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State Education Department
Compliance With the Reimbursable Cost Manual

Issued: December 29, 2015
Link to full audit report 2015-S-48
Link to 90-day response

To determine whether the costs reported by Newmeadow Inc. (Newmeadow) on its Consolidated Fiscal Report (CFR) were properly calculated, adequately documented and allowable under the State Education Department’s (SED’s) guidelines, including the Reimbursable Cost Manual (RCM). The audit covered the fiscal year ended June 30, 2014.

Newmeadow, a not-for-profit organization located in Malta, New York, provides preschool special education services to children with disabilities between the ages of three and five years. Newmeadow is reimbursed for preschool special education services through rates set by SED. These reimbursement rates are based on financial information, including costs, that Newmeadow reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the guidelines specified in the RCM. For the fiscal year ended June 30, 2014, Newmeadow reported $2.9 million in reimbursable costs on its CFR for its preschool special education programs.

Key Findings

  • We identified $12,059 in costs charged to the preschool special education programs that did not comply with SED’s requirements for reimbursement. The non-reimbursable costs included $3,897 in personal service costs and $8,162 in other-than-personal-service (OTPS) costs.
  • We also found unreported less-than-arm’s-length (LTAL) relationships that Newmeadow should have disclosed on its CFR and financial statements. We also determined that Newmeadow did not maintain sufficient inventory records or have a process for identifying board members’ conflicts of interest on an ongoing basis.

Key Recommendations


  • Review the disallowances identified by our audit and, if warranted, make the necessary adjustments to Newmeadow’s reimbursement rates.
  • Remind Newmeadow officials of the pertinent SED guidelines that relate to the deficiencies we identified.

To Newmeadow:

  • Ensure that costs reported on annual CFRs fully comply with SED’s guidelines and requirements.
  • Improve compliance with the RCM by: requiring that all LTAL business relationships be properly reported on the CFR and financial statements; maintaining required inventory records; and developing a process for identifying board members’ conflicts of interest on an ongoing basis.

Other Related Audits/Reports of Interest

SED - UCP Rochester: Compliance With the Reimbursable Cost Manual (2014-S-75)
SED - Astor Services for Children and Families: Compliance With the Reimbursable Cost Manual (2014-S-66)

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