Objective

To determine whether the costs reported by Mama Program, LLC (Mama Program) 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 (CFR Manual). The audit focused primarily on expenses claimed on Mama Program’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.

About the Program

Mama Program is a New York City-based for-profit organization authorized by SED to provide preschool Special Education Itinerant Teacher (SEIT) services to children with disabilities who are between the ages of three and five years. During the 2012-13 school year, Mama Program also operated another SED-approved preschool special education program: Related Services. For the 2014-15 school year, Mama Program served approximately 176 students.

The New York City Department of Education refers students to Mama Program and pays for its services using rates established by SED. The rates are based on the financial information Mama Program reports to SED on its annual CFRs. For the three fiscal years ended June 30, 2015, Mama Program reported approximately $9.78 million in reimbursable costs for the SEIT preschool cost-based program.

Key Findings

For the three fiscal years ended June 30, 2015, we identified $95,562 in reported costs that did not comply with the requirements in the RCM and recommend that such costs be disallowed. These ineligible costs included $26,876 in personal service costs and $68,686 in other than personal service (OTPS) costs, as follows:

• $32,096 in unsupported OTPS costs, including $31,768 in accounting fees;
• $28,825 in insufficiently supported OTPS costs, including $25,902 in accounting fees and $2,483 in legal fees;
• $26,876 in personal service costs for pension contributions that did not comply with the RCM’s requirements;
• $6,336 in ineligible OTPS costs that pertained to future periods and that did not relate to the period in which they were claimed on the CFR; and
• $1,429 in unsupported depreciation expenses.

Key Recommendations

To SED:

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

To Mama Program:

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