State Education Department
Special Education Associates, Inc.
Compliance with the
Reimbursable Cost Manual (Issued 6/22/12)
To determine whether the costs reported by Special Education Associates, Inc. (SEA), on the Consolidated Fiscal Report (CFR) were properly calculated, adequately documented, and allowable under the Reimbursable Cost Manual (Manual). The audit covers the two fiscal years ended June 30, 2008 and June 30, 2009.
SEA, located in Brooklyn, New York, provides special education itinerant teacher (SEIT) and related services to disabled preschool children. The New York City Department of Education pays tuition and fees to SEA using rates set by the State Education Department (SED). SED sets these rates using financial information that SEA presents in an annual CFR filed with SED. During fiscal years 2007-08 and 2008-09, SEA claimed and received $12.5 million in State support. The Executive and Assistant Executive Directors of SEA are husband and wife.
- We disallowed $324,881 in personal service costs. SEA officials fraudulently claimed $324,881 in salary for the Assistant Executive Director for the 2007-08 and 2008-09 fiscal years, even though she was not a full-time employee in their SEIT program but rather a full-time employee at a senior college of the City University of New York. We referred this matter to the Office of the Manhattan District Attorney for investigation and possible prosecution. On December 13, 2011, SEA's Executive Director pled guilty to one count of defrauding the government, a Class E Felony, and paid restitution of $610,000. The $610,000 represented salary paid to the Assistant Executive Director, including $285,000 for the period July 2004 through June 2007 and $325,000 for the period January 2008 through June 2010. SEA's Assistant Executive Director is scheduled to appear in court in June 2012, at which time it is anticipated she will have resigned her CUNY position and will plead guilty to a crime.
- We disallowed an additional $60,857 for expenses that did not comply with the Manual.
- SED should review the exceptions identified by our audit, as well as the restitution paid by SEA's Executive Director, and determine necessary adjustments to SEA's tuition reimbursement rates.
- SEA should ensure that the reporting of reimbursable expenses complies with SED requirements.
Other Related Audits/Reports of Interest
State Education Department: Integrated Treatment Services: Compliance with the Reimbursable Cost Manual Report 2009-S-37
State Education Department: Henry Viscardi School: Compliance with the Reimbursable Cost Manual Report 2009-S-70
State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone:(212) 417-5200; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236