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NYS Comptroller


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State Education Department
Aim High Children’s Services
Compliance With the Reimbursable Cost Manual

Issued: November 22, 2016
Link to full audit report 2015-S-62
Link to 90-day response

To determine whether the costs reported by Aim High Children’s Services (Aim High) 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 the expenses claimed on Aim High’s CFRs for the three fiscal years ended June 30, 2014.

Aim High is a not-for-profit organization that provides Special Education Itinerant Teacher (SEIT) and Special Class in an Integrated Setting (SCIS) preschool programs to children with disabilities between the ages of three and five years. During the 2013-14 school year, Aim High served 202 students. The New York City Department of Education (DoE) refers students to Aim High based on clinical evaluations and pays for their services using rates established by SED. The rates are based on the financial information that Aim High reports to SED on its annual CFRs. SED reimburses DoE for a portion of its payments to Aim High based on statutory rates. For the three fiscal years ended June 30, 2014, Aim High reported approximately $9.7 million in reimbursable costs for the audited cost-based programs.

In addition to the SEIT and SCIS programs, Aim High operated three other SED-approved programs: Evaluations, Related Services, and 1:1 Aides. However, payments for services under these other programs were based on fixed fees, as opposed to cost-based rates established through CFR-reported financial information.

Also, Aim High maintained “collaborative agreements” with eight other schools to integrate certain special education students into mainstream classrooms. Aim High compensated the other schools for their services. According to the agreements, “such monthly consideration shall consist of expenses which shall be reasonable and well documented, and shall be allocated to Aim High under an allocation methodology which is fair and reasonable.”

Key Findings

For the three fiscal years ended June 30, 2014, we identified $616,906 in reported costs that did not comply with the Manual’s requirements, and recommend such costs be disallowed. These ineligible costs included $22,139 in personal service costs and $594,767 in other than personal service costs. Among the disallowances we identified were:

  • $501,085 in payments to seven other schools for mainstream educational services provided under collaborative agreements. According to the agreements, the cost allocation methods, as well as the statistical basis used to calculate allocation percentages, should have been documented and retained on file for a minimum of seven years. However, Aim High did not provide adequate supporting documentation, as otherwise required, for the payments in question;
  • $75,256 in ineligible costs associated with non-audit services provided by a registered public accounting firm and a person associated with that firm, within 365 days of audit work;
  • $22,139 in personal service costs that were over-allocated to the SED programs; and
  • $11,264 in consulting expenses in which the supporting documentation did not meet the Manual’s requirements. These expenses included invoices totaling $8,745 that were altered by a consultant at the request of an Aim High executive.

Key Recommendations


  • Review the recommended disallowances resulting from our audit and make the appropriate adjustments to Aim High’s CFRs and reimbursement rates.
  • Work with Aim High officials to help ensure their compliance with Manual provisions, as well as the pertinent provisions of their agreements with collaborative schools.

To Aim High:

  • Ensure that costs reported on future CFRs comply with all Manual requirements, as well as the provisions of agreements with collaborative schools.

Other Related Audits/Reports of Interest

Whitestone School for Child Development: Compliance With the Reimbursable Cost Manual (2014-S-38)
Institutes of Applied Human Dynamics: Compliance With the Reimbursable Cost Manual (2014-S-39)

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