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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

State Education Department
Developmental Disabilities Institute, Inc.
Compliance With the Reimbursable Cost Manual


Issued: December 27, 2018
Link to full audit report 2018-S-3
Link to 90-day response

Purpose
To determine whether the costs reported by Developmental Disabilities Institute, Inc. (DDI) 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 DDI's CFR for the year ended December 31, 2015 and certain expenses claimed on its CFRs for the two years ended December 31, 2014.

Background
DDI is a Suffolk County-based not-for-profit organization approved by SED to provide preschool special education services to children with disabilities who are between the ages of three and five years. During our audit period, DDI operated preschool special education full-day Special Classes and half-day and full-day Special Classes in an Integrated Setting. For the purposes of this report, these programs are referred to as the SED preschool cost-based programs. DDI also operated three other SED-approved preschool special education programs: Evaluations, Related Services, and 1:1 Aides. Payments for the services provided by these programs are based on fixed fees. In addition, DDI operated an SED-approved school-age special education program, an Early Intervention program funded through the Department of Health, programs authorized by the Office for People With Developmental Disabilities, and various other programs.

During 2015, DDI served about 577 preschool special education students in its cost-based programs. Local counties refer students to DDI based on clinical evaluations and pay for the services using rates established by SED. The rates are based on the financial information DDI reports to SED on its annual CFRs. For the three years ended December 31, 2015, DDI reported approximately $39.8 million in reimbursable costs for its SED preschool cost-based special education programs.

Key Findings
For the three years ended December 31, 2015, we identified $138,718 in reported costs that did not comply with the RCM’s requirements, as follows:

  • $69,350 in vehicle expenses that were unsupported and/or were insufficiently documented;
  • $34,302 in excess staffing expenses;
  • $18,733 in executive compensation that was above the median compensation levels;
  • $13,438 in non-mandated fringe benefits that were insufficiently documented and not program related;
  • $2,004 in legal costs that were insufficiently documented or charged to the incorrect period; and
  • $891 in non-allowable lobbying, food for parents, and personal expenses.

Key Recommendations
To SED:

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

To DDI:

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

Other Related Audits/Reports of Interest
Infant and Child Learning Center - The Research Foundation for the State University of New York: Compliance With the Reimbursable Cost Manual (2017-S-22)
Interdisciplinary Center for Child Development: Compliance With the Reimbursable Cost Manual (2017-S-31)


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