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State Education Department
New York Therapy Placement Services, Inc.
Compliance With the Reimbursable Cost Manual

Issued: December 31, 2018
Link to full audit report 2016-S-87
Link to 90-day response

To determine whether the costs reported by New York Therapy Placement Services, Inc. (NYTPS) on its Consolidated Fiscal Reports (CFRs) were properly calculated, adequately documented, and allowable under the State Education Department’s (SED) guidelines, including the Reimbursable Cost Manual (RCM). The audit covered expenses reported on NYTPS’ CFR for the fiscal year ended June 30, 2014 and certain expenses reported on NYTPS’ CFRs for the two fiscal years ended June 30, 2013.

NYTPS is an SED-approved, for-profit organization that provides preschool special education services to children with disabilities who are between three and five years of age. NYTPS is reimbursed for these services through rates set by SED. The reimbursement rates are based on financial information, including costs, that NYTPS reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the RCM’s requirements. For the three fiscal years ended June 30, 2014, NYTPS reported $23.5 million in reimbursable costs on its CFRs for its rate-based preschool special education program.

Key Findings
For the three fiscal years ended June 30, 2014, we identified $841,392 in reported costs that did not comply with SED’s requirements, including $483,136 in personal service costs and $358,256 in non-personal service costs, as follows:

  • $420,281 in employee salaries that lacked sufficient documentation to support the amount allocated to the preschool special education program;
  • $308,761 in agency administration costs that were inappropriately allocated and overcharged to the preschool special education program;
  • $62,855 in executive compensation that exceeded median salaries for comparable administrative job titles of public school districts in the region; and
  • $49,495 in ineligible non-personal service costs, including $31,560 in non-program-related costs; $11,331 in costs for a different reporting period; $6,047 in non-reimbursable expenses such as non-audit services, bank fees, and food for staff; and $557 in expenses that lacked required supporting documentation.

Key Recommendations

  • Review the disallowances identified by our audit and, if warranted, make the necessary adjustments to the costs reported on NYTPS’ CFRs and to NYTPS’ tuition reimbursement rates.
  • Remind NYTPS officials of the pertinent SED requirements that relate to the deficiencies we identified.


  • 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
Adirondack Helping Hands, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-88)
Building Blocks Developmental Preschool, Inc.: Compliance With the Reimbursable Cost Manual (2017-S-1)

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