2025 SED Landscape

It’s back to school time, which means your busy ensuring your facilities and your programs are in place, that you’re staying abreast of new SED programmatic requirements, and your grappling with student counts and staffing ratios, both of which are the life blood of a special education school these days. These are super important, but what about the fiscal aspects of your organization; the need to bring in additional discretionary dollars to help subsidize growing costs; and the ability to attract and engage effective Board members?

SED Rate Methodology:

The new rate methodology letter was released July 1, 2025, covering the 2025-26 year. There were no major surprises:

• The trend factor for the 2025-26 year will be 2.9%, a little bit lower than the 3.1% discussed in the fall. This applies to pre-school and school aged tuition based programs, as well as 1:1 aide rates, SEIT, and RSO. As evaluations are linked to the EI rate, we are in a sit and wait position to see if evaluations will receive an increase. Currently the rates on the SEDFIN site do not include one. For anyone that provides SEIT services, you may feel like the new rate increase is lower than expected ($1 vs. $2). It is important to understand that the SEIT rate is rounded each year to the nearest dollar, but the rate calculated each year is based off the prior year actual rate calculated to 3 decimals. As a result, as the calculated rate was below .500, it was rounded down to the nearest dollar.
• The non-direct care limit remains at 35% for tuition based programs (25% for SEIT).
• Once again, the 2025-26 total cost screen will be the greater of:
• The 2023-24 reconciliation rate per diem trended forward (an adjustment factor pf 7.32% which is the product of the 2024-25 trend factor of 4.3% and the 2025-26 trend factor of 2.9%).
• The final 2024-25 prospective per diem adjusted for the 2025-26 trend factor of 2.9%.
• The 2024-25 reconciled rate per diem adjusted for the 2025-26 trend factor of 2.9%.
• As in the past, if your actual costs are within 1% of your prospective rate (either over or under spent), your rates will not be reconciled, and your prospective rate will be your final reconciliation rate.
• The methodology continues to provide a safety net for providers that have experienced a decline in average enrollment of 7.5% or more when compared to average enrollment for the 3 years between 2016-17 and 2018-19.
• The surpluses are still in effect, with the allowable surplus for the 2025-26 year set at 8%. This is down from the 11% surplus available over the last 3 years.
• Interim Rates are once again calculated using the 2022-23 reconciled/prospective rates trended forward using the 2023-24, 2024-25, and 2025-26 trend factors.

Public School Median Salaries:

The median salaries (prospective) for the 2025-26 year for position title codes 601 (Superintendent) and 602 and 603 (Assistant Superintendent) have been posted, along with the statewide public fringe benefit rate of 67.05%.

Regional Need:

There continues to be regional need in many regions of the state, as we have seen contraction in the industry over the last 10 years. With the increases in rates over the last few years, and the growing regional need, we have seen expansion from existing programs as well as some new agencies jumping into the 4410 and 853 worlds, including some EI providers adding SEIT services to their programming. While this is part of the normal cycle of supply and demand, it also puts additional strain on the already tenuous staffing situation.

Capital Cost Approvals:

According to the RCM, new or renovated facility space for tuition- based programs, both instructional and noninstructional, to be occupied by approved programs in which space is new or substantially altered, or results in capitalized costs in excess of $100,000, will require both program and fiscal designee written approval prior to implementing. Unfortunately, NYSED and DOB are currently working on new procedures for such approval, which has put a temporary freeze on all approvals of construction projects. It is uncertain as to when the new procedures will be in place and DOB will once again be approving projects.

PPP/ERTC:

As the last of the PPP/ERTC funding trickles in, and programs are filing revised CFR’s to provide for the offsetting revenue attributable to these funding streams, some agencies have run into issues with non-direct care screens due to the rate methodology. As you know, the rate methodology requires the non-direct care offset to be done before offsetting revenue is applied. If you are hitting a non-direct care screen and you were funded for certain non-direct care staff through PPP/ERTC funding, you may not be receiving the benefit for these. To the extent any non-direct staff funded by PPP/ERTC staff are screened out do to a non-direct care staff, it may want to reach out to your line accountant or their supervisor to see if you can get a waiver of the non-direct care screen for these salaries.

New Methodology:

NY state is working through the next iteration of tuition based funding. We should have a glimpse of it as early as next year, with a goal of implementation for the 2027-28 school year. There is not a lot to report at this time, but keep your ears out as we know it is coming.

Early Intervention:

We are still up in the air with respect to many things:

• Classroom size for center-based group visits (max of 10 verse 6)
• Whether the 5% increase included in the 2024/25 State budget will materialize and if it does, will it be retroactive to October 1, 2024 as has been discussed.
• With respect to the 4% regional add-on, which will be retroactive to April 1, 2025, zip codes have been identified by utilizing a formula based upon IFSP wait time and community poverty data versus NY State regional averages. Furthermore, the State Medicaid Amendment has been submitted to CMS for their approval.
• Problems with EI Hub continue to persist, which has delayed the flow of new students into the system and the payment of services delivered. This has wreaked havoc on providers bottom-line, and now that the NYDOH is recouping advances made, it will also be impacting cash flows.
• Telehealth rates have been reduced so that they are now lower than that for in-person services. With certain hard to reach communities where it is difficult to find providers, decreasing the rates for telehealth could significantly impact access to care.

Student Loans:

With the difficulties that special education programs are having in finding and retaining staff, it may make sense to look into teacher loan forgiveness programs, and educate your staff about them in order to get them to stay. Some of the available programs are:

Federal programs

• The Teacher Loan Forgiveness Program (TLF): Offers up to $17,500 in forgiveness for eligible Direct and Stafford Loans. Eligibility requires five consecutive years of full-time teaching in a low-income school or agency, with special education teachers potentially qualifying for the higher forgiveness amount. An application is submitted to your loan servicer after completing the service requirement. This is not open to for-profit schools. Nonprofit schools should check the Teacher Cancellation Low Income Directory on StudentAid.gov to see if they are listed.
• Public Service Loan Forgiveness Program (PSLF): Forgives the remaining balance on Direct Loans after 120 qualifying monthly payments while working full-time for a government or 501(c)(3) non-profit organization. Payments should be made under an income-driven repayment plan. An Employment Certification form is recommended annually or when changing employers, and the application for forgiveness is submitted after 120 payments.
• Federal Perkins Loan Cancellation for Teachers: Can forgive up to 100% of Federal Perkins Loans for full-time teachers at low-income schools or those teaching certain subjects, including special education. Contact your Perkins Loan holder to apply.

New York state programs

• New York State Teacher Loan Forgiveness Program: Certified teachers in NYS who are employed full-time in an elementary or secondary school in NYS and teach in a subject-shortage area or hard-to-staff district (including Special Education) may be eligible if they have been NYS residents for 12 continuous months prior to application and have outstanding eligible student loan debt. A lifetime maximum of up to $20,000 is available, paid in annual disbursements of up to $5,000 for up to four years.

The surpluses that NYSED providers are allowed to maintain have alleviated some cash flow concerns for providers, however we continue to hear from clients about funding delays from counties which is significantly impacting cash positions and line of credit borrowings.

We have included in this newsletter some insights into fundraising ideas. We understand that for most nonprofit special education providers, fundraising is not an easy process, but the need for additional discretionary funding is always a help. In addition, keeping Board members engaged has always been an issue. We will be hosting a Board month during October with seminars, postings, videos and more. If there are topics you like us to include, we would love to hear from you.

Please remember, we strive to be a resource to the special education community. We understand that you are working with children that need a greater level of work and support. This is not easy, so please let us help.

THIS ARTICLE WAS ALSO FEATURED IN SPECIAL ED-ITION VOL. 30. READ THE ARTICLE AND MUCH MORE RELATED CONTENT HERE!