If you’ve ever sat down to play a game you’ve never played before, you know you always start by reading the rules. It’s really tough when you’re midway through the game and someone tells you a new rule that you weren’t aware of, which changes how you would have played the game if you had only known. If you are a special education provider, reimbursed by NYSED, then you know that the Reimbursable Cost Manual (RCM) outlines the rules that you need to follow in serving children with special needs. Unfortunately, due to staff shortages at the Rate Setting Unit, and other responsibilities that they are trying to get through, the 2019 version of the RCM, which governs 2019/2020 operations, was released sometime in October/November without a lot of fanfare.
The changes outlined within the RCM were not overly significant, however, they do provide some changes and clarification that are important to understand:
The threshold for purchases of furniture, fixtures, and equipment that requires an estimate was increased from $5,000 to $20,000. This would be for capitalizable items. This could reduce the need for obtaining quotes for smaller purchases, providing your own internal policy isn’t more restrictive.
We all know how tough it is to attract and retain direct care staff. While paying for a direct care staff member’s degree to meet the minimum requirements for her/his position is not an allowable cost, the related student interest is. You would need to establish a formal policy and consistently apply it. Furthermore, you would need to handle it correctly from an employment tax perspective. On a separate note, SED will be proposing in the next NYS budget, that $2 million be set aside for loan forgiveness for teachers that take jobs with qualified special education providers. Hopefully, this will pass.
SEIT Group Sessions
There has been a certain level of confusion regarding how SEIT group visits should be tracked and reported on the CFR. The new RCM provides a certain level of guidance:
- Mandated Group Sessions: Mandated group SEIT sessions should be prorated based upon the number of students enrolled in the group. For example, if a student is enrolled for SEIT services in a group of two, that student’s group session should be counted as a .50 session when determining the total mandated billable units of service to report. Ultimately, each half-hour group SEIT session should be reported as one mandated session regardless of the number of students enrolled in that group session (1-3).
- Delivered Group Sessions: Delivered group SEIT sessions are prorated based upon the attendance in the group. For example, if a student is enrolled to receive should be prorated based upon the number of children that attended the group. So for example, if there was a group of two, and both students were in attendance for the session, each student’s group session should be counted as a .50 session when determining the total number of SEIT sessions provided. If only one student was in attendance, the child in attendance should be counted as a 1.0 and the child that did not attend the group session should be reflected as a 0.0. Ultimately, each half-hour group SEIT session should be reported as one delivered session regardless of the number of students who were actually in attendance for the session.
SCIS Collaborative Agreements
In order to comply with the recordkeeping requirements for contractual agreements, as outlined within the RCM, collaborative agreements must be “in writing, signed, and dated” prior to the commencement of the agreement. Program-related costs contained within a collaborative agreement are reimbursable to the extent that such expenses would have been allowable within the program in accordance with the RCM and CFR claiming manual. For instance, if the collaborative agreement provided for an instructional lunch, and the program wasn’t approved for an instructional lunch, the instructional lunch would not be allowable just because the collaborative agreement requires it. The new RCM provides guidance on what must be included in the collaborative agreement:
- The collaborative agreement must provide specificity with respect to the expenses shared under the agreement (e.g. facility space, utilities, shared staff, supplies, administrative support, etc.) and the amount of consideration paid by the SCIS program for these expenses.
- The standard of review for whether an expense is reimbursable pursuant to a collaborative agreement is the same standard applicable to the costs reported by a SCIS program that operates both the preschool special education and early childhood program components: expenses must be “reasonable, necessary and directly related to the education program” and “have adequate substantiating documentation.”
- The RCM provisions pertaining to Less-Than-Arms-Length transactions are applicable to SCIS collaborative agreements between related parties.
For-profit providers are subject to income tax. While the IRS does not provide for a minimum tax, NY State and other local jurisdictions do. While income taxes are not deductible, the minimum tax that providers are required to pay are. The calculation of the minimum taxes needs to be documented and such taxes are considered non-direct care costs.
Documentation of Payroll
Employee timesheets must be signed or electronically approved and dated by the employee and the employee’s supervisor or personnel authorized to approve/date employee timesheets and must be completed at least monthly.
Your school’s operations continue to be subject to governmental audits, so it is imperative that providers continue to familiarize themselves with the RCM, including any changes that may occur each year. Following SED guidelines is a win for everyone.
Kelly Mehr, CPA
Kelly is a senior accountant of Cerini & Associates’ audit and consulting practice. She works with nonprofit, special education and school district clients.