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Over $500 Million In NYC School Funds Left Unclaimed; Officials Scramble To Explain

NEW YORK (CBSNewYork) -- Hundreds of millions of dollars set aside to help fund city schools is simply sitting on the table unclaimed. School administrators say they don't have the manpower to fill out the paperwork necessary to get it.

City school administrators are scrambling to explain why they haven't bothered to claim more than $500 million they're entitled to.

"This is sheer incompetence, it is disgusting and every parent in this city should be outraged," Michael Mulgrew, president of the United Federation of Teachers, said.

The Department of Education hasn't filed Medicaid reimbursement claims for services like physical, occupational and speech therapy since 2006.

As a result, the department has missed out on more than $500 million that taxpayers have been forced to foot the bill for.

The DOE blames the state for the screw up, saying it ordered an overhaul of the process several years ago and from 2005 to 2010 while that was in the works, barred the city from filing these types of claims .

But, while the DOE is allowed to file now retroactively, Mayor Bloomberg doubts the DOE will be able to recoup any of the money.

"A lot of that stuff is impossible to go back and recreate the documentation that now we're told you should have had," Bloomberg said.

School administrators say even if they could, they don't have the manpower to handle the workload it would require
But other cities have had no trouble getting their share. Since 2004 the federal government has paid out $558 million to smaller districts around the state.

"You gotta admit it's kind of embarrassing for Buffalo to get this right, Syracuse to get this right," Manhattan Borough President Scott Stringer said.

Schools Chancellor Dennis Walcott said they are working on the problem. In a statement they said "we are committed to addressing the issues associated with our Medicaid claims, and are in the midst of implementing an aggressive plan in order to increase our reimbursements."

Susan Lerner with the government watchdog group Common Cause says they need to do it fast.

"In these times of budget cuts, no one can afford to leave money on the table -- especially money that is neccessary for we well-being of the most vulnerable students," Susan Lerner, Executive Director of the group, said.

Moving ahead, the DOE said even with additional staff and training, it likely won't be able to do the work required to file all the claims and get all the money it is owed.

What do you make of this discovery?  Share your thoughts in the comments section below...

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