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State Education Department
Kennedy Child Study Center
Compliance With the Reimbursable Cost Manual

Issued: December 29, 2017
Link to full audit report 2017-S-7
Link to 90-day response

To determine whether the costs reported by Kennedy Child Study Center (Kennedy) 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 (RCM). The audit focused primarily on expenses claimed on Kennedy’s CFR for the fiscal year ended June 30, 2014, and included certain expenses claimed on Kennedy’s CFRs for the two fiscal years ended June 30, 2013.

Kennedy is a New York City-based not-for-profit organization authorized by SED to provide preschool special education services to children with disabilities who are between the ages of three and five years. During the 2013-14 school year, Kennedy served about 345 students. The New York City Department of Education (DoE) refers students to Kennedy and pays for its services using rates established by SED. The DoE is reimbursed by SED for a portion of its payments to Kennedy. For the three fiscal years ended June 30, 2014, Kennedy reported approximately $41.7 million in reimbursable costs for the SED preschool cost-based programs.

Key Findings
For the three fiscal years ended June 30, 2014, we identified $612,781 in reported costs that did not comply with the guidelines in the RCM, as follows:

  • $583,400 in excessive compensation costs charged to the SED cost-based programs for six psychologists who also worked for the fixed-fee Evaluations program;
  • $24,106 in ineligible expenses, including $13,116 in charitable donations, $9,741 in parking garage costs for the Executive Director’s privately owned vehicle, $799 in maintenance staff uniforms, and $450 in MetroCards provided to non-employees; and
  • $5,275 in bonuses that were not in compliance with the RCM’s requirements.

Key Recommendations

  • Review the recommended disallowances resulting from our audit and make the appropriate adjustments to Kennedy’s CFRs and tuition reimbursement rates, as warranted.
  • Work with Kennedy officials to ensure their compliance with SED’s reimbursement requirements.

To Kennedy:

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

Other Related Audits/Reports of Interest
Hebrew Institute for the Deaf and Exceptional Children: Compliance With the Reimbursable Cost Manual (2015-S-67)
Books and Rattles, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-25)

State Government Accountability Contact Information:
Audit Director: Ken 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