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July
200 2 Reimbursable Cost Manual
I. COST PRINCIPLES:
II. RECORD KEEPING:
A. Record Keeping
B. Accounting Requirements
C. Definitions
III. METHODOLOGY:
APPENDICIES:
TOPIC APPENDIX:
The University of the State of New York
The State Education Department
Program Services Reimbursement Unit
Albany, New York 12234
Reimbursable Cost Manual for Programs Receiving Funding Under Article 81 and Article 89 of the Education Law to Educate Students with Disabilities
This Manual Applies to the July [2001] 2002 to June [2002] 2003 Tuition Rates and Defines Reimbursable Costs for the July [2001] 2002 to June [2002] 2003 Period.
July [2001] 2002 Edition
NOTE: For your convenience, changes from the previous manual are noted so that additions are underlined and deletions are bracketed.
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF CONTENTS
Introduction 3
- Cost Principles 5
- General Requirements and Definitions
Record Keeping 40
Accounting Requirements 43
. Definitions 45
- Tuition Rate-Setting Methodology
Tuition Rate-Setting Methodology for [2001]-[2002] Tuition Rates 52
Tuition Rate Adjustments 52
Close-Down Policy and Procedures 53
- Index 55
V. Appendices 57
A-1. Categorization of Expenditures 58
A-2. Categorization of Revenues 60
B. Purchasing Consortia 61
C. Travel Guidelines 62
D. Guidelines for Development, Review and Approval of Capital Projects 63
for Students with Disabilities
E. Statement on the Governance Role of a Trustee or Board Member 67
INTRODUCTION
THIS JULY [2001] 2002 REIMBURSABLE COST MANUAL DEFINES REIMBURSABLE COSTS FOR THE JULY [2001] 2002 - JUNE [2002] 2003 SCHOOL YEAR. IT APPLIES TO THE [2001]-[2002] PROSPECTIVE TUITION RATES AND THE [2001]-[2002] 2002-2003 RECONCILIATION ADJUSTMENT FACTORS AND RECONCILIATION RATES, AND FINAL AUDIT RATES BASED ON [2001]-[2002] 2002-2003 ACTUAL DATA.
This July [2001] 2002 Reimbursable Cost Manual (Manual) applies to programs receiving public funds for educating students with disabilities ages 3-21, in private schools, special act school districts (SASDs), Boards of Cooperative Educational Services (BOCES), public school districts, and municipalities, under Articles 81 or 89 of the Education Law.
Approved programs should recognize that information in financial reports is continually being analyzed and any part of this Manual may be modified from year to year based on that analysis. Continuous review by the NYS Education Department (SED), other State agencies, the State Division of the Budget (DOB) (as mandated by the Institution Schools Act), and by municipalities providing funding to programs under section 4410 of the Education Law may also result in modifications. Since this Manual is revised and updated on a periodic basis, questions arising about a subject not described herein will be reviewed by SED and treatment of such subjects may be described in the subsequent edition of the Manual.
Final costs are determined upon field audit and will be considered for reimbursement provided that such costs are reasonable, necessary and directly related to the education program. Costs must also have adequate substantiating documentation. Designation of a cost as reimbursable during the initial rate-setting process or during the reconciliation process does not mean that the cost will be reimbursed through the final audit rate since all rates are subject to adjustment on field audit, in accordance with section 200.18 of the Commissioner's Regulations and this Manual. A more detailed review of expenditures during an audit may reveal that costs reimbursed during a prior rate calculation for that fiscal year should not be reimbursed. Programs will be given an opportunity to review and comment on the draft audit report before the report is made final in accordance with section 200.18 of the Commissioner's Regulations.
Section I, Cost Principles, describes costs SED considers reimbursable in the calculation of tuition rates for approved programs.
Section II, General Requirements and Definitions, provides information on recordkeeping requirements, general accounting standards and definitions for programs receiving reimbursement under Articles 81 and 89 of the Education Law.
Section III, Tuition Rate-Setting Methodology, provides information on rate setting, adjustments and closedown.
Section IV, the Index, provides an alphabetical listing of subjects described in this publication.
The Appendices contain supplementary information. Special attention should be given to Appendix A, "Categorization of Expenditures" and Appendix A-1, "Categorization of Revenues" that identify specific items of expense and revenue. They also provide direction as to where the cost categories should be reported on the CFR. Please be advised that reimbursement of expenses designated as nondirect care expenses will be subject to the nondirect care cost parameter. Appendix E, "Statement on the Governance Role of a Trustee or Board Member" is new in this edition. As this is all new, and to make it easier for the reader, Appendix E is not underlined.
THIS JULY [2001] 2002 REIMBURSABLE COST MANUAL DEFINES REIMBURSABLE COSTS FOR THE JULY [2001] 2002 - JUNE [2002] 2003 SCHOOL YEAR. IT APPLIES TO THE [2001]-[2002] PROSPECTIVE TUITION RATES AND THE [2001]-[2002] 2002-2003 RECONCILIATION ADJUSTMENT FACTORS AND RECONCILIATION RATES, AND FINAL AUDIT RATES BASED ON [2001]-[2002] 2002-2003 ACTUAL DATA.
This July [2001] 2002 Reimbursable Cost Manual (Manual) applies to programs receiving public funds for educating students with disabilities ages 3-21, in private schools, special act school districts (SASDs), Boards of Cooperative Educational Services (BOCES), public school districts, and municipalities, under Articles 81 or 89 of the Education Law.
Approved programs should recognize that information in financial reports is continually being analyzed and any part of this Manual may be modified from year to year based on that analysis. Continuous review by the NYS Education Department (SED), other State agencies, the State Division of the Budget (DOB) (as mandated by the Institution Schools Act), and by municipalities providing funding to programs under section 4410 of the Education Law may also result in modifications. Since this Manual is revised and updated on a periodic basis, questions arising about a subject not described herein will be reviewed by SED and treatment of such subjects may be described in the subsequent edition of the Manual.
Final costs are determined upon field audit and will be considered for reimbursement provided that such costs are reasonable, necessary and directly related to the education program. Costs must also have adequate substantiating documentation. Designation of a cost as reimbursable during the initial rate-setting process or during the reconciliation process does not mean that the cost will be reimbursed through the final audit rate since all rates are subject to adjustment on field audit, in accordance with section 200.18 of the Commissioner's Regulations and this Manual. A more detailed review of expenditures during an audit may reveal that costs reimbursed during a prior rate calculation for that fiscal year should not be reimbursed. Programs will be given an opportunity to review and comment on the draft audit report before the report is made final in accordance with section 200.18 of the Commissioner's Regulations.
Section I, Cost Principles, describes costs SED considers reimbursable in the calculation of tuition rates for approved programs.
Section II, General Requirements and Definitions, provides information on recordkeeping requirements, general accounting standards and definitions for programs receiving reimbursement under Articles 81 and 89 of the Education Law.
Section III, Tuition Rate-Setting Methodology, provides information on rate setting, adjustments and closedown.
Section IV, the Index, provides an alphabetical listing of subjects described in this publication.
The Appendices contain supplementary information. Special attention should be given to Appendix A, "Categorization of Expenditures" and Appendix A-1, "Categorization of Revenues" that identify specific items of expense and revenue. They also provide direction as to where the cost categories should be reported on the CFR. Please be advised that reimbursement of expenses designated as nondirect care expenses will be subject to the nondirect care cost parameter. Appendix E, "Statement on the Governance Role of a Trustee or Board Member" is new in this edition. As this is all new, and to make it easier for the reader, Appendix E is not underlined.
THIS JULY [2001] 2002 REIMBURSABLE COST MANUAL DEFINES REIMBURSABLE COSTS FOR THE JULY [2001] 2002 - JUNE [2002] 2003 SCHOOL YEAR. IT APPLIES TO THE [2001]-[2002] PROSPECTIVE TUITION RATES AND THE [2001]-[2002] 2002-2003 RECONCILIATION ADJUSTMENT FACTORS AND RECONCILIATION RATES, AND FINAL AUDIT RATES BASED ON [2001]-[2002] 2002-2003 ACTUAL DATA.
This July [2001] 2002 Reimbursable Cost Manual (Manual) applies to programs receiving public funds for educating students with disabilities ages 3-21, in private schools, special act school districts (SASDs), Boards of Cooperative Educational Services (BOCES), public school districts, and municipalities, under Articles 81 or 89 of the Education Law.
Approved programs should recognize that information in financial reports is continually being analyzed and any part of this Manual may be modified from year to year based on that analysis. Continuous review by the NYS Education Department (SED), other State agencies, the State Division of the Budget (DOB) (as mandated by the Institution Schools Act), and by municipalities providing funding to programs under section 4410 of the Education Law may also result in modifications. Since this Manual is revised and updated on a periodic basis, questions arising about a subject not described herein will be reviewed by SED and treatment of such subjects may be described in the subsequent edition of the Manual.
Final costs are determined upon field audit and will be considered for reimbursement provided that such costs are reasonable, necessary and directly related to the education program. Costs must also have adequate substantiating documentation. Designation of a cost as reimbursable during the initial rate-setting process or during the reconciliation process does not mean that the cost will be reimbursed through the final audit rate since all rates are subject to adjustment on field audit, in accordance with section 200.18 of the Commissioner's Regulations and this Manual. A more detailed review of expenditures during an audit may reveal that costs reimbursed during a prior rate calculation for that fiscal year should not be reimbursed. Programs will be given an opportunity to review and comment on the draft audit report before the report is made final in accordance with section 200.18 of the Commissioner's Regulations.
Section I, Cost Principles, describes costs SED considers reimbursable in the calculation of tuition rates for approved programs.
Section II, General Requirements and Definitions, provides information on recordkeeping requirements, general accounting standards and definitions for programs receiving reimbursement under Articles 81 and 89 of the Education Law.
Section III, Tuition Rate-Setting Methodology, provides information on rate setting, adjustments and closedown.
Section IV, the Index, provides an alphabetical listing of subjects described in this publication.
The Appendices contain supplementary information. Special attention should be given to Appendix A, "Categorization of Expenditures" and Appendix A-1, "Categorization of Revenues" that identify specific items of expense and revenue. They also provide direction as to where the cost categories should be reported on the CFR. Please be advised that reimbursement of expenses designated as nondirect care expenses will be subject to the nondirect care cost parameter. Appendix E, "Statement on the Governance Role of a Trustee or Board Member" is new in this edition. As this is all new, and to make it easier for the reader, Appendix E is not underlined.
SECTION I. COST PRINCIPLES
Generally, costs will be considered for reimbursement provided such costs are reasonable, necessary, and directly related to the education program and are sufficiently documented. Such reimbursable costs will be included in the calculation of tuition rates up to any limits or cost screens approved annually in the rate setting methodology.
1. Accounting
Costs of establishing and maintaining accounting and other information systems required for management of Articles 81 and 89 funded programs are reimbursable and subject to the nondirect care cost parameter. When consultants or the program's independent CPA firm, provide these non-audit services, refer to Item #15 Consultants for reimbursement standards. (See Section II, General Requirements and Definitions, of this Manual for specific details on record keeping requirements).
2. Administration
A. Administrative costs include salary and fringe benefit costs of persons whose primary function is management and administration of the program and/or agency, in accordance with Federal and State laws, Regulations of the Commissioner of Education and/or the Board of Directors. All administrative costs are subject to the nondirect care cost parameter.
B. Administrative costs may include, but are not limited to: other-than-personal-services costs of professional dues and conferences; travel; telephone; office equipment and supplies; bonding of employees handling program funds; fees for lawyers, accountants and consultants; charges from parent organizations; personnel advertising and other recruiting costs; minimum corporation franchise tax or similar business tax; postage; office equipment rental or depreciation; repairs and maintenance; depreciation on assets related to administration; administrative purchase of services; dues; licenses and permits; subscriptions and publications; interest on operating loans; administrative staff development; and membership in civic, business, professional or technical organizations.
3. Advertising
Advertising means the costs associated with publications and other public relations endeavors using the mediums of newspapers, magazines, radio and television programs, direct mail, trade papers, and the like.
Outreach activities, such as publications and other public relations endeavors which describe the services offered by approved private schools enabling them to better contribute to community educational objectives, are reimbursable. The intended outcome of these publications and public relations endeavors should be that of providing information and not for the purpose of recruiting students into programs or soliciting fund raising monies or donations. New York State places students without regard to advertising or public relations activities. (Refer to Item #40, Recruitment of Personnel.)
Guidelines for Preschool Program Advertising:
A. Chapter 474 of the Laws of 1996 amended Section 4410 of the Education Law to require the State Education Department (SED) to establish guidelines for advertising by preschool programs and evaluators. The following guidelines have been developed pursuant to the Statute and corresponding amendments to the Regulations of the Commissioner of Education.
These amendments also require preschool programs and evaluators to periodically submit copies of advertising to the State Education Department for review. However, neither the Statute nor the Regulations require approved programs to advertise. Advertising costs are nonreimbursable and remain nonallowable in the calculation of tuition rates.
If you have any questions, please call the [Preschool] Policy Development Unit of VESID - Special Education Policy and Quality Assurance Office at (518) 473-[6108] 2878.
- The following are appropriate contents of advertising:
- A description of special services available: evaluation, special education, speech therapy, occupational therapy, physical therapy and labeled as special education services;
- A description of the appropriate licensure and/or certification of staff employed;
- A statement that indicates that the special education services are at no direct cost to the parent, but that funding is provided through county taxes and state funds, earmarked for special education services provided;
- A statement that transportation may be a service provided, but, parents are encouraged to transport their own children and may be reimbursed at a rate per mile or a public service fare established by the municipality and approved by the Commissioner.
- Advertisements should not include:
- Information which would mislead a parent to believe their child can receive, at no cost to them, day care services or any and all services the agency has to offer.
- Information which would mislead a parent to believe that the decision regarding appropriate services and where services will be provided is based solely upon what the parent/or the provider requests;
- Information which would indicate that services are "free" since services are paid through local and state funds;
- Information which would indicate that transportation is always provided;
- General statements that would lead the reader to believe that this is something other than a special education program (i.e., are you concerned about your children – come see us);
- Any information which would be false, deceptive or fraudulent with respect to the services to be provided to preschool children and their families.
4. Assistive Technology Devices and Services*
An assistive technology device is defined as "any item, piece of equipment, or product system, whether acquired [communally] commercially, off the shelf, modified or customized, that is used to increase, maintain, or improve the functional capabilities of a child with a disability." (34 CFR 300.5)
An assistive technology service is defined as "any service that directly assists a child with a disability in the selection, acquisition, or use of an assistive technology device." (34 CFR 300.6)
A. Preschool Children
Under the preschool system, an approved program would make available and be responsible for, in most situations, high and low assistive technology devices as part of its instructional program and be reimbursed, as part of the tuition rate, through the Department's current rate-setting methodology. When a child-specific assistive technology device is required, the county in which the child resides purchases or leases the device and submits costs to the Department on a STAC-1 form. The assistive technology device should be identified on the related service line of the form .
Counties must contract with assistive technology service providers and must submit the contracted rate for such services on the annual County List of Approved Rates for Related Services (SED-RS-3).
B. School Age Children
When the school district that is programmatically responsible for the student, purchases or leases equipment specified on the IEP, the cost is not reimbursable in the tuition rate.
*The above information is referenced from Thomas Neveldine's memo of September 1995 regarding Assistive Technology Devices and Services.
5. Auditing
The cost of certified audits necessary for the administration and management of Articles 81 and 89 funded programs is reimbursable subject to the limitations and requirements for consultant services (Refer to Item #15 on Consultants).
6. Bad Debts
Bad debt expenses are not reimbursable. Actual or estimated losses resulting from uncollectible accounts or other claims, including related collection and legal costs, are not reimbursable operating expenses for Articles 81 and 89 funded programs.
7. Bedding/Linen
Costs of bedding and linens are not reimbursable as an education expense. Such costs are considered to be parental responsibility or residential expenses. However, bedding, linen and towels for the nurse's office and for the classrooms will be considered reimbursable.
8. Bonding
Costs of insurance premiums on bonds covering employees who handle program funds are reimbursable and subject to the nondirect care cost parameter.
9. Capital Expenditures
(A) Special act school districts (SASDs), public school districts and BOCES are not required to depreciate the cost of buildings, equipment, furniture, fixtures or vehicles over the useful life of such assets. Public school districts and BOCES must adhere to the applicable sections of the General Municipal Law which govern Capital Expenditures. SASDs may choose to renovate existing buildings or expense equipment, furniture, fixtures or vehicles by transferring funds from the General Fund to a Capital Project or Capital Expenditure Fund as discussed in section (B) below:
(1) Renovations of existing buildings: Costs of renovations, alterations, or major repairs must be approved by the District Board in accordance with the District's annual approved budget policy. Proposals for renovations, alterations or major repairs [should] must be submitted to the Commissioner's designated program and fiscal representatives for their review and comment. See Appendix D: Guidelines for Development, Review and Approval of Capital Projects for Students with Disabilities.
(2) Purchases of furniture, fixtures or equipment: For proposed purchases of equipment, furniture, and fixtures, three (3) estimates must be provided for items which cost more than $1,000 and have a useful life of more than two years.
(3) Special act school districts have no voters or bonding authority and are not considered component school districts within the meaning of Section 1950(14) of Education Law for the purpose of participation in funding of BOCES capital projects, without the prior written approval of SED and the New York State Division of the Budget.
(4) Consistent with the provisions of Chapter 383 of the New York State Laws of 2001, SASDs and public school districts are authorized access to the Dormitory Authority of the State of New York (DASNY) for financing and refinancing of bonds for school construction projects. SASDs and public school districts are further authorized to structure financing of capital projects consistent with the payment of building aid based on assumed amortization of debt service payments in accordance with the useful life of the project.
(5) Special act school districts, public school districts and BOCES are required to fully access available Building Aid funding for all capital projects. Failure to apply for Building Aid funding will result in an adjustment to approved capital costs to reduce reimbursement through the tuition rate to the level of funding that would have resulted if the provider had applied for Building Aid.
(B) Interfund transfers will be recognized in the tuition rate calculation process under the following conditions:
(1) In cases where there may be several transfers between funds, costs will only be reimbursed once in the tuition rate-setting process.
(2) Proposed transfers from the General Fund to the Capital Fund or additions to the Capital Fund will be recognized in the tuition rate calculation if a fiscal staff review determines prior to the transfer of funds, that transfers or additions result from the need to fund capital projects. Such projects must have been approved by resolution of the Special Act District Board and endorsed by the SED program staff.
Fiscal staff will consult with the Department of Facilities Planning and/or State Aid Unit staff during the review process. Districts should submit copies of proposals to Facilities Planning staff and to the [Program Services Reimbursement Unit] Rate Setting Unit (RSU). RSU staff review will confirm in writing that amounts to be transferred are reasonable and made at appropriate times during the completion of the project.
(3) When the Trust and Agency fund is used as a clearinghouse for expenses, transfers from the General Fund to the Trust and Agency Fund will be recognized in the rate calculation process, if consistent with regular District practice and in compliance with this Manual. However, transfers from the Trust and Agency Fund back to the General Fund will be offset in rate calculations, if the costs have already been included in a tuition rate.
(4) When a capital project(s) is completed and the Capital Projects Fund has a surplus, then a transfer(s) from the Capital Projects Fund to the General Fund is required. The transferred amount will be offset in rate calculations, if the previous transfers to the Capital Project Fund have already been included in a tuition rate. Interest income earned by Capital Projects Fund and retained in this fund will be offset in the tuition rate calculations to the extent it was not previously offset in tuition rate calculations.
(5) Transfers to Contingency funds are not reimbursable in the calculation of tuition rates.
(C) All other providers should also refer to Item #18 on Depreciation/Amortization in this Manual.
10. Charges from Parent or Related Organizations
Charges to programs receiving administrative services, insurance, supplies, technical consultants, etc. from a parent or related organization are reimbursable provided they are based on actual direct and indirect costs, allocated to all programs on a consistent basis, and defined as reimbursable in the Regulations of the Commissioner of Education, the CFR Manual or this Manual. (Refer to Section II. C. Definitions, Item 4, in this Manual for less-than-arm's-length (LTAL) transactions).
11. Students' Activities
A. Costs incurred for intramural activities, student publications, student clubs and other student activities, to the extent such activities are normally provided by public day schools, are reimbursable direct care expenditures. Reasonable costs of class field trips during school hours and extra-curricular activities after school hours are reimbursable as direct care expenditures.
B. Ordinary living expenses such as the cost of overnight class trips or other expenses that are normally assumed by parents of students attending public day schools, are not reimbursable.
C. Costs incurred for, or in support of, alumni activities and similar services are not reimbursable.
12. Clothing/Uniforms
Ordinary living expenses, such as the cost of clothing and uniforms that are normally assumed by parents or legal guardians of students attending day care centers or public day schools, are not reimbursable. Clothing expenses for staff such as uniforms for custodians or bus drivers, even if required by school policy, are not reimbursable. Such costs are considered to be personal expenses.
13. Commencement and Convocation
Costs of commencement and convocation activities are reimbursable when they are consistent with local public school districts.
14. Compensation for Personal Services
Compensation for personal services includes all salaries and wages, as well as fringe benefits and pension plan costs. Accrued vacation/sick leave is not reimbursable. Payments for vacation/sick leave, including lump sum payments made upon retirement that are required by law or by employer-employee agreement and meet the criteria listed in item (B) below, are reimbursable when paid and reported in the base year financial reports. (Refer also to Section II. General Requirements and Definitions, Item A.1. Record Keeping - Payroll).
A. Salaries
Salaries include all taxable and non-taxable salaries and wages paid or accrued to employees on the agency payroll, including severance pay to regular employees. Reimbursement of salary expense shall be subject to the following principles:
(1) Entities operating approved programs shall develop employer-employee agreements with written salary scales and issue them to employees.
(2) Base year salary expense will be inflated at an amount approved by the State Division of Budget for the purpose of establishing a level of reimbursable costs on which to base the per pupil tuition rate calculation.
(3) Payments for sick and vacation leave credits for a retiring employee transferred into a lump sum payment to the employee are reimbursable when reported and paid in the base year financial reports and when documented in employer-employee contract agreements.
(4)(a) Compensation (i.e., salaries plus fringe benefits) for the entity's executive director, assistant executive director and chief financial officer will be directly compared to the regional median compensation for comparable administration job titles of public school districts, as determined and published annually by SED's Basic Educational Data Systems (BEDS). Reimbursement of employee compensation for these job titles shall not exceed the median paid to comparable personnel in public schools for similar work and hours of employment in the region in which the entity is located. Compensation for an "Executive Director" providing services to an Article 81 and/or Article 89 funded program will be compared to the median "Superintendent-Independent" compensation for the region in which the entity is located and compensation for an Assistant Executive Director and Chief Financial Officer will be compared to the median compensation for "Assistant Superintendent."
(4)(b) For any individual who is employed in any job title or combination of job titles by the entity operating the approved programs, compensation up to 1.0 FTE for that individual in total, will be considered in the calculation of the portion of 1.0 FTE reimbursable in the tuition rates, subject to the limitations defined in (4)(a) above.
(4)(c) An entity that employs co-executive directors shall have reimbursement for the co-executive directors limited to a level commensurate with a 1.0 FTE position.
(4)(d) For any individual employed as executive director, assistant executive director, chief financial officer or comparable administrative job titles who works in more than one entity (including organizations that have a less than arm's length relationship with the approved program), and whose FTE in total across entities exceeds 1.0, the allocation of compensation must be supported by personnel activity reports or equivalent documentation which meets the following standards:
- they must reflect contemporaneous time records of the actual activity of each employee;
- they must account for the total activity for which each employee is compensated;
- they must be prepared at least monthly and coincide with one or more pay periods;
- they must be signed and dated by the employee and Board President or equivalent officer;
- budget estimates or other allocation methods determined before the services are performed are not adequate documentation for use in completing annual financial reports but may be used for interim accounting purposes;
Compensation beyond 1.0 FTE for any individual in total will not be considered reimbursable in the calculation of tuition rates.
(4)(e) Direct care student staff ratios shall not exceed the approved staffing levels supported by SED’s program approval letter. Any net excess of staff will not be included as part of reimbursable costs in the tuition rate. Such additional staff may be deemed reimbursable upon demonstration to the satisfaction of the Commissioner that such costs were necessary.
(5) Reimbursement of all employee compensation, including administrative job titles shall not exceed the levels paid to comparably qualified and appropriately certified personnel in local public schools for similar work and hours of employment. Any net excess compensation will not be included as part of reimbursable costs in the tuition rate calculation.
(6) Compensation to all individuals including shareholders, trustees, board members, officers, family members or others who have a financial interest in the program and who are also program employees must be commensurate to actual services provided as program employees or consultants and shall not include any distribution of earnings in excess of reimbursable compensation. For all individuals, compensation for board service or trustee service is not reimbursable. For example, a full-time program employee may serve on the Board of Directors of the agency. However, compensation for board service will not be reimbursed. Compensation for such employee's personal service to the program will be allowed in the computation of the tuition rate if:
The board member abstains from any discussion or vote on matters related to his/her compensation and the Board minutes reflect this.
The board member has not been employed by the State Education Department within two (2) years of his/her appointment to the Board.
(7) Expenses of a personal nature, such as a residence or personal use of a car, known as perquisites (or perks), are not reimbursable.
(8) Compensation paid to an employee(s) which serves to duplicate worker's compensation awards, jury fees or disability claims are not reimbursable.
(9) The estimated value of donated services is not reimbursable. (Refer to Item #24 on Fundraising).
(10) Expenses for compensation of overtime work for direct care and nondirect care staff who are compensated on an hourly basis are reimbursable subject to all applicable statutes, rules and regulations of the NYS Department of Labor. Overtime compensation for salaried direct care staff for extracurricular activities such as coaching stipends, extra period coverage, plays, etc. are reimbursable when documented in the employee's contract and if they do not exceed local school district compensation for such activities. Overtime for all others is not reimbursable.
(11) Bonus compensation shall mean a non-recurring and non-accumulating (i.e., not included in base salary of subsequent years) lump sum payment(s) in excess of regularly scheduled salary which is not directly related to hours worked. Bonus compensation may be reimbursed if based on merit as measured and supported by employee performance evaluations. Bonus compensation restricted to only administrative staff is not reimbursable. Bonus compensation shall be subject to all aspects, constraints and cost screens contained in the methodology. Bonus compensation specifically relating to grant awards for targeted enhancements of teacher compensation is reimbursable.
(12) Private schools shall submit to the Department upon request, proposed compensation packages of the owners/officers/partners whose annualized compensation exceed $75,000 or whose owners/officers/partners are employed in other businesses or are the owners/officers/partners of other businesses. Such arrangements shall include the proposed salary based on qualifications and actual documented hours worked (time sheets), and fringe benefits, as well as a list of the other jobs and/or businesses and the time devoted to each. The package will be approved/disapproved in writing by the Department within 30 days of receipt from the Department. Compensation will be subject to median analysis in the calculation of tuition rates as described in [14.A.(4) through (6) above.] this Manual and the Commissioner’s Regulations.
B. Fringe Benefits
(1) Fringe benefits may include paid time off, such as vacation leave, sick leave, military leave, holidays, training and educational costs, provided the benefit is established by written school policy. Payments into specific employee benefit packages, such as teachers' retirement, employees' retirement and pension plans, Social Security, health insurance, life insurance (to the extent the Internal Revenue Service does not require payment of such premiums to be included in the employee's income), unemployment insurance, disability insurance, union welfare funds, or pension plan termination insurance premiums paid pursuant to the Employee Retirement Income Security Act of 1974, may also be included.
(2) Reimbursement of fringe benefit expenses shall be subject to the following principles:
(a) Vacation and sick leave are reimbursable in the year actually paid and reported as a salary expense. Accrued vacation and sick leave expenses are not reimbursable until actually paid.
(b) Costs of benefits for employees who provide services to more than one program and/or entity must be allocated to separate programs and/or entities in proportion to the salary expense allocated to each program.
(c) Benefits including pensions, for individual employees or officers/directors are not significantly disproportionate to those received by other classes or groups of employees.
(d) Amounts paid or credited to employees for sabbatical leave will be reimbursed to the extent that such leaves, as reflected in labor-management agreements, are a prevalent practice of the local public school district.
(e) Employer-provided educational assistance costs are reimbursable as compensation only when the course or degree pursued is relevant to the field in which the employee is working. Such costs are limited to tuition charged by the educational institution, textbooks, fees and training materials. Costs of specialized programs specifically designed to enhance the effectiveness of executives or managers are reimbursable. Employer-provided educational assistance costs will be considered compensation to the individual. Costs of education or training necessary for an employee to meet minimum qualifications for the position for which he/she was hired are not reimbursable.
C. Pensions
(1) Costs of employer funded pension plans which are approved by the Internal Revenue Service and accounted for under generally accepted accounting principles (GAAP) are reimbursable subject to the following exceptions and limitations:
a. Payments in lieu of pensions made to or for the benefit of school officers, directors, presidents, etc. are not reimbursable as a fringe benefit but will be considered as salary expense.
b. IRA or KEOGH plan payments made by a entity for employees or officers are not reimbursable as a fringe benefit as they are individual in nature, however, they will be considered as salary expense.
c. Employer funded plans such as 403(b) plans are reimbursable if they qualify under IRS Guidelines. Employees' contributions to such pension plans may be reimbursable expenses as part of reported gross salaries.
d. Self-Employed Retirement Plans (Partnerships and Sole Proprietorships) that are qualified and non-discriminatory, and which include 70% or more of the employees, are reimbursable. Costs of plans that do not include anyone other than the owner or owner's relatives will not be reimbursed. In instances where sole proprietors or partners are not offered plans, SED will allow the Self Employment Tax deduction allowed as an adjustment to income on IRS Form 1040 Income Tax Return. In no case will SED allow a charge for pensions that is accounted for as a salary deduction through compensation paid to the employee.
e. Where funding requirements of the Employee's Retirement Income Security Act (ERISA) differ from GAAP, an explanatory note should be included in the CPA financial statements. Reimbursement will be based upon GAAP requirements. In addition, the costs of any excise tax imposed on accumulated funding deficiencies are not reimbursable.
f. Any program decision to terminate participation in a pension plan must be communicated in writing to the Commissioner's designated fiscal representative not less than 90 days in advance of the proposed termination date and should indicate the reasons for termination and plans for disposition of funds in the pension plan.
(2) The following principles shall apply concerning pension plan asset reversion transactions in which employers received plan assets in excess of plan obligations:
a. Net reversion assets will be classified as offsetting revenues.
b. Net reversion assets are the reversion dollar amount before any excise tax or tax penalties are deducted.
c. Net reversion assets will include funds received from pension plan termination insurance proceeds.
d. The net reversion assets must be allocated to all programs based on the employees who participated in the pension plan.
e. SED strongly encourages providers to give primary consideration to enhancing employee pension plans.
15. Consultants
Consultants include independent accountants, as defined in section 200.9 (e)(1)(ii)(a) of the Commissioner's Regulations, lawyers and other independent contractors. (Refer to Item # 39 (A) on Purchase of Services and Section II. General Requirements and Definitions, A.3. Consultants). Nondirect care consultant service costs are subject to the nondirect care cost parameter.
A. Costs of consultants' services are reimbursable provided that:
(1) Fees do not exceed the prevailing rate for such services. The school will maintain documentation to support the regional prevailing rate at the time such costs are incurred. (Refer to Section II. General Requirements and Definitions, Item A on Record Keeping).
(2) The services could not have been performed by an appropriately certified school officer or employee who possesses the necessary technical skills or by SED Office of Special Education Services (OSES) /RSU (Rate Setting Unit) staff. (Refer to Section II. General Requirements and Definitions, Item C.1.(a).
(3) Paid consultants providing services to approved programs for students with disabilities are not officers or employees of the entity, employees of the State Education Department, employees of municipalities, or employees of other private schools whose positions are funded wholly or in part by State or local taxpayer funds.
(4) Persons who have been employed by the State Education Department to monitor or audit approved programs for students with disabilities are not employed as consultants for a period of two years following State employment.
(5) Fees and transactions meet criteria for less-than-arm's length transactions when applicable (Refer to Section IIC., Definitions, Item 4 in this Manual for LTAL).
B. Costs of legal, accounting or consulting services, and related costs incurred in connection with reorganization of the agency, including mergers and acquisitions, unless mandated by the State Education Department, are not reimbursable. Costs associated with retainers for legal, accounting or consulting services are not reimbursable unless the fee represents payment for actual documented reimbursable services rendered. The cost of certain influencing activities (lobbying) associated with obtaining grants, contracts, cooperative agreements, or loans is not reimbursable.
C. Legal, accounting or consultant costs that result from claims or lawsuits against an Article 81 and Article 89 funded program are reimbursable to the extent not recoverable from other parties. Claims against non-Article 81 and non-Article 89 programs are not reimbursable through the tuition rate.
D. When an audit/financial review is conducted by a local school district, a municipality or the State in accordance with State law, Regulations of the Commissioner of Education, Municipal Law and this Manual, any legal/accounting/consultant costs incurred as a result of proceedings brought pursuant to Article 78 of Civil Practice Law & Rules to challenge the established tuition rates are not reimbursable.
E. Fringe benefit costs for independent contractors or consultants are not reimbursable.
16. Contingency Provisions
Contributions to a contingency reserve or any similar provision made for events whose occurrence cannot be forecast are not reimbursable.
17. Contributions and Donations
Political and charitable contributions and donations made by the program are not reimbursable.
18. Depreciation/Amortization
This section does not apply to special act school districts, public school districts and BOCES. Public school districts and BOCES must comply with applicable sections of the General Municipal Law. (Refer to Item #9 on Capital Expenditures in this Manual).
A. Depreciation - Buildings, Furniture, Equipment and Vehicles:
(1) Items having a unit cost of $1,000 or more and an estimated useful life of two years or more must be capitalized. Group purchases of similar items (i.e., furniture, small tools, etc.) or separate purchases of similar items in the same fiscal year totaling $1,000 or more should be treated as a single unit purchase.
- Costs of facility acquisition or construction shall be depreciated over the expected useful life of the facility as indicated in Appendix O - "Guidelines for Depreciation and Amortization" of the CFR Manual. Cost of facility acquisition or construction includes architect and inspection fees and should be included in the cost of the building for depreciation purposes. Renovations or alterations that are considered to be directly related to the education program and therefore reimbursable through depreciation charges over the estimated useful life of the renovation or alteration as indicated in Appendix O of the CFR Manual may include: replacement of roofs, boilers, plumbing systems, or similar repairs needed to protect the agency's physical plant; installation of safety devices, such as fire exits, alarms or smoke detectors in existing buildings; renovations necessary to comply with New York State standards of instruction; renovations to protect the health or safety of New York State students; and other capital expenditures for minor renovation work. Proposals for acquisition, new construction, renovations, alterations or major repairs must be submitted to the Commissioner's designated program and fiscal representatives for their review and comment. [It is also highly recommended that facility costs be fiscally reviewed prior to incurring any obligations.] Refer to Appendix D for guidelines [for] on the development of capital projects.
A move to a new location must be approved by SED program staff prior to the move. Moving costs are discussed in Item #41 B. (1) on Rent.
(3) The straight line method of computing depreciation is required by SED for all classes of assets. Provision for estimated salvage value must be made in accordance with generally accepted accounting principles when computing depreciation for vehicles, furniture and equipment.
(4) Refer to Appendix O in the CFR Manual for the required minimum useful lives of assets acquired on or after July 1, 1992 to be used in the computation of reimbursable depreciation. Deviation from this Appendix for furniture, equipment and vehicles may be granted by SED if the assets in question were previously owned. Modifications to reduce useful lives from those indicated in this Appendix must be requested in writing to the Department for their advance approval.
(5) Depreciation based on reappraisals designed to increase the cost basis for depreciation is not reimbursable. Accumulated depreciation on assets transferred due to a change in legal status of the owner, such as incorporation, is not reimbursable. Accumulated depreciation on property owned by a division, subsidiary or affiliate of a entity prior to acquisition by the entity will not be reimbursed to the program after acquisition; the remaining undepreciated cost of the prior entity will be reimbursed over the remaining useful life of the asset as if no ownership change occurred.
(6) The portion of the cost of building construction, acquisition, renovation or equipment cost funded by a government grant or other public funding cannot be reimbursed again through depreciation of these costs. The asset cost must be reduced by the amount of the grant(s) and the balance depreciated in accordance with this Manual.
(7) Depreciation charges for donated assets are reimbursable in accordance with (1) through (6) above.
(8) If assets are shared by more than one program and/or entity, the share of depreciation expense allocated to programs funded pursuant to Articles 81 or 89 shall be based on documented and reasonable criteria.
(9) Depreciation charged for assets acquired through approved Dormitory Authority construction/renovation projects is not reimbursable in a tuition rate.
B. Amortization: Except for Goodwill (Refer to Item #25), intangible assets such as leaseholds, leasehold improvements, organization expenses, and mortgage expenses must be amortized in accordance with the following amortization periods:
(1) Leasehold/Leasehold Improvements - Amortized over the useful life of the improvements or the remaining term of the lease, whichever is shorter. Amortization expense for leaseholds and leasehold improvements will be reimbursable only with the existence of a formal written lease agreement. The term of the lease includes any period for which the lease may be renewed or extended. In the absence of an expressed option, past actions on the part of the lessor and lessee pertaining to renewal will be considered in determining the term of the lease for amortization purposes.
(2) Mortgage Related Expense - Expenses related to purchasing or constructing a facility such as attorney's fees; recording costs; transfer taxes; and service charges such as finder's fees and placement fees; etc. should be amortized over the term of the mortgage.
(3) Organization Expense - Amortized over a 60 month period starting with the month the program becomes operational to provide educational services.
- Start-Up Costs (previously amortized) - Refer to Item #49 on Start-Up Costs.
- Due Process Costs for Preschool Students Served under Section 4410 of the Education Law
Due process costs incurred by public school districts associated with educational programs or educational services approved pursuant to Section 4410 of the Education Law and Section 200.17 of the Regulations of the Commissioner.
- General Public School District Due Process Costs:
The following general due process costs incurred by a public school district are reimbursable, to the extent reasonable and necessary:
- Impartial Hearing Officer (IHO) Costs including the hourly fee up to the maximum rate developed by the Department and approved by the Director of the State Division of the Budget. The number of hours of service must also be submitted and reviewed for reasonableness. Reasonable and necessary travel costs incurred by the IHO may also be reimbursable. The Impartial Hearing Officer must be on the Department’s list of certified
IHOs.
- Court Stenographer Costs at the impartial hearing are reimbursable.
- School District Attorney Fees are reimbursable, to the extent they are reasonable, when incurred at the impartial hearing, during review by the State review officer or in a judicial action or proceeding brought by another party to review the State review officer's determination. Under the conditions described below, school district attorneys fees are reimbursable in an action or proceeding brought by the board of education. The district must provide a contract or retainer agreement that establishes the hourly rate for the school district attorney. Such hourly fees and number of hours of service shall be reviewed for reasonableness. Reasonable and necessary travel and other incidental costs, such as photocopying, may be reimbursable if documentation is presented. To be eligible to receive reimbursement for reasonable attorneys' fees in an action or proceeding brought by the board of education, the board of education must demonstrate that:
(i) (a) The board of education has not named or joined the State nor any State officer, department, board or agency of the State (State defendant) as a party to the action or proceeding; or
(b) There has been a judicial determination joining one or more State defendants as a necessary party; and
(ii) The board of education, upon final disposition of such action or proceeding, has received a judgment in its favor annulling the determination of the State review officer.
- Interim Special Education Program or Service Costs paid for by the parents between the time of the Committee on Preschool Special Education meeting, which precipitated the impartial hearing and final resolution (whether a decision from an Impartial Hearing Officer, State Review Officer or a Court) are not reimbursable unless the Impartial Hearing Officer, the State Review Officer or the Court requires the school district to reimburse the parents for such costs in their decisions.
- Parent Attorney Fees are not reimbursable unless the parents prevail in the final resolution (whether a decision from an Impartial Hearing officer, State Review Officer or a Court) and the final decision requires the public school district to reimburse the parents for their attorney fees.
- Evaluation of the child paid for by the parents as part of due process activities is not reimbursable unless the Impartial Hearing Officer, State Review Officer or Court requires the public school district to reimburse the parents for such evaluation costs.
E. Application for the reimbursable costs described in (A) through (D) above shall be submitted upon final resolution (whether a determination from an Impartial Hearing Officer, State Review Officer or a Court).
F. Documentation: The public school district must provide complete and detailed documentation of costs requested for reimbursement. For each item, the nature of the cost must be detailed, the per hour cost and the number of hours must be clear, as well as who performed the service. Costs requested, but not sufficiently documented will not be reimbursed.
20. Dues/Licenses/Permits
The costs of dues, licenses and permits are reimbursable and are subject to the nondirect care cost parameter.
21. Entertainment Costs and Personal Expenditures
A. Costs incurred for entertainment of officers or employees, or for activities not related to the program, or any related items such as meals, lodging, rentals, transportation, and gratuities, are not reimbursable. (Refer to Item #30 on Meetings and Conferences and Item #57 on Travel).
B. All personal expenses, such as personal travel expenses, laundry charges, beverage charges, gift certificates to staff and vendors, flowers or parties for staff, holiday parties, repairs on a personal vehicle, rental expenses for personal apartments, etc., are not reimbursable unless specified otherwise in this Manual.
22. Fines and Penalties
Costs resulting from violations of, or failure by, the entity to comply with Federal, State, and/or local laws and regulations, are not reimbursable.
23. Food
[The cost of food and food related salary and fringe benefit costs will be reimbursed in accordance with the following principles:
A. School-Age Programs (5-21 years old)
(1) The cost of food and food related salary and fringe benefit costs are reimbursable for those students whose physical needs require specially prepared foods or whose instructional needs are limited to such basic skills as swallowing, as specified on the individualized education program (IEP). Food as an instructional supply will be considered only if supported by goals and objectives on the student's IEP.
(2) When provision of meals is not required by the IEP or meals do not meet the above criteria reimbursement of the cost of food and food related salary and fringe benefit costs will be limited to the following:
(Total care days* x $2.00) + offsetting food grant revenues
*Total care days = days in session multiplied by the student FTE enrollment.
(3) Reimbursement of food expense over the allowable limit (total care days x $2.00) will only be considered when programs have taken full advantage of the resources of the National School Lunch Program, the School Breakfast Program and the Special Milk Program. The national programs are administered at the state level by SED. Applications and further information regarding child nutrition or school food management and nutrition may be obtained by writing to the New York State Education Department, Child Nutrition Program Administration, Room 362 EBA, Albany, New York 12234 or call Child Nutrition, (518) 473-8781.
B. Preschool Programs (3-4 years old)
(1) Food costs will be reimbursed to allow programs to provide one daily snack of adequate nutritive quality, as recommended by the National Research Council. Reimbursement of costs for the provision of a snack will be limited to the following:
(Total non-prorated care days* x $2.00)** + offsetting food grant revenues
(2) Food costs will be reimbursed to allow programs that are appropriately licensed or approved non-residential public or private preschool programs which operate four hours or more per day to provide in addition to one daily snack, a meal of adequate nutritive quality, as recommended by the National Research Council. Reimbursement of costs for the provision of a meal will be limited to the following:
(Total non-prorated care days* x $1.74)** + offsetting food grant revenues
(3) Food costs will not be reimbursed for special education itinerant programs unless required by the student's IEP as an instructional supply.
Reimbursement of food and food related expense will only be considered when programs have taken full advantage of the funding available from the NYS Department of Health's, Division of Nutrition Child and Adult Care Food Program (CACFP). For more information about how a program can participate, call the Albany office of CACFP at (518) 458-5550.
*Total non-prorated care days = days in session multiplied by the non-prorated student FTE enrollment.
** CACFP average payment rate for the period July 1, 2000 through June 30, 2001 are: snacks - $.55; lunches - $2.19.
C. For all approved programs providing required meals to students with disabilities, the following principles shall also apply:
(1) When the program subcontracts for food services, the program shall employ competitive bidding practices.
(2) When the program directly supplies meals, the direct costs of food and food preparation must be reasonable in comparison to the prevailing market for such services.
- Costs of food provided to any staff including lunchroom monitors, are not reimbursable.]
- The cost of food and food related salary and fringe benefit costs are reimbursable. Programs are strongly encouraged to take full advantage of the funding available through the following sources:
- National School Lunch Program, the School Breakfast Program and the Special Milk Program. These national programs are administered at the State level by SED. Applications and further information regarding child nutrition or school food management may be obtained by writing to the New York State Education Department, Child Nutrition Program Administration, Room 362 EBA, Albany, NY 12234 or by calling (518) 473-8781.
- The New York State Department of Health, Division of Nutrition Child and Adult Care Food Program (CACFP). For more information about the program, call the Albany Office of CACFP at (518) 458-5550.
B. For all approved programs providing required meals to students with disabilities, the following principles shall also apply:
(1) When the program subcontracts for food services, the program shall employ competitive bidding practices.
(2) When the program directly supplies meals, the direct costs of food and food preparation must be reasonable in comparison to the prevailing market for such services.
C. Costs of food provided to any staff including lunchroom monitors are not reimbursable.
D. Food costs will not be reimbursed for special education itinerant programs unless required by the student’s IEP as an instructional supply.
24. Fund-Raising Costs
Costs of organized fund raising (i.e., financial campaigns, endowment drives, or solicitation of gifts and bequests) to raise capital, or to obtain contributions are not reimbursable. However, reasonable and necessary costs associated with the procurement and retention of donated services used for IEP mandated services either directly or indirectly, may be reimbursable as long as the program can demonstrate that cost savings exist and that there is a direct benefit to the students in the program through the use of such donated services. These costs are subject to the nondirect care cost parameter.
25. Goodwill
Goodwill, defined as the stated value of a business in excess of its book value, is not a reimbursable cost.
26. Grants
A. Costs of staff or consultants to prepare a proposal to obtain a government grant or to administer the activities or projects funded by such grants may be reimbursable within the tuition rate as a nondirect care expense to the extent that such costs remain net of all administrative expenses allowed by the grantor.
B. Any claimed excess of actual government (Federal, State or local) grant expenses over approved budgeted grant expenses is not reimbursable through the tuition rate for either current or prior years, except for costs defined in A. above.
C. Federal funds previously disbursed directly to approved programs to supplement the education of individuals with disabilities flowed through the New York State Education Department. These funds and related expenditures were reported in discrete cost columns within the program code range 9800 – 9810 (Federal Grants). Effective with the July 1, 2000 to June 30, 2001 reporting period, revenues received from local education agencies
(LEAs) pursuant to Sections 611 and 619 of the Individuals with Disabilities Education Act (IDEA) and the related expenses should be directly charged or allocated to the
program(s) receiving the benefit. These revenues and related expenses must be reported on the full accrual basis of accounting. The expenses should be direct charged or allocated to the
program(s) receiving the benefit. The revenue should be reported on CFR-1 line #94 as "Other Revenue" (for approved 853 schools, approved private preschool providers and
BOCES). Approved providers will need to attach a separate sheet to their cost report submissions to identify IDEA Section 611 or 619 revenue.
27. Insurance
A. Reimbursable insurance premium costs include those for liability, fire/disaster, or casualty loss insurance obtained to guard against loss to the program. NOTE: Self-insurance plans for liability, fire/disaster, or casualty loss, whereby a program establishes a reserve or contingency account/fund for future liabilities are not reimbursable. Self-insurance plans for unemployment and workers compensation are allowable for school districts if consistent with regular district practice and in compliance with this manual. (Please refer to Item #9.B.on Interfund Transfers).
B. Entities have an obligation to adopt insurance practices that will obtain the best coverage for the lowest cost (i.e. solicit competitive bids on insurance).
C. Costs of insurance on the lives of owners/officers or employees when the entity is identified as the beneficiary are not reimbursable. Costs to insure against the loss of key personnel are not reimbursable. (Refer to Item #14 on Compensation).
D. Costs resulting from losses not covered because of deductible insurance policy provisions, and in keeping with sound business practice, are reimbursable. Costs are not reimbursable if the school chooses not to file a claim with the insurance company for losses that are covered under the policy in force at the time.
28. Interest Costs
A. Arm's-Length - Interest expense on capital indebtedness and working capital is reimbursable provided the interest rate is not in excess of the prime rate plus one percent of the lending institution at the time the loan was made. Interest expense will be reimbursed on loans in excess of the prime rate plus one percent only with written approval of the Commissioner in cases where the entity can establish that it was unable to secure a rate of prime plus one percent or lower despite its good faith efforts to do so. Good faith efforts shall be demonstrated by documentation that a entity has attempted within the last year to obtain the most competitive rate available from lending institutions in the entity's immediate geographic area. Loan procurement fees are not reimbursable.
B. Less-Than-Arm's-Length - Interest expense on capital indebtedness or on working capital loans incurred in a LTAL transaction between the lender and the borrower will be reimbursed only with the prior written approval of the Commissioner upon establishment of the necessity and cost effectiveness of the transaction. A cost effective transaction relating to interest expense on capital indebtedness or on working capital loans is one in which the interest rate charged by the LTAL lender is less than or equal to the prime rate on lending in the geographic area and is greater than the actual cost of the capital rate to the lender. The borrowing LTAL entity must demonstrate that this LTAL transaction was necessary as a last resort to acquiring monies and that the interest rate charged by the lending LTAL entity was more favorable than could be obtained in the market place and that rate of interest must be demonstrated to be at prime or less of the lending institutions in the geographic region at the time the loan was incurred. Loan procurement fees are not reimbursable. (Refer to Section IIC, Definitions, Item #[3] 4 in this Manual for LTAL).
C. Reimbursement of interest expense on capital indebtedness shall be subject to the following conditions:
(1) Interest expense shall be included in the nondirect care cost parameter of the rate-setting methodology.
(2) Interest expense on bank loans, bonds, mortgages or similar instruments is reimbursable if such expense was incurred to finance the acquisition of fixed assets or vehicles, or implement major renovations necessary to provide special education services that conform to standards in Federal and State law and regulation. Interest costs on construction loans must be capitalized as required by GAAP.
(3) Mortgage interest expense will be reimbursed, as part of occupancy costs effective with the actual date of occupancy in the new location. Occupancy refers to the site where the students are physically located and receiving services as prescribed on their IEP's. Occupancy costs of the prior location are reimbursable up to the actual date of occupancy in the new location.
(4) Interest expense on the above is reimbursable only when there is a corresponding amortization of principal on the capital indebtedness and there are no loans/notes receivable from related parties at any time during the entity's loan repayment period. Payments which represent "interest only", are not reimbursable.
D. Working capital interest is defined as interest paid on loans that are secured for operational expenses. Entities are encouraged to explore the most cost efficient means of working capital borrowing. For example, a revolving line of credit may result in a lower average monthly principal and lower annual interest charges. Reimbursement for interest expense on working capital financing shall be subject to the following conditions:
(1) Interest expense shall be included in the nondirect care cost parameter of the rate-setting methodology.
(2) Interest expense will be reimbursed only if conditions exist that warrant a loan and the principal amount of the loan. Documentation that the loan is warranted includes but is not limited to:
Evidence that the required financial statements and financial reports were submitted by the deadline including any extension approved by the Commissioner and in the format required by the Commissioner.
For a new program whose prospective rate was to be based on a budget, evidence that the complete budget with any applicable supporting data was received by SED fiscal staff within 30 days after a written request.
Documentation of cash flow needs including receipts and [expenditures] disbursements.
Documentation indicating that tuition billings or their equivalent were submitted to the appropriate funding sources in a timely manner in accordance with a written contract or schedule of payments and at least one follow-up notice was sent to delinquent sources.
Documentation indicating that the required preschool program's contract with the county was submitted to the county on a timely basis and in the format required by the county.
(3) Interest expense on working capital loans for late filers of required financial information will be reimbursed on a prorated basis if submitted within 90 days of the respective due date. No interest expense will be reimbursed for entities that file cost reports more than 90 days after the respective due dates. Non-reimbursable interest expense will affect the tuition rates for the tuition rate year, in accordance with the rate-setting methodology, and will apply to all tuition rates for that year (prospective, appeal, reconciliation adjustments/rates and final audit).
(4) Interest expense on working capital loans used for the purpose of repayment of tuition to school districts and/or municipalities as a result of an audit or reconciliation rate is not reimbursable.
(5) Interest expense is reimbursable only when there are corresponding payments of principal on the working capital loans
and only if there are no loans/notes receivable from related parties at any time during the entity's loan repayment period. Payments which represent "interest only", are not reimbursable.
(6) Interest expenses paid on loans to the entity are not reimbursable unless the criteria in Item #28 have been met. In addition, these interest payments will be considered compensation when paid to a shareholder who is also a paid employee or a consultant of an entity or program.
29. Investment Management
Costs of investment counsel and staff and similar expenses incurred solely to enhance income from investments are not reimbursable.
30. Meetings and Conferences
For reimbursement purposes, conferences are generally defined to include meetings, conventions, symposiums, seminars, Department sponsored sessions or other such assemblies whose primary purpose is the dissemination of technical information. Conferences must be directly related to the education program or to the administration of the program. Programs shall be required upon audit to provide brochures, agenda or other literature that document the purpose of the conference or meeting. The following reimbursement principles shall be applied to conference costs:
(1) Reimbursement for off-site conference costs are limited to no more than three conferences within a 12 month period for any single individual and will be reimbursed consistent with New York State guidelines for costs of meals, transportation, rental of facilities, and other items incidental to such conferences. (Refer to Item #57 on Travel.)
(2) Costs of conferences held at out-of-state resorts are limited to the guidelines detailed in Appendix C. Reimbursement is allowed up to three days per conference for each person but only when each person requesting reimbursement attends six or more hours per day of conference sessions.
(3) Costs for food, beverages, entertainment and other related costs for meetings, including Board meetings, are not reimbursable.
(4) Costs of conferences attended by teachers and other direct care staff whose purpose is to improve desired student learning outcomes by more effective means are reimbursable.
(5) Costs of conferences attended by administration staff are limited to two people per conference and are reimbursable provided that the purpose of the conference is to improve or demonstrate new administrative techniques or concepts and the criteria in 1 - 3 above are met. Such costs will be subject to the nondirect care cost parameter.
(6) Documentation to support the cost of meetings and conferences must include the names and job titles of staff that attended and the program(s) served by each staff person.
31. Miscellaneous Expenses
Expenses that do not fit into any other category for the operation of Article 81 and Article 89 education programs are reimbursable provided these expenses meet the cost principle criteria as discussed in this Manual. Miscellaneous expenses are subject to the nondirect care cost parameter.
32. Office Supplies
See #52 Supplies and Materials (Household).
33. Payroll Preparation
The cost of preparing payrolls and maintaining necessary related wage records is reimbursable subject to the nondirect care cost parameter.
34. Plant Security
Necessary expenses incurred to comply with security requirements, including wages and equipment of personnel engaged in plant protection, are reimbursable subject to the nondirect care cost parameter.
35. Postage
Postage costs such as stamps, postage meter rentals, and mailing permits for Article 81 and Article 89 programs and activities are reimbursable subject to the nondirect care cost parameter.
36. Printing and Reproduction
A. Cost for printing and reproduction of forms or reports, etc., which are necessary for Article 81 and Article 89 programs, are reimbursable.
B. Costs of providing information regarding program services, placement procedures, admission policies and related matters to be used by placing agencies are reimbursable subject to the nondirect care cost parameter.
C. Costs of publications about research or fund raising are not reimbursable.
37. Professional Dues
Costs of the school's membership in civic, business, technical, and professional organizations are reimbursable subject to the following restrictions:
A. The benefit from the membership is related to Article 81 and Article 89 programs.
B. The cost of membership is reasonably commensurate to the value of the services or benefits received.
C. The expenditure is not for membership in an organization whose primary purpose is to influence legislation.
38. Profits and Losses on Investments
Profits and/or losses on the sale or exchange of either short or long term investments are not considered in the computation of tuition rates. (Refer to Item #44 on Revenues).
39. Purchase of Services
A. Fees paid to independent contractors (see item #15 on Consultants), such as payments for garbage pickup, upkeep of grounds, data processing, payroll processing, temporary office workers, security guards, or pest exterminators are reimbursable.
Tuition costs paid by the special act school district (SASD) for non-disabled children of SASD staff or the related residential agency staff who attend local public schools are reimbursable.
B. Health related costs such as speech therapy, physical and occupational therapy and psychological services are reimbursable in the calculation of the program's tuition rate to the extent such services are prescribed in a student's IEP and are subject to the following:
(1) For Article 89 school age students, costs of diagnostic or evaluative services are the responsibility of the school district or the committee on special education (CSE), and are not reimbursable.
For Article 81 school age students, costs of diagnostic or evaluative services by the Article 81 school's committee on special education are reimbursable in the tuition rate.
(2) For Article 89 preschool students, evaluation costs and bilingual evaluation costs reported in the preschool provider's evaluation cost center are reimbursable, at the rates established annually pursuant to section 4410 of the Education Law and the related Commissioner's Regulations.
(3) Consistent with federal and state regulations, related services for students with disabilities may include medical services as provided by a licensed physician, or other appropriately licensed health professional. These services must be for diagnostic or evaluative services only to determine whether a student has a medically related disability. Reimbursement for such evaluations is discussed above in B. (1) and (2). The cost for medical services other than diagnostic or evaluative service in approved private schools should be reimbursed through the maintenance rate as appropriate. Costs incurred to comply with OSHA mandates (Part 1910.1030 of Title 29 of the Code of Federal Regulations) that all health care employers offer Hepatitis B vaccine free of charge to employees who "reasonably" anticipate exposure to blood and other infectious materials are reimbursable in the tuition rate.
(4)(a). Costs incurred in less-than-arm's-length purchase of health related service transactions that are determined to be above actual documented costs of the owner shall be reimbursed only with written approval of the Commissioner obtained prior to the LTAL transaction upon the establishment of the cost-effectiveness that may result from the transaction. The Commissioner's approval may be rescinded retroactively if, based on further review/reconciliation/audit, it is determined that information used in the initial approval was erroneous, incomplete, did not fairly represent all relevant facts, data or issues, or there is inadequate supporting documentation for information/data provided and used during the approval process.
(4)(b). A cost-effective purchase of health related services transaction is one in which the amount paid to one related party by another related party for the purchase of health related services, on a per session basis, is less than or equal to the average per session base year costs of the purchase of such services from other entities approved under Article 81 or 89 of the Education Law to deliver such related services and, those entities have tuition rates established by the Education Department and approved by the State Division of the Budget and are located within the same Basic Education Data Systems geographic region as the entity requesting the cost-effective determination. The data to be used for this analysis shall be derived from the financial reports submitted to the Department by approved programs as required under Section 200.9(e) of the Commissioner's Regulations. For example, requests for a cost-effectiveness determination for the purchase of health related services transaction for the [2001] 2002-[2002] 2003 school year would have the per session average calculated using the [1998-99] 1999-2000 financial report data submitted by approved programs and must be approved prior to July 1 of the school year to which the determination pertains. The per session average shall not be subject to revision based on subsequent data from future financial reports.
40. Recruitment of Personnel
A. Costs of recruiting personnel required to meet State program or fiscal mandates or of solicitation of bids for necessary goods and services are reimbursable. Costs of "help wanted" advertising and of operating an aptitude and educational testing program for prospective employees, travel costs of employees engaged in recruiting personnel and travel costs of applicants for interviews for prospective employment are reimbursable provided that the size of the staff recruited and maintained is in keeping with workload requirements. Costs of finger-printing staff, drug testing, etc. are reimbursable if mandatory in the recruitment of personnel. Records must be kept which include the prospective employee's credentials and salary requests. Where the program uses employment agencies, costs not in excess of standard commercial rates for such services are reimbursable. These costs are subject to the nondirect care cost parameter.
B. Costs for recruiting LTAL individuals are not reimbursable. (Refer to Section II C., Definitions, Item 3 in this Manual for LTAL).
41. Rent
A. Rental agreements, including renewals, must be in writing, dated and signed by the lessee and the lessor.
B. Property - Rental costs of buildings and facilities are reimbursable under the following circumstances:
(1) Rental costs are within the nondirect care cost parameter. Entities operating approved programs may submit copies of new or renegotiated leases to RSU (RATE SETTING UNIT) staff for review at least 90 days before the effective date of the lease to allow the Commissioner's designated fiscal representatives to determine whether the costs of rental agreements are within the limitations of the program's nondirect care cost parameter.
A move to a new location must be approved by SED program staff prior to the program's move. Moving costs are reimbursable if the move is necessary to enable the program to conform to requirements of the Regulations of the Commissioner of Education or the students' IEP. However, the program must establish that a change in location or lease resulted from Education Department program mandates, consistent with regulatory or IEP requirements, or arm's-length landlord action in response to market forces. In addition, the program's occupancy costs of the new location are not reimbursable before the effective date of the program's occupancy. The program's occupancy costs of the prior location are reimbursable up to the actual date of the program's occupancy in the new location.
(2) Occupancy costs are based on actual documented rental charges, supported by bills, vouchers, etc. Donated rent is not reimbursable.
Rent security deposits are not reimbursable.
(3) Rental costs specified in sale/transfer and leaseback agreements may not be greater than what the actual costs would have been had the program retained legal title. A sale/transfer or leaseback agreement is one in which a entity either: sells/transfers assets to another party (e.g., insurance company, associated organization or institution, or private investor) and the property is leased back to the program, or sells/transfers assets to a person or entity related to the program who then leases the asset to the program.
Sale/transfer and leaseback agreements should be identified in an explanatory note in the program's certified financial statements.
(4) The share of rental expense allocated to programs funded pursuant to Articles 81 and 89 is based on documented and reasonable criteria, such as square footage utilization, when more than one program is operated in a rented facility.
(5) Costs incurred in less-than-arm's-length lease of real property transactions that are determined to be above actual documented costs of the owner shall be reimbursed only with written approval of the Commissioner upon the establishment of the cost effectiveness resulting from the transaction. This written approval must be obtained prior to the LTAL transaction upon the establishment of the cost-effectiveness that may result from the transaction. The Commissioner's approval may be rescinded retroactively if, based on further review/reconciliation/audit, it is determined that information used in the initial approval was erroneous, incomplete, did not fairly represent all relevant facts, data or issues, or there is inadequate supporting documentation for information/data provided and used during the approval process.
A cost effective lease of real property transaction is one in which the lease amount paid and incidental costs of the property to one related party by another related party, on a per pupil basis, is less than or equal to the average per pupil base year costs of property (including rental costs, building depreciation, and mortgage interest) provided by other entities, approved under Articles 81 or 89 of the Education and, those entities have tuition rates established by the Education Department and approved by the State Division of the Budget and are located within the same Basic Education Data Systems geographic region as the entity requesting the cost effective determination. The data to be used for this analysis shall be derived from the financial reports submitted to the Department by approved programs as required under Section 200.9(e) of the Commissioner's Regulations. For example, requests for a cost effectiveness determination for a lease of real property transaction for the [2001] 2002-[2002] 2003 school year would have the per pupil average calculated using the [1999]-[2000] 2000-2001 financial report data submitted by approved programs and must be approved prior to July 1 of the school year to which the determination pertains, i.e. July 1, [2001] 2002. The per pupil average shall not be subject to revision based on subsequent data from future financial reports. Approved cost-effective rental amounts are subject to the nondirect care screen parameter.
C. Furnishings and Equipment - Rental costs of furniture and fixtures are reimbursable provided that annual rental charges and maintenance costs are comparable to the costs that would be reimbursed if the equipment were owned by the program and being maintained and depreciated by the program.
The cost of lease-purchase agreements for furnishings and equipment is reimbursable provided that the lease-purchase agreements are reasonable and appropriate.
Reimbursement of rental costs of furniture and equipment specified in sale/transfer and leaseback agreements will be subject to the conditions specified in B (3) above. Reimbursement for rental costs in LTAL transactions will be limited to owner's actual costs.
D. Vehicles - Rental costs of program vehicles are reimbursable provided that annual rental charges and maintenance costs are comparable to the costs that would be reimbursed if the vehicles were owned by the program and being maintained and depreciated by the program.
The cost of lease-purchase agreements for vehicles is reimbursable provided that the lease-purchase agreements are reasonable and appropriate.
Rental costs of vehicles used by administrative staff will be reimbursed only to the extent that they are within the limits of the nondirect care cost parameter and are necessary for operating the program. (See Item #57 on Travel).
42. Repairs and Maintenance - Plant, Equipment, and Vehicles
A. Costs incurred for necessary maintenance, repair or upkeep of property that do not add to the permanent value of the property's usefulness nor appreciably prolong its intended life, but keep it in efficient operating condition, are reimbursable to the extent that they are not otherwise included in rental or other charges.
B. Costs incurred for necessary maintenance or repair of office, stationary or movable equipment that keeps the equipment in an efficient operating condition are reimbursable.
C. Costs incurred for necessary maintenance and repair of agency vehicles that keep these vehicles in an efficient operating condition are reimbursable.
(1) Costs of maintenance and repair of vehicles provided as perks to agency officers or employees for personal use are not reimbursable.
(2) If an agency rents vehicles, only repair and maintenance expenses not covered by the rental/lease agreement are reimbursable. (See Item #41 on Rent).
D. These costs are reimbursable only to the extent that they are within the limits of the nondirect care cost parameter and are necessary for operating the program.
43. Research
Costs of staff salaries, supplies or printing and reproduction of materials or any other costs associated with general research activities are not reimbursable.
44. Revenues
A. Section 4401 of Education Law states that an approved tuition rate shall be computed after the following revenues have been offset by SED against the proper expenditures:
(1) Any cash receipts that reduce the cost of an item will be applied against the item, except gifts, donations and earned interest from other than public funds. Gains from the sale of program equipment, vehicles or buildings not purchased through a grant or private funds will be offset by SED against replacement assets or total program costs when a tuition rate is calculated. (See Item #18 on Depreciation relating to costs funded by grants).
(2) Funding received from a governmental agency or unit for specific education programs or cost items will be offset by SED against the appropriate program costs in the calculation of tuition rates so that costs will not be reimbursed more than once by public funds.
(3) Any income earned from investment of public funds (e.g., tuition) resulting from the operations of approved programs will be considered applied income to reduce the costs of the program(s).
(4) Interest income earned on assets/fund balances in funds other than the General Fund shall be offset in the tuition rate calculation if these assets/fund balances were not transferred to these funds in accordance with the accounting requirements in Section I Item 9 (B) of this Manual.
(5) State Transportation Aid, BOCES Aid and Building Aid when not applicable to a Dormitory Authority project are offsetting revenues for Special Act School Districts (SASD).
B. Tuition revenues received from State or local governments or school districts for education of students pursuant to Article 81 and Article 89 of Education Law are not offset against costs when a tuition rate is calculated.
45. Scholarships and Student Aid
Costs of scholarships, fellowships and other forms of student aid that apply only to instruction of privately funded or nondisabled students are not reimbursable.
46. Severance Pay
A. Severance pay is compensation in addition to the regular salary that is paid by a program to employees whose services are being terminated.
B. Cost of severance pay is reimbursable provided that:
(1) Such payment is required by law or by employer-employee agreement or contract.
(2) The cost of severance pay does not exceed two weeks for a full-time employee.
(3) Severance payment should be allocated to all appropriate
programs and/or entities on a reasonable basis. Costs should be reported in
programs where salary and fringe benefits of the employee who received severance
pay would have been reported.
C. Severance pay for normal, recurring staff turnover is not reimbursable in the absence of legal requirements, contracts, or
agreements.
47. Special Education Itinerant
Teacher Services
A. The following costs are reimbursable in the calculation of preschool special education itinerant teacher (SEIT) tuition rates:
(1) Costs for certified special education teacher salaries and fringe benefits are reimbursable.
(2) Costs associated with substitute special education teachers as well as the costs associated with providing regular education classroom coverage when a special education teacher is engaged in consultation with the regular education teacher, (i.e., indirect service as defined in Section 200.16 (h)(3)(ii) of the Commissioner's Regulations), are reimbursable. Under no circumstances will the reimbursable hours for regular education classroom coverage exceed the weekly amount of such indirect service as required by the student's IEP.
(3) Travel costs incurred by the special education teacher in providing direct and indirect services or performing other required functions are reimbursable.
(4) Reimbursable nondirect care costs are subject to the nondirect care cost parameter and include, but are not limited to: nondirect supplies and materials, office space and related expenses, administration and overhead.
(5) Total reimbursable expenditures are subject to the total cost screen.
B. Expenditures for related services, as defined in Section 4410(1)(J) of the Education Law and Section 200.1(qq) of the Regulations, are not reimbursable in the calculation of tuition rates for special education itinerant teacher services.
48. Staff Development
A. The costs of in-service training provided for employee development, including training materials, salaries and related costs of instructors, are reimbursable.
B. Educational costs at an undergraduate or postgraduate college level are discussed in Item #14 on Compensation in this Manual.
49. Start-Up Costs
Start-up costs as defined in SOP 98-5 relating to initiating an approved program or expanding an existing approved program to include a new site shall be expensed in the initial year of operation in accordance with generally accepted accounting principles (Statement of Position -SOP 98-5) and are reimbursable as one-time only expenses subject to the parameters of the tuition rate-setting methodology. Additionally, previously unamortized start-up costs shall also be expensed in accordance with generally accepted accounting principles (SOP 98-5) and are reimbursable as one-time only expenses subject to the parameters of the tuition rate-setting methodology and the nondirect care cost screen. Start-up costs must be incurred after the date of program approval issued by the Department to be considered for reimbursement.
50. Stipends
Payments to students for on the job training or work stipends as part of an educational program are not reimbursable. Such stipends should be paid by the party that receives some benefit from the job or work experience involving the student or by private sources. However, monies provided to students through the entity's payroll for services performed by students that would otherwise need to be performed by school employees are reimbursable if those payments conform to all appropriate labor laws and regulations.
51. Subscriptions and Publications
52. Supplies and Materials (Household)
Purchases made specifically for Article 81 and Article 89 programs should be charged at actual prices after deducting all cash discounts, trade discounts, rebates, and allowances received by the entity. Withdrawals from general stores or stockrooms should be charged at their cost under any method of pricing that conforms to sound accounting practices. Incoming transportation charges are part of material costs. Direct material cost should include only the materials and supplies actually used and due credit should be given for any excess materials retained or returned to vendors. Due credit should also be given for all proceeds or value received for any scrap. Where government donated or furnished material is used in the Article 81 and/or Article 89 program, no estimated value of such material will be included in the computation of tuition rates.
Private providers are expected to purchase supplies and materials through New York State contract or private purchasing consortia whenever possible and when those contracts or consortia can provide materials at a cost lower than the market place in general. Appendix B provides a listing of approved vendors offering a wide range of products at prices negotiated by purchasing consortia.
Costs of supplies such as light bulbs, brooms, paper products, repair tools, ladders, etc. for repairs and maintenance of the facility are reimbursable subject to the nondirect care cost parameter. Costs of consumable office supplies such as paper, pencils, pens, paper clips, etc. or of printing financial reports, checks, or office forms are reimbursable subject to the nondirect care cost parameter.
53. Supplies and Materials (Non-Household)
54. Taxes
A. In general, taxes that the entity must pay and charged to a program (such as water, school or property tax) are reimbursable if they are paid or accrued in accordance with generally accepted accounting principles. Payments made to local governments in lieu of taxes commensurate with services received are reimbursable. The payment of minimum New York State Corporation Franchise Tax or similar business tax is reimbursable. Any amounts over the minimum are the result of a corporation having to base its franchise tax on one of the other given calculation methods (e.g., income capital, officers' compensation, etc.) and is not considered the required minimum tax. Such costs will be subject to the nondirect care cost parameter.
B. Payments for Federal, State and local income taxes or any related penalties and interest are not reimbursable. Penalties and interest on late payments or nonpayment of payroll withholding taxes are not reimbursable.
To get more information on the minimum New York City and New York State Corporation Taxes, you may call the New York State Department of Taxation and Finance, Taxpayer Assistance Bureau at 1-800-972-1233.
55. Telephone/Facsimiles
A. Costs incurred for telephone service, local and long distance telephone calls, electronic facsimiles (FAX) and charges for cellular telephones, etc., are reimbursable provided that:
(1) They pertain to the special education program; and
(2) Long distance telephone or message charges are documented by monthly bills and proof of payment and directly attributable to the Article 81 and Article 89 funded programs.
B. Long distance telephone charges and all cell phone charges that are not properly documented will not be reimbursed.
C. Reimbursement received from persons who make personal calls from business phones, including business cell phones, must be offset against this expense.
D. These costs are subject to the nondirect care cost parameter.
56. Transportation of Students
- Costs of transportation to and from a school age (5-21) student's home to the program for the September through June and/or the July/August component are the responsibility of the local school district and are therefore not reimbursable in the computation of a tuition rate.
B. Costs of transportation of students residing in child care institutions between the residence and the education program are reimbursable in accordance with Section 200.12 of the Commissioner’s Regulations.
C. Certain New York City private programs may be open on days when the New York City Board of Education does not provide transpor |
