INTRODUCTION
THIS JULY 2005 REIMBURSABLE COST MANUAL
DEFINES REIMBURSABLE COSTS FOR THE JULY 2005‑JUNE 2006 SCHOOL
YEAR. IT APPLIES TO THE
2005-06 PROSPECTIVE TUITION RATES AND THE - 2005-2006 RECONCILIATION
ADJUSTMENT FACTORS AND RECONCILIATION RATES, AND FINAL AUDIT RATES
BASED ON - 2005-2006 ACTUAL DATA.
This July
2005 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.
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, internet websites,
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
for the purpose of recruiting students into programs or soliciting
fund raising monies or donations are not
reimbursable and remain nonallowable in the calculation of
tuition rates.
If
you have any questions, please call the Policy Development Unit of
VESID - Special Education Policy and Quality Assurance Office at
(518) 402-3353 [473-2878].
B.
Advertisements should include:
·
Clear identification that the program
is for preschool children who have or are suspected of having a
disability pursuant to Section 4410 of Article 89 of the Education
Law;
·
A statement that any services provided
are based upon the individual needs of the preschool child found to
have a disability, as determined by the Committee on Preschool
Special Education of the local school district;
·
A statement that the local school
district will determine the location where needed special education
services will be provided, which may be the child’s normal daytime
setting;
·
A statement that parents are
responsible for arranging for and paying the costs of any child
care.
C.
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.
D.
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 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 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.
(6)
The New York State Uniform Fire Prevention and Building Code
applies certain standards to new work involving conversions,
alterations, additions or repairs to any building owned or operated
by a special act school district or a public school district.
For construction costing up to $5,000, the school district
board must assure compliance with the code.
Between $5,000 and $10,000, the school district board has the
responsibility to assure compliance and to retain a licensed
architect/engineer to prepare plans and specifications and provide
supervision. For costs
over $10,000, or affecting health and safety, the school district
board is responsible for assuring compliance and retaining the
architect/engineer to prepare plans and specifications to be
submitted for approval and a building permit
to the New York State Education Department, Office of
Facilities Planning, Room 514W, Education Building, Albany, New York
12234 For more information, please visit the website at http://www.emsc.nysed.gov/fmis/
(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
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
total reimbursement for all co-executive directors combined limited
to a level commensurate with a 1.0 FTE position.
This level will be the maximum compensation level for the
entire entity operating the approved programs.
(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 that 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 this Manual and the Commissioner’s Regulations.
(13)
The costs of parent counseling and training to assist parents
in understanding the special needs of their child; providing parents
with information about child development; and helping parents to
acquire the necessary skills that will allow them to support the
implementation of their child’s IEP are reimbursable.
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 office
