Purpose

To determine whether the costs reported by the Bank Street College of Education (Bank Street) on its Consolidated Fiscal Report (CFR) were reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (Manual). Our audit covered the fiscal year ended June 30, 2014.

Background

Bank Street’s Family Center (Center) is a not-for-profit organization authorized by SED to provide Preschool Special Education Itinerant Teacher (SEIT) services and a Preschool Integrated Special Class – over 2.5 hours per day to children with disabilities who are between the ages of three and five years. For purposes of this report, these programs are collectively referred to as the SED cost-based programs. During the 2013-14 school year, the Center reported serving 73 children in its SEIT program and 24 children in its Preschool Integrated Special Class program. Bank Street is reimbursed for the preschool special education services through rates established by SED. The reimbursement rates are based on the financial information that Bank Street reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the Manual’s requirements and be reasonable, necessary, directly related to the special education program, and sufficiently documented. For the fiscal year ended June 30, 2014, Bank Street reported approximately $2.3 million in reimbursable costs for the audited cost-based programs.

The Center is designed to provide developmentally oriented, culturally sensitive child care and support to families of children up to five years and be a training site for graduate students and high school interns. The home/community-based special education program brings special education services into the child’s home, preschool, or child care program. In addition, the program evaluates children to determine eligibility for special education services.

Key Findings

For the fiscal year ended June 30, 2014, we identified $585,047 in ineligible costs that Bank Street reported on its CFR and recommend such costs be disallowed. These ineligible costs included $338,175 in personal service costs, $246,707 in administrative overhead costs, and $165 in other than personal service costs. Among the ineligible costs identified were:

• $252,276 in employee compensation that was not properly supported by time and attendance records;
• $246,707 in parent agency administrative overhead costs that were not adequately supported;
• $85,899 in fringe benefits that were not allowable by the Manual or were insufficiently documented; and
• $165 in costs for consultant services not provided and non-reimbursable gift cards for employees.

Key Recommendations

To SED:

• Review the recommended disallowances resulting from our audit and make the appropriate adjustments to the costs reported on Bank Street’s CFR and tuition reimbursement rates.
• Work with Bank Street officials to help ensure their compliance with the provisions in the Manual.

To Bank Street:

• Ensure that costs reported on future CFRs comply with the requirements in the Manual.