Lois Bronz Children's Center, Inc. – Compliance With the Reimbursable Cost Manual

Issued Date
September 13, 2017
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported by Lois Bronz Children’s Center, Inc. (Center) 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 the Center’s CFR for the fiscal year ended June 30, 2014, and certain expenses reported on the Center’s CFR for the fiscal year ended June 30, 2013.


The Center, formerly known as Union Child Day Care Center, is an SED-approved, not-for-profit special education provider located in Westchester County, New York. The Center provides preschool special education services to children with disabilities who are between three and five years of age. The Center is reimbursed for preschool special education services through rates set by SED. The reimbursement rates are based on financial information, including costs that the Center reports to SED on its annual CFR. To be eligible for reimbursement, reported costs must comply with the requirements of the RCM as well as the Consolidated Fiscal Reporting and Claiming Manual. For the two fiscal years ended June 30, 2014, the Center reported $2.5 million in reimbursable costs on its CFRs for the rate-based preschool special education programs (Programs) it operated.

Key Findings

For the two years ended June 30, 2014, we identified $177,786 in ineligible costs that the Center reported on its CFRs for the Programs. The ineligible costs included:

  • $172,460 in personal service costs, which consisted of $164,502 of offsetting revenue that was not included in the calculation of the tuition rate of the integrated program and $7,958 in ineligible bonuses; and
  • $5,326 in other than personal service costs, which consisted of $3,358 in ineligible food expenses, $697 in non-reimbursable interest expenses, and $1,271 in other non-reimbursable expenses that included travel costs, holiday gifts for students, gift cards for staff, and late fees.

We also identified $132,713 in questionable costs that the Center reported for the Programs from a contract that the Center could not prove was competitively bid. While Center officials maintain that several potential vendors were considered, and a review and analysis of each proposal was conducted prior to making its selection, the Center was unable to provide any documentation to support this. 

Key Recommendations


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

To the Center:

  • 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

North Country Kids, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-53)
ACDS, Inc.: Compliance With the Reimbursable Cost Manual (2016-S-76)

Brian Reilly

State Government Accountability Contact Information:
Audit Director: Brian Reilly
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236