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FOR IMMEDIATE RELEASE: April 30, 2004

SCHUMER: NASTY AUDIT BY FEDS IS UNDERHANDED SCHEME TO TAKE $330M FROM NYC SCHOOLKIDS

As detailed in press accounts this morning, DC is trying to snatch back hundreds of millions of dollars in Medicaid payments for NY schools

Schumer tells Feds it may be OK to change rules for the future but can't balance the budget on the backs of New York school kids by retroactively taking back funds

Schumer threatens to introduce legislation to block Feds's takeback scheme

US Senator Charles E. Schumer will announce this morning that he will attempt to block the Federal government from taking back hundreds of millions of dollars in Medicaid payments for Special Education it has given New York City schools over the last several years. As detailed in press accounts this morning, Washington is trying to snatch back $174 million in Medicaid payments previously made to Upstate NY schools and potentially upwards of $330 million from New York City schools because the Feds maintain that the funds were improperly claimed.

"For the federal government to assess this kind of money against the state or any city in the state is nothing short of an outrage. They knew the regulations, they went along with the regulations, and now, ex post facto, they are whacking the state and only hurting New York school children in the process," said Schumer in response to the federal government's actions. "What the federal government needs to do is clarify the regulations prospectively and not exact any retroactive penalties on the back of New York's children. This is the meanest way for the government to help solve its deficit problem that I have ever seen."

Schumer, who has been working behind the scenes to resolve this issue for months, has told the Federal government that while it may be acceptable to change rules for the future, they cannot try to balance the federal budget on the backs of New York school kids by retroactively taking back special education funds Washington already sent and New York schools already spent. Schumer announced this morning that - if necessary - he will introduce legislation in the Senate to prevent the Federal government from completing their take-back plan.

The Feds' take-back scheme stems from a recent audit by the Department of Health and Human Services (HHS) of Medicaid payments made to public school districts New York State (outside New York City) between 1993 and 2001. During this period New York schools received $362 million in federal funds to help defray costs associated with treating children with speech disabilities. HHS now claims that many students were improperly treated under this program, even though all claims were approved by the Federal government before they were paid out. New York school officials have also noted that such retroactive penalties seem particularly unfair given that the Federal government never provided specific and clear regulations regarding Medicaid claims by the schools. A recently-begun similar audit of New York City schools is expected to cost city schools upwards of $330 million.

Penalizing the schools in this manner would only force already cash strapped school systems to pass the penalty along to the school children of New York. Senator Schumer maintains that instead of irresponsibly and wrongly penalizing the children of New York the federal government should instead simply correct the Medicaid claims regulations in order to avoid any further payment problems down the road.

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