July
2008 Reimbursable Cost Manual
I. COST PRINCIPLES:
II. RECORD KEEPING:
A. Record Keeping
B. Accounting Requirements
C. Definitions
III. METHODOLOGY:
V. APPENDICIES:
VI. TOPIC APPENDIX:
The University of the State of New York
The State Education Department (SED)
Office of Management Services (OMS)
Rate Setting Unit (RSU)
Albany, New York 12234
Reimbursable Cost Manual for Programs
Receiving Funding Under Article 81 and Article 89 of the
Education Law to Educate Students with Disabilities
This Manual Applies to the July 2007 to June 2008 Tuition
Rates and Defines Reimbursable Costs for the July 2007 to June 2008 Period
.
July 2007 Edition
TABLE OF CONTENTS
Introduction 3
I. Cost Principles
5
II. General Requirements and
Definitions
Record Keeping
38
Accounting
Requirements 41
Definitions 43
III. Tuition Rate-Setting
Methodology
Tuition Rate-Setting
Methodology for Tuition Rates 50
Tuition Rate Adjustments
50
Close-Down Policy and
Procedures 51
V. Appendices 56
A-1. Categorization of
Expenditures 56
A-2. Categorization of
Revenues68
B. Purchasing Consortia69
C. Travel Guidelines 61
D. Guidelines for
Development, Review and Approval of Capital Projects
for Students with Disabilities 62
E. Statement on the
Governance Role of a Trustee or Board Member 67
VI. Topic Appendices
A. Select Regulations of
the Commissioner of Education 72
B. Best Practices for Boards
to Follow 72
C. Top Ten Warning Signs for
Boards 73
D. Links to Web Sites 76
E. Contact Offices in SED by
Type of Institution 77
INTRODUCTION
THIS JULY 2008 REIMBURSABLE COST MANUAL DEFINES
REIMBURSABLE COSTS FOR THE JULY 2008‑JUNE 2009 SCHOOL YEAR. IT
APPLIES TO THE 2008-09 PROSPECTIVE TUITION RATES AND
THE - 2008-2009 RECONCILIATION ADJUSTMENT FACTORS AND
RECONCILIATION RATES, AND FINAL AUDIT RATES BASED ON
- 2008-2009 ACTUAL DATA.
This July 2008 Reimbursable Cost Manual (Manual) applies
to programs receiving public funds for educating students
with disabilities ages 3-21 in private schools, special act school districts
(SASDs), Boards of Cooperative Educational Services (BOCES), public school
districts, and municipalities under Articles 81 or 89 of the Education
Law.
Approved programs should recognize that information in financial reports
is continually being analyzed and any part of this Manual may be modified
from year to year based on that analysis. Continuous review by the NYS
Education Department (SED), other State agencies, the State Division of
the Budget (DOB) (as mandated by the Institution Schools Act), and by
municipalities providing funding to programs under section 4410 of the
Education Law may also result in modifications. Since this Manual
is revised and updated on a periodic basis, questions arising about a
subject not described herein will be reviewed by SED and treatment of
such subjects may be described in the subsequent edition of the Manual.
Final costs are determined upon field audit and will be considered for
reimbursement provided that such costs are reasonable, necessary and directly
related to the education program. Costs must also have adequate
substantiating documentation. Designation of a cost as reimbursable
during the initial rate-setting process or during the reconciliation process
does not mean that the cost will be reimbursed through the final audit
rate since all rates are subject to adjustment on field audit, in accordance
with section 200.18 of the Commissioner's
Regulations and this Manual. A more detailed review of expenditures
during an audit may reveal that costs reimbursed during a prior rate calculation
for that fiscal year should not be reimbursed. Programs will be
given an opportunity to review and comment on the draft audit report before
the report is made final in accordance with section 200.18 of the Commissioner's
Regulations.
Section I, Cost Principles,
describes costs SED considers reimbursable in the
calculation of tuition rates for approved programs.
Section II, General Requirements and
Definitions, provides information on recordkeeping
requirements, general accounting standards and definitions
for programs receiving reimbursement under Articles 81 and
89 of the Education Law.
Section III, Tuition Rate-Setting
Methodology, provides information on rate setting,
adjustments and closedown.
Section IV, the Index, provides an
alphabetical listing of subjects described in this
publication.
Section V, the Appendices contain
supplementary information. Special attention should be given to Appendix
A-1, "Categorization of Expenditures" and Appendix
A-2, "Categorization of Revenues" that identify specific
items of expense and revenue. They also provide direction as to
where the cost categories should be reported on the CFR. Please
be advised that reimbursement of expenses designated as nondirect care
expenses will be subject to the nondirect care cost parameter.
SECTION I.
COST PRINCIPLES
Generally, costs will be considered for reimbursement provided such costs
are reasonable, necessary, and directly related to the education program
and are sufficiently documented. Such reimbursable costs will be
included in the calculation of tuition rates up to any limits or cost
screens approved annually in the rate-setting methodology.
1.
Accounting
Costs of establishing and maintaining accounting and other information systems
required for management of Articles 81 and 89 funded programs are reimbursable
and subject to the nondirect care cost parameter. When consultants or the
program's independent CPA firm, provide these non-audit services, refer to Section
I Item #15 on Consultants for reimbursement standards. (See Section
II A.3, General Requirements, Consultants, of this Manual for specific details
on record keeping requirements).
2.
Administration
A. Administrative costs
include salary and fringe benefit costs of
persons whose primary function is management
and administration of the program and/or
agency, in accordance with Federal and State
laws, Regulations of the Commissioner of
Education and/or the Board of Directors. All
administrative costs are subject to the
nondirect care cost parameter.
B. Administrative costs
may include, but are not limited to:
other-than-personal-services costs of
professional dues and conferences; travel;
telephone; office equipment and supplies;
bonding of employees handling program funds;
fees for lawyers, accountants and
consultants; charges from parent
organizations; personnel advertising and
other recruiting costs; minimum corporation
franchise tax or similar business tax;
postage; office equipment rental or
depreciation; repairs and maintenance;
depreciation on assets related to
administration; administrative purchase of
services; dues; licenses and permits;
subscriptions and publications; interest on
operating loans; administrative staff
development; and membership in civic,
business, professional or technical
organizations.
3.
Advertising
Advertising means the costs
associated with publications and other public
relations endeavors using the mediums of newspapers,
internet websites, magazines, radio and television
programs, direct mail, trade papers, and the like.
Outreach activities, such as
publications and other public relations endeavors
which describe the services offered by approved
private schools enabling them to better contribute
to community educational objectives, are
reimbursable. The intended outcome of these
publications and public relations endeavors should
be that of providing information and not for the
purpose of recruiting students into programs or
soliciting fund raising monies or donations. New
York State places students without regard to
advertising or public relations activities. (Refer
to Item #40, Recruitment of
Personnel.)
Guidelines for Preschool Program
Advertising:
A. Chapter
474 of the Laws of 1996 amended Section 4410 of the
Education Law to require the SED to
establish guidelines for advertising by
preschool programs and evaluators. The
following guidelines have been developed
pursuant to the Statute and corresponding
amendments to the Regulations of the
Commissioner of Education.
These amendments also
require preschool programs and evaluators to
submit upon request copies of advertising to
the SED for review. However, neither the
Statute nor the Regulations require approved
programs to advertise. Advertising costs for
the purpose of recruiting students into
programs or soliciting fund raising monies
or donations are not reimbursable and
remain nonallowable in the calculation of
tuition rates.
If you have any
questions, please call the Policy
Development Unit of VESID - Special
Education Policy and Quality Assurance
Office at (518) 402-3353.
B. Advertisements should include:
- Clear identification that
the program is for preschool children
who have or are suspected of having a disability
pursuant to Section 4410 of Article 89
of the Education Law;
- A statement that any
services provided are based upon the
individual needs of the preschool child
found to have a disability, as determined
by the Committee on Preschool Special Education
of the local school district;
- A statement that the
local school district will determine
the location where needed special education
services will be provided, which may
be the child’s normal daytime setting;
- A statement that parents
are responsible for arranging for and
paying the costs of any child care.
C. The following are appropriate
contents of advertising:
- A description of special
services available: evaluation, special
education, speech therapy, occupational therapy, physical therapy
and labeled as special education services;
- A description of the
appropriate licensure and/or certification
of staff employed;
- A statement that
indicates that the special education
services are at no direct cost to the
parent, but that funding is provided
through county taxes and state funds, earmarked for
special education services provided;
- A statement that
transportation may be a service provided,
but, parents are encouraged to transport their own children and
may be reimbursed at a rate per mile or a public service fare
established by the municipality and approved
by the Commissioner.
D. Advertisements should not
include:
- Information, which would
mislead a parent to believe their child,
can receive, at no cost to them, day care
services or any and all services the
agency has to offer.
- Information which would
mislead a parent to believe that the
decision regarding appropriate services and
where services will be provided is based
solely upon what the parent/or the provider requests;
- Information which would
indicate that services are "free" since
services are paid through local and state
funds;
- Information which would
indicate that transportation is always
provided;
- General statements that
would lead the reader to believe that
this is something other than a special education
program (i.e., are you concerned about
your children – come see us);
- Any information, which
would be false, deceptive or fraudulent
with respect to the services to be provided to
preschool children and their families.
4.
Assistive Technology Devices and Services*
An assistive technology device is
defined as "any item, piece of equipment, or product
system, whether acquired commercially, off the
shelf, modified or customized, that is used to
increase, maintain, or improve the functional
capabilities of a child with a disability." (34 CFR
300.5)
An assistive technology service
is defined as "any service that directly assists a
child with a disability in the selection,
acquisition, or use of an assistive technology
device." (34 CFR 300.6)
A.Preschool Children
Under the preschool
system, an approved program would make
available and be responsible for, in most
situations, high and low assistive
technology devices as part of its
instructional program and be reimbursed, as
part of the tuition rate, through the
Department's current rate-setting
methodology. When a child-specific assistive
technology device is required, the county in
which the child resides purchases or leases
the device and submits costs to the
Department on a STAC-1 form. The assistive
technology device should be identified on
the related service line of the form.
Counties must contract
with assistive technology service providers
and must submit the contracted rate for such
services on the annual County List of
Approved Rates for Related Services
(SED-RS-3).
B. School Age Children
When the school district
that is programmatically responsible for the
student, purchases or leases equipment
specified on the IEP, the cost is not
reimbursable in the tuition rate.
*The above information is
referenced from Thomas Neveldine's memo of September
1995 regarding Assistive Technology Devices and
Services and
Guidelines to Allow for the Transfer of Assistive
Technology When a Student Moves from School
Jurisdiction to Higher Education, Other Human
Services Agency or Employment.
5. Auditing
The cost of certified audits
necessary for the administration and management of
Articles 81 and 89 funded programs is
reimbursable subject to the limitations and
requirements for consultant services (Refer to
Item #15 on Consultants).
6. Bad Debts
Bad debt expenses are not
reimbursable. Actual or estimated losses resulting
from uncollectible accounts or other claims,
including related finance charges are not
reimbursable operating expenses for Articles 81 and
89 funded programs. Collection and legal expenses
for collecting bad debts are reimbursable subject to
the nondirect care cost screen parameter.
7.
Bedding/Linen
Costs of bedding and linens are
not reimbursable as an education expense. Such costs
are considered to be parental responsibility or
residential expenses. However, bedding, linen and
towels for the nurse's office and for the classrooms
will be considered reimbursable.
8. Bonding
Costs of insurance premiums on
bonds covering employees who handle program funds
are reimbursable and subject to the nondirect care
cost parameter.
9. Capital
Expenditures
(A) SASDs, public school
districts and BOCES are required to comply
with GASB 34 and depreciate the cost of
buildings, equipment, furniture, fixtures or
vehicles over the useful life of such
assets. Public school districts and BOCES
must adhere to the applicable sections of
the General Municipal Law, which govern
Capital Expenditures. SASDs may choose to
renovate existing buildings or purchase
equipment, furniture, fixtures or vehicles
by transferring funds from the General Fund
to a Capital Project or Capital Expenditure
Fund as discussed in section (B) below:
(1) Renovations
of existing buildings: Costs of
renovations, alterations, or major
repairs must be approved by the
District Board in accordance with
the District's annual approved
budget policy. Proposals for
renovations, alterations or major
repairs must be submitted to the SED
for review and comment. See
Appendix D:
Guidelines for Development, Review
and Approval of Capital Projects for
Students with Disabilities.
(2) Purchases of
furniture, fixtures or equipment:
For proposed purchases of equipment,
furniture, and fixtures, three (3)
estimates must be provided for items
which cost more than $1,000 and have
a useful life of more than two
years.
(3) SASD’s have
no voters or bonding authority and
are not considered component school
districts within the meaning of
Section 1950(14) of Education Law
for the purpose of participation in
funding of BOCES capital projects,
without the prior written approval
of SED and the New York State
Division of the Budget.
(4) Consistent
with the provisions of
Chapter 383 of the New York State
Laws of 2001, SASDs and public
school districts are authorized
access to the Dormitory Authority of
the State of New York (DASNY) for
financing and refinancing of bonds
for school construction projects.
SASDs and public school districts
are further authorized to structure
financing of capital projects
consistent with the payment of
building aid based on assumed
amortization of debt service
payments in accordance with the
useful life of the project.
(5) SASDs, public
school districts and BOCES are
required to fully access available
Building Aid funding for all capital
projects. Failure to apply for
Building Aid funding will result in
an adjustment to approved capital
costs to reduce reimbursement
through the tuition rate to the
level of funding that would have
resulted if the provider had applied
for Building Aid.
(6) The
New York State Uniform Fire Prevention and
Building Code applies certain
standards to new work involving
conversions, alterations, additions
or repairs to any building owned
or operated by a special act school
district or a public school
district. For construction costing
up to $5,000, the school district
board must assure compliance with
the code. Between $5,000 and
$10,000, the school district board
has the responsibility to assure
compliance and to retain a licensed
architect/engineer to prepare
plans and specifications and provide
supervision. For costs over $10,000,
or affecting health and safety,
the school district board is responsible
for assuring compliance and
retaining the architect/engineer
to prepare plans and specifications
to be submitted for approval and
a building permit to the New York
State Education Department, Office
of Facilities Planning, Room 514W,
Education Building, Albany, New
York 12234. For more information,
please visit the website at
http://www.emsc.nysed.gov/facplan/.
(B) Interfund transfers
will be recognized in the tuition rate
calculation process under the following
conditions:
(1) In cases
where there may be several transfers
between funds, costs will only be
reimbursed once in the tuition
rate-setting process.
(2) Proposed
transfers from the General Fund to
the Capital Fund or additions to the
Capital Fund will be recognized in
the tuition rate calculation if RSU
fiscal review determines prior to
the transfer of funds, that
transfers or additions result from
the need to fund capital projects.
Such projects must have been
approved by resolution of the SASD
Board and endorsed by the SED.
RSU staff will
consult with the Department of
Facilities Planning and/or State Aid
Unit staff during the review
process. Districts should submit
copies of proposals to Facilities
Planning staff and to the RSU.. RSU
staff review will confirm in writing
that amounts to be transferred are
reasonable and made at appropriate
times during the completion of the
project.
(3) When the
Trust and Agency fund is used as a
clearinghouse for expenses,
transfers from the General Fund to
the Trust and Agency Fund will be
recognized in the rate calculation
process, if consistent with regular
District practice and in compliance
with this Manual. However, transfers
from the Trust and Agency Fund back
to the General Fund will be offset
in rate calculations, if the costs
have already been included in a
tuition rate.
(4) When a
capital project(s) is completed and
the Capital Projects Fund has a
surplus, then a transfer(s) from the
Capital Projects Fund to the General
Fund is required. The transferred
amount will be offset in rate
calculations, if the previous
transfers to the Capital Project
Fund have already been included in a
tuition rate. Interest income earned
by Capital Projects Fund and
retained in this fund will be offset
in the tuition rate calculations to
the extent it was not previously
offset in tuition rate calculations.
(5) Transfers to
Contingency funds are not
reimbursable in the calculation of
tuition rates. See
Item #16
Contingency Provisions for
additional information.
(C) All other providers
should also refer to
Item #18 on Depreciation/Amortization in
this Manual.
10. Charges
from Parent or Related Organizations
Charges to programs receiving
administrative services, insurance, supplies,
technical consultants, etc. from a parent or related
organization are reimbursable provided they are
based on actual direct and indirect costs, allocated
to all programs on a consistent basis, and defined
as reimbursable in the Regulations of the
Commissioner of Education, the CFR Manual or this
Manual. (Refer to Section II. C.
Definitions, Item 4, in this Manual for
less-than-arm's-length (LTAL) transactions.)
11.
Students' Activities
A. Costs incurred for
intramural activities, student publications,
student clubs and other student activities,
to the extent such activities are normally
provided by public day schools, are
reimbursable direct care expenditures.
Reasonable costs of class field trips during
school hours and extra-curricular activities
after school hours are reimbursable as
direct care expenditures.
B. Ordinary living
expenses such as the cost of overnight class
trips or other expenses that are normally
assumed by parents of students attending
public day schools are not reimbursable.
C. Costs incurred for, or
in support of, alumni activities and similar
services are not reimbursable.
12.
Clothing/Uniforms
Ordinary living expenses, such as
the cost of clothing and uniforms that are normally
assumed by parents or legal guardians of students
attending day care centers or public day schools,
are not reimbursable. Clothing expenses for staff
such as uniforms for custodians or bus drivers, even
if required by school policy, are not reimbursable.
Such costs are considered to be personal expenses.
13.
Commencement and Convocation
Costs of commencement and
convocation activities are reimbursable when they
are consistent with local public school districts.
14.
Compensation for Personal Services
Compensation for personal
services includes all salaries and wages, as well
as fringe benefits and pension plan costs. Accrued
vacation/sick leave is not reimbursable.
Payments for vacation/sick leave, including lump
sum payments made upon retirement that are required
by law or by employer-employee agreement and meet
the criteria listed in item (B) below, are reimbursable
when paid and reported in the 2008-09 financial reports.
(Refer also to Section
II. General Requirements and Definitions, Item A.1.
Record Keeping - Payroll).
A. Salaries
Salaries include all
taxable and non-taxable salaries and wages
paid or accrued to employees on the agency
payroll, including severance pay to regular
employees. Reimbursement of salary expense
shall be subject to the following
principles:
(1) Entities operating
approved programs shall develop
employer-employee agreements with
written salary scales and issue them
to employees
(2) Base year
salary expense will be inflated at
an amount approved by the State
Division of Budget for the purpose
of establishing a level of
reimbursable costs on which to base
the per pupil tuition rate
calculation.
(3) Payments for
sick and vacation leave credits for
a retiring employee transferred
into a lump sum payment to the
employee are reimbursable when
reported and paid in the 2008-09
financial reports and when documented
in employer-employee contract
agreements.
(4)(a)
Compensation (i.e., salaries plus
fringe benefits) for the entity's
executive director, assistant
executive director and chief
financial officer will be directly
compared to the regional median
compensation for comparable
administration job titles of public
school districts, as determined
and published annually by SED's
Basic Educational Data Systems (BEDS).
Reimbursement of employee
compensation for these job titles
shall not exceed the median paid
to comparable personnel in public
schools for similar work and hours
of employment in the region in
which the entity is located. Compensation
for an "Executive Director"
providing services to an Article
81 and/or Article 89 funded program
will be compared to the median
"Superintendent-Independent"
compensation for the region in which
the entity is located and
compensation for an Assistant
Executive Director and Chief
Financial Officer will be compared
to the median compensation for
"Assistant Superintendent."
(4)(b) For any
individual who is employed in any
job title or combination of job
titles by the entity operating
the approved programs, compensation
up to 1.0 FTE for that individual
in total, will be considered in the
calculation of the portion of
1.0 FTE reimbursable in the tuition
rates, subject to the limitations
defined in (4)(a) above.
(4)(c) An entity
that employs co-executive directors
shall have total reimbursement
for
all co-executive directors
combined limited to a level
commensurate with a 1.0 FTE
position. This level will be the
maximum compensation level for the
entire entity operating the approved
programs.
(4)(d) For any
individual who works in more than
one entity (including organizations
that have a less-than-arm's-length
relationship with the approved
program), and whose FTE in total
across entities exceeds 1.0, the
allocation of compensation must
be supported by time and effort reports
or equivalent documentation which
meets the following standards:
- they must
reflect contemporaneous time
records of the actual activity
of each employee;
- they must
account for the total activity
for which each employee is
compensated;
- they must be
prepared at least monthly
and coincide with one or
more pay periods;
- they must be
signed and dated by the employee
and employee’s supervisor .
- budget
estimates or other allocation
methods determined before
the services are performed
are not adequate documentation
for use in completing annual financial reports but may
be used for interim accounting
purposes;
Compensation
beyond 1.0 FTE for any individual
in total will not be considered
reimbursable in the calculation
of tuition rates.
(4)(e) Direct
care student to staff ratios shall
not exceed the approved staffing
levels supported by SED’s program
approval letter. Any net excess of
staff will not be included as part
of reimbursable costs in the
tuition rate. Such additional staff may
be deemed reimbursable upon
demonstration to the satisfaction
of the Commissioner that such costs
were necessary.
(5) Reimbursement
of all employee compensation,
including administrative job titles
shall not exceed the levels paid
to comparably qualified and
appropriately certified personnel
in local public schools for similar
work and hours of employment.
Any net excess compensation will not
be included as part of reimbursable
costs in the tuition rate
calculation.
(6) Compensation
to all individuals including
shareholders, trustees, board
members, officers, family members
or others who have a financial
interest in the program and who
are also program employees must be
commensurate to actual services
provided as program employees or
consultants and shall not include
any distribution of earnings in
excess of reimbursable compensation.
For all individuals, compensation
for board service or trustee service
is not reimbursable. For
example, a full-time program
employee may serve on the Board of
Directors of the agency. However,
compensation for board service will
not be reimbursed. Compensation
for such employee's personal service
to the program will be allowed in
the computation of the tuition rate
if:
- The
board member abstains
from any discussion
or vote on matters
related to his/her compensation
and the Board minutes
reflect this.
- The
board member has not
been employed by the
State Education Department
within two (2) years
of his/her appointment
to the Board.
(7) Expenses of a
personal nature, such as a residence
or personal use of a car, known
as perquisites (or perks), are
not reimbursable. When costs are
disallowed because they are of a
personal nature, providers should
inform the employee(s) in writing,
that the employee(s) must refund
the disallowed costs to the provider
within a date certain. If the
employee(s) fails to do so, the
amount should be recovered through
a reduction in compensation.
(8) Compensation
paid to an employee(s), which serves
to duplicate worker's compensation
awards, jury fees or disability
claims are not reimbursable.
(9) The estimated
value of donated services is not
reimbursable. (Refer
to Item #24 on Fund-raising).
(10) Expenses for
compensation of overtime work for
direct care and nondirect care
staff that are compensated on
an hourly basis are reimbursable subject
to all applicable statutes, rules
and regulations of the NYS
Department of Labor. Overtime compensation for
salaried direct care staff for
extracurricular activities such as
coaching stipends, extra period
coverage, plays, etc. are
reimbursable when documented in the
employee's contract and if they
do not exceed local school district
compensation for such activities.
Overtime for all others is not
reimbursable.
(11) Bonus
compensation shall mean a
non-recurring and non-accumulating
(i.e., not included in base salary
of subsequent years) lump sum
payment(s) in excess of regularly
scheduled salary which is not
directly related to hours worked.
Bonus compensation may be reimbursed
if based on merit as measured
and supported by employee performance
evaluations. Bonus compensation
restricted to only administrative
staff is not reimbursable.
Bonus compensation shall be subject
to all aspects, constraints and
cost screens contained in the
methodology. Bonus compensation
specifically relating to grant
awards for targeted enhancements
of teacher compensation is
reimbursable.
(12) Private
schools shall submit to the SED upon
request, proposed compensation
packages of the
owners/officers/partners whose
annualized compensation exceed
$75,000 or whose
owners/officers/partners are
employed in other businesses or are
the owners/officers/partners of
other businesses. Such arrangements
shall include the proposed salary
based on qualifications and actual
documented hours worked (time
sheets), and fringe benefits,
as well as a list of the other jobs
and/or businesses and the time
devoted to each. The package will
be approved/disapproved in writing
by the SED within 30 days of receipt
from the SED. Compensation will
be subject to median analysis
in the calculation of tuition rates as
described in this Manual and the
Commissioner’s Regulations.
B. Fringe Benefits
(1) Fringe
benefits may include paid time off,
such as vacation leave, sick leave,
military leave, holidays, training
and educational costs, provided the
benefit is established by written
school policy. Payments into
specific employee benefit packages,
such as teachers' retirement,
employees' retirement and pension
plans, Social Security, health
insurance, life insurance (to the
extent the Internal Revenue Service
does not require payment of such
premiums to be included in the
employee's income), unemployment
insurance, disability insurance,
union welfare funds, or pension plan
termination insurance premiums paid
pursuant to the Employee
Retirement Income Security Act of 1974, may
also be included.
(2) Reimbursement
of fringe benefit expenses shall be
subject to the following principles:
(a)
Vacation and sick leave are
reimbursable in the year
actually paid and reported
as a salary expense. Accrued
vacation and sick leave
expenses are not
reimbursable until actually
paid.
(b) Costs
of benefits for employees
who provide services to more
than one program and/or
entity must be allocated to
separate programs and/or
entities in proportion to
the salary expense allocated
to each program.
(c)
Benefits including pensions,
life insurance, and TSAs for
individual employees or
officers/directors are
proportionately similar to
those received by other
classes or groups of
employees.
(d)
Amounts paid or credited to
employees for sabbatical
leave will be reimbursed to
the extent that such leaves,
as reflected in
labor-management agreements,
are a prevalent practice of
the local public school
district.
(e)
Employer-provided
educational assistance costs
are reimbursable as
compensation only when the
course or degree pursued is
relevant to the field in
which the employee is
working. The employee must
complete and receive a
passing grade for the
course(s) for which the
employer/provider paid.
Appropriate records of
course completion must be
maintained by the
employer/provider. Such
costs are limited to tuition
charged by the educational
institution, textbooks, fees
and training materials.
Costs of specialized
programs specifically
designed to enhance the
effectiveness of executives
or managers are
reimbursable.
Employer-provided
educational assistance costs
will be considered
compensation to the
individual. Costs of
education or training
necessary for an employee to
meet minimum qualifications
for the position for which
he/she was hired are not
reimbursable.
C. Pensions
(1) Costs of
employer funded pension plans which
are approved by the Internal Revenue
Service and accounted for under
generally accepted accounting
principles (GAAP) are reimbursable
subject to the following exceptions
and limitations:
a.
Payments in lieu of pensions
made to or for the benefit
of school officers,
directors, presidents, etc.
are not reimbursable as a
fringe benefit but will be
considered as salary
expense.
b. IRA or
KEOGH plan payments made by
an entity for employees or
officers are not
reimbursable as a fringe
benefit as they are
individual in nature,
however, they will be
considered as salary
expense.
c.
Employer funded plans such
as 403(b) plans are
reimbursable if they qualify
under IRS Guidelines.
Employees' contributions to
such pension plans may be
reimbursable expenses as
part of reported gross
salaries.
d.
Self-Employed Retirement
Plans (Partnerships and Sole
Proprietorships) that are
qualified and
non-discriminatory, and
which include 70% or more of
the employees, are
reimbursable. Costs of plans
that do not include anyone
other than the owner or
owner's relatives will not
be reimbursed. In instances
where sole proprietors or
partners are not offered
plans, SED will allow the
Self Employment Tax
deduction allowed as an
adjustment to income on IRS
Form 1040 Income Tax Return.
In no case will SED allow a
charge for pensions that are
accounted for as a salary
deduction through
compensation paid to the
employee.
e. Where
funding requirements of the
Employee's Retirement Income
Security Act (ERISA) differ
from GAAP, an explanatory
note should be included in
the CPA financial
statements. Reimbursement
will be based upon GAAP
requirements. In addition,
the costs of any excise tax
imposed on accumulated
funding deficiencies are not
reimbursable.
f. Any
program decision to
terminate participation in a
pension plan must be
communicated in writing to
the RSU not less than 90
days in advance of the
proposed termination date
and should indicate the
reasons for termination and
plans for disposition of
funds in the pension plan.
g.
Supplemental Executive
Retirement Plans (SERP) are
discriminatory and
nonqualified by the IRS and
therefore are not
reimbursable.
(2) The following
principles shall apply concerning
pension plan asset reversion
transactions in which employers
received plan assets in excess of
plan obligations:
a. Net reversion assets
will be classified as offsetting revenues.
b. Net
reversion assets are the
reversion dollar amount
before any excise tax or tax
penalties are deducted.
c. Net
reversion assets will
include funds received from
pension plan termination
insurance proceeds.
d. The
net reversion assets must be
allocated to all programs
based on the employees who
participated in the pension
plan.
e.
Enhancing employee benefit
plans in such situations is
reimbursable.
15.
Consultants
Consultants include
independent accountants, as defined in
section 200.9 (e)(1)(ii)(a) of the
Commissioner's Regulations, lawyers and
other independent contractors. (Refer to
Section I
Item # 39 (A) on
Purchase of Services and
Section II. General
Requirements and
Definitions, A.3. Consultants).
Nondirect care consultant service costs are
subject to the nondirect care cost
parameter.
A. Costs of consultants' services
are reimbursable provided that:
(1) Fees
do not exceed the prevailing
rate for such services.
The school will maintain
documentation to support
the regional prevailing
rate at the time such
costs are incurred. (Refer
to Section II. General
Requirements Item A.3.
Record Keeping).
(2) The
services could not have been
performed by an
appropriately certified
school officer or employee
who possesses the necessary
technical skills or by SED staff. (Refer to Section II.
General Requirements Item
C.1. (a).
(3) Paid
consultants providing
services to approved
programs for students with
disabilities are not
officers or employees of
the entity, employees of the
State Education Department,
employees of municipalities,
or employees of other
private schools whose
positions are funded wholly
or in part by State or local
taxpayer funds.
(4)
Persons who have been
employed by the State
Education Department to
monitor or audit approved
programs for students with
disabilities are not
employed as consultants for
a period of two years
following State employment.
(5) Fees
and transactions meet
criteria for less-than-arm’s
length transactions when
applicable (Refer to
Section
II. C., Definitions, Item
4 in this Manual for L-T-A-L).
B. Costs of
legal, accounting or consulting
services, and related costs incurred
in connection with reorganization of
the agency, including mergers and
acquisitions, unless mandated by the
State Education Department, are not
reimbursable. Costs associated with
retainers for legal, accounting or
consulting services are not
reimbursable unless the fee
represents payment for actual
documented reimbursable services
rendered provided the services are
not for lobbying efforts. [The cost
of certain influencing activities
(lobbying) associated with obtaining
grants, contracts, cooperative
agreements, or loans are not
reimbursable.] Lobbying
activities include, but are not
limited to, advocating for
legislation and activities
associated with obtaining grants,
contracts, cooperative agreements,
or loans.C. Legal,
accounting or consultant costs that
result from claims or lawsuits
against an Article 81 and Article 89
funded program are reimbursable to
the extent not recoverable from
other parties. Claims against
non-Article 81 and non-Article 89
programs are not reimbursable
through the tuition rate.D. When an
audit/financial review is conducted
by a local school district, a
municipality or the State in
accordance with State law,
Regulations of the Commissioner of
Education, Municipal Law and this
Manual, any
legal/accounting/consultant costs
incurred as a result of proceedings
brought pursuant to Article 78 of
Civil Practice Law & Rules to
challenge the established tuition
rates are not reimbursable.E. Fringe benefit
costs for independent contractors or
consultants are not reimbursable.F. Costs
associated with non-audit services
provided by a registered public
accounting firm or any person
associated with that firm, during or
within 365 days of required audit
work (prior to the beginning of the
fiscal period being audited or after
the date of the audit report issued
for the audit period), are not
reimbursable. Such non-audit
services include:
- Bookkeeping or
other services related to the
accounting records or financial statements of the audit client;Financial
information systems design and
implementation;Appraisal or
valuation services, fairness
opinions or contribution-in-kinds
reports;Actuarial
services;Internal audit
outsourcing services;Management
functions or human resourcesBroker or dealer,
investment advisor, or investment
banking services;Legal services
and expert services unrelated
to the audit; and
- Any other service
that the Board of the provider
does not approve, or that the SED or
other governing State agency
does not approve as reasonable and
necessary, consistent with
applicable requirements and this
Manual.
16.
Contingency Provisions
Contributions to a contingency
reserve or any similar provision made for events
whose occurrence cannot be forecast are not
reimbursable.
17.
Contributions and Donations
Political and charitable contributions
and donations made by the program are not reimbursable.
18.
Depreciation/Amortization
Public school districts and BOCES
must comply with applicable sections of the General
Municipal Law and GASB
34. (Refer to Item #9 on
Capital Expenditures in this Manual).
A. Depreciation - Buildings, Furniture,
Equipment and Vehicles:
(1) Items having
a unit cost of $1,000 or more and
an estimated useful life of two
years or more must be capitalized.
Group purchases of similar items
(i.e., furniture, small tools,
etc.) or separate purchases of
similar items in the same fiscal year
totaling $1,000 or more should
be treated as a single unit purchase.
Costs of facility
acquisition or construction shall be
depreciated over the expected useful
life of the facility as indicated
in
Appendix O - "Guidelines for
Depreciation and Amortization" of the
CFR Manual. Cost of facility
acquisition or construction includes
architect and inspection fees and should
be included in the cost of the building
for depreciation purposes. Renovations
or alterations that are considered to
be directly related to the education
program and therefore reimbursable
through depreciation charges over the
estimated useful life of the renovation
or alteration as indicated in Appendix
O of the CFR Manual may include:
replacement of roofs, boilers, plumbing
systems, or similar repairs needed to
protect the agency's physical plant;
installation of safety devices, such
as fire exits, alarms or smoke detectors
in existing buildings; renovations
necessary to comply with New York State
standards of instruction; renovations
to protect the health or safety of New
York State students; and other capital
expenditures for minor renovation work.
Proposals for acquisition, new
construction, renovations, alterations
or major repairs must be submitted to
the Commissioner's designated program
and fiscal representatives for their
review and comment. Refer to
Appendix D for
guidelines on the development of capital
projects.
(2) A move to a new
location must be approved by SED
program staff prior to the move.
Moving costs are discussed in
Item #41 B. (1) on
Rent.
(3) The
straight-line method of computing
depreciation is required by SED
for all classes of assets. Provision
for estimated salvage value must
be made in accordance with generally
accepted accounting principles
when computing depreciation for
vehicles, furniture and equipment.
(4) Refer to
Appendix O in the CFR Manual for
the required minimum useful lives
of assets acquired on or after July
1, 1992 to be used in the computation
of reimbursable depreciation.
Deviation from this Appendix for
furniture, equipment and vehicles
may be granted by SED if the assets
in question were previously owned.
Modifications to reduce useful lives
from those indicated in this
Appendix must be requested in
writing to the Department for their
advance approval.
(5) Depreciation
based on reappraisals designed to
increase the cost basis for
depreciation is not reimbursable.
Accumulated depreciation on assets
transferred due to a change in legal
status of the owner, such as
incorporation, is not
reimbursable. Accumulated
depreciation on property owned by
a division, subsidiary or affiliate
of an entity prior to acquisition
by the entity will not be reimbursed
to the program after acquisition;
the remaining undepreciated cost
of the prior entity will be reimbursed
over the remaining useful life of
the asset as if no ownership change
occurred.
(6) The portion
of the cost of building
construction, acquisition,
renovation or equipment cost funded
by a government grant or other
public funding cannot be reimbursed
again through depreciation of
these costs. The asset cost must
be reduced by the amount of the
grant(s) and the balance depreciated
in accordance with this Manual.
(7) Depreciation
charges for donated assets are
reimbursable in accordance with (1)
through (6) above.
(8) If assets are
shared by more than one program
and/or entity, the share of
depreciation expense allocated to
programs funded pursuant to Articles
81 or 89 shall be based on
documented and reasonable criteria.
(9) Depreciation
charged for assets acquired through
approved Dormitory Authority
construction/renovation projects
is not reimbursable in a tuition
rate.
B. Amortization: Except
for Goodwill (Refer to
Item #25), intangible and tangible
assets such as leaseholds, leasehold
improvements, organization expenses, and
mortgage expenses must be amortized in
accordance with the following amortization
periods:
(1)
Leasehold/Leasehold Improvements
- Amortized over the useful life
of the improvements or the remaining
term of the lease, whichever is
shorter. Amortization expense
for leaseholds and leasehold
improvements will be reimbursable
only with the existence of a formal
written lease agreement. The term
of the lease includes any period
for which the lease may be renewed
or extended. In the absence of
an expressed option, past actions
on the part of the lessor and lessee
pertaining to renewal will be
considered in determining the
term of the lease for amortization
purposes.
(2) Mortgage
Related Expense - Expenses related
to purchasing or constructing
a facility such as attorney's
fees; recording costs; transfer
taxes; and service charges such
as finder's fees and placement
fees; etc. should be amortized over the term
of the mortgage.
(3) Organization
Expense - Amortized over a 60-month
period starting with the month
the program becomes operational
to provide educational services.
C. Start-Up Costs
(previously amortized) - Refer to
Section 1 Item #49 Start-Up
Costs.
19. Due
Process Costs for Preschool Students Served under Section
4410 of the Education Law
Due process costs incurred by
public school districts associated with educational
programs or educational services approved pursuant
to Section 4410 of the Education Law and Section
200.17 of the Regulations of the Commissioner.
A. General Public School
District Due Process Costs:
The following general due
process costs incurred by a public school
district are reimbursable, to the extent
reasonable and necessary:
1. Impartial Hearing
Officer (IHO) costs including the
hourly fee up to the maximum rate
developed by the Department and
approved by the Director of the
State Division of the Budget. The
number of hours of service must also
be submitted and reviewed for
reasonableness. Reasonable and
necessary travel costs incurred by
the IHO may also be reimbursable.
The Impartial Hearing Officer must
be on the Department’s list of
certified IHOs.
2. Court
Stenographer Costs at the impartial
hearing are reimbursable.
3. School District
Attorney Fees are reimbursable,
to the extent they are
reasonable, when incurred at the
impartial hearing, during review by
the State review officer or in a
judicial action or proceeding
brought by another party to review
the State review officer's
determination. Under the conditions
described below, school district
attorneys’ fees are reimbursable in
an action or proceeding brought by
the board of education. The district
must provide a contract or retainer
agreement that establishes the
hourly rate for the school district
attorney. Such hourly fees and
number of hours of service shall be
reviewed for reasonableness.
Reasonable and necessary travel and
other incidental costs, such as
photocopying, may be reimbursable if
documentation is presented. To be
eligible to receive reimbursement
for reasonable attorneys' fees in an
action or proceeding brought by the
board of education, the board of
education must demonstrate that:
(i) (a) The
board of education has not named
or joined the State nor any
State officer, department, board
or agency of the State (State
defendant) as a party to the
action or proceeding; or
(b) There has
been a judicial determination
joining one or more State
defendants as a necessary party;
and
(ii) The
board of education, upon final
disposition of such action or
proceeding, has received a
judgment in its favor annulling
the determination of the State
review officer.
B. Interim Special Education
Program or Service Costs paid for by the
parents between the time of the Committee on
Preschool Special Education meeting, which
precipitated the impartial hearing and final
resolution (whether a decision from an
Impartial Hearing Officer, State Review
Officer or a Court) are not reimbursable
unless the Impartial Hearing Officer, the
State Review Officer or the Court requires
the school district to reimburse the parents
for such costs in their decisions.
C. Parent Attorney Fees are
not reimbursable unless the parents prevail
in the final resolution (whether a decision
from an Impartial Hearing Officer, State
Review Officer or a Court) and the final
decision requires the public school district
to reimburse the parents for their attorney
fees.
D. Evaluation of the child
paid for by the parents as part of due
process activities is not reimbursable
unless the Impartial Hearing Officer, State
Review Officer or Court requires the public
school district to reimburse the parents for
such evaluation costs.
E. Application for the
reimbursable costs described in (A) through
(D) above shall be submitted upon final
resolution (whether a determination from an
Impartial Hearing Officer, State Review
Officer or a Court).
F. Documentation: The
public school district must provide complete
and detailed documentation of costs
requested for reimbursement. For each item,
the nature of the cost must be detailed, the
per hour cost and the number of hours must
be clear, as well as who performed the
service. Costs requested, but not
sufficiently documented will not be
reimbursed.
20.
Dues/Licenses/Permits
The costs of professional
dues, licenses and permits are reimbursable and are
subject to the nondirect care cost parameter.
21.
Entertainment Costs and Personal Expenditures
A. Costs incurred for
entertainment of officers or employees, or
for activities not related to the program,
or any related items such as meals,Section
I lodging, rentals, transportation, and gratuities,
are not reimbursable. (Refer to
Item #30 on Meetings and
Conferences and Item
#57 on Travel).B. All personal expenses,
such as personal travel expenses, laundry
charges, beverage charges, gift certificates
to staff and vendors, flowers or parties
for staff, holiday parties, repairs on
a personal vehicle, rental expenses for
personal apartments, etc., are not
reimbursable unless specified otherwise in
this Manual.
22. Fines and
Penalties
Costs resulting from violations
of, or failure by, the entity to comply with
Federal, State, and/or local laws and regulations,
are not reimbursable.
23. Food
A. The cost of food and
food related salary and fringe benefit costs
are reimbursable. Programs are strongly
encouraged to take full advantage of the
funding available through the following
sources:
1. National School
Lunch Program, the School Breakfast
Program and the Special Milk
Program. These national programs are
administered at the State level by
SED. Applications and further
information regarding child
nutrition or school food management
may be obtained by writing to the
New York State Education Department,
Child Nutrition Program
Administration, Room 55 , Albany, NY
12234-0055 or viewing the
New York State Child Nutrition
Knowledge Center website or by
calling (518) 473-8781.
2. The New York
State Department of Health,
Child And Adult Care Food Program -
CACFP For more information about
the program, call CACFP at
1-800-942-3858
B. For all approved
programs providing required meals to
students with disabilities, the following
principles shall also apply:
(1) When the
program subcontracts for food
services, the program shall employ
competitive
bidding practices.
(2) When the
program directly supplies meals, the
direct costs of food and food
preparation must be reasonable in
comparison to the prevailing market
for such services.
C. Costs of food provided to any staff
including lunchroom monitors are not reimbursable.
D. Food costs will not be
reimbursed for special education itinerant
programs unless required by the student’s
IEP as an instructional supply.
24.
Fund-Raising Costs
Costs of organized fund raising
(i.e., financial campaigns, endowment drives, or
solicitation of gifts and bequests) to raise
capital, or to obtain contributions are not
reimbursable. However, reasonable and necessary
costs associated with the procurement and retention
of donated services used for IEP mandated services
either directly or indirectly, may be reimbursable
as long as the program can demonstrate that cost
savings exist and that there is a direct benefit to
the students in the program through the use of such
donated services. These costs are subject to the
nondirect care cost parameter.
25. Goodwill
Goodwill, defined as the stated
value of a business in excess of its book value, is
not a reimbursable cost.
26. Grants
A. Costs of staff or
consultants to prepare a proposal to obtain
a government grant or to administer the
activities or projects funded by such grants
may be reimbursable within the tuition rate
as a nondirect care expense to the extent
that such costs remain net of all
administrative expenses allowed by the
grantor.
B. Any claimed excess of
actual government (Federal, State or local)
grant expenses over approved budgeted grant
expenses is not reimbursable through
the tuition rate for either current or prior
years, except for costs defined in A. above.
C. Effective July
1, 2005, Chapter 437 of the Laws of 2005
requires that the revenues and expenditures
awarded by local education agencies’ (LEAs)
pursuant to Section 611 (g)(1) and Section
619 (g)(1) of the Individuals with
Disabilities Act (IDEA) be reported in
separate and discrete cost columns.
Previously, these funds and related
expenditures were reported within the
program that benefited from LEA’s
suballocation. Program codes 9805 and 9806
are to be used to report the revenues and
expenses of §611 and §619 suballocations,
respectively. The full accrual basis of
accounting is required.
27.
Insurance
A. Reimbursable insurance
premium costs include those for liability,
fire/disaster, or casualty loss insurance
obtained to guard against loss to the
program. NOTE: Self-insurance plans for
liability, fire/disaster, or casualty loss,
whereby a program establishes a reserve or
contingency account/fund for future
liabilities are not reimbursable.
Self-insurance plans for unemployment and
workers compensation are allowable for
school districts if consistent with regular
district practice and in compliance with
this manual. (Please refer to
Item #9.B.on Interfund
Transfers).
B. Entities have an
obligation to adopt insurance practices that
will obtain the best coverage for the lowest
cost (i.e. solicit competitive bids on
insurance).
C. Costs of insurance on
the lives of owners/officers or employees
when the entity is identified as the
beneficiary are not reimbursable. Costs to
insure against the loss of key personnel are
not reimbursable. (Refer to Item
#14 on Compensation).
D. Costs resulting from
losses not covered because of deductible
insurance policy provisions, and in keeping
with sound business practice, are
reimbursable. Costs are not reimbursable if
the school chooses not to file a claim with
the insurance company for losses that are
covered under the policy in force at the
time.
Costs for Business Income
Insurance to safeguard against the loss of
revenues due to business interruption and
consistent with industry standards are
reimbursable and subject to the nondirect care
costs parameter.
28. Interest
Costs
A. Arm's-Length -
Interest expense on capital indebtedness and
working capital is reimbursable
provided the interest rate is not in excess
of the prime rate plus one percent of the
lending institution at the time the loan was
made. Interest expense will be reimbursed on
loans in excess of the prime rate plus one
percent only with written approval of the
Commissioner in cases where the entity can
establish that it was unable to secure a
rate of prime plus one percent or lower
despite its good faith efforts to do so.
Good faith efforts shall be demonstrated by
documentation that an entity has attempted
within the last year to obtain the most
competitive rate available from lending
institutions in the entity's immediate
geographic area. Loan procurement fees are
not reimbursable.
B. Less-Than-Arm's-Length
- Interest expense on capital indebtedness
or on working capital loans incurred in a
LTAL transaction between the lender and the
borrower will be reimbursed only with the
prior written approval of the Commissioner
upon establishment of the necessity and cost
effectiveness of the transaction. A cost
effective transaction relating to interest
expense on capital indebtedness or on
working capital loans is one in which the
interest rate charged by the LTAL lender is
less than or equal to the prime rate on
lending in the geographic area and is
greater than the actual cost of the capital
rate to the lender. The borrowing LTAL
entity must demonstrate that this LTAL
transaction was necessary as a last resort
to acquiring monies and that the interest
rate charged by the lending LTAL entity was
more favorable than could be obtained in the
market place and that rate of interest must
be demonstrated to be at prime or less of
the lending institutions in the geographic
region at the time the loan was incurred.
Loan procurement fees are not reimbursable.
(Refer to Section II C, Definitions,
Item #4 in this Manual for
LTAL).
C. Reimbursement of
interest expense on capital indebtedness
shall be subject to the following
conditions:
(1) Interest
expense shall be included in the
nondirect care cost parameter of the
rate-setting methodology.
(2) Interest
expense on bank loans, bonds,
mortgages or similar instruments
is reimbursable if such expense
was incurred to finance the
acquisition of fixed assets or
vehicles, or implement major
renovations necessary to provide
special education services that
conform to standards in Federal and
State law and regulation. Interest
costs on construction loans must be
capitalized as required by GAAP.
(3) Mortgage
interest expense will be reimbursed,
as part of occupancy costs effective
with the actual date of occupancy in
the new location. Occupancy refers
to the site where the students are
physically located and receiving
services as prescribed on their
IEPs. Occupancy costs of the prior
location are reimbursable up to the
actual date of occupancy in the new
location.
(4) Interest
expense on the above is
reimbursable only when there is
a corresponding amortization of
principal on the capital
indebtedness and there are no
loans/notes receivables from related
parties at any time during the
entity's loan repayment period.
Payments, which represent "interest
only", are not reimbursable.
D. Working capital
interest is defined as interest paid on
loans that are secured for operational
expenses. Entities are encouraged to explore
the most cost efficient means of working
capital borrowing. For example, a revolving
line of credit may result in a lower average
monthly principal and lower annual interest
charges. Reimbursement for interest expense
on working capital financing shall be
subject to the following conditions:
(1) Interest
expense shall be included in the
nondirect care cost parameter of the
rate-setting methodology.
(2) Interest
expense will be reimbursed only if
conditions exist that warrant the
principal amount of the loan.
Documentation that the loan is
warranted includes but is not
limited to:
.
Evidence that the required
financial statements and
financial reports were
submitted by the deadline
including any extension
approved by the Commissioner
and in the format required
by the Commissioner.
. For a
new program whose
prospective rate was to be
based on a budget, evidence
that the complete budget
with any applicable
supporting data was received
by SED fiscal staff within
30 days after a written
request.
. Documentation of cash flow
needs including receipts
and disbursements.
. Documentation indicating
that tuition billings
or their equivalent were
submitted to the appropriate
funding sources in a timely
manner in accordance with
a written contract or
schedule of payments and
at least one follow-up
notice was sent to delinquent
sources.
.
Documentation indicating
that the required preschool
program's contract with
the county was submitted
to the county on a timely
basis and in the format
required by the county.
(3) Interest
expense on working capital loans for
late filers of required financial
information will be reimbursed on a
prorated basis if submitted within
90 days of the respective due date.
No interest expense will be
reimbursed for entities that file
cost reports more than 90 days after
the respective due dates.
Non-reimbursable interest expense
will affect the tuition rates for
the tuition rate year, in accordance
with the rate-setting methodology,
and will apply to all tuition rates
for that year (prospective, appeal,
reconciliation adjustments/rates and
final audit).
(4) Interest
expense on working capital loans
used for the purpose of repayment of
tuition to school districts and/or
municipalities as a result of an
audit or reconciliation rate is
not reimbursable.
(5) Interest
expense is reimbursable only
when there are corresponding
payments of principal on the working
capital loans and only if
there are no loans/notes receivables
from related parties at any time
during the entity's loan repayment
period. Payments, which represent
"interest only", are not
reimbursable.
(6) Interest
expenses paid on loans to the entity
are not reimbursable unless the
criteria in Item #28 have been met.
In addition, these interest payments
will be considered compensation when
paid to a shareholder who is also a
paid employee or a consultant of an
entity or program.
29.
Investment Management
Costs of investment counsel and
staff and similar expenses incurred solely to
enhance income from investments are not
reimbursable.
30. Meetings
and Conferences
For reimbursement purposes,
conferences are generally defined to include
meetings, conventions, symposiums, seminars,
Department sponsored sessions or other such
assemblies whose primary purpose is the
dissemination of technical information. Conferences
must be directly related to the education program or
to the administration of the program. Programs shall
be required upon audit to provide brochures, agenda
or other literature that verify attendance and
document the purpose of the conference or meeting.
The following reimbursement principles shall be
applied to conference costs:
(1) Reimbursement for
off-site conference costs are limited to no
more than three conferences within a 12
month period for any single individual and
will be reimbursed consistent with New York
State guidelines for costs of meals,
transportation, rental of facilities, and
other items incidental to such conferences.
Reimbursement for transportation costs
will be limited to the most cost effective
means of travel. (Refer to
Item #57 on Travel.)
(2) Costs of conferences
held at out-of-state resorts are limited to
the guidelines detailed in
Appendix C.
Reimbursement is allowed up to three days
per conference for each person but only when
each person requesting reimbursement attends
six or more hours per day of conference
sessions.
(3) Costs for food,
beverages, entertainment and other related
costs for meetings, including Board
meetings, are not reimbursable.
(4) Costs of conferences
attended by teachers and other direct care
staff whose purpose is to improve desired
student learning outcomes by more effective
means are reimbursable.
(5) Costs of conferences
attended by administration staff are limited
to two people per conference and are
reimbursable provided that the purpose of
the conference is to improve or demonstrate
new administrative techniques or concepts
and the criteria in 1 - 3 above are met.
Such costs will be subject to the nondirect
care cost parameter.
(6) Documentation to
support the cost of meetings and conferences
must include the names and job titles of
staff that attended and the program(s)
served by each staff person.
31.
Miscellaneous Expenses
Expenses that do not fit into any
other category for the operation of Article 81 and
Article 89 education programs are reimbursable
provided these expenses meet the cost principle
criteria as discussed in this Manual. Miscellaneous
expenses are subject to the nondirect care cost
parameter.
32. Office
Supplies
See Section I Item#52
Supplies and Materials (Household).
33. Payroll
Preparation
The cost of preparing payrolls
and maintaining necessary related wage records is
reimbursable subject to the nondirect care cost
parameter.
34. Plant
Security
Necessary expenses incurred to
comply with security requirements, including wages
and equipment of personnel engaged in plant
protection, are reimbursable subject to the
nondirect care cost parameter.
35. Postage
Postage costs such as stamps,
postage meter rentals, and mailing permits for
Article 81 and Article 89 programs and activities
are reimbursable subject to the nondirect care cost
parameter.
36. Printing
and Reproduction
A. Cost for printing and
reproduction of forms or reports, etc.,
which are necessary for Article 81 and
Article 89 programs, are reimbursable.
B. Costs of providing
information regarding program services,
placement procedures, admission policies and
related matters to be used by placing
agencies are reimbursable subject to the
nondirect care cost parameter.
C. Cost of publication
about research or fund raising are not
reimbursable.
37.
Professional Dues
Costs of the school's membership
in civic, business, technical, and professional
organizations are reimbursable subject to the
following restrictions:
A. The benefit from the
membership is related to Article 81 and
Article 89 programs.
B. The cost of membership
is reasonably commensurate to the value of
the services or benefits received.
C. The expenditure is not
for membership in an organization whose
primary purpose is to influence legislation.
38. Profits
and Losses on Investments
Profits and/or losses on the sale
or exchange of either short or long term investments
are not considered in the computation of tuition
rates. (Refer to Item #44 on
Revenues).
39. Purchase
of Services
A. Fees paid to
independent contractors (see
Item #15 on
Consultants), such as payments for
garbage pickup, upkeep of grounds, data
processing, payroll processing, temporary
office workers, security guards, or pest
exterminators are reimbursable.
Tuition costs paid by the
special act school district (SASD) for
non-disabled children of SASD staff or the
related residential agency staff that are
required to reside on the grounds of the
special act school district and attend[s]
local public school districts are
reimbursable.
B. Health related costs
such as speech therapy, physical and
occupational therapy and psychological
services are reimbursable in the calculation
of the program's tuition rate to the extent
such services are prescribed in a student's
IEP and are subject to the following:
(1) For Article
89 school age students, costs of
diagnostic or evaluative services
are the responsibility of the
school district or the committee
on special education (CSE), and
are not reimbursable in the tuition
rate.
For Article 81
school age students, costs of
diagnostic or evaluative services
by the Article 81 school's committee
on special education are reimbursable
in the tuition rate.
(2) For Article
89 preschool students, evaluation
costs and bilingual evaluation
costs reported in the preschool
provider's evaluation cost center
are reimbursable, at the evaluation
rates established annually pursuant
to section 4410 of the Education
Law and the related Commissioner's
Regulations.
(3) Consistent
with federal and state regulations,
related services for school-age
students with disabilities may
include medical services as
provided by a licensed physician,
or other appropriately licensed health
professional. These services
must be for diagnostic or evaluative
services only to determine whether
a student has a medically related
disability. Reimbursement for
such evaluations is discussed
above in B. (1) and (2). The
cost for medical services other than
diagnostic or evaluative service
in approved private schools should be reimbursed
through the maintenance rate as
appropriate. Costs incurred
to comply with OSHA mandates
(Part 1910.1030 of Title 29
of the Code of Federal Regulations) that all
health care employers offer
Hepatitis B vaccine free of charge
to employees who "reasonably" anticipate exposure
to blood and other infectious
materials are reimbursable in the
tuition rate.
(4)(a). Costs
incurred in less-than-arm's-length
purchase of health related service
transactions that are determined
to be above actual documented
costs of the owner shall be
reimbursed only with written
approval of the Commissioner
obtained prior to the LTAL transaction upon the
establishment of the
cost-effectiveness that may result
from the transaction. The
Commissioner's approval may be
rescinded retroactively if, based
on further review/reconciliation/audit,
it is determined that information
used in the initial approval was
erroneous, incomplete, did not
fairly represent all relevant
facts, data or issues, or there
is inadequate supporting documentation
for information/data provided
and used during the approval
process.
(4)(b). A
cost-effective purchase of health
related services transaction is
one in which the amount paid
to one related party by another
related party for the purchase
of health related services, on
a per session basis, is less
than or equal to the average
per session base-year costs of
the purchase of such services from other entities
approved under Article 81 or
89 of the Education Law to deliver
such related services and, those
entities have tuition rates established
by the SED and approved by the
State Division of the Budget
and are located within the same
Basic Education Data Systems
geographic region as the entity requesting the
cost-effective determination.
The data to be used for this
analysis shall be derived from
the financial reports submitted to the Department
by approved programs as required
under Section 200.9(e) of the
Commissioner's Regulations. For
example, requests for a cost-effectiveness
determination for the purchase of
health related services transaction
for the 2008-09 school year
would have the per-session average
calculated using the 2006-07
financial report data submitted by
approved programs and must be
approved prior to July 1 of
the school year to which the
determination pertains. The
per-session average shall not be
subject to revision based on
subsequent data from future
financial reports received for the
same fiscal year.
(5) The costs of
parent counseling and training to
assist parents in understanding
the special needs of their child;
providing parents with information
about child development; and helping
parents to acquire the necessary
skills that will allow them to
support the implementation of
their child’s IEP are reimbursable.
40.
Recruitment of Personnel
A. Costs of recruiting
personnel required to meet State program or
fiscal mandates or of solicitation of bids
for necessary goods and services are
reimbursable. Costs of "help wanted"
advertising and of operating an aptitude and
educational testing program for prospective
employees, travel costs of employees engaged
in recruiting personnel and travel costs of
applicants for interviews for prospective
employment are reimbursable provided that
the size of the staff recruited and
maintained is in keeping with workload
requirements. Costs of fingerprinting staff,
drug testing, etc. are reimbursable if
mandatory in the recruitment of personnel.
Records must be kept which include the
prospective employee's credentials and
salary requests. Where the program uses
employment agencies, costs not in excess of
standard commercial rates for such services
are reimbursable. These costs are subject to
the nondirect care cost parameter.
B. Costs for recruiting
LTAL individuals are not reimbursable.
(Refer to Section II C., Definitions,
Item 3 in this Manual for
LTAL).
41. Rent
A. Rental agreements,
including renewals, must be in writing,
dated and signed by the lessee and the
lessor.B. Property - Rental
costs of buildings and facilities are
reimbursable under the following
circumstances:
(1) Rental costs
are within the nondirect care cost
parameter. Entities operating
approved programs may submit
copies of new or renegotiated
leases to RSU staff for review
at least 90 days before the effective
date of the lease to allow the
Commissioner's designated fiscal
representatives to determine whether the costs
of rental agreements are within
the limitations of the program's
nondirect care cost parameter. A move to a new
location must be approved by SED
program staff prior to the program's
move. Moving costs are reimbursable
if the move is necessary to enable
the program to conform to
requirements of the Regulations of
the Commissioner of Education
or the students' IEP. However, the
program must establish that a change
in location or lease resulted from
Education Department program
mandates, consistent with regulatory
or IEP requirements, or arm's-length
landlord action in response to
market forces. In addition, the
program's occupancy costs of the
new location are not reimbursable
before the actual date of the
program's occupancy. The program's
occupancy costs of the prior
location are reimbursable up to the
actual date of the program's
occupancy in the new location.(2) Occupancy
costs are based on actual documented
rental charges, supported by bills,
vouchers, etc. Donated rent is
not reimbursable.Rent security deposits
are not reimbursable.(3) Rental costs
specified in sale/transfer and
leaseback agreements may not be
greater than what the actual costs
would have been had the program
retained legal title. A
sale/transfer or leaseback agreement
is one in which a entity either:
sells/transfers assets to another
party (e.g., insurance company,
associated organization or
institution, or private investor)
and the property is leased back
to the program, or sells/transfers
assets to a person or entity related
to the program who then leases
the asset to the program. Sale/transfer and
leaseback agreements should be
identified in an explanatory note
in the program's certified financial
statements.(4) The share of
rental expense allocated to programs
funded pursuant to Articles 81
and 89 is based on documented and
reasonable criteria, such as square
footage utilization, when more
than one program is operated in a rented
facility.(5) Costs
incurred in less-than-arm's-length
lease of real property transactions
that are determined to be above
actual documented costs of the
owner shall be reimbursed only
with written approval of the Commissioner
upon the establishment of the
cost effectiveness resulting
from the transaction. This written
approval must be obtained prior
to the LTAL transaction upon the
establishment of the cost-effectiveness that
may result from the transaction.
The Commissioner's approval may
be rescinded retroactively if,
based on further review/reconciliation/audit,
it is determined that information
used in the initial approval was
erroneous, incomplete, did not
fairly represent all relevant
facts, data or issues, or there
is inadequate supporting documentation
for information/data provided
and used during the approval
process.A cost effective
lease of real property transaction
is one in which the lease amount
paid and incidental costs of the
property to one related party
by another related party, on a
per pupil basis, is less than
or equal to the average per pupil
base year costs of property (including
rental costs, building depreciation,
and mortgage interest) provided
by other entities, approved under
Articles 81 or 89 of the Education
and, those entities have tuition rates established by the SED and
approved by the State Division
of the Budget and are located
within the same BEDS geographic
region as the entity requesting
the cost effective determination.
The data to be used for this analysis shall be
derived from the financial reports
submitted to the Department by
approved programs as required
under Section 200.9(e) of the
Commissioner's Regulations. For
example, requests for a cost effectiveness determination for a
lease of real property transaction for the 2008-09 school year
would have the per pupil average calculated using the 2006-07 financial
report data submitted by approved programs and must be approved
prior to July 1 of the school year to which the determination
pertains, i.e. July 1, 2008. The
per pupil average shall not be
subject to revision based on subsequent
data from future financial reports
received for the same fiscal year. Approved
cost-effective rental amounts
are subject to the nondirect care
screen parameter.
C. Furnishings and
Equipment - Rental costs of furniture and
fixtures are reimbursable provided that
annual rental charges and maintenance costs
are comparable to the costs that would be
reimbursed if the equipment were owned by
the program and being maintained and
depreciated by the program. The cost of
lease-purchase agreements for furnishings
and equipment is reimbursable
provided that the lease-purchase agreements
are reasonable and appropriate. Reimbursement of rental
costs of furniture and equipment specified
in sale/transfer and leaseback agreements
will be subject to the conditions specified
in B (3) above. Reimbursement for rental
costs in LTAL transactions will be limited
to owner's actual costs.D. Vehicles - Rental
costs of program vehicles are reimbursable
provided that annual rental charges and
maintenance costs are comparable to the
costs that would be reimbursed if the
vehicles were owned by the program and being
maintained and depreciated by the program.The cost of
lease-purchase agreements for vehicles is
reimbursable provided that the
lease-purchase agreements are reasonable and
appropriate.Rental costs of vehicles
used by administrative staff will be
reimbursed only to the extent that they are
within the limits of the nondirect care cost
parameter and are necessary for operating
the program. (See Item #57 on Travel).
42. Repairs
and Maintenance - Plant, Equipment, and Vehicles
A. Costs incurred for
necessary maintenance, repair or upkeep of
property that do not add to the permanent
value of the property's usefulness nor
appreciably prolong its intended life, but
keep it in efficient operating condition,
are reimbursable to the extent that they
are not otherwise included in rental or other
charges.B. Costs incurred for
necessary maintenance or repair of office,
stationary or movable equipment that keeps
the equipment in an efficient operating
condition are reimbursable.C. Costs incurred for
necessary maintenance and repair of agency
vehicles that keep these vehicles in an
efficient operating condition are
reimbursable.
(1) Costs of
maintenance and repair of vehicles
provided as perks to agency officers
or employees for personal use are
not reimbursable. (2) If an agency
rents vehicles, only repair and
maintenance expenses not covered
by the rental/lease agreement are
reimbursable (See
Item #41 on Rent).
D. These costs are
reimbursable only to the extent that they
are within the limits of the nondirect care
cost parameter and are necessary for
operating the program.
E. All facilities, located
in New York City, operating classes for
children under six years of age will be
responsible for correcting all lead-based
paint hazards using safe work practices. The
NYC department of Health and Mental Hygiene
will conduct inspections of day care service
providers for lead-based paint hazards. If
such hazards are found the provider must
remediate such conditions within 45 days.
The program shall employ competitive bidding
practices in correcting the conditions.
Should the expense involved in correcting
the condition cause a total cost screen,
documentation should be sent to the
rate-setting unit during the reconciliation
comment period. These additional costs may
be subject to a waiver if they are the cause
of a total cost screen. The full law is
available at the New York City Council
website at
http://www.nyccouncil.info/pdf_files/bills/law04001.pdf
43. Research
Costs of staff salaries, supplies
or printing and reproduction of materials or any
other costs associated with general research
activities are not reimbursable.
44. Revenues
A. Section 4401 of
Education Law states that an approved
tuition rate shall be computed after the
following revenues have been offset by SED
against the proper expenditures:
(1) Any cash
receipts that reduce the cost of an
item will be applied against the
item, except gifts, donations and
earned interest from other than
public funds. Gains from the sale of
program equipment, vehicles or
buildings not purchased through a
grant or private funds will be
offset by SED against replacement
assets or total program costs when a
tuition rate is calculated. (See
Item #18 on
Depreciation relating to costs
funded by grants).
(2) Funding
received from a governmental agency
or unit for specific education
programs or cost items will be
offset by SED against the
appropriate program costs in the
calculation of tuition rates so that
costs will not be reimbursed more
than once by public funds.
(3) Any income
earned from investment of public
funds (e.g., tuition) resulting from
the operations of approved programs
will be considered applied income to
reduce the costs of the program(s)
(See Item # 38 on
Profits and Losses on Investments).
(4) Interest
income earned on assets/fund
balances in funds other than the
General Fund shall be offset in the
tuition rate calculation if these
assets/fund balances were not
transferred to these funds in
accordance with the accounting
requirements in Section I Item 9 (B) of this Manual.
(5) State
Transportation Aid, BOCES Aid and
Building Aid when not applicable to
a Dormitory Authority project are
offsetting revenues for Special Act
School Districts (SASD).
B. Tuition revenues
received from State or local governments or
school districts for education of students
pursuant to Article 81 and Article 89 of
Education Law are not offset against costs
when a tuition rate is calculated.
45.
Scholarships and Student Aid
Costs of scholarships,
fellowships and other forms of student aid that
apply only to instruction of privately funded or
nondisabled students are not reimbursable.
46.
Severance Pay
A. Severance pay is
compensation in addition to the regular
salary that is paid by a program to
employees whose services are being
terminated.
B. Cost of severance pay is
reimbursable provided that:
(1) Such payment is required by
law or by employer-employee agreement or contract.
(2) The cost of severance pay
does not exceed two weeks for a full-time employee.
(3) Severance
payment should be allocated to all
appropriate programs and/or entities
on a reasonable basis. Costs should
be reported in programs where salary
and fringe benefits of the employee
who received severance pay would
have been reported.
C. Severance pay for
normal, recurring staff turnover is not
reimbursable in the absence of legal
requirements, contracts, or agreements.
47. Special
Education Itinerant Teacher Services
A. The following costs
are reimbursable in the calculation of
preschool special education itinerant
teacher (SEIT) tuition rates:
(1) Costs for
certified special education teacher
itinerant salaries and fringe
benefits are reimbursable.
(2) Costs
associated with substitute special
education itinerant teachers as well
as the costs associated with
providing regular education
classroom coverage when a special
education itinerant teacher is
engaged in consultation with the
regular education teacher, (i.e.,
indirect service as defined in
Section 200.16 (h)(3)(ii) of the
Commissioner's Regulations), are
reimbursable. Under no circumstances
will the reimbursable hours for
regular education classroom coverage
exceed the weekly amount of such
indirect service as required by the
student's IEP.
(3) Travel costs
incurred by the special education
itinerant teacher in providing
direct and indirect services or
performing other required functions
are reimbursable.
(4) Reimbursable
nondirect care costs are subject to
the nondirect care cost parameter
and include, but are not limited to:
nondirect supplies and materials,
office space and related expenses,
administration and overhead.
(5) Total reimbursable
expenditures are subject to the total cost screen.
B. Expenditures for
related services, as defined in Section
4410(1) (J) of the Education Law and Section
200.1(qq) of the Regulations, are not
reimbursable in the calculation of tuition
rates for special education itinerant
teacher services.
48. Staff
Development
A. The costs of
in-service training provided for employee
development, including training materials,
salaries and related costs of instructors
are reimbursable.
B. Educational costs at
an undergraduate or postgraduate college
level are discussed in Item #14 on
Compensation in this Manual.
49. Start-Up
Costs
Start-up costs as defined in SOP
98-5 relating to initiating an approved program or
expanding an existing approved program to include a
new site shall be expensed in the initial year of
operation in accordance with generally accepted
accounting principles (Statement
of Position -SOP 98-5) and are reimbursable as one-time only expenses
subject to the parameters of the tuition
rate-setting methodology. Additionally, previously
unamortized start-up costs shall also be expensed in
accordance with generally accepted accounting
principles (SOP 98-5) and are reimbursable as
one-time only expenses subject to the parameters of
the tuition rate-setting methodology and the
nondirect care cost screen. Start-up costs must be
incurred after the date of program approval issued
by the Department to be considered for
reimbursement.
50. Stipends
Payments to students for on- the-
job training or work stipends as part of an
educational program are not reimbursable. Such
stipends should be paid by the party that receives
some benefit from the job or work experience
involving the student or by private sources.
However, monies provided to students through the
entity's payroll for services performed by students
that would otherwise need to be performed by school
employees are reimbursable if those payments conform
to all appropriate labor laws and regulations.
51.
Subscriptions and Publications
Costs of subscriptions to civic,
business, professional and technical periodicals are
reimbursable when related to Article 81 and Article
89 programs and addressed to the school.
52. Supplies
and Materials (Household)
Purchases made specifically for
Article 81 and Article 89 programs should be charged
at actual prices after deducting all cash discounts,
trade discounts, rebates, and allowances received by
the entity. Withdrawals from general stores or
stockrooms should be charged at their cost under any
method of pricing that conforms to sound accounting
practices. Incoming transportation charges are part
of material costs. Direct material cost should
include only the materials and supplies actually
used and due credit should be given for any excess
materials retained or returned to vendors. Due
credit should also be given for all proceeds or
value received for any scrap. Where government
donated or furnished material is used in the Article
81 and/or Article 89 program, no estimated value of
such material will be included in the computation of
tuition rates.
Private providers are expected to
purchase supplies and materials through New York
State contract or private purchasing consortia
whenever possible and when those contracts or
consortia can provide materials at a cost lower than
the market place in general. Appendix B provides a
listing of approved vendors offering a wide range of
products at prices negotiated by purchasing
consortia.
Costs of supplies such as light
bulbs, brooms, paper products, repair tools,
ladders, etc. for repairs and maintenance of the
facility are reimbursable subject to the nondirect
care cost parameter. Costs of consumable office
supplies such as paper, pencils, pens, paper clips,
etc. or of printing financial reports, checks, or
office forms are reimbursable subject to the
nondirect care cost parameter.
53.
Supplies and Materials (Non-Household)
A. Reasonable and
necessary costs incurred for purchased
supplies and materials that are related to
Article 81 and Article 89 programs are
reimbursable. Reimbursable supply costs
include:
(1) Costs of
consumable items used in the
classroom and SEIT programs (craft
paper, chalk, paste, etc.);
(2) Costs
incurred for freight, express,
cartage, postage and other
transportation services relating
either to goods purchased, in
process, or delivered;
(3) Costs of
supplies required and supported by
the individualized education program
(IEP) for students with disabilities
as part of their education; and
(4) The costs of
consumable medical supplies
(aspirin, bandages, etc.) are
reimbursable provided they are
administered for emergency care by
qualified professionals.
54. Taxes
A. In general, taxes that
the entity must pay and charged to a program
(such as water, school or property tax) are
reimbursable if they are paid or accrued in
accordance with generally accepted
accounting principles. Payments made to
local governments in lieu of taxes
commensurate with services received are
reimbursable. The payment of minimum New
York State Corporation Franchise Tax or
similar business tax is reimbursable.
Any amounts over the minimum are the result
of a corporation having to base its
franchise tax on one of the other given
calculation methods (e.g., income capital,
officers' compensation, etc.) and are not
considered the required minimum tax. Such
costs will be subject to the nondirect care
cost parameter.
B. Payments for Federal,
State and local income taxes or any related
penalties and interest are not reimbursable.
Penalties and interest on late payments or
nonpayment of payroll withholding taxes are
not reimbursable.
To get more information
on the minimum New York City and New York
State Corporation Taxes, you may call the
New York State
Department of Taxation and Finance, Taxpayer Assistance Bureau at
1-800-972-1233.
55.
Telephone/Facsimiles
A. Costs incurred for
telephone service, local and long distance
telephone calls, electronic facsimiles (FAX)
and charges for cellular telephones, etc.,
are reimbursable provided that:
(1) They pertain to the special
education program; and
(2) Long distance
telephone or message charges are
documented by monthly bills and
proof of payment and directly
attributable to the Article 81 and
Article 89 funded programs.
B. Long distance
telephone charges and all cell phone charges
that are not properly documented will not be
reimbursed.
C. Reimbursement is
received from persons who make personal
calls from business phones, including
business cell phones, must be offset against
this expense.
D. These costs are subject to the
nondirect care cost parameter.
56.
Transportation of Students
A. Costs of transportation
to and from a school age (5-21) student's
home to the program for the September
through June and/or the July/August
component are the responsibility of the
local school district and are therefore not
reimbursable in the computation of a tuition
rate.
B. Costs of
transportation of students residing in child
care institutions between the residence and
the education program are reimbursable in
accordance with Section 200.12 of the
Commissioner’s Regulations.
C. Certain New York City
private programs may be open on days when
the New York City Board of Education does
not provide transportation. Programs should
contact the Commissioner's designated fiscal
representatives about the reimbursement of
transportation costs in these circumstances.
D. SASDs should refer to
Item #44 on Revenues
regarding State Transportation Aid.
E. Costs of
transportation to and from a preschool (ages
3-4) student's special education program
and/or services are the responsibility of
the appropriate municipality and are
therefore not reimbursable in the
computation of the tuition rate.
57. Travel
Travel costs include costs of
transportation, lodging and subsistence incurred by
employees in travel status on official school
business. Reimbursement for such travel costs shall
be consistent with Bulletins issued by the N.Y.S.
Division of the Budget and the Office of the State
Comptroller. (See Appendix C of
this Manual).
A. The method used to
claim costs (e.g. per diem, actual costs)
must be consistently applied to the entire
trip.
B. Out-of-state travel
costs, except for conferences as explained
in Item #30 Meetings and Conferences, are
not reimbursable.
C. Costs of first class air
accommodations are not reimbursable.
D. Costs of automobile travel are
reimbursable as follows:
(1) Costs of
personal use of a program-owned or
leased automobile are not
reimbursable. The costs of vehicles
used by program officials, employees
or Board members to commute to and
from their homes are not
reimbursable.
(2) The
Commissioner reserves the right to
determine whether a program-owned or
rented automobile is a luxury
vehicle. For purposes of
reimbursement, a luxury vehicle is
described as a car that exceeds a
sales price of $38,000 in accordance
with the 2001 IRS Retailer's Excise
Tax Rates for passenger cars. If the
Commissioner determines that an
automobile is a luxury car, the
added expense of owning or operating
such a vehicle will not be
reimbursed.
Stereo equipment,
remote car starters, fog lights,
winches, and the like that are
factory installed or after-market
installed as optional equipment are
considered luxury items and are not
reimbursable whether the vehicle is
program owned, rented or leased by
the entity.
(3) Use of
privately-owned vehicles for program
business by employees is
reimbursable provided such use
is documented and necessary. Such
use will be compensated at a rate
not to exceed the mileage rate
allowed by the Internal Revenue
Service (IRS) for automobile travel
or for the use of privately owned
motorcycle. Private car mileage
reimbursements in excess of the
allowable IRS reimbursement rate per
mile are subject to withholding and
reporting requirements. Auto repair,
depreciation, insurance, rental,
garage and maintenance costs
incurred by employees for
privately-owned vehicles are not
reimbursable.
(4) For CFR
filers, reimbursement for the
purchase of vehicles will be in
accordance with Appendix O of the
CFR Manual governing depreciation.
Reimbursable depreciation expense
for vehicles used by administrative
staff and Board members will be
subject to the limitations of the
nondirect care cost parameter.
E. Reasonable and
necessary costs of meals, lodging and
transportation will be reimbursed for Board
members in travel status to attend Board
meetings at a level of reimbursement
consistent with the guidelines established
by the Office of the State Comptroller for
New York State employees. (See Appendix C).
F. Travel expenses of
spouses, family members or any nonemployee
are not reimbursable unless the spouse or
family member is an employee of the entity (ies)
and a legitimate business purpose exists for
them to travel.
58.
Utilities
Costs of electricity, gas, heat,
water, fuel, bottled gas, etc. are reimbursable,
provided these costs have not already been included
in costs reported for rental or lease agreements.
Such costs must be directly charged to applicable
programs or allocated on a reasonable basis and will
be subject to the limitations of the nondirect care
cost parameter.
SECTION II.
GENERAL REQUIREMENTS AND DEFINITIONS
A. Record
Keeping
Section 200.9 (d) of the
Commissioner's Regulations requires entities
operating approved programs to retain all pertinent
accounting, allocation and enrollment/attendance
records supporting reported data directly or
indirectly related to the establishment of tuition
rates for seven years following the end of each
reporting year. Information relating to the
acquisition of fixed assets, equipment, land or
building improvements and any related financing
arrangements and grants must be retained as long as
the facility is used by any education program the
provider operates if this period exceeds seven
years.
Costs will not be reimbursable on
field audit without appropriate written
documentation of costs. Documentation includes but
is not limited to:
1. Payroll
Compensation costs must
be based on approved, documented payrolls..
Payroll must be supported by employee time
records prepared during, not after, the time
period for which the employee was paid.
Employee time sheets must be signed by the
employee and a supervisor, and must be
completed at least monthly.
2.
Time Distribution
Actual hours of service
is the preferred statistical basis upon
which to allocate salaries and fringe
benefits for shared staff who work on
multiple programs. Entities must maintain
appropriate documentation reflecting the
hours used in this allocation. Acceptable
documentation may include payroll records or
time studies. If hours of service cannot be
calculated or a time study cannot be
completed, then alternative methods that are
equitable and conform to generally accepted
accounting principles may be utilized.
Documentation for all allocation methods
(bases and percentages) must be retained for
a minimum of seven years. Guidelines for
acceptable time studies for CFR filers are
provided in
Appendix L - "Acceptable Time Studies" of
the CFR Manual.
3.
Consultants
The Department will use
government publications including the
Handbook
for Employers published by the New
York State Unemployment Insurance Division
as a guide to determine when individuals
employed by the program are independent
contractors or consultants and when
individuals are employees.
Adequate documentation
includes, but is not limited to, the
consultant's resume, a written contract
which includes the nature of the services to
be provided, the charge per day and service
dates. All payments must be supported by
itemized invoices which indicate the
specific services actually provided; and for
each service, the date(s), number of hours
provided, the fee per hour; and the total
amount charged. In addition, when direct
care services are provided, the
documentation must indicate the names of
students served, the actual dates of service
and the number of hours of service to each
child on each date.
Requests for proposals
(RFP) or other bidding documentation must be
kept on file by the entities operating the
program. The entity will need to justify
that the consultant hired was the most
economical and/or appropriate available for
a particular service.
4. Purchases
All purchases must be
supported with invoices listing items
purchased and indicating date of purchase
and date of payment, as well as canceled
checks. Costs must be charged directly to
specific programs whenever possible. The
particular program(s) must be identified on
invoices or associated documents. When
applicable, competitive
bidding practices
should be used in conformance with the
School Business Management-Handbook Number
5.
5. Travel
Logs must be kept by each
employee indicating dates of travel,
destination, purpose, mileage, and related
costs such as tolls, parking and gasoline
and approved by supervisor to be
reimbursable.
6.
Attendance Records
Instruction:
Attendance
records must be maintained for all
students indicating date of
admission, discharge, program, and
funding source. Daily attendance
records must be maintained
indicating whether each student is
present or absent and summarized
monthly. In addition, individual
student files must be maintained and
kept current. Also, both legal and
illegal absences, as defined in item
C (6) on
"Full-Time Equivalent Enrollment"
in this Section, must be documented
by the provider. Attendance records
and documentation of absences must
be kept for seven years as well as a
signed and dated copy of each
student's IEP.
Related Services:
Related service
records for each child indicating,
for each service session, the date,
duration, nature and scope of
service provided, with the name,
license or certification number and
signature of the related service
provider.
7.
Contractual Agreements
All contractual
agreements (e.g., leases) must be in
writing, signed, and dated.
8.
Liabilities: Short and Long-Term
Long-term payables (e.g.,
mortgages and loans) must be supported with
amortization schedules, the signed and dated
mortgage/loan agreements, and evidence of
payments made. The acquired assets related
to each loan must be identified as well as
the program(s) utilizing each of these
assets.
Working capital loans and
lines of credit borrowings must be supported
with the written agreement, loan dates and
amounts of borrowings and repayments,
applicable interest rates for each borrowing
and documentation (i.e. Board meeting
minutes) supporting the necessity for the
loan and the borrowed amount.
9. Equipment
and Furniture
Inventory records,
including the invoice, must be kept for all
items purchased by the entity or donated to
the entity for the benefit of approved
programs. These records should list: the
invoice number; a description of the item;
the make; model; or serial number of the
item; cost; date of purchase; date retired;
if applicable, the program(s) using the
asset; and the location. For donated items,
inventory records should identify the item
as donated, listing the date of donation and
the fair market value of the item at the
time of donation.
10. Vehicles
Records must include date
purchased, cost, make, model, vehicle ID #
and year of the vehicle. If vehicles were
rented or leased, a copy of the rental
agreements or leases should be retained.
Vehicle use must be
documented with individual vehicle logs that
include at a minimum: the date, time of
travel, to and from destinations, mileage
between each, purpose of travel, and name of
traveler. If the vehicle was assigned to an
employee, also list the name of the employee
to whom it was assigned. The annual mileage
for program purposes and repairs and
maintenance costs for each vehicle should be
summarized and maintained.
11.
Buildings
Records for buildings and
land owned by the entity and used by the
program must describe the buildings and land
owned. Records must include a copy of the
purchase agreement, deed, any mortgages and
the amortization schedule for such
mortgages. Records must include the
allocable portion of space in each building
used by or for the benefit of each program
(education and non-education) and for the
purposes of program administration and
agency administration. All related
information must be retained as long as the
facility is used by an approved education
program even if this period exceeds seven
years.
12. Building
Improvements
Records must include the
date work was completed, a description of
the improvement, including location (i.e.
floor, rooms), the cost, the program(s) that
benefited, the share of costs allocable to
each program and the basis for allocation.
Detailed bills from the person or business
doing the work are acceptable records.
13.
Allocations
a) Any
expenditures that cannot be charged
directly to a specific program must
be allocated across all programs
and/or entities benefited by the
expenditure. For example:
.
Salaries of employees who
perform tasks for more than
one program and/or entity
must be allocated among all
programs and/or entitities
for which they work. See
also
Item #14, Compensation
for additional allocation
requirements.
. The
cost of supplies that are
purchased for distribution
among multiple programs must
be allocated among these
programs if direct charges
are not possible. Adequate
documentation of the
allocation methodology
should be maintained.
. General
maintenance and overhead
expenses must be allocated
among all programs and
entities.
b) Entities
operating programs must use
allocation methods that are fair and
reasonable, as determined by the
Commissioner's fiscal
representatives. Such allocation
methods, as well as the statistical
basis used to calculate allocation
percentages, must be documented and
retained for each fiscal year for
review upon audit for a minimum of
seven (7) years. Allocation
percentages should be reviewed on an
annual basis and adjusted as
necessary.
c) For CFR filers
(except OCFS Residential
Facilities), agency administration
costs shall be allocated to all
programs operated by the entity
based on the Ratio Value Method of
allocation. Agency administration
costs allocated to grant cost
centers shall be the lower of actual
costs allowable based on the Ratio
Value Method or the maximum amount
that can be charged based on grantor
requirements.
14.
Classification (Direct Care/Non-Direct Care)
Entities operating
programs may be required upon audit to
support the classification of costs as
direct care. For example, the classification
of conference costs as direct care would be
supported by copies of brochures or other
literature that explains the purpose of the
conference.
B.
Accounting Requirements
1. Entities operating
programs must maintain accounts in
accordance with generally accepted
accounting principles and section 200.9 (d)
of the Commissioner's Regulations.
2. The accrual basis of
accounting is required for all programs
receiving Article 81 and Article 89 funds.
3. Accounting books of
original entry shall include asset,
liability and fund balance or equity
accounts, as well as expenditure and revenue
accounts. Subsidiary revenue and expenditure
accounts shall be maintained for, but not
limited to, each approved program requiring
a tuition rate, for preschool evaluation
costs, and for each government grant
administered by the Commissioner.
4. As established in
section 200.9(e) (ii) (a) of the
Commissioner's Regulations, the financial
statements must be certified by a licensed
or certified public accountant independent
of the program. In instances where a program
retains a licensed or certified public
accountant or accounting entity to certify
the programs' financial statements and the
CPA also provides other non-audit services
such as management consulting, automation
consulting or bookkeeping services, the
provision of these services should be fully
disclosed via explanatory notes to the
audited financial statements. See also
Item #15, Consultants,
for other examples of non-audit services.
5. Entities operating
programs must establish adequate systems of
internal controls and to conduct annual risk
assessments in accordance with guidelines of
the Committee of Sponsoring Organizations (COSO).
6. For special act school
districts (SASD), public school districts
and BOCES, the following accounting
principles shall apply:
(a) For capital
expenditures, refer to Section I.,
Cost Principles, Item #9 in this
Manual.
(b) Amounts paid
to the New York State Teachers'
Retirement System and/or New York
State Employee Retirement System
must be expensed in the fiscal year
the amount is due to the retirement
systems.
(c) Encumbrances
at year end will not be included in
the tuition rate for that year. The
expenditure will be included in the
tuition rate only after the
expenditure is made.
(d) Public school
districts and BOCES must adhere to
all applicable sections of the
General Municipal Law.
7. Public school
districts, SASDs and BOCES may apply for and
receive discounts or rebates on the price of
certain eligible telecommunication services
and equipment under the Federal Universal
Telecommunication Discount Program for
Schools and Libraries (E-Rate Discount
Program). The New York State Education
Department strongly encourages all schools
(K-12) to take maximum advantage of the
significant discounts offered by the E-Rate
program on telecommunications, Internet
access, and internal wiring services. The
E-Rate Central website (http://www.e-ratecentral.com)
posts news bulletins, weekly summaries,
special instructions and tips covering all
phases of the E-Rate application process.
E-Rate forms are available in several
formats for off-line computer use. To assist
public school districts, SASDs and BOCES in
properly accounting for and reporting any
discounts or rebates received, the following
guidelines are provided:
(a). If a
discounted price is paid for an
eligible service or item under the
E-Rate program, the expense should
be recorded at the discounted amount
and reported accordingly for rate
setting purposes.
(b). If a rebate
is received, the public school
district, SASD or BOCES should
record the rebate as offsetting
revenues as follows:
Public
School District: Schedule SS-10,
Line 3
SASD:
Schedule SS-20, Line 4
BOCES:
Schedule CFR-1, Line 94
C.
Definitions
1.
Commissioner's Approval
(a) In order to
receive approval of the
Commissioner, the program must
submit a written request to the
Commissioner's designated
representative with all supporting
documents. The Commissioner
delegates responsibility for
monitoring approved programs
educating students with disabilities
to the staff of the VESID-Special
Education Policy and Quality
Assurance Office and rate-setting
responsibility to the staff of the
Rate Setting Unit.
The
Commissioner's designated
representative for program issues is
the Deputy Commissioner of the
Office of Vocational and Educational
Services for Individuals with
Disabilities (VESID), Room 1603, One
Commerce Plaza, Albany, New York
12234.
The
Commissioner's designated
representative for fiscal issues is
the Chief Operating Officer of the
New York State Education Department,
Room 128, Education Building,
Albany, New York 12234.
(b) Program and
fiscal issues that require prior
written approval of the
Commissioner’s designees include but
are not limited to:
Education
program expansion requiring
additional staff, property
related costs, classroom
equipment, etc. when the cost is
expected to be reimbursed fully
or partially through the tuition
rate. Both program and fiscal
designee written approval are
required;
New or
renovated facility space, both
instructional and
non-instructional to be occupied
by approved programs including
costs associated with such
space. Both program and fiscal
designee written approval are
required;
Service to
students whose disabilities are
different from the disabilities
of students the program is
approved to serve. Program
designee written approval is
required;
Anticipation
of large decreases or increases
in student population. Program
designee written approval is
necessary.
Reimbursement
of interest expense in
less-than-arm's length
relationships or in excess of
the prime rate plus one percent
in arm's-length relationships;
and/or for reimbursement of
costs incurred in
less-than-arm's-length
relationships that are above the
actual costs of the owner or
vendor. Fiscal designee written
approval is required.
Approval by
the Department and the Division
of the Budget of any request for
a determination of cost
effectiveness. Fiscal designee
written approval is required.
2. Entity
The governmental unit or
corporate organization operating a program(s),
as defined in Section II, C. 5. of this
Manual.
3. Fiscal
Viability
Fiscal viability as
referenced in the Commissioner's Regulations
200.7(a) and 200.9(e) means:
(a) Private
schools seeking initial approval to
be reimbursed with public funds
shall have access to sufficient
capital or lines of credit to cover
all operating, property maintenance,
leasing or purchase costs during the
period of conditional approval.
Schools must be able to demonstrate
that sufficient internal controls
exist for the protection of school
assets. Furthermore, appropriate
insurance policies covering assets
and limiting school liability must
be in place.
(b) Entities
operating approved programs must use
the accrual basis of accounting and
maintain accounting books of
original entry including asset,
liability and fund balance or equity
accounts, as well as expenditure and
revenue accounts. Subsidiary revenue
and expenditure accounts must be
maintained for each program
requiring a tuition rate, for
evaluation costs, and for government
grants administered by the State
Education Department.
(c) The required
financial statements for providers
must include a balance sheet, a
statement of activity, and a
statement of cash flow, if
applicable. To be considered
fiscally viable, the provider's
balance sheet should show a positive
fund balance or net assets, an
acceptable current ratio (current
assets divided by current
liabilities) of 1:1 or greater and
sufficient working capital (current
assets minus current liabilities) to
demonstrate solvency. Such current
assets typically include cash,
marketable securities and
receivables, but do not include
loans or lines of credit. Approved
programs where fiscal viability is a
concern, will be required to submit
to the Department a plan to address
fiscal viability. The plan must
include a description of
management's strategies, key
assumptions and specific steps to
improve fiscal viability. Also
required is a five-year projection
of revenue, expenditures and net
assets or fund balance; a comparison
of the projection for the last
complete year to actual results; a
current year projection for cash
flow; and the projected date for net
assets or fund balance to be
positive. It must also show any
negative impact on the educational
program. The plans must be updated
annually and submitted to the
Department by the CFR due date.
Where an adequate plan is not
provided or fiscal viability remains
a concern, the VESID Office of
Quality Assurance will be notified
and consulted for potential further
action.
(d) The entity
will be required to retain all
pertinent accounting, allocation,
enrollment/attendance records,
information relating to the
acquisition of fixed assets,
equipment, and/or building
improvements and any related
financial arrangements for at least
seven years unless otherwise
specified in this Manual and provide
access to such records during an SED
audit or audit by any other funding
or regulatory entity. (See Section
IIA, Record Keeping).
4.
Less-Than-Arm's-Length (LTAL) Relationship
In general, a LTAL
relationship exists when there are related
parties and one party can exercise control
or significant influence over the management
or operating policies of another party, to
the extent that one of the parties is or may
be prevented from fully pursuing its own
separate interests. These relationships must
be disclosed in the notes to the audited
financial statements.
Related parties consist of all
affiliates of an entity, including but not limited
to:
- its management and their
immediate families;
- its principal owners and their
immediate families;
- any party that
may have an opportunity to enter
into a transaction, or deal with the
agency/entity and that party has
ownership of, control over, or can
significantly influence the
management or operating policies of
a program(s)/entity(ies) to the
extent that an arm's-length
transaction may not be achieved.
Common related party transactions
include the following:
(a) services received or
furnished (e.g., accounting, management,
engineering, legal services and therapy/medical);
(b) services, purchases, and
transfers of realty and personal property;
(c) purchase of health related
services such as speech therapy, physical therapy,
occupational therapy and psychological services as prescribed in a student's
IEP; (refer to the Cost Principles Section I, Item
39 B. (4) for the treatment of LTAL transactions and
cost effectiveness;
(d) lease of equipment;
(e) lease of real property;
(refer to Cost Principles in Section
I., #41 B. (5) for the treatment of LTAL
transactions and cost effectiveness)
(f) borrowings
and lendings; (refer to Cost
Principles in Section I., #28 B.) for the
treatment of LTAL transactions and
cost effectiveness)
(g) all LTAL
transactions except for (c) purchase
of health services, (e) lease of
real property and (f) borrowings and
lendings above will be reimbursed
using actual documented costs of the
owner or vendor. Items (c), (e), and
(f) above, may be reimbursable at a
level other than actual costs if a
written approval from the
Commissioner’s designee is provided.
5. Program
Program means an approved
program that provides special education to
students with disabilities requiring the
establishment of a tuition rate consistent
with Part 200 of the Commissioner's
Regulations.
Full-time programs are defined
as:
(a) For school
age, those programs operating for
either 5 hours or 5.5 hours per day
or more;
(b) For preschool, those programs
operating for more than 2.5 hours per day.
6. Staffing
Ratios
Staff-to-student ratios
are defined in Part 200 of the
Commissioner's Regulations. A specific
approved program’s student-staff ratio is
also defined in that program’s programmatic
approval letter from VESID-SEQA. Direct care
personnel in excess of, or not prescribed by
such ratios, are not reimbursable, unless
supported by the student's IEP requirements
and the program generated summary data
relating to those IEPs. A Department
programmatic review and approval of
variations from these ratios is required for
costs of additional staff to be
reimbursable.
7. Full-Time
Equivalent Enrollment
Section 175.6 of the
Commissioner's Regulations provides the
framework for calculating student enrollment
for approved programs. The following
specific standards apply to the calculation:
(a) "Enrollment"
means the student is physically
present at or legally absent from
the special education program.
(b) Legal
absences include personal illness,
illness or death in the family,
impassable roads, weather, religious observance, quarantine, required
court appearances, attendance at health clinics, approved college
visits, military obligations, or
for such other reasons as may
be approved by the Commissioner.
(c) A full time
student who is enrolled from
September through June is deemed
to be in attendance during that period
and therefore a 1.000 FTE. If a
student is enrolled for less than the full program duration, then
full-time equivalent enrollment
is calculated by dividing the total
weeks of enrollment by the total
number of weeks the program operated. The first and last weeks
of the period of enrollment that
contain three consecutive days of enrollment within the same week
and month plus all weeks in between
shall be counted in determining
the total number of weeks of enrollment,
provided that no more than four
weeks of enrollment may be counted in any calendar month. For the
summer programs, weeks should be
counted as they actually occur; that is, more than 4 weeks in a single
month may be counted. Full-time equivalent enrollment shall be
calculated to three decimal places
without rounding. A full time student who is enrolled for the
entire summer program regardless
of the number of weeks the program
operates is counted a 1.000 FTE
for enrollment purposes.
(d) Tuition rates
are calculated on the basis of
full-time equivalent student
enrollment and therefore billing
and reimbursement must be based upon
full-time equivalent enrollment.
Billing and payment procedures based on actual student attendance
are not acceptable practices. Voluntary
agencies for foster care students
placed in institutions, residential treatment facilities or other
day treatment programs should refer to
the Local Commissioner's Memorandum
on this subject and the DSS Administrative Directive 88 ADM-28
for further clarification. Please
be advised that BOCES and public
school districts are also required to report student enrollment
and bill for tuition-based programs they
operate under Articles 81 and
89 in accordance with section 175.6 of the
Commissioner’s Regulations.
(e) For preschool
special class and special class
in an integrated setting programs
that operated for more than five hours
per day, full-time equivalent
enrollment shall not be prorated for the hours over five hours
per dayFor preschool special class and special class in
an integrated setting programs
that operate for less than five hours per
day, full-time equivalent enrollment
shall be prorated as follows. For the following examples, assume
a total non-prorated FTE for the
program of 50.000 as calculated
consistent with the previous subsections 6(a)-(d):
- 2.5 hr program:
50.000 x 2.5 hr = 25.000 prorated FTE
5.0
hr
- 3.0 hr program:
50.000 x 3.0 hr = 30.000 prorated FTE
5.0
hr
(f) For preschool
students in special class and
special class in an integrated
setting programs who are enrolled
less than 5 days per week, in
accordance with IEP requirements,
the appropriate method of
calculating FTE enrollment for
students is as follows:
- The day of the
week the student is enrolled or
discharged determines whether
the three days in a week requirement
is met for counting the student
enrolled for the week. The specific
days of the week a student is
scheduled to attend school is
not a determining factor. If a student's enrollment period
begins on Monday, Tuesday or
Wednesday, and the student is
present or legally absent for the dates that week specified in
his/her IEP, the week is counted as a week enrolled.
- Similarly, if a student's enrollment
period ends on Thursday or Friday
and a student is present or legally
absent for his/her scheduled
days that week until the discharge
date, the week is counted as a week enrolled. All weeks between
the first and last weeks of enrollment are
counted as weeks enrolled, in accordance
with Part 175.6 of the Commissioner's
Regulations.
- A proration of FTE
enrollment of less than 25 hours
per week is still required for
students in such special class and special class in an integrated
setting programs.
(g) For programs
operating Special Education Itinerant
Teacher (SEIT) programs, the
following rules regarding billing
apply:
Special education
itinerant teacher rates shall be paid on
the basis of enrollment as defined in
Section 175.6(a) (1) and (2) of the
Commissioner’s Regulations.
Approved programs may
bill for SEIT services if the child
is absent and the SEIT teacher is available
at the site when services are scheduled
to be delivered. Make-up sessions are encouraged but are not
billable.
Approved programs may bill for
scheduled SEIT services when the student is available to receive
the service and the SEIT teacher is
absent, however, programs are encouraged
to use substitute SEIT teachers in such
instances. The cost of substitute
SEIT teachers is reimbursable.
A SEIT student’s FTE
enrollment is counted for reporting
purposes only as a 1.0 FTE
when the student is enrolled
for the entire 10 month
program or 1.0 when enrolled
for the entire July –August program.
The FTE is prorated for both
the 10 month and 2 month programs
if the student is enrolled
for less than the full 10 month
instructional school calendar
or less than the full July-August
instructional calendar.
8. Close Down
Close down, as defined in
section 200.7 (e) and 200.9 (g) of the
Commissioner's Regulations, is the period
during which an entity operating an approved
program plans to cease operation, transfer
ownership or voluntarily terminate its
status as an approved private residential or
non-residential program for students with
disabilities that receives public funds
pursuant to Article 81 and/or Article 89 of
the Education Law. The close down period
means the period of time beginning with the
date of the Commissioner's receipt of notice
and ending on the date of the program's
cessation of operations, transfer of
ownership or voluntary termination of its
status as an approved program. Reimbursement
shall be determined in accordance with the
provisions set forth in section 200.9 (g) of
the Commissioner's Regulations and this
Manual. Financial reports and financial
statements as required pursuant to section
200.9 (e) of the Commissioner's Regulations
must be submitted to the Commissioner no
later than 90 days following close down. The
entity is required to transfer student
records back to the public school district
of origin's Committee on Special Education
or Committee on Preschool Special Education.
Financial and other records must be
maintained by the entity for seven years.
The entity must provide the Department with
the name, address, and phone number of the
contact person for these records.
9. Agency
Administration
Agency administration is
defined as those expenses which are not
directly related to a specific program, but
are attributable to the overall operation of
the agency. These costs include: costs for
the overall direction of the organization;
costs for general recordkeeping, budget and
fiscal management; costs for public
relations (non-fundraising); and costs for
parent agency expenditures.
10.
Reasonable Cost
A cost is reasonable if,
in its nature and amount, it does not exceed
that which would be incurred by a prudent
person under the circumstances prevailing at
the time the decision was made to incur the
cost. In determining reasonableness of a
given cost, consideration shall be given to:
a. Whether the
cost is of a type generally
recognized as ordinary and necessary
for the operation of the approved
program.
b. The restraints
or requirements imposed by such
factors as: sound business
practices; arm's length bargaining;
Federal, State or local laws and
regulations.
c. Prices for
comparable goods or services
determined by reviewing similar
entities.
d. Whether the
individuals concerned acted with
prudence given their
responsibilities to the entity's
Board of Directors, its employees,
the public at large and the State
government.
e. Significant
deviations from the established
practices of the entity or similar
entities which may unjustifiably
increase the cost of the approved
program.
SECTION III.
TUITION RATE-SETTING METHODOLOGY
A.
Rate-Setting Methodology For - 2007-08 Tuition Rates
The "Tuition Rate-Setting
Methodology for 2007-08 Tuition Rates for Students
with Disabilities Memorandum" will be available on
the Internet in the "Methodology Letter" section
found within the "Correspondence" link on the RSU
(Rate Setting Unit’s) home page (https://www.oms.nysed.gov/rsu/home.html).
B. Tuition
Rate Adjustments
1. Tuition Rate Appeals:
Tuition rate appeals must
be submitted in accordance with the "2006-07
Criteria and Procedures for Tuition Rate
Appeals". These criteria will be available
on the Internet as a direct link from within
the "Tuition Rate-Setting Methodology for
2006-07 Tuition Rates for Students with
Disabilities Memorandum" on RSU’s home page
(https://www.oms.nysed.gov/rsu/home.html).
2. Corrected Rates:
Tuition rates will only
be adjusted for errors in the reporting of
student FTE enrollment, and only if verified
with the student enrollment reported on the
STAC system. Corrected rates are subject to
approval by the Division of the Budget and
are retroactive to the start of the
applicable school year. Requests for rate
corrections must be received by RSU within
30 days of receipt of the prospective
tuition rate.
3. Reconciliation Process:
The "2007-08
Reconciliation Process" will be available as
a direct link from within the "Tuition Rate
Setting Methodology for 2007-08 Tuition
Rates Memorandum" found within the
"Correspondence" link on RSU’s homepage
(https://www.oms.nysed.gov/rsu/home.html).
4. Rates Based on Audit:
All approved programs
shall be subject to a fiscal audit pursuant
to section 200.18 of the Commissioner's
Regulations. Tuition rates may be adjusted
accordingly based on the results of the
final audit of actual program expenditures,
revenues, enrollment and other relevant
program information. The rate-setting
methodology in effect for the financial
statement period shall be applied to the
results of the final audit. All tuition rate
adjustments based on audit are subject to
the approval and certification of the
Division of the Budget. After the rate based
on audit is certified, school district or
municipality tuition payments to programs
are to be adjusted accordingly.
5. Rates for Newly Approved Special
Class Programs:
For the initial year of
operation, special class programs will be
subject to the provisions of Section 200.9
(f) (2) (viii). This section of the
regulations states that if a new program’s
student enrollment is not equal to or
greater than the minimum number required in
Section 200.7(c) (3), then that program will
continue to receive a rate based on the
regional weighted average per diem tuition
rate previously approved for that program.
Upon reconciliation, for programs failing to
meet the minimum number of students, the
program’s per diem rate will be limited to
the lower of the per diem based on the
school’s actual costs or the regional
weighted average per diem initially
established.
6. Rates for 1:1 Aides:
For the 2007-08 school
year, regional weighted average 1:1 aide
add-on rates will be developed and added
to the schools’ base tuition rates. All 1:1
aide costs (salaries, fringe benefits of
the aide, and allocated direct and indirect
costs) should be reported in one separate
cost center on the providers' financial
reports.
C.
Close-Down Policy and Procedures
1. Pursuant to section
200.7(e) and section 200.9(g) of the
Regulations of the Commissioner of
Education, if the owner or operator of an
approved private residential or
non-residential program for students with
disabilities receiving public funds,
pursuant to Article 81 and/or Article 89 of
the Education Law, intends to cease the
operation of such program or chooses to
transfer ownership of such program or to
voluntarily terminate its status as an
approved program, the owner or operator
must:
(a) Provide to
the Commissioner written notice not
less than 90 days prior to the
closing date;
(b) Submit to the
Commissioner a detailed plan which
makes provision for a safe and
orderly transfer of each student
with a disability who was publicly
placed in the program; and
(c) Continue to
provide uninterrupted services until
the required notice and plan have
been received and approved by the
Commissioner and a transfer of such
students has been completed in
accordance with the approved plan.
2. Disposition of assets during a close
down period:
(a) Entities
operating an approved private
residential and nonresidential
program must submit to the Rate
Setting Unit (RSU) an inventory list
of all furniture and equipment (not
funded via IDEA grants) and
consumable supplies and materials to
allow the State Education Department
to arrange for an orderly
disposition of assets to other
approved providers. A similar
listing of equipment for items
purchased with IDEA grants must be
provided to the entity's SED
Regional Associate of the
VESID-Special Education Policy and
Quality Assurance Office. Such lists
must be submitted not less than 90
days prior to the closing date and
include the following information:
For furniture
and equipment – a site-specific
listing describing each item,
the location at that site (i.e.,
room number), the cost of the
item, school year of acquisition
and the amount depreciated.
For
consumable supplies and
materials – a site specific
listing grouped in categories
(such as books, toys/games,
curriculum materials,
instructional supplies) with the
total quantity of items in that
group, the location of the items
within that site and the market
value of each group of items.
(b) Disposition
of assets for BOCES, public school
districts and special act school
districts must be in accordance with
a board approved written policy.
3. Reimbursement procedures during a
close down period:
(a) The following
types of expenditures during the
closedown period would not be viewed
by this Department as reimbursable:
Costs
relating to non-essential
and non-mandated staff
during the closedown period.
This includes salaries
and fringe benefits of
any of those non-essential,
non-mandated staff;
Expenses for dues,
conferences, etc;
Expenses intended to enhance
the value of the property
or space occupied by the
program; and
.Major
equipment purchases such
as computers, typewriters,
photocopying machines
or any other such items
during this period that
are not essential for the
provision of education
services to students with
disabilities enrolled in
the program during this
period.
(b) Financial
statement forms annually submitted
to the SED by an entity operating an
approved program must be filed for
the last school year of operation or
portion thereof which includes the
final date of the close down period.
4. These close down
policies and procedures shall also apply to
BOCES, and public school districts operating
preschool programs and summer school-age
programs for students with disabilities
pursuant to Articles 81 and 89 of the
Education Law and to special act school
districts.
SECTION IV. INDEX
A-1. Categorization of Revenues,
2
Accounting, 4, 41
Accounting Requirements, 2
Administration, 4, 48, 57, 65
Advertising, 4, 5
Amortization, 9, 17, 18
Assistive Technology Devices and Services, 6
Auditing, 6
B
Bad Debts, 7
Bedding/Linen, 7
BOCES, 3, 7, 42, 47, 52
Bonding, 7
Building Improvements, 40
Buildings, 17, 40
C
Capital Expenditure, 7
Capital Expenditures, 7
Capital Indebtedness, 57
Capital Projects Fund, 9
Categorization of Expenditures,
2
Close-Down Policy and Procedures,
2
Clothing, 9
Commencement and Convocation, 9
Commissioner's Approval, 43
Compensation, 10, 11, 12, 22, 33, 38
Conferences, 20, 25, 36
Consultants, 4, 6, 15, 26, 38
Contingency Provisions, 16
Contractual Agreements, 39
Contributions and Donations, 16
Cost Principles,
2
D
Depreciation, 9, 17, 18, 31, 56
Dues/Licenses/Permits, 20
E
Enrollment, 39, 46
Entertainment Costs and Personal
Expenditures, 20
Equipment and Furniture, 40
F
Fines and Penalties, 20
Food, 20, 56, 58
Fringe Benefits, 12, 56
G
General Fund, 7, 8, 9, 32
General Requirements and
Definitions, 2
Goodwill, 18, 21
Grants, 21, 58
Guidelines for Development, Review
and Approval of Capital Projects,
2
H
Household, 25, 34, 56
I
Index, 2
Insurance, 22, 38, 56, 57
Interest Costs, 22
Introduction, 2
Investment, 24
L
Leasehold Improvements, 18, 56
LTAL, 9, 23, 28, 29, 45, 46
M
Management, 24, 39, 43
Meal and Lodging Allowance,
2
Meetings, 20, 25, 36
Miscellaneous Expenses, 25
O
Office Supplies, 25
P
Payroll, 10, 25, 38
Plant Security, 26
Postage, 26
Preparation, 25
Printing and Reproduction, 26
Professional Dues, 26
Profits and Losses on Investments, 26
Property, 28, 56, 57
Purchase of Services, 15, 26
Purchases, 7, 34, 39
Purchasing Consortia, 2
R
Record Keeping, 2
Records, 10, 28, 38, 39, 40, 45
Records Keeping, 10, 38, 45
Recruitment of Personnel, 28
Rent, 17, 28, 29, 31, 57
Repairs and Maintenance, 30, 56
Research, 31
S
Salaries, 10, 41
Scholarships and Student Aid, 32
Severance Pay, 32
Special Act School Districts, 32
Staff Development, 33, 56
Stipends, 34
Subscriptions and Publications, 34
Supplies and Materials, 25, 34
T
Taxes, 35, 57
Telephone/Facsimiles, 35
Transportation, 32, 36, 56, 58
Travel, 20, 25, 30, 33, 36, 37, 39, 56
Tuition Rate Adjustments, 2
Tuition Rate-Setting Methodology,
2
Utilities, 37, 56
V
Vehicles, 17, 30, 40
SECTION V.
APPENDICES
APPENDIX A-1
Categorization of Expenditures |
CFR-1 |
CFR-1 |
Cost |
Account
Code |
Item
Description |
Category |
|
|
|
11999 |
Personal
Services |
Direct
Care = job codes 200 - 390
Nondirect Care = job codes 100 - 190; 400; 500 - 590 |
12999 |
Vacation
Accruals |
Not
Reimbursable |
13200 |
Mandated
Fringe Benefits |
Based on
personal services above |
13300 |
Non-Mandated Fringe Benefits |
Based on
personal services above |
14010 |
Food |
Direct
Care |
14020 |
Repairs
and Maintenance |
Nondirect Care |
14030 |
Utilities |
Nondirect Care |
14040 |
Transportation - Related |
Direct
Care |
14250 |
Staff
Travel |
Nondirect Care |
14050 |
Participant Incidentals |
Direct
Care |
14070 |
Expensed
Adaptive Equipment |
Direct
Care |
14080 |
Expensed
Equipment |
Nondirect Care |
14090 |
Raw
Materials |
Not
Applicable |
14100 |
Participant Wages - Non-Contract |
Not
Applicable |
14110 |
Participant Wages - Contract |
Not
Applicable |
14120 |
Participant Fringe Benefits |
Not
Applicable |
14130 |
Section
43.04 Services Assessments |
Not
Applicable |
14140 |
Staff
Development |
Direct
Care |
14150 |
Contracted Services |
Direct
Care |
14160 |
Supplies
and Matls - Non-Household |
Direct
Care |
14170 |
Household Supplies |
Nondirect Care |
14190 |
Telephone |
Nondirect Care |
14260 |
Insurance - General |
Nondirect Care |
14998 |
Other -
OTPS |
Nondirect Care |
15010 |
Lease/Rental - Vehicle |
Direct
Care |
15020 |
Lease/Rental - Equipment |
Direct
Care |
15040 |
Depreciation - Vehicle |
Direct
Care |
15050 |
Depreciation - Equipment |
Direct
Care |
15070 |
Interest
- Vehicle |
Direct
Care |
15998 |
Other -
Equipment |
Direct
Care |
16010 |
Lease/Rental - Real Property |
Nondirect Care |
16020 |
Leasehold/Leasehold Improvements |
Nondirect Care |
16030 |
Depreciation - Building |
Nondirect Care |
16040 |
Depreciation - Bldg/Land Improvements |
Nondirect Care |
16060 |
Mortgage
Interest |
Nondirect Care |
16070 |
Mortgage
Expenses |
Nondirect Care |
16080 |
Insurance - Property and Casualty |
Nondirect Care |
16090 |
Real
Estate Taxes |
Nondirect Care |
16100 |
Interest
- Capital Indebtedness |
Nondirect Care |
16110 |
Start-Up
Expenses |
Nondirect Care |
16120 |
MCFFA
Interest Expense |
Not
Applicable |
16130 |
MCFFA
Administration Fees |
Not
Applicable |
16140 |
Maintenance In Lieu of Rent |
Not
Applicable |
16998 |
Other -
Property |
Nondirect Care |
Note:
All CFR-3 line items are categorized as nondirect
care. |
APPENDIX A-2
Categorization of Revenues |
CFR-1 |
CFR-1 |
Revenue |
Account
Code |
Revenue
Description |
Category |
|
|
|
0 |
Participant Fee |
Offsetting |
0 |
SSI –
SSA |
Not
Applicable |
20030 |
Home
Relief |
Not
Applicable |
20040 |
Medicaid |
Offsetting |
20060 |
Medicare |
Offsetting |
20070 |
Other
Third Parties |
Offsetting |
20080 |
OMRDD
Residential Room and Board |
Not
Applicable |
20090 |
Transportation – Medicaid |
Regular |
20100 |
Transportation - Other |
Regular |
21070 |
Sales –
Contract Total |
Not
Applicable |
22040 |
Federal
Grants |
Offsetting |
22030 |
State
Grants |
Offsetting |
22080 |
LTSE
Income Total OMH/OMRDD |
Not
Applicable |
22160 |
Food
Stamps/Food Revenue |
Offsetting |
22010 |
Gifts/Legacies/Bequests/Donations |
Regular |
22020 |
Section
202/8 HUD Funds |
Not
Applicable |
22050 |
Interest/Dividend Income |
Offsetting |
22090 |
Prior
Period Rate Adjustments |
Regular |
22100 |
VESID |
Regular |
22110 |
LDSS
County |
Regular |
22120 |
Article
89 Section 4402 |
Regular |
22130 |
DOH
Chapter 428 |
Regular |
22140 |
Article
89 Section 4408 |
Regular |
22150 |
Article
81 Section 4410 |
Regular |
20110 |
Net
Deficit Funding |
Not
Applicable |
22998 |
Other –
Revenue |
Regular |
APPENDIX B
PURCHASING CONSORTIA
NAMES AND ADDRESSES
1. Greater New York
Hospital Association
555 West 57th Street
15th floor
New York, New York 10019
Phone (212) 246-7100
2. United
Iroquois Shared Services
17 Halfmoon Executive Park Drive
Clifton Park , New York 12065
Phone (518) 383-5060
United
Iroquois Shared Services
5740 Commons Park
P. O. Box 160
East Syracuse, New York 13057
Phone (315) 445-1851
3.
Joint Purchasing Corporation
P.O.Box 9427
Providence, RI 02940
Phone 800-416-8229
4. Northern
Metropolitan Hospitals Shared Services Corporation
400 Stony Brook Court
Newburgh, New York 12550
Phone (845) 562-7520
5. RRHA Joint
Ventures Corporation
3445 Winton Place Suite #222
Rochester, New York 14692
Phone(888) 732-4282
6.
Vector Healthsystems (an affiliate of Amerinet, Inc.)
10 Charles Street
Providence, Rhode Island 02940-9427
Phone (800) 338-9427
APPENDIX C
TRAVEL GUIDELINES
In-state and out-of-state meal and lodging allowances and
per diem rates are available on the State Comptroller's
Internet at website at:
http://www.osc.state.ny.us/agencies/ under
"New York State Travel Guidelines".
APPENDIX D
GUIDELINES FOR DEVELOPMENT, REVIEW AND
APPROVAL
OF CAPITAL PROJECTS FOR STUDENTS
WITH DISABILITIES
I. School-Age-Only Projects and
Combined School-Age/Preschool Projects
A. Guidelines for
State review and approval of applications for capital projects.
All applications for
capital projects must be put in writing to
their VESID Special Education and Quality
Assurance Office and the Rate Setting Unit.
The application must include line drawings
of existing and proposed facilities with
square footages listed for each room, cost
estimates that include all estimated
construction and incidental costs, current
enrollment data and student staffing ratios.
Additionally, documentation of health/safety
issues or violations, building code
non-compliance, and/or non-compliance with
accessibility requirements must be provided
to justify the need for the proposed
project.
- The agency will be
notified by the RSU if any additional
information is needed to review the project
application.
- Project plans will be
reviewed by the RSU,VESID Special Education
and Quality Assurance Office and the
Office of Facilities Planning.
- The agency will be
notified in writing of the capital project
cost that is approved by the New York State Division of the Budget
and will be considered for reimbursement in future
tuition rates.
[Notes1: During the construction phase of the capital project, only loan interest and amortization of closing costs will be included in the tuition rate. After the school takes occupancy of the building, depreciation of the total capital project will be included.]
B. Guidelines for
development of applications for capital
projects.
All proposed projects
will be reviewed to determine the adequacy
and appropriateness of services and program
space to meet the educational needs of the
students with disabilities. Prior to
incurring any obligation, it is recommended
that the agency receives notification of the
approved capital project costs that will be
included as part of future tuition rates.
Before capital
projects are approved for education
funding for students with
disabilities, it must be determined
that current education space is
not being reallocated to non-education
programs causing a lack of
appropriate space for the education
programs.
Administrative space may be
approved in buildings to be constructed or
renovated.
Existing
education areas may also be
converted to administrative space
when new education facilities
are being constructed.
Note: Where
another state agency also has
oversight responsibility for the
applying program, the Department
will confer with such other
supervising agency prior to
approving any application to
construct administrative and/or
other shared space.
1) Room Sizes for Special
Education Classrooms
15:1 - approximately 770 square
feet
12:1+1 - approximately 770 square
feet
8:1+1 - approximately 550 square
feet
6:1+1 - approximately 450 square
feet
12:1+4 - approximately 900 square
feet
Resource Room - approximately 300
square feet
Preschool
Programs - 50 square feet per
student or 60 square feet per
student for classroom serving
students who are non-ambulatory
The guidelines
for preschool programs will be
applied with the expectation that
classrooms will serve a maximum of
12 students. The square footage
requirement for preschool students
includes space for a variety of
recreational and instructional
activities. Consideration will be
given to less than 50 square feet
per student if other areas of the
building have been allocated,
outside of the special education
classroom, for such activities.
Note: For
classrooms which are planned for use
by more than one class, size should
accommodate the largest requirement.
2) Specialized Areas
- Physical Education
Space
While
Department requirements are
applicable, physical
education space for
secondary level students
recommended for a building
with an enrollment of 500 or
less may be exceeded based
on the programmatic needs of
the students to be served
and the physical education
and recreation program
planned by the school. These
dimensions may also be
exceeded for schools
involved in interscholastic
sports.
The
construction of swimming
pools may be considered only
in those instances where the
development of a pool is
necessary to meet the
programmatic needs of the
population served. This
relates to programs serving
students with multiple
disabilities who are unable
to access community pools,
unable to adequately utilize
other recreational areas,
and require the pool for
therapeutic purposes.
- Library
For
secondary level students, a
library or media center of
up to 1,500 feet may be
developed. Dimensions are
based on the projected
enrollment and the number of
students to use this room at
any one time. This guideline
may be exceeded based on the
specialized needs of the
population to be served. For
elementary level students,
library space of up to 900
square feet may be developed
based on enrollment and
planned use of space.
- Art
Art rooms
of 800 to 900 square feet
may be developed for use by
classes of 15:1, 12:1+1 or
12:1+4. Dimensions of 500 to
700 square feet are
recommended for classes of
8:1+1 and 6:1+1. Additional
classrooms may be needed
based on enrollment.
- Industrial Arts
Industrial Arts rooms of
between 800 and 1,500 square
feet may be developed based
on the proposed purpose of
the space (e.g., an
automotive shop normally
requires more area than an
electrical shop).
- Home Economics
Home
Economics rooms of 800 to
1,000 square feet may be
developed for use by classes
of 15:1, 12:1+1 or 12:1+4.
Dimensions for Home
Economics classrooms for
8:1+1 and 6:1+1 classes may
have less square footage
based on planned use of
space.
- Science (Laboratory
Rooms)
Science
rooms for laboratory
instruction of approximately
900 square feet in addition
to classroom space may be
developed for classes of
between 12 and 15 students.
Dimensions for laboratory
space for classes of 6 to 8
students is recommended at
approximately 600 - 700
square feet.
- Music
Music
rooms of 770 square feet for
classes of 15:1, 12:1+1 and
8:1+1 or 450 square feet for
classes of 6:1+1 and 900
square feet for classes of
12:1+4 may be developed.
- Storage
Storage
space may be included in
school building plans for
general storage areas and
storage within classrooms
such as Art, Home Economics,
Music, Science Laboratory
and Industrial Arts.
- Related Services
A
determination on the amount
of space allocated for
related services should be
based on the number of staff
and students using the room,
activities to be conducted
(group or individual speech
therapy, counseling,
physical therapy, etc.) and
equipment to be used.
- Multi-Purpose Rooms
Other
spaces may be developed.
However, consideration must
be given to using the
following areas for multiple
purposes (e.g., gym with
stage for use as auditorium,
cafeteria with stage for use
as auditorium, etc.). Size
is based on student
enrollment and/or the
proposed use of the space,
such as Auditorium,
Cafeteria, and remedial
rooms or Music practice
rooms.
- Administration Space
Administration space is
determined based on the
functions required to be
conducted in the school
building and the amount of
staff using the space.
- Final Determination
In
determining the appropriate
number of classrooms to be
included in the school
building, the following
factors should be
considered:
. Student
enrollment;
.
Number of class size
configurations and
the number of
students in each
class;
. Proposed
scheduling of classroom use;
. Number of staff
for school building;
. Multiple use of
classroom space and specialty area
space.
II. Preschool- Only Projects
A. All
applications for capital projects
for preschool only programs must be
submitted via the "Approved
Preschool Special Education Program
Modification Requests" process.
Preschool programs considering a
capital project, a change in program
location or adding a new site or
deleting an existing site should
contact their Regional Associate for
further guidance on the required
procedures.
The "Approved
Preschool Special Education Program
Modification Requests" forms and
instructions are available from the
SED VESID website at
www.vesid.nysed.gov/specialed/home
or from the link to the SED Rate
Setting Unit’s webpage at
www.oms.nysed.gov/rsu/home.
B. Please be
advised that cost screen waivers
will not be approved with respect to
capital projects involving
preschool-only space.
APPENDIX E
Statement on the Governance Role of a
Trustee or Board Member
Board of Regents
The University of the State of New York
www.nysed.gov
Preface:
The Statement on the Governance Role of a
Trustee or Board Member is intended to provide guidance and
information to assist trustees and board members in
exercising their fiduciary responsibilities. The statement
is relevant for all institutions that have been incorporated
by the Board of Regents or the New York State Legislature,
including programs receiving funding under Article 81 and/or
Article 89 of Education Law. Board members of these
institutions should additionally be familiar with the
requirements and provisions of this manual and Part 200 of
the Regulations of the Commissioner of Education.
THE STATE EDUCATION DEPARTMENT / THE
UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234
November 2001
Dear Colleague:
The University of the State of New York (USNY)
is a vast multi-billion dollar enterprise that encompasses
schools, colleges, universities, libraries, museums, public
broadcasting and other educational and cultural institutions
that have been incorporated by the Board of Regents or the
New York State Legislature. This enterprise has one common
characteristic among almost all of its components. Each
institution is governed by a board of individuals who
willingly volunteer their services. On behalf of the Board
of Regents and the State Education Department, we thank you
for your contributions as a trustee/board member. You are
performing a much-needed and valuable service to your
institution and the community it serves.
This
Statement on the Governance Role of a Trustee or Board
Member is provided by the Board of Regents to assist
trustees/board members in exercising their responsibilities.
The Statement provides certain fundamental information
regarding the stewardship role that members fulfill. The
Regents recognize that USNY institutions vary greatly in the
mission, size, form and structure of their boards. This
document was prepared to provide guidance and information to
assist all trustees/board members in the performance of
their responsibilities. From the small historical society to
the multi-million dollar college, university or school
district, each member has a fiduciary responsibility for the
institution he/she governs.
We urge you to share this document with
your board colleagues, become familiar with its contents,
and integrate its provisions into your institution’s
governance process, e.g., include in orientation materials
for new board members or in the institution’s handbook,
where one exists. It can also be accessed at the following
web site – www.nysed.gov.
Board of Regents
The University of the State of New York
The University of the State of New York (USNY),
created by the Legislature in 1784, includes: • all
elementary, secondary and postsecondary educational
institutions, both public and private • libraries • museums
• historical societies and •other educational institutions
that have been incorporated by the Regents or the
Legislature or have been admitted to membership by the
Regents.
As a trustee or board member, you have
assumed an oversight role with your institution’s service to
the community, which includes protecting the public
interest. This is a very important role because, as a
trustee or board member, you and your colleagues are
responsible for the overall direction, operation, assets and
fiscal well-being of your institution. The assets of the
institution are held in trust for the people of the State
with trustees/board members acting as fiduciaries. As a
volunteer, you must be willing to donate the time and
attention to ensure that senior managers are fulfilling the
institution’s charter and/or legislative mandate. Presented
below are fundamental questions that trustees/board members
need to ask and revisit continuously to ensure they are
fulfilling their role in a responsible manner.
What is the purpose of the institution?
As a trustee/board member, you should
understand the purpose and mission of your institution which
is defined by its charter, certificate of incorporation or
by legislation. USNY institutions encompass a wide array of
education purposes as described above. In the case of
organizations that are incorporated or chartered by the
Board of Regents, you should obtain a copy of the
Regents-issued charter or certificate of incorporation.
Institutions chartered or incorporated by the Board of
Regents are treated as not-for-profit entities. You should
familiarize yourself with the institution’s corporate
status, powers, privileges, and duties, which are defined by
its charter or certificate. Independent colleges and
universities derive their corporate powers from the Board of
Regents as do certain non-degree granting institutions.
Libraries, museums, historical societies, public television
and/or radio stations also derive their corporate powers
from the Board of Regents. All of these institutions are
governed by a board of trustees which is legally responsible
for assuring that the institution fulfills the distinctive
purposes for which it was established.On the other hand, the State University
of New York, its four university centers and various
colleges of arts and sciences, technical colleges, medical
centers and community colleges derive their authority from
Education Law, as does the City University of New York, all
of which are part of the USNY enterprise. A board of
trustees governs and provides oversight for each.
USNY encompasses school districts and
boards of cooperative educational services (BOCES) which
also obtain their authority from the Education Law and other
relevant statutes. As a board member, you need to know
whether the school district is a common school, union free,
central, central high school, or city school district. There
are also "special act" school districts which have been
established by the New York State Legislature on the grounds
of charitable institutions caring for children and youth.
BOCES are voluntary associations of school districts that
agree to provide education and business services in a
cooperative manner for purposes of economy and efficiency.
The New York State School Boards Association publishes a
handbook for school board members that provide more detailed
information on the role of a school board member.
What is the financial status of the institution?
One of the most important issues you need
to monitor is the financial status of your institution and
whether its assets are being used for the benefit of the
institution’s mission. Ask for copies of fiscal reports,
financial statements, and tax returns where applicable. Talk
to executive staff and other board members about the
financial condition of the institution.
Just exactly what am I responsible for?
You should meet with other trustees/board
members to discuss their expectations of you. Inquire about
by-laws, committees, organizational structure, financial
responsibility, and conflict of interest policies. Keep in
mind that being a trustee/board member requires a commitment
of personal time and effort with generally no fiscal
remuneration.
What duties do trustees and board members have to
fulfill?
Although varied in purpose and mission,
USNY institutions are, for the most part, not-for-profit
corporations subject to the Education Law and other laws
governing not-for-profit corporations wherein trustees/board
members must fulfill certain duties to the institution and
the community it serves. Such duties involve care, loyalty
and obedience.
Duty of Care
A trustee or board member must act in
good faith and exercise the degree of diligence, care and
skill that an ordinary prudent individual would use under
similar circumstances in a like position. To conform with
this standard, trustees and board members should:
Regularly attend and participate
in board meetings and committee meetings where
applicable;
Read, review and inquire about materials that
involve the institution, especially board minutes,
reports, and any literature that involves the
institution;
Have a fiduciary responsibility
for the assets, finances and investments of the
institution and exercise due diligence, care and
caution as if handling one’s own personal finances;
and
Use one’s own judgment in
analyzing matters that have an impact on the
institution.
Duty of Loyalty
Trustees/board members owe allegiance to
the institution and must act in good faith with the best
interest of the organization in mind. They should not seek
to benefit personally from any business derived from the
institution without full disclosure to the board. They must
avoid conflicts of interest or even the appearance of such.
Acts of self-dealing constitute a breach of fiduciary
responsibility that could result in personal liability.
Duty of Obedience
A trustee/board member has a
responsibility to insure that the institution’s resources
are dedicated to the fulfillment of its mission. The member
also has a duty to ensure that the institution complies with
all applicable laws and does not engage in any unauthorized
activities.
The NYS Attorney General publishes
A
Handbook for Not-For-Profit Board Members,.
. The Handbook contains more detailed information on the
duties of a trustee/board member of a not-for-profit
corporation.
What is the difference between provisional and absolute
charters?
Corporations formed for the principal
purpose of operating a college, university, school
conducting some or all of the grades nursery through twelve,
library, museum, historical society, or public television
and/or radio station are created by the Board of Regents by
issuance of an instrument called a charter, which sets forth
the powers of the corporation. The document by which all
other education corporations are created is known as a
certificate of incorporation.
The initial incorporation of the
educational institution is executed by the issuance of a
provisional charter that is valid for a fixed term of one to
five years. If the Board of Regents is not satisfied that
the corporation can qualify for an absolute charter, it may
extend the provisional charter for an additional term of
years.
The process for the issuance of a
certificate of incorporation is the same as that pertaining
to a provisional charter. The legal effect of a certificate
of incorporation is the same as that of an absolute charter.
If you are a trustee of a chartered institution, you need
to be aware of the following:
Whether your institution has a provisional or
absolute charter;
The specific standards that apply to your
institution (see Appendix A);
The specific powers of the corporation contained
in the charter; and
Whether the board has the number of members
stipulated in its charter.
How do I distinguish between my governance role and that
of a supporter or team player for my institution?
There is a fine line between governance
and being a supporter of an institution. Members need to
avoid meddling in managing daily affairs. Trustees/board
members must balance their role as supporters for the
institution’s success against their governance role as
overseers of the institution’s management to ensure that
assets are used properly, laws and regulations are followed,
and the public interest is best served. The board needs to
support the institution’s management but must also govern by
holding the chief executive officer (CEO) accountable for
the institution’s operations and service to the public.
In the governance role, trustees/board
members should be concerned with protecting the public
interest which they serve. Members exercise this role by
hiring a CEO to manage the operation of the institution and
evaluating his/her overall performance in providing services
to the public.
In a supportive role, board members
assist by fund-raising, liaison and networking with other
community leaders, and providing expertise in specialty
areas such as law, planning, accounting and overall
corporate management.
What if I lack knowledge or experience in fiscal
governance?
One of the most important
responsibilities of a trustee or board member is to ensure
that financial resources are being used efficiently and
effectively toward meeting the institution’s goals, and that
its assets are properly safeguarded. The area of fiscal
governance is one in which board members may feel the least
qualified and rely entirely on the CEO for guidance.
Trustees/board members should be cautious
about relying completely on the guidance and judgment of the
institution’s CEO and management. Members have ultimate
responsibility for governance of the institution’s resources
and their primary role of protecting the public interest. In
monitoring the institution’s budget, board members should
ask questions about the assumptions made in preparing the
budget. What types of data were used to prepare the budget?
How are estimates developed for such expenditures as
payroll, supplies and materials, travel and conferences,
capital outlays, etc.? Are accounting and/or management
processes adequate to ensure accurate and reliable data?
What will be accomplished by passing this budget? How will
outcomes be measured, evaluated and reported? How will the
board hold the CEO accountable for budget outcomes? How are
variances from expectations handled?
Similar questions may be raised about
other areas, such as the institution’s system of financial
controls, processes employed to comply with applicable laws
and regulations, accountability with performance results,
etc.
What if the institution needs more expertise with fiscal
matters?
When matters of fiscal governance become
very technical and require greater expertise in assessing
the fiscal condition of the institution or its long-term
well-being, a board should seek the advice of experts. One
mechanism for giving emphasis to the responsibility of
fiscal governance is to create an audit committee composed
of board members who have expertise in dealing with fiscal
affairs.
An audit committee is organized pursuant to a charge or
mission approved by the board. It should be established in
the institution’s charter, certificate of incorporation or
by-laws. It holds meetings routinely throughout the fiscal
year that involve such activities as:
Helping set the fiscal environment or "tone at
the top," which promotes a theme of fiscal
responsibility and ethical conduct among all
institution staff and board members;
Reviewing the certified financial audit report of
the institution and providing input on the results
to the full board;
Assessing the effectiveness of the institution’s
system of internal controls and reporting on any
weaknesses;
Assessing any risk associated with the validity
and reliability of financial data; and
Monitoring compliance with laws and regulations
applicable to the institution’s operations.
These are just some of the many
activities that an audit committee can pursue to assist a
board in its role of fiscal governance. Appendix D provides
links to web sites that contain more information on audit
committees and other issues relevant to the duties and
responsibilities of trustees and board members.
Where can I get additional help?
There are many sources available to
trustees and board members needing further information and
guidance on their role. Members are encouraged to seek
additional guidance, evaluate the need for additional
training, and contact the NYS Education Department (SED) for
guidance. The offices and contact information for SED are
illustrated on Appendix E.
The procedures for the creation of
education corporations by the Regents, and other related
matters, are outlined in the pamphlet entitled "Education
Corporations – Law Pamphlet 9."
Members are strongly encouraged to seek
the advice of an attorney in matters involving the
interpretation of laws and regulations pertaining to the
institution’s operations. The information contained in this
document is not a substitute for the guidance provided by
legal counsel.
The appendices contain additional
information that may be helpful in fulfilling your role as a
trustee or board member. Their content is listed below.
If you have questions or comments
regarding the Statement, please refer to
Topic Appendix E for offices to
contact in the State Education Department or write to the
address listed above in the letterhead.
Sincerely,
Carl T.
Hayden
Chancellor,
Board of
Regents
and
Richard
P. Mills
Commissioner
of Education
and
President of
the
University
of the State
of New York
THE UNIVERSITY OF THE STATE OF NEW YORK
Regents of The University
Carl T. Hayden, Chancellor, A.B., J.D. ......
Elmira
Adelaide L. Sanford, Vice Chancellor, B.A., M.A.,
P.D. .....Hollis
Diane O’Neill McGivern, B.S.N., M.A., Ph.D. . ....Staten
Island
Saul B. Cohen, B.A., M.A., Ph.D. .....New Rochelle
James C. Dawson, A.A., B.A., M.S., Ph.D. .....Peru
Robert M. Bennett, B.A., M.S. .....Tonawanda
Robert M. Johnson, B.S., J.D. .....Huntington
Anthony S. Bottar, B.A., J.D. .....North Syracuse
Merryl H. Tisch, B.A., M.A. .....New York
Ena L. Farley, B.A., M.A., Ph.D. .....Brockport
Geraldine D. Chapey, B.A., M.A., Ed.D. .....Belle Harbor
Arnold B. Gardner, B.A., LL.B. .....Buffalo
Charlotte K. Frank, B.B.A., M.S.Ed., Ph.D. .....New York
Harry Phillips, 3rd, B.A., M.S.F.S. .....Hartsdale
Joseph E. Bowman, Jr., B.A., M.L.S., M.A., M.Ed., Ed.D.
.....Albany
Lorraine A. CortÉs-VÁzquez, B.A., M.P.A. .....Bronx
President of The University and Commissioner of Education
Richard P. Mills
Chief Operating Officer
Theresa E. Savo
The State Education Department does not
discriminate on the basis of age, color, religion, creed,
disability, marital status, veteran status, national origin,
race, gender, genetic predisposition or carrier status, or
sexual orientation in its educational programs, services and
activities. Portions of this publication can be made
available in a variety of formats, including braille, large
print or audio tape, upon request. Inquiries concerning this
policy of nondiscrimination should be directed to the
Department’s Office for Diversity, Ethics, and Access, Room
530, Education Building, Albany, NY 12234. Requests for
additional copies of this publication may be made by
contacting the Publications Sales Desk, Room 309, Education
Building, Albany, NY 12234.
Topic Appendix
Appendix A: Select
Regulations of the Commissioner of Education Applicable to
Chartered Institutions
Appendix B: Best
Practices for Boards to Follow
Appendix C: Top Ten
Warning Signs for Boards
Appendix D: Links to
Web Sites
Appendix E: Contact
Offices in SED by Type of Institution
Appendix A
The University of the State of New York
The State Education Department
Select Regulations of the Commissioner of
Education
Applicable to Chartered Institutions
Elementary and Secondary Schools |
Part 100 |
Nursery Schools and Kindergartens |
Part 125 |
Libraries and Library Systems |
Part 90 |
Historical Societies |
Section 52.22 and Section 3.30 of
the Rules of the Board of Regents |
Museums |
Section 52.22 and Section 3.27 of
the Rules of the Board of Regents |
Public Television and/or Radio
Stations |
Part 179 and Part 26 of the Rules
of the Board of Regents |
Colleges and Universities |
Part 52 |
NOTE: This list is not exhaustive.
Moreover, it does not include relevant provisions of the
Education Law or other laws affecting these institutions.
NOTE: Reimbursement for expenses in the
ordinary course of business does not constitute
compensation. Trustees/board members who also serve
as officers may receive compensation in their role
as an officer (e.g., treasurer, secretary).
Appendix B
The University of the State of New York
The State Education Department
Best Practices for Boards to Follow
1. Be informed of the institution’s activities by:
Discussing operations with board members and
officers.
Reviewing materials provided by the institution.
Actively participating in meetings of the board
and the committees.
Asking questions and obtaining an understanding
of the issues facing the institution.
2. Establish an audit and finance committee with
responsibility to periodically meet with management and
the auditors to consider:
The adequacy of internal controls and financial
reporting processes, and the reliability of fiscal
reports.
The independence and performance of the internal
and external auditors.
Steps taken by management to address audit report
findings.
Compliance with legal and regulatory
requirements.
Steps taken by management to minimize significant
risks to the institution.
3. Ensure the institution is carrying out its purpose
without extravagance or waste and is not engaging in
any questionable or illegal activities by:
Requiring management to provide periodic reports
on how well the institution is fulfilling its
mission and the activities accomplished for the
period.
Approving strategic plans, budgets, policies,
plans of operation, development plans and goals,
contracts, key financial and program reports, and
other items.
Holding the chief executive officer accountable
for results.
Being involved in the selection and compensation
of the chief executive officer.
Using good judgment in analyzing matters that may
impact the institution.
4. Monitor the financial condition and management
practices of the institution by:
Reviewing periodic fiscal reports, financial
statements and tax returns.
Ensuring reserve funds are used for their
intended purposes.
Verifying fund raising expenses are reasonable in
relation to the amount of fund raising revenue
generated.
Ensuring net assets are positive, but not
excessive.
Verifying any deficits are being addressed with
remedial action.
Ensuring records are complete and accurate, and
required reports are filed with federal and state
agencies.
5. To help ensure effectiveness, trustees/board members
need to address the following, consistent with statute:
Consist of a minimum of five voting members who
are independent.
Meet at least twice a year, and more often as
needed or required by statute.
Keep complete and accurate minutes of all
meetings.
Not compensate their members for services in
their role as trustee or board member (see note
below).
Develop a training program for both new and
experienced board members.
Seek expert advice when needed.
Avoid any conflict of interests or even the
appearance of a conflict and maintain a conflict of
interest policy for board members and employees.
Require each member to file an annual written
disclosure of any business involvement with the
institution or related parties.
Assess the need for liability insurance to
protect board members and officers from legal
liability.
Ensure their processes for selecting new members
result in diversity of viewpoints and seek out
individuals with commitment, skills, life
experience, background, and other characteristics
that will serve the institution and its needs.
Appendix C
The University of the State of New York
The State Education Department
Top Ten Warning Signs for Boards
1. Lack of available documentation on the
organization - by-laws, charter, mission statement,
organization chart, prior year financial statements.
2. Lack of independent attitude or excessive
conflict among trustees/board members.
3. Infrequent board meetings. Absence of board
minutes.
4. Poor board attendance at meetings.
5. Lack of access to key information, fiscal,
budget, program, and operations.
6. Lack of access to the chief financial officer.
Existence of conflict of interest relationships or
less than arm’s length transactions between the
institution’s board members and organizations that
conduct business with the institution.
7. Lack of internal financial controls and
written policies and procedures to safeguard,
promote, and protect the organization’s funds and
other assets.
8. Lack of fidelity bonds.
9. Lack of involvement in the hiring of key
employees.
10. Failure to file documents with key control
agencies such as the NYS Education Department,
Internal Revenue Service, and NYS Department of
Taxation and Finance.
Appendix D
The University of the State of New York
The State Education Department
Links to Web Sites
Government Agencies
Internal Revenue Service:
www.irs.ustreas.gov
NYS Attorney General:
www.oag.state.ny.us
NYS Education Department:
www.nysed.gov
NYS Office of the State Comptroller:
www.osc.state.ny.us
Education Associations
American Association of School Administrators:
www.aasa.org
Education Commission of the States:
www.ecs.org
Educational Research Service:
www.ers.org
National Association of State Boards of Education:
www.nasbe.org
National School Boards Association:
www.nsba.org
New England School Development Council:
www.nesdec.org
New York State School Boards Association:
www.nyssba.org
Not-for-Profit Associations
Center for Non-Profit Corporations:
www.njnonprofits.org
Guidestar (IRS Form 990 database):
www.guidestar.org
Internet Nonprofit Center:
www.nonprofit-info.org
Law about Nonprofit Organizations:
www.law.cornell.edu/topics/nonprofits.html
National Center for Nonprofit Boards:
www.ncnb.org
Nonprofit Evaluation Tools:
www.innonet.org
Nonprofit Resource Center:
www.not-for-profit.org
Nonprofit Risk Management Center:
www.nonprofitrisk.org
Urban Institute – Center on Nonprofits:
www.urban.org
Museums/Art Associations
American Association for State and Local History (AASLH):
www.aaslh.org
American Association of Museums (AAM):
www.aam-us.org
New York State Museum-Chartering Program:
www.nysm.nysed.gov/charter
The International Council of Museums (ICOM):
www.icom.org
Library Associations
American Library Association’s Association for Library
Trustees and Advocates:
www.ala.org/alta
New York Library Association:
www.nyla.org
New York State Association of Library Boards:
www.nysalb.org
New York State Library:
www.nysl.nysed.gov
DISCLAIMER: These sites are provided for the user’s
convenience. The State Education Department (SED) does not
control or guarantee the accuracy, relevance, timeliness or
completeness of web sites not maintained by SED. Further,
the inclusion of such sites on this list is not intended to
reflect their importance, nor is it intended to endorse
views expressed, or products or services offered, on these
outside sites, or the organizations sponsoring the sites.
Appendix E
The University of the State of New York
The State Education Department
Contact Offices in SED by Type of
Institution
To obtain further guidance about the
governance role of a trustee or board member, you may
contact the following addresses, telephone numbers, and web
sites for your respective institution.
Institution |
Contact Office |
Public schools, Boards of
Cooperative Educational Services |
Facilities, Management and
Information Services
Office of Elementary, Middle, Secondary and
Continuing Education
Room 885 EBA
Albany, New York 12234
www.emsc.nysed.gov
518-474-2238 |
Nonpublic schools |
Office for Nonpublic School
Services
Room 481 EBA
Albany, New York 12234
www.emsc.nysed.gov/rscs/
nonpub/nonpublichomepage.htm
518-474-3879 |
Museums, historical societies,
public broadcast stations, and other cultural
agencies |
Chartering Program
NYS Museum
Room 3090 CEC
Albany, New York 12230
www.oce.nysed.gov
518-473-3131 |
Libraries and library systems |
Division of Library
Development NYS Library
NYS Education Department
Room 10C50 CEC
Albany, New York 12230
www.nysl.nysed.gov
518-474-7196 |
Public and private colleges and
universities, licensed private and registered
business schools |
Office of Higher Education
NYS Education Department
89 Washington Avenue
Room 979 EBA
Albany, New York 12234
www.highered.nysed.gov
518-474-5851 |
Independent living centers |
Office of Vocational and
Educational Services for Individuals with
Disabilities
One Commerce Plaza
Albany, New York 12234
www.nysed.gov/vesid
518-474-2925 |
Psychotherapy institutes |
Executive Secretary to the State
Boards for Psychology and Massage
Office of the Professions
89 Washington Avenue
Albany, New York 12234
psychbd@mail.nysed.gov
518-474-3817 ext. 150 |
|