It seems these days that everyone wants you to do more with less. There never seems to be enough funds to cover your costs, reward your staff, finance your operations, and provide high-quality programming … especially if you are solely a provider of educational services to special needs children. With districts opening up more preschool special education classes and finding teachers getting more and more difficult each year, its no wonder that there has been a significant decline in 4410 and 853 schools. With the odds seemed stacked against them, what can schools do to improve their overall finances?
If you’re a school that is hitting non-direct care screens, you have three choices, cut costs, expand your programs, or continue losing money. Even if you’re not hitting non-direct care screens, expansion is beneficial, because many of your costs are fixed. What this means is that each additional student you add lower’s your overhead cost, resulting in less non-direct care costs per child and the ability to spend more on direct costs (such as staff). Expansion can come through expansion of your SED programs or it can be expanded into non-SED programs.
Some potential ideas could be:
- Add a food program for your tuition-based children. This provides more direct costs which will be offset by the revenue you receive, but it will help to absorb some of your non-direct care overages.
- Think about SEIT. If you can find the teachers, SEIT does not require much additional space and is typically more skewed towards direct costs.
- Consider collaborating with a daycare or head start program for integrated services. This creates a way to expand your program without taking on any additional space.
- Consider other funders such as OPWDD (self-directed, fiscal intermediary, self-hired community habilitation, support broker, etc.), Early Intervention (center-based programs), grant opportunities, etc.
SED’s Rate Setting Unit is trying to move away from waivers, because they take a significant amount of time to process. This also means that if you apply for a waiver, it will require a significant amount of time to receive it, and you may need to expend some of your political capital. If you have been generating loses from operations, you should go through the process of understanding why and if these losses are the result of programmatic activities that are beyond your control. In working with our clients, we have seen several areas that could potentially result in an increase in your rates:
- Student Intensity Increases – if you’re seeing an increase in your related service costs per care day, look to see if your student mandates per care day are also increasing. If they are, this could be a waivable item.
- Increase in Behavioral Needs – Over the past few years, we have seen an increase in the number of Behavioral Intervention Plans (BIP) needed by children. If you are experiencing an uptick in BIP’s and you have hired additional counseling or ABA staff to accommodate the increase, this could be an item you can appeal.
- Special Needs or Services – If you have a child that has feeding or medication requirements resulting in increased nursing staff, a child that needs a teacher for the deaf or visually impaired that you didn’t employ in the past, or any similar programmatic issues that may arise that increases your cost, you may have a case for a waiver.
- Understaffed in Prior Years – If you were understaffed in prior years (resulting in a drop in your rates) and you have now been able to hire the appropriate staff (resulting in overspending), a waiver or rebasing of your rate could be available.
If you have a year with a significant loss, where significant losses didn’t exist in the past, you should consider analyzing your costs per care day to determine what’s driving the increase and whether you have a case for a waiver.
While this isn’t an option for a for-profit provider, it is definitely something that nonprofit organizations should be looking at. While SED should really be funding you for all of your operating costs, we know the reality is that you need additional resources to subsidize your program. Fundraising can help. Most large nonprofit organizations have a fundraising program in place, however, many of the smaller nonprofits find it very difficult to bring in any significant fundraising dollars. When you think about fundraising, it doesn’t all need to be event-based. Consider leveraging the people you know and your contacts to mobilize for your school. Facebook has a platform whereby you can register your organization and your network can set up fundraising events to raise money for your organization. Talk to your vendors, your parents, your community to find out if there are ways that they can help. Parents at your school may want to consider starting a SEPTA. This will allow them to come together to help support your school.
SED is a cost-based reimbursement system. As such, it is important that you appropriately track your costs, by program throughout the year and utilize the data to understand how your spending is in comparison to your rates. By doing “mock CFR’s” throughout the year, you can appropriately adjust your spending, either up or down, to help ensure that you don’t incur significant losses or underspending within the programs you are running.
Analyze Your Cost Structure:
While most organizations have already cut costs anywhere possible, there are still pockets where opportunities may exist.
- Health Insurance – Larger programs (100 employees or more) should consider looking into some level of self-insurance (or partial self-insurance), while smaller programs should consider a high deductible bronze plan with a Health Savings Account attached. For many providers, this could result in a significant savings that can be reinvested in additional compensation for your staff.
- Unemployment – NY based nonprofit organizations can opt-out of the NY State unemployment system and become “self-insured.” Several private insurance companies have developed policies specifically for nonprofit organizations as an alternative to the standard State-based policy which could save a nonprofit organization up to 20% on its unemployment premiums.
- Phone charges – Many nonprofit organizations are overpaying for their phone charges. If you haven’t had your phone bills analyzed in a while, you may want to consider it … there could be savings there.
There are other areas that you can look at too, especially if there are long-term relationships with vendors that you haven’t bid out in a while.
We know that running a special education school these days is an extremely challenging endeavor. It almost feels like everyone is against you … bureaucratic regulations, teacher retention issues, competition from districts, and more. Schools need to run lean and efficiently, and find additional sources of funding if they are going to continue to make a difference in the lives of children.