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State Education Department
Hebrew Academy for Special Children, Inc.
Compliance With the Reimbursable Cost Manual

Issued: February 4, 2020
Link to full audit report 2018-S-68

To determine whether the costs reported by the Hebrew Academy for Special Children, Inc. (Hebrew Academy) on its Consolidated Fiscal Reports (CFRs) were reasonable, necessary, directly related to the special education programs, and sufficiently documented pursuant to the State Education Department’s (SED) Reimbursable Cost Manual (RCM). The audit focused primarily on expenses claimed on Hebrew Academy’s CFR for the fiscal year ended June 30, 2017 and included certain expenses claimed on its CFRs for the two fiscal years ended June 30, 2016.

About the Program
Hebrew Academy is a New York City-based not-for-profit organization authorized by SED to provide preschool Special Education Itinerant Teacher (SEIT), full- and half-day Special Class (SC), and full- and half-day Special Class in an Integrated Setting (SCIS) programs to children with disabilities who are between the ages of three and five years. For purposes of this report, the SC and SCIS programs for the three years ended June 30, 2017 and the SEIT program for the year ended June 30, 2015 are collectively referred to as the SED preschool cost-based programs. Hebrew Academy also operated three other SED-approved preschool special education programs: Evaluations, Related Services, and 1:1 Aides. However, payments for services under these programs and under the SEIT program effective in the 2015-16 fiscal year are based on fixed fees. Hebrew Academy operated several other programs, including SED-approved school-age programs, an Early Intervention program administered by the Department of Health, programs funded through the Office for People With Developmental Disabilities, a camp, and a day care program.

During the 2016-17 school year, Hebrew Academy served approximately 539 students in its SED preschool cost-based programs. The New York City Department of Education (DOE) refers students to Hebrew Academy and pays for its services using rates established by SED. The rates are based on the financial information Hebrew Academy reports to SED on its annual CFRs. SED reimburses DOE 59.5 percent of the statutory rate it pays to Hebrew Academy. For the three fiscal years ended June 30, 2017, Hebrew Academy reported approximately $52 million in reimbursable costs for its SED preschool cost-based programs.

Key Findings
For the three fiscal years ended June 30, 2017, we identified $2,873,898 in reported costs that did not comply with the requirements in the RCM and the Consolidated Fiscal Reporting and Claiming Manual (CFR Manual), including:

  • $792,672 in compensation for 174 (145 1:1 aides and 29 agency administrative) employees whose services were incorrectly allocated to the SED preschool cost-based programs;
  • $766,955 in fringe benefit costs not directly related to the SED preschool cost-based programs;
  • $479,596 in property costs incorrectly allocated to the SED preschool cost-based programs;
  • $488,450 in other than personal service related party costs incorrectly charged to the SED preschool cost-based programs;
  • $121,769 in inappropriate depreciation costs;
  • $113,552 in excess executive compensation;
  • $76,793 in unsupported other than personal service costs; and
  • $34,111 in unsupported personal service costs.

Key Recommendations

  • Review the disallowances identified by our audit and, if warranted, make the necessary adjustments to the costs reported on Hebrew Academy’s CFRs and tuition reimbursement rates.
  • Work with Hebrew Academy officials to help ensure their compliance with the provisions of the RCM and the CFR Manual.

To Hebrew Academy:

  • Ensure that costs reported on annual CFRs fully comply with SED’s requirements, and communicate with SED to obtain clarification as needed.

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