Purpose

To determine whether the costs reported by Hagedorn Little Village School (HLVS) on its Consolidated Fiscal Report (CFR) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). The audit covered the fiscal year ended June 30, 2015.

Background

HLVS, a not-for-profit organization located in Seaford, New York, is an SED-approved provider of preschool special education services. During the 2014-15 school year, HLVS provided four SED-funded, rate-based preschool special education programs to 317 children from school districts located in Nassau and Suffolk counties. The counties pay tuition to HLVS for these services using reimbursement rates set by SED. The State, in turn, reimburses the counties 59.5 percent of the tuition that the counties pay. SED sets the rates based on financial information, including costs, that HLVS reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the provisions in the RCM. For the fiscal year ended June 30, 2015, HLVS reported $6,285,225 in reimbursable costs on its CFR for the rate-based preschool special education programs it operated.

Key Finding

For the fiscal year ended June 30, 2015, the personal service costs that HLVS reported on its CFR that we tested were in compliance with SED’s requirements. However, we identified $10,040 in other than personal service costs that HLVS reported on its CFR that did not comply with SED’s prescribed requirements for reimbursement.

Key Recommendations

To SED:

• Review the disallowances identified by our audit and, if warranted, make the necessary adjustments to the costs reported on HLVS’ CFR and to HLVS’ tuition reimbursement rates.
• Remind HLVS officials of the pertinent SED requirements that relate to the deficiencies we identified.

To HLVS:

• Ensure that costs reported on annual CFRs fully comply with SED’s requirements, and communicate with SED to obtain clarification as needed.

Other Related Audits/Reports of Interest

Variety Child Learning Center: Compliance With the Reimbursable Cost Manual (2016-S-77)
Elmcrest Children’s Center, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-62)