Positive Beginnings, Inc. – Compliance With the Reimbursable Cost Manual

Issued Date
March 13, 2024
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported by Positive Beginnings, Inc. (Positive Beginnings) 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 Positive Beginnings’ CFR for the fiscal year ended June 30, 2020 and certain expenses claimed on its CFRs for the 2 fiscal years ended June 30, 2019.

About the Program

Positive Beginnings is a New York City-based proprietary organization approved by SED to provide full-day and half-day Special Class programs to children with disabilities who are between the ages of 3 and 5 years. For the purpose of this report, these programs are referred to as the SED preschool cost-based programs. Positive Beginnings also operated three other SED-approved preschool programs: Evaluations, Related Services, and 1:1 Aides. However, payments for services under these programs are based on fixed fees. Positive Beginnings also operated a New York City Department of Education (DOE) Universal Pre-Kindergarten program. During the 2019–20 school year, Positive Beginnings served 538 students with disabilities in the SED preschool cost-based programs.

The DOE refers students to Positive Beginnings and pays for its services using rates established by SED. The rates are based on the financial information Positive Beginnings reports to SED on its annual CFRs. For the 3 fiscal years ended June 30, 2020, Positive Beginnings reported approximately $32.1 million in reimbursable costs for the SED preschool cost-based programs.

Key Findings

For the 3 fiscal years ended June 30, 2020, we identified $663,830 in reported costs that did not comply with the requirements in the RCM and the CFR Manual, as follows:

  • $274,518 in compensation expenses applicable to the 1:1 Aides program that were incorrectly allocated to the SED preschool cost-based programs.
  • $169,090 in property expenses incorrectly allocated to the SED preschool cost-based programs.
  • $68,363 in overallocated non-program staff compensation. We determined the Program Director was acting in the capacity of an Assistant Executive Director.
  • $54,600 in unreasonable and unnecessary consultant fees.
  • $41,899 in overallocated shared-staff compensation expenses.
  • $19,949 in undocumented, insufficiently documented, and/or ineligible expenses.
  • $12,954 in unsupported General Ledger entries that were reported on the CFR.
  • $12,063 in employee bonuses that were not in compliance with the RCM’s guidelines.
  • $10,394 in expenses that were reported in the incorrect CFR reporting period.

Key Recommendations


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

To Positive Beginnings:

  • 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