State And Dairy Company Resolve Milk Overcharge Case

Attorney General Spitzer said today that dozens of school districts across the state will receive refund checks later this month as part of a final settlement with a leading dairy distributor that overcharged the school districts for milk.

Under the final settlement with Binghamton-based Crowley Foods, Inc., nearly 130 school districts and six BOCES districts in 35 counties will receive a distribution of nearly $310,000.

"Every penny counts in a school budget," Spitzer said. "This settlement will provide compensation to school districts for past overcharges, and it will help the districts do a better job of monitoring contracts for milk and other dairy products in the future."

Spitzer's office began an investigation of Crowley in 2001, in which an initial audit revealed that at least six school districts in the upstate region were being overcharged on milk purchases. In response to that investigation, Crowley paid $55,000 to 30 school districts that it determined had been overbilled.

In 2002, Spitzer reached an initial settlement with Crowley in which the company agreed to pay for a complete independent audit of all its contracts with school districts between September 1997 and July 2002. That audit led to the upcoming distribution of the $310,000.

Crowley also adopted certain reforms, including providing "integrity riders" with its invoices to school districts. The riders will provide school districts with better disclosure of the monthly calculation of prices for milk and other dairy products.

Crowley also agreed that it will not include clauses that allow it to pass on future unanticipated costs in its competitive bids for milk contracts.

Spitzer acknowledged Crowley's cooperation in resolving the case.

This case was handled by Winthrop Thurlow, Assistant Attorney General In Charge of the Syracuse Regional Office; Mark Peters, Assistant Attorney General In Charge of the Public Integrity Unit; and Assistant Attorney General Judith Malkin.

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