Audit Report on Department of Education’s Planning and Allocation of Funds to Community-Based Organizations for the Universal Pre-Kindergarten Program

Audit Report In Brief

The Universal Pre-Kindergarten Program (UPK) early childhood initiative was enacted by New York State in 1997 under Chapter 436 of the New York State Legislature.  In essence, the law provides funds for half-day UPK programs for children who are eligible (four years of age on or before December 31 of the year in which he or she is enrolled).  In New York City, the UPK program is administered by the Department of Education’s (DOE) Office of Early Childhood Education (OECE).  Parents who wish to send their eligible children to a State-funded UPK program administered by DOE can apply at DOE public schools or at DOE-contracted community-based organizations (CBOs) that offer such a program.  CBOs interested in providing UPK services at a particular site are required to adhere to the regulations of the UPK program as administered by the New York State Education Department (NYSED).  Payments made to the contracted providers are based on the number of children registered and attending the UPK program multiplied by the cost per child.

In addition to UPK classes offered at DOE-contracted CBOs and at public schools, the Administration for Children’s Services (ACS) also offers UPK programs provided through its own contracted CBOs.  For Fiscal Year 2010, the State’s UPK appropriation to the City totaled $248 million, of which $99 million was spent on DOE UPK programs by the public schools, $65 million by DOE-contracted CBOs, and $51 million by ACS.  Additional general programmatic expenditures totaled almost $4 million.  During the same period, DOE provided approximately 18,500 children UPK services at 448 separate sites.

This audit determined the adequacy of DOE’s efforts over the planning and allocation of funds to its DOE-contracted CBOs for the UPK program.

Audit Findings and Conclusions

DOE has not adequately planned for and distributed all the funds appropriated by the State for the pre-kindergarten program.  As a result of DOE’s inability to spend all the funds made available to it by the State, $29 million—which could potentially have been used to place 8,000 additional children in a UPK program—was unused by DOE and reverted to the State in Fiscal Year 2010.  Furthermore, during Fiscal Years 2007 to 2010, $133 million of the appropriate balance that was unused by DOE for the UPK program reverted to the State.

Specifically, DOE has not provided adequate evidence that it sufficiently evaluated demand for UPK services or provided additional UPK services to districts with greater demand.  For example, DOE did not seek out to recruit new CBOs that might have been capable of providing UPK services, such as existing early childhood education providers registered with the Department of Health and Mental Hygiene (DOHMH).  We also found that DOE did not conduct any trend analyses to determine which CBOs have a proven track record and have the ability to fill UPK seats.

Audit Recommendations

We make 10 recommendations, including that DOE:

• Implement its pipeline strategy for the coming school years by developing a recruitment process to solicit additional independent contractors interested in participating in the State-funded UPK program and utilizing DOHMH’s online listing of licensed preschool providers.
• Require that CBOs maintain and submit a waitlist of applicants who were turned away due to unavailability at their site in order to more effectively plan and distribute UPK funds in future years.
• Continue to lobby the State to allow use of UPK funds for full-day UPK programs.

Agency Response

In their response, DOE officials generally agreed with nine recommendations and only disagreed with the recommendation that DOE collect waitlists maintained by the CBOs.  However, officials strongly disagreed with the audit’s methodology and the findings upon which the audit’s recommendations are based.  Additionally, DOE submitted its response under protest, citing as its reasons perceived flaws and material omissions in the report as well as our office’s refusal to grant them an extension to respond to this report.  After carefully reviewing DOE’s arguments and protest, we found them to be without merit.

Throughout its response, DOE contends that the evidence presented in the audit in support of the audit’s findings is insufficient.  It is noteworthy that the agency curiously provides very little evidence of its own in opposition.  The lack of sufficient substantive evidence has been an issue throughout the course of the audit and has continued through DOE’s official response to our report.  Despite repeated requests for supporting evidence during the audit, DOE failed to present sufficient substantiation of its existing strategic plans and its efforts to prevent almost $30 million from reverting to the State in Fiscal Year 2010.  Whether DOE’s failure to provide us with evidence of its efforts was simply the result of a lack of systematic planning or was to prevent us from effectively evaluating its efforts, we cannot say.  Regardless of DOE’s reasons or intentions, we provided its officials with repeated opportunities to present evidence to corroborate their assertions, including during and after the exit conference for this audit, yet little was provided.  Instead, a clearly defensive DOE resorts to attacks on the audit and auditors.  Had DOE provided substantive evidence to support its claims, one could infer that the basis of its contentions had some merit.  In the absence of such evidence, however, DOE’s attacks on the audit appear to be an unconvincing attempt to divert attention away from the deficiencies identified in this audit.

A detailed discussion of the DOE response is included as an appendix (Appendix E) to this report, and the full text of the DOE response follows the appendix as an addendum.