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Methodology Letter

To:                   District Superintendents, Superintendents and Executive Directors of Approved Programs Serving Students with Disabilities, County Officials, Office of Special Education

From:              Suzanne Bolling

Subject:          Tuition Rate Setting Methodology for 2016-17 Rates for School-Age Providers Serving Students with Disabilities

Date:               September 6, 2016

The 2016-17 tuition rate setting methodology provides a 4.0 percent trend factor for the 2016-17 school year and continues a number of modifications adopted as part of the 2014-15 and 2015-16 approved methodologies to enhance funding stability for private and special act school district school-age providers serving students with disabilities.  

Section I:  General Rate Setting Methodology

The following methodology components may be used in whole or in part, pursuant to Section 200.9 of the Regulations of the Commissioner, to establish the 2016-17 tuition rates.  Generally, the 2016-17 tuition rates for programs that were in operation during the 2014-15 school year are based on reported 2014-15 financial data.  Any approved appeal items from prior and current school years will be reviewed and, if appropriate, included in the calculation of the 2016-17 rate.  As in previous years, each provider’s financial data is reviewed by staff of the Rate Setting Unit (RSU) and any necessary adjustments are made in accordance with Section 200.9 of the Commissioner’s Regulations and the Reimbursable Cost Manual (RCM), as applicable.  This process is completed prior to the application of cost screens.  The basic components of the tuition rate setting methodology and various factors used to calculate the 2016-17 tuition rates are described below:

A.        Prospective Trend Factor - School-Age Programs

A 4.0 percent trend factor is approved for the 2016-17 school year for school-age programs.   A factor of 8.16 percent which represents the compounding of the approved prospective trend factors of 4.0 percent for the 2015-16 and 4.0 percent for the 2016-17 school years is applied to reimbursable 2014-15 base year direct care and non-direct care costs, excluding interest, depreciation, and expenses related to one-time waivers as appropriate.
B.         Non-direct Care Cost Parameter

The non-direct care cost parameter limits the amount of non-direct care costs that will be reimbursed through the tuition rate to 30 percent of the reimbursable costs after adjustments.  The reimbursable limit for non-direct care costs can be calculated by multiplying adjusted direct care costs by .4286, which is the ratio of 30/70 for non-direct care/direct care costs.

C.        Applied Revenues

Applied revenues will be subtracted from total adjusted costs after the application of the non-direct care cost parameter. 

D.        Total Cost Screen

  1. The hold-harmless component of the total cost screen is not applied in the calculation of 2016-17 tuition rates for school-age programs.
  2. For the 2016-17 Prospective Rate:
    1. For private and special act school district school age programs the 2016-17 prospective rate cannot exceed the greater of:
      1. The 2014-15 reconciliation per diem rate plus 8.16 percent.
      2. The 2015-16 prospective per diem rate plus 4.0 percent.

Provided that i. will be used where ii. incorporates expenses for capital, interest or depreciation, that were added to ii. via a waiver to the approved tuition methodology; or where a prior year’s rate based on audit has been issued subsequent to the issuance of the 2016-17 prospective per diem rate which would otherwise impact the calculation of ii.  The Department also reserves the right to apply i. if the application of ii. would result in inappropriate benefit, as determined by SED, under the  specific circumstances applicable at the time the reconciliation rate is being calculated. 

2. For public and BOCES school age providers that operate summer only programs, the 2016-17 prospective per diem rate cannot exceed the 2014-15 reconciliation per diem rate plus 8.16 percent.

3. For the 2016-17 Reconciliation Rate:

    • a. For private and special act school district school age programs:
      1. In most cases, the 2016-17 reconciliation per diem rate cannot exceed the greater of: 
        1. The 2015-16 reconciliation per diem rate plus 4.0 percent.
        2. The 2016-17 prospective per diem rate.
      2. However, if the 2016-17 enrollment-to-capacity percent decreases by 10 percentage points or more from the prior three year average enrollment-to-capacity percent, then the 2016-17 reconciliation per diem rate cannot exceed the greater of:
        1. The 2015-16 reconciliation per diem rate plus 4.0 percent, plus per diem costs removed by the total cost screen that are added back by using the lesser of the three year average enrollment-to-capacity percent or 90 percent of reported enrollment capacity care days  in the total cost screen calculation.
        2. The 2016-17 prospective per diem rate, plus per diem costs removed by the total cost screen that are added back by using the lesser of the three year average enrollment-to-capacity percent or 90 percent of reported enrollment capacity care days in the total cost screen calculation.

Provided that in both (i) and (ii) stated above, 1. will be used where 2. incorporates expenses for capital, interest or depreciation, that were added to 2. via a waiver to the approved tuition methodology; or where a prior year’s rate based on audit has been issued subsequent to the issuance of the 2016-17 prospective per diem rate which would otherwise impact the calculation of 2.  The Department also reserves the right to apply 1. if the application of 2. would result in an inappropriate benefit, as determined by SED, under the  specific circumstances applicable at the time the reconciliation rate is being calculated. 

Provided further that in (ii) above, if the school age program has not been issued a reconciliation rate/adjustment factor for the previous three (3) years, then 1. will be calculated as the 2015-16 reconciliation rate plus 4.0 percent.

  • b. For public and BOCES school age providers that operate summer only programs, the 2016-17 reconciliation per diem rate cannot exceed the 2015-16 reconciliation per diem rate plus 4.0 percent.

E.         2016-17 Reconciliation Process

The reconciliation process, as defined in Section 200.9 (f)(3)(iii) of the Commissioner’s Regulations, will be applied in the reconciliation of the 2016-17 school year costs for all approved school age programs as follows: 

  1. Approved school age special class programs will have reconciliation rates issued unless the 2016-17 reconciliation per diem rate differs from the 2016-17 prospective per diem rate by less than 1 percent.  If the 2016-17 reconciliation per diem rate differs from the 2016-17 prospective per diem rate by less than 1 percent, then the 2016-17 prospective rate will become the final rate upon audit.  It is important to note that a 2016-17 reconciliation rate will be calculated and certified in all instances where a school age program has operated and submitted complete financial reports to RSU; however RSU will not issue a 2016-17 reconciliation rate if it differs from the 2016-17 prospective per diem rate by less than 1 percent.  Public notice will be given where a 2016-17 reconciliation rate is not being issued because it differs from the 2016-17 prospective per diem rate by less than 1 percent as RSU will post the following statement in the net rate web posting:  “reconciliation rate not issued, within 1%, prospective rate is final rate subject to audit.”  RSU will also maintain a listing of programs where 2016-17 reconciliation rates have not been issued due to being within 1% of the 2016-17 prospective rate; when available, this listing may be viewed at: http://www.oms.nysed.gov/rsu/Rates_Methodology/
  2. In all instances, the 2016-17 reconciliation rate calculated and certified will be the basis of 2017-18 reconciliation and 2018-19 prospective rate calculations, regardless if the 2016-17 reconciliation rate is not issued.  Therefore, even when a 2016-17 reconciliation rate is not issued,  it is anticipated that each program will access their 2016-17 reconciliation rate on SEDFIN and use that reconciliation rate for future budgeting purposes.
  3. When an enrollment adjustment factor is applied to the 2016-17 reconciliation rate, a 2016-17 reconciliation rate will be issued in all instances irrespective of whether such rate differs from the 2016-17 prospective per diem rate by less than 1 percent.
  4. As also described above for the 2016-17 reconciliation  rate total cost screen calculation, for private and special act school district school age programs, the 2016-17 reconciliation tuition rate per diem cannot exceed the greater of:
    1. The 2015-16 reconciliation per diem rate plus 4.0 percent.
    2. The 2016-17 prospective per diem rate.

    The 2016-17 reconciliation per diem to be used in the calculation of the 2017-18 reconciliation and 2018-19 prospective tuition rates will be exclusive of any amount  that may be added back to the 2016-17 reconciliation rate due to an enrollment-to-capacity percent decline of 10 percentage points or greater.

For public and BOCES providers that operate summer only programs, the 2016-17 reconciliation tuition rate per diem will be a maximum of the 2015-16 reconciliation per diem rate plus 4.0 percent.

5. Funding for the Excessive Teacher Turnover Prevention Program (ETTPG) for eligible school age programs will be directly incorporated into the 2016-17 prospective tuition rates for qualifying providers based on a distribution formula for awards, as outlined in the 2016-17 enacted state budget.  A Chief Administrator’s Certification statement will be needed to attest to the use of the funds and will include an assurance statement that additional revenues generated from these expenditures will continue to be used to supplement teacher compensation and remain in the school’s base year costs.  Upon review of such reports, annual cost reports, or as a result of field audit, if SED determines funds were not spent in compliance with stated purpose of supplemental teacher compensation, such expenditures will be recouped via a reconciliation rate or a final audit rate.  Schools may also be required to repay current year funds if it is determined that prior funds were not spent in compliance with the stated purpose or the school does not continue to use these funds to supplement teacher compensation.

Reconciliation Glossary

  • “Reconciliation tuition rate per diem” is the per care day rate after adjustments to reported costs made on desk review, and after offsetting applied revenues and application of the non-direct care cost parameter and the total cost screen.
  • “Regional weighted average per diem” used in the 2016-17 reconciliation process is the weighted average per diem for full-day segregated special class programs operating at greater than 2.5 hours and are equal to the approved 2015-16 rates plus 4.0% growth.
  • “Reconciliation adjustment factor” is the adjustment to be added to or subtracted from the prospective tuition rate on a per diem basis.
  • “Reported enrollment capacity care days” is the number of students per the approved classroom ratio multiplied by the approved number of classrooms multiplied by the number of session days.
  • “Enrollment-to-capacity percent” is total care days used in the tuition rate calculation divided by reported enrollment capacity care days.
  • “Three year average enrollment-to-capacity percent” is the sum of the total care days for each of the three years preceding the tuition rate year divided by the sum of the reported enrollment capacity care days for each of the three years preceding the tuition rate year.
  • “Enrollment Adjustment Factor” is the per diem costs removed by the total cost screen in the reconciliation rate that are added back by using the lesser of the three year average enrollment-to-capacity percent or 90 percent of reported enrollment capacity care days in the total cost screen calculation.

Section II.      Specific Provisions to the Rate Setting Methodology

A.        Special Class Programs - Tuition Rates for Initial Years of Operation Pursuant to Section 200.9 (f)(2)(viii) of the Regulations of the Commissioner of Education. 

  1. Special class programs that operated initially in 2014-15 will have the prospective tuition rate and reconciliation tuition rate for 2016-17 established using the general rate setting methodology detailed in Section I of this memo based on required financial statements and reports; provided that approved private schools that operated initially in 2014-15 and failed to meet the minimum enrollment requirement in 2014-15, 2015-16, and 2016-17, as prescribed in section 200.7(c)(3) of the Regulations of the Commissioner, will continue to receive the 2014-15 regional weighted average per diem rate.
  2. Special class that operated initially in 2015-16 will have the prospective tuition rate for 2016-17 established at the 2015-16 level with no inflation applied and the 2016-17 reconciliation rate will be established using the general rate setting methodology detailed in Section I of this memo based on required financial statements and reports; provided that approved private schools that operated initially in 2015-16 and failed to meet the minimum enrollment requirement in 2015-16 and 2016-17, as prescribed in section 200.7(c)(3) of the Regulations of the Commissioner, will receive the 2015-16 regional weighted average per diem rate as the 2016-17 reconciliation rate.
  3. Special class programs that are seeking initial approval in 2016-17 will receive prospective tuition rates based on the 2016-17 regional weighted average per diem tuition rate and on reconciliation will be held to the lower of the per diem based on the school’s reimbursable costs or the 2016-17 regional weighted average per diem rate; provided that approved private schools that operated initially in 2016-17 and failed to meet the minimum enrollment requirement, as prescribed in section 200.7(c)(3) of the Regulations of the Commissioner, will receive the 2016-17 regional weighted average per diem rate as the 2016-17 reconciliation rate.

 

Separate 2016-17 regional weighted average per diem tuition rates shall be used for school age 2 month only and 10/12 month programs.  A list of the 2016-17 school-age regional weighted average per diem tuition rates are listed in Attachment II.

B.         1:1 Aide Add-On Rates

The 2016-17 regional weighted average 1:1 aide add-on rates are listed in Attachment III.  These rates will be added to the approved tuition rate(s) of the program in which the student is enrolled.  The 2016-17 1:1 aide add-on rates are not subject to reconciliation. The 2016-17 rates are based on 2015-16 regional rates plus 4.0% growth.  The rates are to be effective through December 31, 2016.  

C.         Minimum Wage

The Department will work with the Division of the Budget on the distribution of additional funding in order to comply with the recently enacted minimum wage law, including added fringe benefit costs. For providers impacted by minimum wage law changes, SED intends to issue amended tuition rates before the first increase takes effect on January 1, 2017.

D.        Interim Rates

For the 2016-17 school year, interim rates will be issued to approved programs, as warranted.  These rates are in effect until the prospective 2016-17 rates are calculated and approved.  The interim rates are intended to provide cash flow until such time as the 2016-17 prospective tuition rates, using the above methodology, are processed.  Interim rates are posted at the Rate Setting Unit website at the following:
http://www.oms.nysed.gov/rsu/Rates_Methodology/Rates/home.html.

E.        Reimbursement for July/August Session Days

This is to remind all providers that consistent with Section 4408 of Education Law, funding for school age programs operated during July and August of 2016 will be based on thirty days of service.  Programs that operate more than thirty days during July and August will only be funded for thirty days and will be subject to total cost screens if they choose to operate longer sessions.

F.         BOCES & Public Summer School Age Only Programs

School Age July/August Home Instruction (9022-9024), Related Service with Specialized Instruction (9025) and Specialized Instruction (9029) are now combined with the previous Related Service Only programs under program code 9015 and renamed School Age - Non Special Class.  This program will be reimbursed with 1/2 hour rates per unit of service, directly through the STAC (System to Track and Account for Children) system and subject to a verification process performed by STAC. The 2016-17 regional weighted average School Age - Non Special Class rates are listed on Attachment IV.  The 2016-17 School Age - Non Special Class rates are not subject to reconciliation. 

G.         Teacher Certification Funds for 2016-17

Instructions and required forms for applying for these monies are available on the Rate Setting Unit website.  Please note that related costs and revenues are to be reported in a separate program cost center, and not in any rate program cost center.  These monies are not to be used to increase base year costs for future rate setting.

H.         Reimbursable Cost Manual

The July 2016 RCM, which defines reimbursable costs for the 2016-17 school year, is available at the Rate Setting Unit’s website: http://www.oms.nysed.gov/rsu/Manuals_Forms/Manuals/RCM/home.html

Inquiries regarding 2016-17 tuition rates should be directed to the RSU staff accountant who is assigned to process the school’s 2014-15 financial reports.  RSU staff telephone numbers and e-mail addresses are available at the Rate Setting Unit’s Website at http://www.oms.nysed.gov/rsu/Contact_Us/employees.html 

2014-15 RSU staff school assignments are available at the Rate Setting Unit’s Website at
http://www.oms.nysed.gov/rsu/Contact_Us/SchoolAssignments.html

The general RSU office information is listed below:

New York State Education Department
Rate Setting Unit
Albany, New York 12234
Phone:  (518) 474-3227
Fax:       (518) 486-3606

Enclosures:

  • Attachment I Attachment I (27 KB):       2016-17 Reconciliation Process
  • Attachment II Attachment II (9 KB):      2016-17 Regional Weighted Average Per Diem Tuition Rates
  • Attachment III Attachment III (9 KB):     2016-17 1:1 Aide Add-on Rates
  • Attachment IV Attachment IV (8 KB):    2016-17 School Age Non-Special Class Regional Rates

 

Last Updated: August 14, 2017