Purpose

To determine whether costs reported by the Lake Grove School (Lake Grove) and Mountain Lake Children's Residence (Mountain Lake) to the State Education Department and the Office of Children and Family Services were adequately supported and allowable under the respective governing guidelines of these State agencies. The audit covers the four fiscal years ended June 30, 2009.

Background

Lake Grove, located in Lake Grove, New York, and Mountain Lake, located in Lake Placid, New York, provide special housing and educational services to eligible disabled children. Each facility is required to submit annual income and expenditure reports to their funding sources, the State Education Department (SED) and the Office of Children and Family Services (OCFS). SED and OCFS use the financial information submitted by Lake Grove and Mountain Lake to establish daily reimbursement rates for services provided to their respective residents. During the four fiscal years ended June 30, 2009, Lake Grove and Mountain Lake reported $45.0 million and $18.3 million, respectively, in reimbursable expenses.

Key Findings

• We identified as much as $7.7 million in inappropriate and/or unsupported costs claimed for reimbursement by these facilities. Such costs included payments to the CEO and other Board members.
• In addition, we identified $356,061 in revenues received by these facilities for the three years ended June 30, 2008, that should have offset reported expenditures.
• Neither SED nor OCFS has adequately monitored the claimed expenses submitted by Lake Grove and Mountain Lake.

Key Recommendations

• SED and OCFS should follow up on the inappropriate and unsupported expenses identified in our report and, as appropriate, revise the reimbursement rates for Lake Grove and Mountain Lake and seek restitution for any overpayments.
• Lake Grove and Mountain Lake should ensure that their reporting of reimbursable expenses complies with SED and OCFS requirements.
• SED and OCFS need to enhance their monitoring efforts of expenses submitted by Lake Grove and Mountain Lake.

Other Related Audits/Reports of Interest

State Education Department: Setting Special Education Itinerant Teacher Services Rates (2008-S-146)
Henry Viscardi School: Compliance with the Reimbursable Cost Manual (2009-S-70)