NYSARC, Inc. – Rockland County Chapter – Compliance With the Reimbursable Cost Manual

Issued Date
April 10, 2024
State Education Department (Preschool Special Education Audit Initiative)


To determine whether the costs reported by NYSARC, Inc. - Rockland County Chapter (NYSARC Rockland) 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 covered expenses reported on NYSARC Rockland’s 2020 and 2021 CFRs for the fiscal year ended June 30, 2021.

About the Program

NYSARC Rockland is a not-for-profit special education provider located in Valley Cottage and serves students from Rockland and Orange counties. NYSARC Rockland is authorized by SED to provide Preschool Non-Integrated education services to children with disabilities between the ages of 3 and 5 years at one location. For the purpose of this report, this program is referred to as the SED preschool cost-based program. NYSARC Rockland also operated other SED-approved preschool special education programs, including Evaluations, Related Services, and 1:1 Aides. However, payments for services under these programs are based on fixed fees, as opposed to the cost-based rates established financial information reported on CFRs. During the fiscal year ended June 30, 2021, NYSARC Rockland served 104 students with disabilities.

The counties that use NYSARC Rockland’s preschool special education services pay tuition to NYSARC Rockland using reimbursement rates set by SED. The State, in turn, reimburses the counties for a portion of the tuition paid. SED sets the special education rates based on financial information, including costs, that NYSARC Rockland reports to SED on its annual CFR. For the fiscal year ended June 30, 2021, NYSARC Rockland reported more than $2.3 million in reimbursable costs for the SED preschool cost-based program.

Key Findings

For the fiscal year ended June 30, 2021, we identified $189,182 in reported costs that did not comply with the requirements in the RCM and CFR Manual, as follows:

  • $79,153 in expenses that were reported in the incorrect CFR reporting period;
  • $53,817 in non-program-related ($51,435) and unsupported ($2,382) compensation expenses charged to the SED preschool cost-based program;
  • $41,616 in unsupported expenses related to depreciation, leasehold improvements, and cleaning services;
  • $7,881 in unsupported related-party expenses;
  • $3,532 in employee bonuses that were not in compliance with the RCM’s guidelines; and
  • $3,183 in ineligible expenses, including $3,120 in interest payments and $63 in non-program-related expenses.

Key Recommendations


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

To NYSARC Rockland:

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

Heather Pratt

State Government Accountability Contact Information:
Audit Manager
: Heather Pratt
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