Over the last few years, special education has undergone significant challenges and change. Between educator shortages and turnover, student learning loss brought about by remote learning and the pandemic, and the growing demand of students needing service (Approximately 1 in 44 students diagnosed with ASD in 2021, up 178% from 2000) without sufficient placement to accommodate; the special education system is struggling to provide effective academic, counselling, and related service support. The impact of COVID on our most vulnerable students is undeniable. Those with learning differences are having difficulty with the return to full-time, in-person schooling. Related service needs and behavioral intervention are both on the rise in special education providers and unfortunately, providers often do not have sufficient resources to meet these needs.
In the downstate region, due in part to slumping enrollment at the district level, districts are holding onto more of the higher functioning preschoolers in need of service, resulting in higher intensity placements coming to 4410 providers. This creates significant challenges for special education providers, and changes in the needs and structure of providers, many of which are not adequately built into the tuition rates these schools are working with. In addition, many providers are finding the need to change their classroom ratios to more intense ratios in order to keep their school enrollment up.
We are all familiar with the staffing shortages that exist, as the number of students going into the field is shrinking, and many of the staff currently in the field are not necessarily enamored with their chosen vocation. According to Houghlin, Mifflin, Harcourt’s latest Educator Confidence Report, 78% of teachers have a negative view of the profession, and 41% are open to the possibility of leaving. While these are global figures encompassing all teachers, for many of the special education schools, this is of particular concern, as the salaries they are paying are significantly lower than salaries paid by school districts and their fringe benefit rates are a far cry from the 62.39% New York statewide rate paid to public school staff.
The 11% rate increase provided for the 2022/23 year was a much-needed boost for special education providers, but without a continued commitment to parity by the NY State legislature, Division of Budget, and Governor’s Office, the staffing shortages are just going to continue. Comparable and predictable rate increases are essential at all levels, early intervention, preschool, and school age to ensure that appropriate resources are available across the full continuum of the educational cycle. Educational needs of children should be integrated and appropriately funded at all levels to ensure the most effective and efficient model.
The preliminary proposed budget released by Governor Hochul’s office did virtually nothing for the early intervention and special education provider worlds. Advocacy groups such as the Coalition, IAC, ACTS, and more are pushing fiscal assistance, and have initiated lobbying campaigns looking for significant increases for the 2023/24 year. While the DOH does support an 11% increase, with the State budget in the condition its in due to the economy and a depressed Wall Street, we are not sure this will play out the way everyone hopes it will.
Unfortunately, we are all too familiar with these issues. It seems that everyday there are new issues impacting the sector:
- We are hearing that the Department of Health, Bureau of Childcare has been conducting audits of providers, reviewing staff credential, required study plans, etc. If they don’t like what they find, they have been closing classrooms and modifying day care licenses to show a reduced level of children capacity.
- The NYCDOE has shared it is in the process of finalizing a FAQ document to aid the field in understanding and implementing the enhanced program it put in place to bring 4410 programs and the DOE’s UPK/3PK programs more into alignment. In addition, the DOE intends to improve its communication with the field, as well as making technical revisions to its vendor portal to facilitate ease of access and use.
- As many of you know, the Office of the Medicaid Inspector General has started doing audits of EI providers. From what we are hearing, it is not the attention of the OMIG to audit every provider in the state (much the way the OSC did with respect to 4410 providers). While the OMIG released audit protocols with respect to these audits, they are still refining these protocols based upon what they are finding during the audit process. There are some concerns regarding policies and practices during the COVID pandemic, and the need to pivot systems. While the OMIG stated that they would be reasonable during the pandemic years there are no definitive answers as to what that means.
- NYSED’s rate setting unit continues to be short staffed, which continues to delay the waiver process. For those agencies that have received any CARES Act funding (PPP, ERTC, Daycare Stabilization) that acts as offsetting revenue, it could be masking changes in operations that would have resulted in overspending during the last three years. It is important to determine if prospective rates calculated by the Rate Setting Unit properly reflect what your rates would be if the CARES Act funding wasn’t there. In addition, if you have overspending in the 2022/23 year, you should consider your spending patterns over the last 3 years in developing your waiver requests.
- While winter just ended, if you are going to provide remote instruction (such as on a snow day), you need to have a plan in place that include policies and procedures to ensure the availability of devices, internet access, provision of special education and related services for students with disabilities, and the expectations for time spent in different remote modalities. Schools and programs must provide an opportunity for public comment at least thirty days prior to the plan’s adoption. These plans must be posted on the school or program website or other online platform if your school or program does not have a website.
- Many of you who have a day care license through OCFS received some level of Day Care subsidy funding. There were two rounds of this funding with the first round less restrictive than the second round. While the day care subsidy funding is federally originated, based upon our review of the compliance supplement, this funding should not be included in your statement of federal awards and thus does not get considered for determination if you are or are not subject to a federal uniform guidance audit.
- The application for the 3rd phase (out of 5) of the healthcare worker bonus (HWB) will be open from April 1, 2023 to April 30, 2023. From an accounting perspective the nonprofit committee of the New York State Society of CPA’s recently released their nonauthoritative guidance on how the HWB should be accounted for. It is recommended that the HWB should be accounted for as an agency transaction. As such, for financial reporting purposes, when the HWB is received it is recorded as a liability, and when the bonus is paid to staff the liability is relieved. It is the consensus of the committee that you have no variance power over these funds (you are just functioning as a conduit through which the funds are paid to your qualified employees). The CFR interagency committee is still exploring how they want the HWB reflected on the CFR.
We will continue to monitor the SED landscape and provide you with important updates as they become available. Please do not hesitate to connect with us if you have any question.
Kenneth R. Cerini, CPA, CFP, FABFA
Managing Partner
Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.