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State Education Department
ADAPT Community Network
Compliance With the Reimbursable Cost Manual

Issued: December 31, 2018
Link to full audit report 2017-S-86
Link to 90-day response

To determine whether the costs reported by ADAPT Community Network (ADAPT), formerly known as United Cerebral Palsy of New York City, Inc., 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) and the Consolidated Fiscal Reporting and Claiming Manual (CFR Manual). The audit focused primarily on expenses claimed on ADAPT’s CFR for the fiscal year ended June 30, 2015, and included certain expenses claimed on ADAPT’s CFRs for the two fiscal years ended June 30, 2014.

ADAPT is a New York City-based not-for-profit organization authorized by SED to provide full-day Special Class and full-day Special Class in an Integrated Setting preschool special education service to children with disabilities who are between the ages of three and five years. For purposes of this report, these programs are collectively referred to as the SED preschool cost-based programs.

During the 2014-15 school year, ADAPT served about 548 preschool students. In addition to the preschool cost-based programs, ADAPT operated three other SED programs: Evaluations and 1:1 Aides, which are based on fixed fees as opposed to the cost-based rates established through financial information reported on the CFRs, and a School Age - Special Class program.

The New York City Department of Education (DoE) refers students to ADAPT based on clinical evaluations and pays for ADAPT’s services using rates established by SED. The rates are based on the financial information ADAPT reports to SED on its annual CFRs. SED reimburses the DoE for a portion of its payments to ADAPT based on statutory rates. For the three fiscal years ended June 30, 2015, ADAPT reported approximately $53 million in reimbursable costs for the SED preschool cost-based programs.

Key Findings
For the three fiscal years ended June 30, 2015, we identified $5,418,457 in reported costs that did not comply with the RCM and the CFR Manual’s requirements and recommend such costs be disallowed. These ineligible costs included $578,363 in personal service costs and $4,840,094 in other than personal service (OTPS) costs, as follows:

  • $3,342,387 in non-allowable occupancy costs related to a leased building that ADAPT did not occupy during the audit period;
  • $670,715 in unsupported depreciation costs;
  • $437,052 in interest costs;
  • $207,703 in compensations costs for six employees that should not have been charged to the SED cost-based programs. These nine employees performed work related to fundraising activities, research activities, and non-SED programs;
  • $144,538 in incorrectly allocated agency administration costs;
  • $192,428 in non-reimbursable OTPS expenses that were either insufficiently documented, not related to the preschool cost based programs, or ineligible;
  • $149,949 in executive compensation above the median;
  • $100,127 in ADAPT’s Family Support Services program costs that were improperly allocated to the preschool cost-based programs;
  • $86,273 in unsupported vehicle expenses;
  • $53,505 in overstated investments costs (broker fees); and
  • $33,780 in property costs that were incorrectly charged to the preschool cost-based programs.

Key Recommendations

  • Review the recommended disallowances resulting from our audit and make the appropriate adjustments to ADAPT’s CFRs and reimbursement rates, as warranted.
  • Work with ADAPT officials to help ensure their compliance with the provisions of the RCM and the CFR Manual.


  • Ensure that costs reported on future CFRs comply with SED’s reimbursement requirements.

Other Related Audits/Reports of Interest
New York League for Early Learning, Inc.: Compliance With the Reimbursable Cost Manual (2015-S-43)
Brookville Center for Children’s Services, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-75)

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