State audit slams Pyramids Child Development Center

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May 16, 2008

Recommends authorities recover salary of absentee child-services director

By JOE LoTEMPLIO The Press Republican Fri May 16, 2008, 05:44 AM EDT

PLATTSBURGH -- A state audit slammed Pyramids Child Development Center, saying the school improperly claimed reimbursement for nearly $240,000 in taxpayer money.

School officials are fighting back, arguing they can support their actions.

The audit, from the New York State Comptroller's Office, claims that some expenses were unexplained or undocumented, such as the preparation of Executive Director Melissa Dorsett-Felicelli's personal income taxes.

The report also recommends that the State Department of Education recover her $171,000 salary, citing the fact that she was not physically present at the school.

Dorsett-Felicelli lives in North Carolina, and the audit says that there was little evidence of the work she provided to justify her salary.

"Making sure that our kids with special needs get the care and attention they need early on is critical," State Comptroller Thomas P. DiNapoli said in a statement.

"But taxpayers have the right to expect that their money is being used for its intended purpose and for reasonable expenses. This organization engaged in improper practices that ultimately shortchanged taxpayers."

Pyramids opened in 2001 at the former St. Alexander's Catholic School on Route 22B in Morrisonville.

The school serves about 100 children with special needs and 24 children in off-site classrooms, some through a contract with Clinton County. It also delivers services to 75 children among Clinton, Essex and Washington counties.

The school made headlines last November when a number of the 104 employees picketed outside Champlain National Bank on Route 3 in Plattsburgh. The employees were complaining that they had not been paid in a month.

The bank had frozen the school's assets the day after Thanksgiving after a loan payment was not made.

Pyramids officials argued that the loan was not paid because reimbursements from the state had not yet arrived.

About a week later, the school sought protection to re-organize under Chapter 11.

Earlier this month, Pyramids notified families of students that tuition would be going up 5 percent on July 1 to accommodate a longer schedule. Tuition is slated to go up another 5 percent for all programs on Sept. 1.

AUDIT CRITICISMS

The state audit covers a period from July 2005 to June 2006.

The school received $2.7 million in state and county funds in the fiscal year ended June 30, 2006.

Among the audit's findings were:

The executive director (Dorsett-Felicelli), who resides in North Carolina, was rarely on site at any of the Pyramids facilities and did not keep any time and attendance records. When auditors attempted to review a computer network log, which Pyramids officials said would provide evidence of the director's work activity, sufficient evidence was not found.

Auditors also found that the non-profit's Board of Directors consisted of employees; therefore, it did not provide independent oversight or monitoring of Pyramids' financial affairs.

Pyramids claimed $15,308 for legal, accounting and other administrative costs that were not appropriate, including charges for the preparation for the executive director's personal income taxes and fees for lobbying services.

Pyramids improperly awarded $101,335 in bonuses and fringe benefits to staff, including a $10,000 bonus for the executive director that did not meet state reimbursement requirements.

Another $30,133 was improperly claimed by Pyramids for building and equipment depreciation and amortization, food and other unexplained and unsupported expenses. Documentation could not be provided for several furniture and equipment purchases.

SCHOOL'S STAND

In an official response to the audit, Pyramids disagreed with just about all of the comptroller's findings. A letter signed by Dorsett-Felicelli outlined in detail the school's position regarding several of the audit's findings.

For example, Dorsett-Felicelli explained that so-called bonuses were actually wage increases based on the amount of services provided.

Doresett-Felicelli also defended living in North Carolina while running the school.

"The state audit claims there was not enough evidence' to validate the superintendent's physical presence at the facility. The state audit report fails to cite or reference what this amount of time must be in numbers or requirement," Dorsett-Felicelli wrote.

"In fact, there is nothing cited or made reference to in the manual stating how often the superintendent must be physically present nor does the manual require documentation of such activity.

"Moreover, as would be the case with most superintendent positions, this role requires supervision of a multitude of locations, as is the case with Pyramids, and thus it would not seem prudent to dictate how often the superintendent must be physically' present at any one location.

"In fact, offices of the superintendent of most schools are often housed at different locations of the classrooms, resulting in work that is remotely completed via computer technology."

Dorsett-Felicelli said the audit findings are still in review and are only recommendations to the State Education Department.

"Our responses were all researched and are held up by State Education Department regulation," she said.

"State Ed has the final say."

jlotemplio@pressrepublican.com