Audit Finds Irregularities in Payments to Tutoring Agency

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The city's Department of Education made more than $850,000 worth of questionable payments to a tutoring agency, and failed to put adequate controls in place to prevent the payments, according to an audit released Wednesday by the office of Comptroller John C. Liu.

The payments were made to Champion Learning Center, one of more than 50 state-approved supplemental education services companies that the Education Department works with to provide tutoring to students at underperforming schools. The city is required to use a portion of its federal funding for such services as part of the No Child Left Behind law.

According to the audit, the Education Department paid Champion Learning Center $834,050 during the 2009-10 and 2010-11 school years for tutoring either entirely or partly during school hours, a violation of No Child Left Behind rules.

The report also states that inadequate controls in both the Education Department’s electronic monitoring program and Champion Learning Center’s monitoring system contributed to many questionable billings, like those services provided during school hours, and $2,204 for tutoring originally listed as being provided between midnight and 5 a.m. The company later said its record-keepers had erred when they entered the times, confusing a.m. and p.m.

The total amount of payments in question is $858,779. The city’s three-year contract with Champion Learning Center, which runs until Aug. 31, is for more than $40 million, the report says.

Veronica Conforme, the Education Department’s chief operating officer, wrote in the department’s response to the audit that it acknowledged the mistakes and took steps before the 2011-12 school year to improve its electronic monitoring program in order to flag payments provided during school hours or at odd times.

Champion Learning Center said in its response to the audit that it did tutor students during school hours, but only because the Education Department did not tell the company until last October that tutoring at those times was prohibited. Since then, the company said, all tutoring has taken place according to the contract.

In 2009, The Daily News reported that Champion collected $79 an hour from the city, while paying its tutors only $16 per hour — meaning that 78 percent of the money the Education Department was paying the company was being used for overhead costs.

Several other tutoring companies contracting with the Education Department have also come under scrutiny in recent years.

At the beginning of May, federal prosecutors filed a lawsuit against the Princeton Review, accusing it of falsifying records and accepting millions of dollars for tutoring services that the lawsuit said were never provided to New York City students.

And in 2006, the Special Commission of Investigation for the New York City School District found that several companies — including Platform Learning Inc., Newton Learning and Socratic Learning Inc. -- had violated contracts and engaged in questionable business practices.

Some critics of the No Child Left Behind supplemental education services policy have argued that there is not enough oversight of the tutoring companies, and they are not asked to provide tangible evidence of their success.

In February, state education officials applied for a waiver that would allow the Supplemental Education Services funds to be spent elsewhere, like on additional programming or school staffing. No decision on the waiver has been made.