Purpose

To determine whether the costs reported by Building Blocks Developmental Preschool, Inc. (Building Blocks) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). The audit covered expenses reported on Building Blocks’ CFR for the fiscal year ended June 30, 2015, and certain expenses reported on Building Blocks’ CFRs for the two fiscal years ended June 30, 2014.

Background

Building Blocks is an SED-approved not-for-profit special education provider located in Commack, New York. Building Blocks provides preschool special education services to children with disabilities who are between three and five years of age. Building Blocks is reimbursed for preschool special education services through rates set by SED. These reimbursement rates are based on financial information, including costs, that Building Blocks reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM requirements. For the three fiscal years ended June 30, 2015, Building Blocks reported over $16 million in reimbursable costs on its CFRs for the four rate-based preschool special education programs (Programs) it operated.

Key Finding

For the three fiscal years ended June 30, 2015, we identified $56,966 in ineligible costs that Building Blocks reported on its CFRs for the Programs. These ineligible costs included: $53,073 in non-reimbursable lease costs, $3,497 in non-reimbursable consultant costs, and $396 in nonreimbursable food costs.

Key Recommendations

To SED:

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

To Building Blocks:

• 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

JCC of Mid-Westchester: Compliance With the Reimbursable Cost Manual (2016-S-21)
North Country Kids, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-53)