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NYS Comptroller


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State Education Department
Capital District Beginnings, Inc. Compliance with the Reimbursable Cost Manual

Issued: June 22, 2012
Link to full audit report 2011-S-1
Link to 90-day response

To determine whether the costs reported by Capital District Beginnings (Beginnings) on the Consolidated Fiscal Report (CFR) were properly calculated, adequately documented and allowable under the Reimbursable Cost Manual (Manual). This audit covers the two fiscal years ended June 30, 2009 and 2010.

Beginnings, located in Troy, provides special education services to children from birth through five years of age. Beginnings is reimbursed for these services based upon financial information contained in the CFR it files with SED. To be eligible for reimbursement, the expenses must comply with the guidelines contained in SED's Manual. During fiscal years 2008-09 and 2009-10, Beginnings claimed and received $16.5 million in State support, of which about $12.1 million was related to the three programs we audited.

Key Findings
We disallowed a total of $831,244 in personal service and other than personal service costs for the two fiscal years ended June 30, 2010 because they were unnecessary, unreasonable, unallowable, or undocumented; or were incurred for the personal benefit of officials at Beginnings. The $462,748 in disallowed personal service costs include:

  • $240,041 to Beginnings owner/executive directors. One owner/executive director received a full-time salary. However, she lives in a southern State and spent an average of only 55 days in New York State during the two fiscal ended June 30, 2010. The other owner/executive director also received a full-time salary but performed limited service during the same period.
  • $121,158 in salary expenses related to certain undisclosed less-than-arms-length (LTAL) transactions.
  • $101,549 in administrative and employee bonuses that were not merit based, as required.

The $368,496 in disallowed other than personal service costs include the costs related to other undisclosed LTAL relationship transactions, an unapproved site, undocumented vehicle and travel expenses, and the charges for hotel rooms used by the out-of-State owner/executive director when she travelled to Troy from her home in the southern State. Beginnings officials advised that conferences would take place in these hotel rooms. However, appropriate office space was always available at Beginnings' administrative sites.

Key Recommendations

  • SED should review the exceptions identified by our audit and make the necessary adjustments
    to Beginnings' tuition reimbursement rates.
  • Beginnings should ensure that the reporting of reimbursable expenses complies with SED

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: Brian Mason
Phone:(518) 474-3271; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236