Purpose

To determine whether the costs reported by the John A. Coleman School (Coleman) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable pursuant to the State Education Department's Reimbursable Cost Manual (Manual). The audit covered the three fiscal years ended June 30, 2011.

Background

Coleman is located in White Plains and Yonkers, New York and provides special education itinerant teacher (SEIT), preschool, and school-age special class services to disabled children. During the 2010-11 school year, Coleman had an enrollment of 491 students. The New York City Department of Education (DoE) and other school districts pay tuition and fees to Coleman using rates set by SED. These rates are based on financial information Coleman presents in an annual CFR filed with SED. SED reimburses DoE and the other school districts for a portion of their payments to Coleman. For the three years ended June 30, 2011, Coleman claimed about $27.3 million in public support.

Key Findings

• For the three years ended June 30, 2011, we disallowed $639,338 in costs that were not in compliance with the applicable provisions of the Manual. The disallowances included $512,783 in personal service costs and $126,555 in other than personal service costs.
• The personal service disallowances consisted of: $366,842 in bonus payments to employees and contracted personnel that were not supported by formal performance evaluations; $140,512 in bonuses that were claimed for the 2010-11 year, but were not paid in that year; and $5,429 in excessive charges for severance pay.
• The other than personal service disallowances included $126,555 in interest only loan payments. The Manual precludes interest only payments from reimbursement.

Key Recommendations

To SED:

• Review the disallowances resulting from our audit and make the appropriate adjustments to costs reported on the CFRs and to Coleman's tuition reimbursement rates, as appropriate.
• Direct Coleman officials to fully comply with provisions of the Manual and to ensure that requests for reimbursement include only those expenses that are allowable.

To Coleman:

• Ensure that requests for SED reimbursement include only those expenses that are allowed by the Manual.

Other Related Audits/Reports of Interest

State Education Department: Bilingual SEIT, Inc. - Compliance With the Reimbursable Cost Manual (2011-S-13)
State Education Department: IncludED Educational Services, Inc. - Compliance With the Reimbursable Cost Manual (2010-S-59)