Purpose

To determine whether the costs reported by Inspire on its Consolidated Fiscal Report (CFR) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). Our audit covered the fiscal year ended June 30, 2013.

Background

Inspire, located in Goshen, New York, was originally founded as Orange County Cerebral Palsy Association, Inc. Inspire provides a wide array of outpatient, educational, and support services for individuals of all ages and abilities. Inspire is also an SED-approved provider of preschool special education services. Inspire operates preschool special education programs at three sites (Goshen, Newburgh, and Monroe, New York) that serve approximately 250 students between the ages of three and five years. Inspire is reimbursed for these services through rates set by SED. These reimbursement rates are based on financial information, including costs that Inspire reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with RCM requirements. For the fiscal year ended June 30, 2013, Inspire reported over $6.4 million in reimbursable costs on its CFR for six rate-based preschool special education programs.

Key Findings

For the fiscal year ended June 30, 2013, Inspire claimed $226,382 in ineligible costs for its six rate-based preschool special education programs. The ineligible costs included:

• $149,768 in personal service costs that consisted of bonuses and fringe benefits paid to direct and non-direct care staff. Many of the bonuses in question were not merit-based (as otherwise required by the RCM) or were paid to non-direct care staff for whom the RCM prohibits bonus payments; and
• $76,614 in other than personal service costs that consisted of $31,359 in vehicle costs, $30,855 in costs that were not related to the programs, $10,004 in food and entertainment, and $4,396 in gifts.

Key Recommendations

To SED:

• Review the disallowances identified by our audit and make the necessary adjustments to the costs reported on Inspire’s CFR and to Inspire’s tuition reimbursement rates, as appropriate.
• Remind Inspire officials of the pertinent SED guidelines that relate to the deficiencies we cited.

To Inspire:

• Ensure that costs reported on annual CFRs fully comply with SED’s requirements, and communicate with SED to obtain clarification as needed.

Other Related Audits/Reports of Interest

Summit Educational Resources: Compliance With the Reimbursable Cost Manual (2014-S-49)
Hear 2 Learn PLLC: Compliance With the Reimbursable Cost Manual (2014-S-74)