Purpose

To determine whether the costs reported by Volunteers of America – Greater New York, Inc. (VOA-GNY) on its Consolidated Fiscal Reports (CFRs) were reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (RCM) and the Consolidated Fiscal Reporting and Claiming Manual. The audit focused primarily on expenses claimed on VOA-GNY’s CFR for the fiscal year ended June 30, 2015 and certain expenses claimed on its CFRs for the two fiscal years ended June 30, 2014.

Background

VOA-GNY is a New York City-based not-for-profit organization authorized by SED to provide preschool special education services to children with disabilities who are between the ages of three and five years. During our audit period, VOA-GNY operated Special Education Itinerant Teacher, full-day Special Class, and full-day Special Class in an Integrated Setting programs. For purposes of this report, these programs are referred to as the SED preschool cost-based programs. VOA-GNY also operated two other SED-approved preschool programs: Evaluations and 1:1 Aides. Payments for services under these programs are based on fixed fees. In addition, VOA-GNY operated programs authorized by the Office of Alcoholism and Substance Abuse Services, Office of Mental Health, Office for People with Developmental Disabilities, and other social service programs.

During the period July 1, 2012 through June 30, 2015, VOA-GNY served an average of 443 preschool special education students in its cost-based programs each year. The New York City Department of Education (DoE) refers students to VOA-GNY and pays for its services using rates established by SED. The rates are based on the financial information that VOA-GNY reports to SED on its annual CFRs. The DoE is reimbursed by SED for a portion of its payments to VOA-GNY. For the three fiscal years ended June 30, 2015, VOA-GNY reported approximately $38.2 million in reimbursable costs for its SED cost-based preschool special education programs.

Key Findings

For the three fiscal years ended June 30, 2015, we identified $1,557,827 in reported costs that did not comply with the RCM’s requirements, as follows:

• $541,775 in non-program compensation paid to 38 individuals who did not work in VOA-GNY’s SED preschool cost-based programs. These individuals provided services to other VOA-GNY programs and an SED fixed-fee program.
• $340,663 in insufficiently documented parent agency administrative allocation costs.
• $257,536 in non-program other than personal service expenses.
• $144,148 in consultant costs that were undocumented, insufficiently documented, and/or were not related to the preschool cost-based programs.
• $114,502 in over-allocated compensation costs.
• $85,572 in executive compensation that was above the median compensation levels.
• $73,631 in expenses that were not eligible for reimbursement, including $40,718 in ineligible personal service costs, $26,335 in excess staffing expenses, and $6,578 in severance pay.

Key Recommendations

To SED:

• Review the recommended disallowances resulting from our audit and make the appropriate adjustments to VOA-GNY’s CFRs and tuition reimbursement rates, as warranted.
• Work with VOA-GNY officials to ensure their compliance with SED’s reimbursement requirements.

To VOA-GNY:

• Ensure that all costs reported on future CFRs comply with the RCM’s requirements.

Other Related Audits/Reports of Interest

Infant and Child Learning Center - The Research Foundation for the State University of New York: Compliance With the Reimbursable Cost Manual (2017-S-22)
Interdisciplinary Center for Child Development: Compliance With the Reimbursable Cost Manual (2017-S-31)