New SED Rate Methodology Issued

New SED Rate Methodology Issued

On August 14, 2014, the NY State Education Department issued its 2014-15 rate methodology for pre-school and school age programs.

Preschool: As anticipated, there were no significant changes from the 2013-14 methodology. For fiscal 2015, programs will once again not receive a trend factor. As such, unless your programs has an appeal granted, your 2014-15 rates cannot exceed your 2013-14 reconciled rates, adjusted for any teacher retention grant increases.

School Age: The changes on the School Age program are more extensive, providing programmatic protection for swings in student enrollment, a rate increase, and administrative relief if rates don’t fluctuate by more than 1%.
For 2014-15, school age programs will receive a 3.8% trend factor. This means that if your program’s expenditures grow by 3.8% or less, providing you do not hit a non-direct care screen, you will receive a corresponding increase in your rate and increased reimbursement. This is different from the increase provided in 2013-14 in that this year’s increase is on your whole rate and not just the direct component of your rate.

In order to avoid rate fluctuations due to increases or drops in student enrollment, the 2014-15 methodology has added new provisions:

  • If a program experiences enrollment declines during 2014-15 of 10% or more of its average enrollment for the previous 3 years (fiscal 2012 to fiscal 2014), then the enrollment that will be used to calculate the 2014-15 rate will be the lesser of the 3 year average or 90% of the reported enrollment capacity. If the decline is less than 10%, the 2014-15 actual student enrollment is used.
  • If a program experiences significant enrollment increases during 2014-15 resulting in a total cost screen, the program will not be penalized. Instead, the program will receive the greater of its 2014-15 prospective rate per diem or the 2013-14 reconciled rate per-diem adjusted for the trend factor (with certain exclusions outlined in the methodology letter). This will be limited to actual reimbursable costs incurred by the provider during fiscal 2014-15.

Finally, the new methodology eliminates the need for a final reconciliation in instances where a program’s reconciled rate differs from prospective rate by less than 1%. In such cases, the prospective rate will become the program’s recon rate. This will be used to develop the program’s 2016-17 prospective rate.

The full SED methodology letter can be reviewed here.

If you have any questions, please feel free to call Ken Cerini, Partner at 631-868-1103

Kenneth R. Cerini, CPA, CFP, FABFA

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.


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