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State Education Department
New York Center for Child Development, Inc.
Compliance With the Reimbursable Cost Manual

Issued: December 30, 2016
Link to full audit report 2015-S-101
Link to 90-day response

To determine whether the costs reported by the New York Center for Child Development, Inc. (NYCCD) on its Consolidated Fiscal Reports (CFRs) were reasonable, necessary, directly related to the special education program, and sufficiently documented pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (Manual). The audit included all expenses claimed on NYCCD’s CFR for the fiscal year ended June 30, 2014, and certain expenses claimed on NYCCD’s CFRs for the two fiscal years ended June 30, 2013.

NYCCD, formerly known as the Manhattan Center for Early Learning, Inc., is a New York Citybased not-for-profit organization authorized by SED to provide Special Education Itinerant Teacher (SEIT) and full-day and half-day Special Class (SC) preschool special education services to children with disabilities between the ages of three and five years. For purposes of this report, these programs are collectively referred to as the SED cost-based programs. During the 2013-14 school year, NYCCD served about 415 students. The New York City Department of Education (DoE) refers students to NYCCD based on clinical evaluations and pays for NYCCD’s services using rates established by SED. The rates are based on the financial information that NYCCD reports to SED on its annual CFRs. SED reimburses DoE for a portion of its payments to NYCCD based on statutory rates. Reimbursable costs must be reasonable, necessary, directly related to the special education program, and sufficiently documented. For the three fiscal years ended June 30, 2014, NYCCD reported approximately $24.5 million in reimbursable costs for the audited cost-based programs.

In addition to the SEIT and SC cost-based preschool special education programs, NYCCD operates three other SED programs: Evaluations, Related Services, and 1:1 Aides. However, payments for services under these other programs were based on fixed fees, as opposed to the cost-based rates established through CFR-reported financial information. NYCCD also receives monetary grants from public and private sources. Furthermore, NYCCD’s executive director and his spouse also own the for-profit entity New York Center for Infants and Toddlers (NYCIT), which operates Early Intervention programs.

Key Findings

For the three fiscal years ended June 30, 2014, we identified $776,901 in reported costs that did not comply with the Manual’s requirements and recommend such costs be disallowed. The ineligible costs included $312,897 in personal service costs and $464,004 in other than personal service costs. Specifically, such costs included:

  • $308,905 in inadequately documented consulting costs. The consultants’ invoices did not indicate the specific services provided and the hourly fee charged, as otherwise required by the Manual;
  • $254,268 in over-allocated staff salaries for three employees. NYCCD’s allocation of these costs did not comply with the guidelines in the Manual;
  • $65,705 in Maintenance and Repairs, Cellphone, and Supplies and Materials expenses that were incorrectly allocated to the SED cost-based programs we audited;
  • $49,935 in non-allowable rent expenses;
  • $38,923 in non-program expenses, including $20,618 paid to the executive assistant to the executive director and $18,305 in compensation paid to a NYCCD employee who also worked for the executive director’s for-profit entity (a non-SED program);
  • $21,591 in travel expenses that were either inadequately supported or not applicable to the programs we audited;
  • $19,706 in ineligible staff compensation costs for NYCCD’s fixed-fee 1:1 Aides program, which were incorrectly charged to the SED cost-based programs; and
  • $17,868 in ineligible costs, including $9,480 for gifts, $4,154 for goods and/or services provided to NYCIT, $2,326 for food provided to staff, and $1,908 in fines and penalties.

Key Recommendations


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


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

Other Related Audits/Reports of Interest

Milestone School for Child Development, Inc.: Compliance With the Reimbursable Cost Manual (2014-S-37)
Manhattan Center for Early Learning: Compliance with the Reimbursable Cost Manual (2004-S-14)

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