Step Up Therapy Services, PLLC – Compliance With the Reimbursable Cost Manual

Issued Date
July 20, 2023
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported by Step Up Therapy Services, PLLC (Step Up) 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 Step Up’s CFR for the fiscal year ended June 30, 2015 and certain expenses claimed on its CFRs for the 2 fiscal years ended June 30, 2014.

About the Program

Step Up is a New York City-based not-for-profit organization approved by SED to provide preschool special education itinerant teacher services to children with disabilities who are between the ages of 3 and 5 years. For purposes of this report, this program is referred to as the SED preschool cost-based program. Step Up also operated another SED-approved preschool special education program: Evaluations. However, payments for services under this program are based on fixed fees. During the fiscal year ended June 30, 2015, Step Up served 209 students with a disability.

The New York City Department of Education (DOE) refers students to Step Up and pays for its services using rates established by SED. The rates are based on the financial information Step Up reports to SED on its annual CFRs. For the 3 fiscal years ended June 30, 2015, Step Up reported approximately $7.4 million in reimbursable costs for the SED preschool cost-based program.

Key Findings

For the 3 fiscal years ended June 30, 2015, we identified $810,382 in reported costs – $697,499 in personal service costs and $112,883 in other than personal service costs (OTPS) – that did not comply with the requirements in the RCM and the CFR Manual, as follows:

  • $304,356 in ineligible fringe benefits, including pension and health insurance contributions that were not proportionally similar among groups of employees or for which employees did not meet eligibility requirements.
  • $197,826 in salaries for the Controller pertaining to his fiscal management responsibilities.
  • $195,317 in salaries for the work employees performed for the non-SED preschool cost-based program. This includes work performed for the Evaluations program and the professional corporation co-owned by Step Up officials.
  • $112,883 in OTPS costs, including $69,540 in unsupported and/or ineligible consultant costs, $34,565 in overallocated and/or unsupported office costs, and $8,778 in various other costs that did not comply with the RCM requirements.

Key Recommendations


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

To Step Up:

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

Kenrick Sifontes

State Government Accountability Contact Information:
Audit Director:Kenrick Sifontes
Phone: (212) 417-5200; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236