Objective

To determine whether the costs reported by Canarsie Childhood Center (CCC) 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 CCC’s CFR for the fiscal year ended June 30, 2018 and certain expenses claimed on its CFRs for the 2 fiscal years ended June 30, 2017.

About the Program

CCC is a New York City-based proprietary organization authorized by SED to provide preschool special education services to children with disabilities who are 3 and 4 years of age. During the 2017-18 school year, CCC served approximately 90 students in its cost-based Preschool Full-Day Special Class Program. For purposes of this report, this program is referred to as the cost-based program. Payments for services under this program come from the New York City Department of Education (DOE).

In addition to the cost based program, CCC also performs preschool multidisciplinary evaluations and provides 1:1 Aide services to children enrolled in the cost-based program. However, payments for services under these programs are based on fixed fees.

The DOE refers students to CCC and pays for its services using rates established by SED. The rates are based on the financial information CCC reports to SED on its annual CFRs. For the 3 fiscal years ended June 30, 2018, CCC reported approximately $8 million in reimbursable costs for the program.

Key Findings

For the 3 fiscal years ended June 30, 2018, we identified $193,420 in reported costs that did not comply with the requirements in the RCM. These ineligible costs included $168,648 in personal service costs and $24,772 in other than personal service costs, as follows:

• $98,344 in personal service costs, including $78,497 in salaries and $19,847 in fringe benefits related to compensation in excess of the regional average.
• $50,052 in non-mandated fringe benefits that were not proportionately similar to other classes or groups of employees.
• $24,772 in unsupported other than personal service costs, including $20,232 in accounting fees and $4,540 in computer consulting fees.
• $15,293 in 1:1 Aide costs allocated to the cost-based program.
• $4,455 in unsupported compensation, including $3,757 in salaries and $698 in fringe benefits claimed by the Executive Director and Principal. 
• $504 in unsupported compensation, including $433 in salary and $71 in fringe benefits for a Teacher Assistant.

Key Recommendations

To SED:

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

To CCC:

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