Objective

To determine whether the costs submitted by The Kelberman Center, Inc. (Kelberman) 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. The audit covered expenses reported on Kelberman’s 2016 and 2017 CFRs for the fiscal year ended June 30, 2017.

About the Program

Kelberman is an SED-approved special education provider located in Utica. Kelberman’s mission is to provide state-of-the-art programs and services for children and adults with Autism Spectrum Disorder and their families through various programs and services. As part of that mission, Kelberman provides preschool special education services to children with disabilities who are between three and five years of age. Kelberman is reimbursed for these services through rates set by SED. The reimbursement rates are based on school year financial information, including costs that Kelberman reports to SED on its annual CFRs. To be eligible for reimbursement, reported costs must be reasonable, necessary, directly related to the special education program, and sufficiently documented. For the fiscal year ended June 30, 2017, Kelberman reported approximately $1.77 million in reimbursable costs on its CFRs for the Preschool Special Class over 2.5 hours (Promise Program) that it operated.

Key Findings

For the fiscal year ended June 30, 2017, we identified $23,616 in ineligible costs Kelberman reported on its CFRs for the Promise Program. The ineligible costs included:

• $2,510 in personal service costs, consisting of $1,600 in longevity payments and $910 in payments for services that were not related to the Promise Program.
• $21,106 in other than personal service costs, consisting of $20,435 in ineligible advertising expenses and $671 in other non-reimbursable costs such as food for staff, non-audit services provided by a registered public accounting firm, expenses not related to the Promise Program, and unsupported expenses.

Key Recommendations

To SED:

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

To Kelberman:

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