special-education prekindergarten contractor by 2018. The bill was proposed by State Comptroller Thomas P. DiNapoli after a series of audits by his office and articles in The New York Times highlighted soaring costs, poor regulation and other problems in the state's special-education prekindergarten system, the most expensive in the country. Contractors have charged taxpayers for overseas vacations, spa trips, jewelry, groceries and home renovations; hired relatives for no-show jobs; given themselves exorbitant salaries and perks like luxury cars; billed for services they never provided; or lived in other parts of the country and rarely showed up for work, the audits and reports found. The Times revealed how some prekindergarten evaluators appeared to be distorting their assessments of children to justify expensive instruction provided by their own companies. The legislation now goes to Gov. Andrew M. Cuomo, whose office did not indicate whether he would sign it. Under the bill, school administrators would not be permitted to assign a child's services to the same prekindergarten contractor that evaluated him or her, unless they stated in writing that "such placement is an appropriate one for the child" and notified the state education commissioner of the assignment. That is intended to address conflicts of interest that have occurred when companies evaluated children, exaggerated their disabilities and then provided the services. Contractors would have to post audit reports on their Web sites, and would be required to "take measures to ensure" that their executive directors work full-time all year. "Students and taxpayers deserve much better than they are getting," Mr. DiNapoli said after passage of the bill, which was sponsored by Assemblywoman Catherine T. Nolan, a Queens Democrat, and State Senator John J. Flanagan, a Long Island Republican. The legislation calls upon the State Education Department to study alternatives to the existing reimbursement and regulatory system. Nearly all the department's budget and personnel for oversight are devoted to calculating some 1,400 reimbursement rates for each of the prekindergarten contractors in the state. Little is left to verify that the money is spent properly or to ensure the quality of the services. A result, officials say, has been rising costs for the state and local governments, which split the bill roughly 60-40. In New York City, annual costs now total $1.2 billion, about 6 percent of the $19.8 billion education budget. Statewide, costs have doubled in just six years. Advocacy groups for contractors have said that they are devoted to helping children with disabilities, and that a few offenders are giving the industry a bad name. Education officials have complained that influential lobbyists for contractors have blocked efforts in Albany to control costs. The current push for reform has been halting: Mr. Cuomo obtained modest changes in the coming year's state budget, but more aggressive proposals were rejected by the Legislature after contractors expressed opposition. The final state budget included $5 million to pay for more audits by the State Education Department and by localities, but an Education Department spokesman called the shift of that responsibility to the comptroller a "sensible next step." The proposal by Mr. DiNapoli, too, was watered down by lawmakers: Its initial draft would have required school administrators to obtain a second evaluation from an independent professional, and the approval of the state education commissioner, before assigning a child evaluated by one company to the same company for services. "Regular and expected audits is really the single best way to get at the corruption," said former Assemblyman Steven Sanders, a lobbyist for one group of contractors. But Mr. Sanders said the state eventually needed to switch to a system with uniform, regional reimbursement rates for all providers. As it stands now, he said: "The more you spend, the more you claim, the more you get back. I think that that methodology leaves wide open the possibility for overexpenditure. Stephen J. Acquario, executive director of the New York Association of Counties, which has lobbied for more stringent spending curbs in the program, said the bill did not go far enough but called it "a step in the right direction."