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NYS Comptroller


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State Education Department
Westchester School for Special Children
Compliance with the Reimbursable Cost Manual

Issued: July 2, 2013
Link to full audit report 2011-S-41
Link to 90-day response

To determine whether the costs reported by the Westchester School for Special Children (WSSC) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable per the State Education Department's (SED's) Reimbursable Cost Manual (Manual). The audit included the four fiscal years ended June 30, 2011.

WSSC, located in Yonkers, New York, provides special education services to school-age and preschool children between 3 and 21 years of age. The New York City Department of Education (DoE) and other school districts pay tuition and fees to WSSC according to rates set by SED. These rates are based on financial information WSSC presents in an annual CFR filed with SED. SED reimburses DoE and the other school districts for a portion of its payments to WSSC. For the four years ended June 30, 2011, WSSC claimed approximately $48.7 million in public support.

  • Key Findings
    We disallowed $802,912 in claimed costs (including $610,507 in personal service costs and $192,405 in other-than-personal-service costs) because they were ineligible per the Manual. The disallowances included:
    • $254,868 for the compensation of nine employees who were neither certified nor qualified for their positions for which they were paid;
    • $126,447 in compensation paid to the former Executive Director and Assistant Executive Director in excess of SED's median allowable compensation levels;
    • $112,734 in reported vehicle expenses because the WSSC did not maintain the required vehicle logs or any other documentation to support the business use of the vehicles;
    • $61,284 in tuition reimbursements to five employees. These reimbursements did not comply with the Manual;
    • $48,000 in salary increases to an employee whose job tasks and responsibilities did not change, and therefore, justify such increases. The employee's salary increased by 126 percent, from $38,000 to $86,000, over a 22-month period; and
    • $40,638 in depreciation related to capital project work that was awarded on a less-than-arms-length basis.
  • WSSC's Board failed to exercise due care and diligence in performing its fiduciary responsibilities. A company owned by WSSC's former Board Chairman received $136,032 in sole source business from the school.
  • The former Executive Director incurred $17,072 in personal charges using a WSSC credit card and WSSC checks. Among the inappropriate charges, the Executive Director spent $4,254 at a Harley Davidson dealer; $1,723 for lodging at the Majestic View Lodge near Zion National Park; $1,620 at a cigar store; and $369 at Victoria's Secret. Although the former Executive Director eventually reimbursed WSSC for the personal expenses, he should not have used WSSC funds for such expenses in the first instance.
  • WSSC paid $97,870 for lobbying services to a firm that was owned by the brother of WSSC's current Executive Director. Although these costs were not claimed on WSSC's CFRs, they represented a less-than-arms-length business arrangement.

Key Recommendations

  • SED should review the disallowances resulting from our audit and make the appropriate adjustments to costs reported on the CFRs and to WSSC's tuition reimbursement rates, as warranted.
  • WSSC officials should ensure that costs reported on WSSC's CFRs are in full compliance with the Manual.

Other Related Audits/Reports of Interest

Bilingual SEIT & Preschool, Inc.: Compliance With the Reimbursable Cost Manual (2011-S-13)
IncludED Educational Services, Inc.: Compliance With the Reimbursable Cost Manual (2010-S-59)

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