A nonprofit Long Island school for disabled children embroiled in a state overbilling dispute will close Sept. 9, displacing about 40 students.
Over the summer, Lake Grove School on the North Shore will place its students at other facilities and help workers find jobs, executive director Gerard Cairns said Friday.
A state audit found recently that Windwood Meadow Inc., a Suffolk-based management company, overbilled by as much as $7.7 million over four years for expenses at Lake Grove and another school, Mountain Lake Children's Residence in upstate Essex County.
Lake Grove can't afford to repay the government for this and other expenses without cutting its reimbursement or tuition rate too deeply, according to Cairns.
"Unfortunately, it's the inherited debt and we had to move, and that's a big cost," he said.
The foundation that owns the land and aging building has also withdrawn its support, said Cairns, who became executive director in November 2011.
Mountain Lake has said it has detached itself from Windwood and its future is secure. The schools serve a total of about 100 children with severe emotional and learning disabilities, many from troubled homes.
Windwood couldn't account for how it divided $5.4 million of state management fees between them, according to the April audit by Comptroller Thomas DiNapoli.
Lake Grove's former chief executive, John Claude Bahrenburg, also reaped significantly higher compensation than executives at nonprofits of comparable size, the audit found. His compensation package totaled $580,000 in fiscal 2008-09, including a car allowance and interest payments on a loan that were forgiven, DiNapoli said.
Bahrenburg said Friday that when he was hired in 2007 to solve Windwood's long-standing problems, the company had about 800 employees in three states and roughly a $50 million budget.
"The genesis of this debt was before 2006," he said.
Beginning in spring 2011, Bahrenburg said he told the board every month that Windwood should wind down because its administrative office was an uncessary expense. The board asked him to leave that fall, he said.
The state auditors also found that Windwood inappropriately paid a board president $180,000 over a three-year period, and identified nearly $1 million in "inappropriate or unsupported" payments, including consultant fees, non-program-related travel and lobbying expenses.
Windwood officials could not be reached.