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NYS Comptroller


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State Education Department
Milestone School for Child Development
Compliance With the Reimbursable Cost Manual

Issued: July 17, 2015
Link to full audit report 2014-S-37
Link to 90-day response

To determine whether the costs reported by the Milestone School for Child Development (Milestone) on its Consolidated Fiscal Reports (CFRs) were properly documented, program related, and allowable pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (Manual). The audit included all expenses claimed on Milestone’s CFR for the fiscal year 2012-13, and certain expenses claimed on Milestone’s CFRs for the two fiscal years ended June 30, 2012.

The Milestone School for Child Development provides full-day preschool special education center-based and integrated programs to disabled children between the ages of three and five years. During the 2012-13 school year, Milestone serviced about 110 students. The New York City Department of Education (DoE) refers students to Milestone based on clinical evaluations and pays for its services using rates established by SED. The rates are based on the financial information that Milestone reports to SED on its annual CFRs. Reimbursable costs must be reasonable, program-appropriate, and properly documented. SED reimburses DoE for a portion of its payments to Milestone based on statutory rates. For the fiscal year ended June 30, 2013, Milestone reported approximately $3.8 million in reimbursable costs for its SED Programs. Our audit scope period focused primarily on fiscal year 2012-13. However, we expanded our review to include certain items claimed on the CFRs for fiscal years 2010-11 and 2011-12.

Key Findings

For the three fiscal years ended June 30, 2013, we identified $801,859 in reported costs that did not comply with Manual requirements and recommend such costs be disallowed. These ineligible costs included $285,455 in personal services costs and $516,404 in other than personal service (OTPS) costs. Among the disallowances we identified were:

  • $196,160 in unsupported rent expenses;
  • $188,447 in various other unsupported OTPS costs. The expenses in question lacked invoices, contracts, and/or other necessary documentation;
  • $149,815 in unsupported fringe benefit costs;
  • $105,632 in over-allocated compensation costs for three employees who also worked at Milestone affiliates; and
  • $63,310 in OTPS charges that were not actually incurred.

Key Recommendations


  • Review the recommended disallowances resulting from our audit and make the appropriate adjustments to Milestone’s CFRs and reimbursement rates.
  • Work with Milestone officials to help ensure their compliance with Manual provisions.

To Milestone:

  • Ensure that costs reported on future CFRs comply with all Manual requirements.

Other Related Audits/Reports of Interest

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