Due to the late release of the CFR software, the due date of the CFR has been extended to February 1, 2021. This is an automatic extension, so providers do not need to file anything.
There have been several significant changes made to the CFR this year, which include:
- Certain DOH and OCFS funded programs must now be included on the CFR. The CFR software has been modified to allow providers with these programs to report appropriate information. For a listing of the programs required to be reflected on the CFR, providers should refer to appendix HH (DOH) and II (OCFS).
- New COVID-19 and COVID-19S schedules have been added to the CFR. Many aspects of these schedules are the same. The COVID-19 schedule is for all programs, while the COVID-19S schedule is only foe SED providers. The COVID-19 schedule is to report increases in program administration and site related expenditures and revenues due to the COVID pandemic, while the COVID-19S schedule reflects net expenses and revenues. Financial information provided must be provided for all programs a provider runs (e.g. the same programs listed on CFR-1 should be reflected within the COVID-19 schedules). The COVID-19 schedules start with a questionnaire requiring providers to disclose information about any PPP funding they received. The goal of these schedules is to help better understand the impact of the COVID-19 pandemic on each provider. These schedules require inclusion of certain amount, date, and forgiveness information. They also require disclosure of any revenue or gains on the extinguishment of debt, recorded during the reporting period, that was attributable to COVID-19 funding, grants, loan forgiveness, specific contributions, awards, or tax credits. This includes PPP, HHS, ERTC, FEMA, SBA, or any other funding received by programs attributable to the pandemic.
- The COVID Schedules are broken out on a CFR-1 type format, with detailed support for personnel costs and contractors separately presented on CFR-4 and CFR-4A type schedules. Providers should reflect any incremental costs such as PPE, reconfiguration of space, combat pay, additional supplies, etc. attributable to the pandemic.
- SED funded agencies are required to complete COVID-19S which doesn’t just reflect incremental expenses and revenue but reflects net costs and revenue attributable to the pandemic.
- Providers are required to show all SED programs (as reflected on CFR-1) and disclose the net impact that the pandemic has had on expenditures. Some examples would be:
- If you incurred additional costs for PPE, you would reflect just the additional cost incurred on the supply line
- If you didn’t incur food costs since your school was closed. You would show a negative cost on the food line
- If your utilities are down due to your facility being closed, you would reflect the reduction in cost in each of the programs impacted
- If you let go an office worker and a therapist, and hired an additional teacher for remote learning, the increases and decreases would be reflected, resulting in a net increase or decrease in compensation attributable to the pandemic
The instructions provided are not totally clear regarding this treatment, so this was directly confirmed with the Rate Setting Unit. Providers will need to review their expenditures to determine the impact the COVID pandemic had on each expenditure within each program to properly reflect it on the schedule. Remember, the purpose of this schedule is to reflect the impact that the COVID pandemic has had on providers, so for the 2019/20 year, providers should reflect the impact from the start of the pandemic. This has nothing to do with your PPP loan and your 24-week forgiveness period.
- Any revenue received to help providers cope with the COVID pandemic will need to be reflected on the COVID-19(S) schedule. This includes governmental grants (SBA, FEMA, PPP, HHS), tax credits (ERTC), and contributions or grants specifically earmarked to cover COVID related expenditures. For PPP funds, the amount of revenue you would reflect is only the revenue earned during the CFR reporting period. For most providers, any PPP forgiveness they may request will most likely cross reporting periods an also most likely won’t be recorded for accounting purposes until notification of forgiveness has been obtained from the SBA. Providers may want to consider reporting anticipated forgiveness on CFR-1 and COVID-19(S) and reflecting the forgiveness revenue as a reconciling item between the audited financial statements and the CFR.
- For SED providers, according to RSU, it is yet to be determined how PPP loans if forgiven will be treated from a reimbursement perspective, but the CFR reporting instructions have the PPP reported under federal grants, which is classified as an offsetting revenue line for SED rate setting.
The Contact information of an agency’s President/Chair of the Board of Directors is required on Schedule CFR-i for all not-for-profit corporations. Not-for-profit corporations will not be able to validate their CFR without completing the President/Chair of the Board of Directors information, which includes name, title, and e-mail address.
Three new lines were added to Schedule CFR-1 as follows:
- Line 13a (Medicaid Fee for Service Units of Service)
- Line 13b (Medicaid Managed Care Units of Service), and
- Line 13c (All Other Units of Service)
In addition, line 79 (Federal Grants) was modified to add pre-defined entries related to COVID-19 funding on CFR-1 and on the DMH claiming schedules.
Appendix J. which provides for appropriate allocation methodologies, was modified to provide additional alternatives to providers that were not able to track the requisite information during the COVID pandemic (e.g. time studies). Providers should read through appendix J to make sure that their cost allocations are appropriate.
Additional program codes were added for all programs, so make sure you review the list of program codes before you complete this year’s CFR to make sure you are in compliance. For example, SED added new programs for group SEIT programs so SEIT information will need to be split over multiple columns depending on the size of the group service was delivered under.
With Thanksgiving behind us, we realize that people are starting to get into the holiday spirit, and for most of you, your CFR has already been traditionally filed. With the COVID pandemic, we have found that many staff members have held off on taking vacation until the end of the year, which means many of your staff may be off as the year comes to a close. The new COVID-19 schedules are going to require a certain level of analysis by providers to understand the additional costs incurred (and for SED providers, the potential cost savings realize due to the pivot to remote learning). Providers need to push to complete their CFR’s as soon as possible to meet the February 1, 2021 deadline, as it will take time for their auditors to work through the CFR’s and complete their audits.
Albert Borghese, CPA
Albert is a member of Cerini & Associates’ audit and consulting practice where he focuses on serving the firm’s special education and nonprofit clients. Albert is also involved in the marketing and development of the firm, and frequently participates in recruiting efforts, and research.