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NYS Comptroller


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State Education Department
Mill Neck Manor School for the Deaf
Compliance with the Reimbursable Cost Manual

Issued: March 14, 2013
Link to full audit report 2011-S-40

To determine whether the costs reported by the Mill Neck Manor School for the Deaf (Mill Neck School) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable pursuant to the State Education Department's Reimbursable Cost Manual (Manual). The audit covers the two fiscal years ended June 30, 2010.

The Mill Neck School, located in Mill Neck, New York, provides special education services to preschool and school-age children with hearing disabilities. Pursuant to the State Education Law, providers, such as the Mill Neck School, are reimbursed by the State Education Department (SED) based on their annual CFRs detailing program related expenses. To be eligible for reimbursement, the provider's reported expenses must comply with the guidelines contained in the Manual. For the two fiscal years ended June 30, 2010, the Mill Neck School claimed approximately $16.7 million in reimbursable expenses.

Key Findings
We identified $282,169 in non-reimbursable costs reported on the Mill Neck School's CFRs. These non-reimbursable costs include $72,505 in personal service costs, $198,911 in other-thanpersonal- service costs (OTPS) and $10,753 in contracted direct care costs. For example:

  • The Mill Neck School's Executive Director, who also oversees the other entities comprising the Mill Neck Family of Organizations, received $338,361 in compensation for the two fiscal years ended June 30, 2010. Prorating his salary based on operating expenses we determined that just $214,712 of this amount should have been allocated to the Mill Neck School. We also found that the Mill Neck School billed SED $7,688 for accrued vacation expenses which are not reimbursable until they are actually paid.
  • We identified $89,500 in inappropriate depreciation expenses, and the loan interest thereon, associated with certain major repairs because Mill Neck School officials did not submit the repair proposals for preapproval by SED as required.
  • We also found $48,063 in costs claimed by the Mill Neck School that were either not related to the program or were unsupported.

Key Recommendations

  • SED should review the inappropriate and unsupported expenses identified by our audit and take action to recover such reimbursed expenses as appropriate.
  • Mill Neck School should not charge costs to the program that are not in compliance with the Manual. Explain Manual requirements to staff involved in the CFR and cost reimbursement processes.

Other Related Audits/Reports of Interest

Henry Viscardi School: Compliance with the Reimbursable Cost Manual (2009-S-70)
Special Education Associates, Inc: Compliance With the Reimbursable Cost Manual (2010-S-31)

State Government Accountability Contact Information:
Audit Director: Frank Patone
Phone:(212) 417-5200; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236