On May 25, 2018, NYSED released regulations regarding additional funding for the changes in the minimum wage rates and how they will impact the 2016/17 and 2017/18 reconciliation rates, and the 2017/18 prospective rates. With mandated increases to low earner workers effective January 1, 2016, and additional increases being phased in over the next few years, NYSED has developed a mechanism to potentially fund providers who lost money associated with the additional cost of labor connected with complying with the minimum wage regulations.
Providers are required to submit a minimum wage survey by July 13, 2018, to the Rate Setting Unit. Failure to do so will forfeit a providers ability to obtain potential financial relief for the 2016/17 and 2017/18 years, although opportunities will exist for relief in future years. The minimum wage increases are intended to support direct employee salary (not outside contractors) costs and related mandated fringe benefits.
To apply for the funding, a provider must complete a funding request form and a certification form, both of which are required to be certified by the school’s chief administrator. Since the minimum wage is being phased in over time, different providers will be impacted at various points, as the minimum wage levels exceed the salaries that they were paying their staff. Providers will need to be cognizant of this when completing the funding request forms, as additional forms may need to be completed for each year to maximize the benefit. In addition, a separate form is required for each program code additional funding is being requested for. If a provider operates in multiple locations, with different minimum wage levels, the provider may need to complete a separate tab for the different locations (e.g. NY City, LI, and rest of state).
For purposes of calculating the minimum wage impact, providers should only consider hours worked, salaries should be calculated on the cash basis, and salaries should not include overtime, stipends, severance pay, or any other potential non-recurring payments. For agency administration staff (600 level staff), you should only include in the survey the portion being allocated to tuition based programs utilizing the ratio value method.
In addition to the salary increase, related costs associated with mandated fringe benefits should also be factored into the request. For a link to the instructions to the minimum wage survey, please go here.
Kenneth R. Cerini, CPA, CFP, FABFA
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.