Changes to the 2023/24 Reimbursable Cost Manual are Minor:
SED has released the 2023/24 version of the reimbursable cost manual, and the changes are minor:
- SED has clarified that non-attest services provided by your audit firm are non-reimbursable if such services impair the auditors’ independence. Auditors, as part of their audit process, are required to assess all non-attest services they provide to an audit client to determine if they impair the auditors’ independence. Prior to this clarification, there were disallowances by the OSC for such things as tax filings and cost report preparation.
- Credit card fees, similar to loan procurement fees, are considered non reimbursable. Similarly, credit card interest expense, late payment fees, and annual credit card fees are also not reimbursable.
- Traditionally, severance pay reimbursement was limited to two weeks. The new RCM expands that to four weeks for severance paid to staff during an organization’s close-down.
These were the only changes made to the 2023/24 RCM.
2023/24 Rate Methodology:
NYSED submitted their 2023/24 rate methodology to the Division of Budget during April, however the methodology letter has not yet been approved. While the terms of the methodology letter have not officially been disclosed, a few of SED’s requests are:
- Continuation of interim plus rates, whereby interim rates would include the current trend factor. The issue here is that unless SED includes all of the previous rate increases into the reimbursement, providers will not get the 11% trend for 2023 in the 2024 interim rates, which will significantly impact cash flow.
- Changing the non-direct care screen from 30% to 35%, which would allow providers greater flexibility with non-direct care costs, considering the rising cost of rent and the high rate of inflation.
- A proposed rate increase of 9.84%. However, given the increases provided to schools and other funding sources, I wouldn’t expect a rate increase of more than 4%.
- Continuation of the 5% enrollment adjustment factor to provide programs with relief if their enrollment compared to capacity decreases by more than 5% of their historical levels.
Reserve Funds:
During 2022, New York enacted laws, which among other things, allows private preschool, school-age, and special act school districts to retain annual surpluses of:
- 11% in 2022/23, 2023/24, and 2024/25
- 8% in 2025/25
- 5% in 2026/27
- 2% in 2027/28
The surplus amount is calculated based upon allowable expenditures (expenses net of non-direct care screens and non-allowable costs). The reconciliation rate including the surplus cannot exceed a provider’s prospective rate.
- Example, if a program has a prospective rate of $225 per day and had expenditures of $205 after considering non-direct care screens and non-allowable costs, the program would be able to establish a maximum reserve of $22.55 per care day ($205 x 11%). The reserve amount, however, would be limited to $20 per care day (the amount the provider spent below the prospective rate).
The law requires a reconciliation of the unspent funds and Board approval to utilize reserve funds. The format of the reconciliation is unknown as is how the reconciliation will be reported to NYSED. The most logical option would be to add a schedule to the CFR (SED-5) to reflect the reconciliation. Stay tuned for any guidance from NYSED.
Tuition Rate Setting Methodology Redesign:
As part of the 2023/24 NY State budget, the State set aside certain funds earmarked for the development of a redesign of the current rate setting methodology. In furtherance of this mandate, NYSED has distributed an RFP for consultants to assist with the process. The goal is to implement a new methodology by the 2028/2029 school year.
OSC Audit of the NYS DOH’s EI Program:
On February 28, 2023, the OSC released their report of their audit of the NY State Department of Health Early Intervention Program. The audit (copy here) outlined the following findings:
- Many children who would benefit from the Program aren’t receiving services, and children who are receiving them aren’t always getting them in a timely manner.
- Of the approximately 189,000 new children who were referred to the Program between July 2018 and February 2022, over 27,000 (14%) never received a multidisciplinary evaluation.
- Of the nearly 98,000 children who were evaluated and deemed eligible to receive services, about 2,000 (2%) never received an IFSP.
- Of the nearly 95,000 children with an approved IFSP, approximately 27,000 (28%) did not begin receiving therapeutic services within 30 days of when they were authorized to start.
- Many eligible children likely did not receive services because Program officials didn’t have parental consent, which occurred for a wide variety of reasons. Further, insufficient provider capacity is a key reason why services were not always provided in a timely manner. The Department needs to do more to identify and address the underlying reasons why children are not receiving valuable Program services that they are entitled to and can benefit from. This includes determining why officials were not able to obtain parental consent for Program services and doing more to improve provider capacity.
- Limited guidance and oversight from the Department has resulted in significant differences in Child Find’s outreach and awareness activities across the State. The OSC’s sample review found that municipalities that conducted the least amount had a lower percentage of children in the population with an IFSP, whereas those that did considerably more outreach served a higher percentage of children.
- There are disparities across the State in the referral and inclusion of children into the program as well as in the availability of providers and access to program services. Equity is also an issue, with white children generally being referred at a younger age and Black children being less likely to receive services within the prescribed time frame. While the Department has demonstrated it recognizes the importance of equity, more work must be done to identify and fully address barriers to equitable access to the Program.
- NYEIS does not have the functionality or accuracy municipalities need to administer the Program efficiently and effectively at the local level. While the Department is working with a contractor to implement a new web-based system, EI-HUB, progress has been delayed multiple times.
Austin Harvey
Staff Accountant
Austin is a staff accountant of Cerini & Associates audit and consulting practice. He works with nonprofit, special education and school district clients. His auditing experience allows him to assist in vital audit functions, such as system testing and analysis, as well as claims audit functions.