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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

State Education Department
Churchill School and Center
Compliance with the Reimbursable Cost Manual


Issued: May 27, 2014
Link to full audit report 2012-S-20
Link to 90-day response

Purpose
To determine whether the costs reported by the Churchill School and Center on its Consolidated Fiscal Reports (CFRs) were calculated properly, documented adequately, and reimbursable pursuant to the State Education Department's (SED) Reimbursable Cost Manual (Manual). The audit covers the three fiscal years ended June 30, 2011.

Background
The Churchill School and Center consists of the Churchill School (Churchill), the Churchill Center (Center), and a Development Office. Churchill provides special education services, pursuant to Section 853 of the State Education Law (Law), to children in kindergarten through 12th grade. Pursuant to the Law, schools such as Churchill receive reimbursement from SED based on the expenses reported in their annual CFRs. To be eligible for reimbursement, reported expenses must comply with Manual requirements. Churchill officials claimed approximately $43 million in Program-related expenses during the audit period.

Key Findings
We disallowed $3,023,220 in claimed costs as follows:

  • $1,412,227 in compensation costs incurred by the Center and the Development Office, but charged to the Churchill School;
  • $439,527 in food, parties, gifts, and other ineligible, inappropriate, and/or insufficiently documented expenses. These expenses included $9,709 spent on alcoholic beverages;
  • $429,729 in employee bonuses that did not comply with Manual requirements;
  • $376,597 in compensation paid to the Churchill School's Executive Director and Chief Financial Officer in excess of SED's allowable compensation levels;
  • $220,501 in unnecessary transportation costs; and
  • $144,639 in unallowable equipment depreciation expenses.

Key Recommendations

  • Review the disallowances identified in our audit, adjust Churchill's CFRs and tuition reimbursement rates accordingly, and recover overpayments as appropriate.
  • SED and Churchill officials should work together to ensure that only eligible costs are included on Churchill's CFRs.

Other Related Audits/Reports of Interest

Bilingual SEIT & Preschool, Inc.: Compliance With the Reimbursable Cost Manual (2011-S-13)
Special Education Associates, Inc.: Compliance With the Reimbursable Cost Manual (2010-S-31)


State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone: (212) 414-5200; 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