PROVIDENCE — The director of the city’s summer lunch program has been fired and the entire administrative staff will not be brought back after a state audit has found that the program falsely claimed it had served far more lunches than it actually had over the past several years, resulting in hundreds of thousands of dollars worth of improper federal reimbursement payments, according to city officials.

A criminal investigation conducted by Providence police is under way, but city officials would not divulge the details or the targets of the investigation, or exactly what happened to that extra money.

Program Director Jane Shugrue has been fired, according to Providence Chief of Operations Alix Ogden. Her entire 11-person administrative staff will also not return for the summer season. The city will now hire a new director, and subcontract out most of the summer lunch program to a private food-service provider.

“We don’t know all the answers, except that there was real serious mismanagement of the program that we needed to respond to immediately in order to make sure that we provide the meals we want to this summer,” Ogden said.

The program serves free lunches to city children 18 and younger at more than 100 facilities such as parks, community centers and daycare centers during the summer months. The program is financed with federal dollars, but administered at the local level. The city prepares and distributes the food, and then files reimbursement requests for the number of meals eaten.

Shugrue, 58, of Smithfield, was a seasonal employee who was paid $25 an hour to run the program for the city. She was hired as a program assistant in 1984, and took over the program in 1991. Ogden said that Shugrue was fired for mismanagement of the program, but would not say if she is a target in the criminal investigation.

“Given the information that we have at this time, we felt that the city’s steps and response were appropriate, because it’s very clear that the program is mismanaged,” Ogden said.

Shugrue has retained a lawyer, Thomas J. McAndrew, and he said that she has nothing to do with the over-billing, and is the victim of a “witch hunt.” Told police are investigating, McAndrew said that Shugrue has not spoken to the police.

“Then that’s a criminal investigation of other people. It has nothing to do with Ms. Shugrue… Jane never had any access to any money,” he said.

He said that Shugrue was terminated without a true chance to argue her case, and that a pre-termination hearing March 25 was over before it started.

“I was just stunned. I’ve been involved in labor and employment law for 37 years and I’ve never seen anything as summary without giving a chance to respond,” he said.

As a temporary employee, Shugrue has little legal recourse. McAndrew speculated that perhaps her firing is political in nature, or that the city is trying to cover up other wrongdoing.

“Maybe someone there did something wrong and let’s get rid of Jane and draw the attention away from someone else,” he said.

Shugrue, a former math teacher at Providence’s Bridgham Middle School, was once an executive board member in the Providence teachers union.

The over-billing was discovered as the result of a state Department of Education inquiry into the program. The Department of Education oversees the summer lunch programs across the state, and conducts regular inquiries into their operations. Last summer it looked into Providence’s program and found several irregularities, which it codified in a draft audit given to the city in January.

In addition to the over-billing, described as “submission of false information,” the state inquiry found that non-eligible adults were being served food, that meals were eaten off site and past the time that regulations allow, and that record-keeping was poor or absent, according to the preliminary audit report.

All told, the state audit found that a total of $741,836 worth of unallowable reimbursement requests were submitted over the past three years, though some improper activities were only documented in 2006 and 2007.

The city may now need to repay the program the amount that was falsely claimed; Chief of Administration Richard I. Kerbel said that the dollar amounts in play are not yet exactly clear.

The program’s annual expenditure is about $673,000 each year, according to an average of the last five years computed by the city.

“It’s likely that these actions are going to cost the city hundreds of thousands of dollars,” Ogden said.

Shugrue’s lawyer, McAndrew, argues that these problems are not Shugrue’s doing — the record slips submitted by employees regarding the number of lunches served are riddled with errors, he said, and are difficult to depend on. He also stated that while program employees are told not to serve lunches to adults, they have been threatened by adults when they do not hand over the meals.

Once the city was informed of the state’s audit, it began its own internal investigation, and commissioned an outside audit of the program by its auditor, Braver, a certified public accounting firm based in Massachuetts. At the beginning of March, Providence police opened a criminal investigation, Kerbel said.

“We were notified by [the Rhode Island Department of Education]. RIDE came to us. We briefed the mayor, and he told us to implement these actions immediately,” Kerbel said.

Providence now plans to contract out the food preparation and delivery functions to a private agency. The city will still retain some seasonal workers to distribute the food at the sites. Extra levels of oversight will also be added to the reimbursement process, Ogden said.

dbarbari@projo.com