Rate Setting Unit Questions and Answers

Topic Areas:

Consolidated Fiscal Report (CFR)

  1. (12/03/14) In Appendix L of the CFR, it states that “ each employee that works in more than one program, a minimally acceptable time study encompass at least two weeks per quarter of the cost reporting period.” Does this mean that every employee that is shared must do a time study each quarter or just one quarter per cost period.

    For example: If there is a Clinical department of 12 people and they are all shared. Do all 12 people have to do a time study each quarter or can 3 people do a time study each quarter for the four quarters?

    1. It is meant for every employee.  So, in your example, all 12 people would have to do a time study in each quarter.
  2. (12/03/14) If I have 2 companies that share staff, 1 is a special education school and 1 is a child care provider.  The 2 companies are very aligned in the services that they provide, so it is very difficult to discern, for administrative staff, when one company’s services end and the other’s begins.  There is no way for staff to segregate their time due to the crossover of responsibilities.  We have seen in the past where the OSC has used a ratio value method to allocate shared costs between entities.  Would this be an allowable methodology to bring a system and consistency to the process.

    Furthermore, some of these staff were charged to code 505 in the past with an estimate of how they are spending their time within programs.  In order to create a more appropriate model, can we code all of these staff to 605 and use ratio value to allocate them.  Once again, this will produce a methodology that is less subjective.  As there are multiple sites, this methodology will produce some skewing of results on a person by person basis, but on a global basis it appears that it will be more appropriate.

    1. Answer: Regarding allocation methodology. We advise our providers to use the guidance in the RCM and CFR Manual Appendix I and Appendix L. Time studies need to be done to support staff allocation when no suitable allocation methodology can be determined. Ratio value is not always appropriate.
  3. (12/03/14) Many programs have transitioned from sign-in sheets and "punch clocks" to track staff time to sophisticated time record systems, including those which rely on staff fingerprints. These systems permit an electronic recording of supervisory approval prior to payroll processing.
    Would these advanced systems be viewed by the Department as meeting the requirement that time records be signed by the employee and countersigned by a supervisor?
    1. Answer: Regardless of the form for recording employees’ time records, the Approved Special Education Provider (ASEP) must have procedures in place to track employees’ time-on-task (that includes employees working in multiple job titles or programs).
      An electronic timekeeping system should meet the following requirements:
      • Each employee is associated with a unique user identification. Employee records time in/out contemporaneously, Supervisor reviews and approves employees' electronic time records, Time records are locked – thus cannot be altered- once supervisor approve them.
      • System generated audit trail is maintained for all events within the system, including manual entries, deletions or changes to the data.
      • System has controls in place to restrict its functionality based on the user.
  4. (1/08/15) If a provider has a program director or assistant ED that is a therapist, and they provide some direct service, but are not separately paid by the program for that service, do you put their time in their main code (i.e. 501) or in the direct service area (OT or PT)?   If the former is the case, how does this get handled on SED-4, if this results in more services delivered than it appears the program has staff to provide (as part of the staff delivery time is in a non-direct care code)?
        1. Answer: Our position is to report the individual under the title in which they were hired and primarily serve in particularly if their salary is commensurate to that position.  In the case presented below, the individual should be reported as a program director.  The discrepancy on the SED-4 can be explained in that way.  I wouldn't expect the individual to be providing a lot of service as a therapist if their main function is to be a program director.
  5. (1/08/15) I was wondering if a Graduation Program printed by a printing company would be considered a reimbursable cost to student recreation. When I was reviewing the 2013 RCM it was not clear to me how I would classify that expense.
        1. Answer: Per the RCM: Costs of commencement and convocation activities are reimbursable when they are consistent with local public school districts. It would be allowable if reasonable cost, and subject to NDC parameter.
  6. (1/08/15) A question has come up with the implementation of time studies for an interpretation of the word “contemporaneous”. If an agency does a time study from July to September and subsequently each quarter can they average the % for the entire year and take the total salary and allocate by the total average for the year? They do not have to apply each quarter by each quarter. Is the meaning in the Appendix L?   Contemporaneous being defined as the costs and time % for the CFR year.
    Appendix L: The time study must be contemporaneous with the costs to be allocated. Thus, a time study conducted in the current cost reporting year may not be used to allocate the costs of prior or subsequent cost reporting years.
  7. Answer: Yes, the meaning of contemporaneous is meant for the reporting fiscal year so the time study correlates with the expenses.

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Rate Methodology

  1. (12/03/14) We all know it is difficult to find typically functioning children in integrated classrooms.  In an effort to get typically functioning children, can a program offer a subsidy to their staff, let’s say $5,000 per year?  Can the program reflect that subsidy as both an expense (fringe benefit), and as offsetting revenue on their CFR?  It really has no impact on the net costs because the program is grossing up both revenue and expense.
    1. Answer: Yes, a program can offer a subsidy to their staff to entice the enrollment of typically functioning children into their integrated preschool programs.  However, such expenses would be considered non-reimbursable in the calculation of the corresponding tuition rates. These expenses will be adjusted out from reported costs but the corresponding revenues will NOT be offset as well. Consequently, these expenses would need to be funded through other avenues.
  2. (12/03/14) What are the determining factors used to determine whether someone who is hired is an employee or consultant?
    1. Answer: Criteria have been established to distinguish an employee from a person in a contractual relationship. The NYS Worker’s Compensation Board advises that to the extent that a program controls the work and provides direct supervision of the teacher, the relationship entails employment (W-2) and not independent contract (1099 form). The existence of an employment relationship depends on the factual context of a particular situation or setting. To demonstrate this, the individual must be a W-2 employee such that the employer is subject to federal social security and withholding taxes and other factors that indicate the existence of an employment relationship. Additional relevant factors that may be considered to determine the existence of an employment relationship include the following:
      • the degree of the employer’s dominion and control over the autonomy of the employee such as whether the individual is required to follow the instructions of the provider relating to when, where and how he or she is to work;
      • whether the employer requires the submission of written reports and provides training;
      • the degree of oversight the employer has over the employee’s work product such as, does the employer set the order of work to be performed; and
      • whether the employer establishes the hours of work.
    • Note: RSU used the definitions offered by Internal Revenue and NYS DOL to determine whether an individual should be considered an employee or consultant. IRS will make a determination if an agency is unsure. They have to complete a SS-8 and based on the information submitted IRS will make a determination as to how an individual should be classified.
    • See SED Memo from James Delorenzo
  3. (12/03/14)

    I have an integrated classroom matched with full day UPK kids.  The full day UPK program is 6.33 hours, and requires providers to offer lunch to the UPK kids.  Providers typically bring in a CACFP program to cover food costs here because all the UPK kids qualify for free lunch.  The question arises with respect to the SED kids.  If a child does not qualify for free lunch (subject to full or reduced lunch), is this something that would be an allowable cost under the tuition rate?  Can parents be charged for the food program?

    1. Answer: These food cost would be an allowable cost in the tuition rate. An agency can charge a parent for food if a parent chooses not to provide lunch for their child. Any charges will be reviewed for reasonableness and could be compared to what the school would receive if those students qualified for CACFP.
  4. (1/08/15) I have a question regarding integrated classrooms. A center I operate has been awarded an Early Learn NYC program. Additionally, we have a contract for an integrated classroom. My question is can we have the same children in the ELNYC program and the integrated class. It would mean getting reimbursed from the NYC Administration of Children's Services and NYC Department of Education for the same classroom and children. Is this allowed under the RCM or not?
    • Answer:  Funding received from a governmental agency or unit for specific education programs or cost items will be offset by the Department against the appropriate program costs in the calculation of tuition rates so that costs will not be reimbursed more than once by public funds.
  5. (1/08/15) What is the treatment of FEMA funding for repairs?
    1. Answer:  FEMA would be treated as offsetting revenue to the reported expense. If it were a replacement (capital improvement), then FEMA funding would be netted against cost of new asset and result would be depreciated. There cannot be duplicate funding received for an expense no matter whether it's a repair or an improvement.
  6. (1/08/15) The union suggested the idea of not offering the union members health/dental insurance at all and giving each union member a fixed amount which would be added to their salary. It would then be up to the union member to get their own insurance – either through a spouse of out in the open market place. We checked with NYSHIP if we could exclude a particular group from our insurance – they said that we could. We would only have to send them a copy of the agreement and give them the effective date of the agreement. Looking at the numbers and there is a possibility for savings, however part of the equation includes us having to pay a penalty under the Affordable Health Care Act (AHCA) for not offering insurance to all employees. Would the penalty be reimbursed?
  • Answer:  The penalty imposed under the AHCA would not be reimbursed.

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  1. (12/03/14) I am having problems logging my viewings of the CFR training videos and am not sure why I cannot record that I have in fact watched them.

    Please advise who I can speak with to follow up on this.

    1. Answer: When linking to a module, if your browser opens a media player instead of remaining as an HTML page, when the module is finished you will not find a link which directs you to enter usercode and password. Contact RATEWEB to inform RSU that you viewed training modules but cannot enter codes.
  2. (12/03/14) When will training be required in order for CEO to sign off on a CFR and CPAs to submit an opinion on the CFR?
    1. We encourage providers and CPAs to take the training. It is currently a requirement for all preschool and school-age approvals and preschool reapprovals. We expect that regulations will be updated requiring mandatary training for 2014-15.
    2. (7/13/15) It is our intention to update regulations in the future regarding this requirement.  But it is consistent with the Regents recommendation that anyone certifying the CFR must take the training.  This was also a recommendation of the State Comptroller.  We anticipate updating the training modules yearly or provide additional information therefore this will become a yearly requirement.

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  1. (12/03/14) Preparation of the CFR:
    1. If a CPA performs an audit and certifies the CFR, can they can also prepare the CFR? Is that in violation of non-audit work and independence?
      1. Answer: Not in violation of non-audit work.
    2. And therefore not reimbursable?
      1. Answer: If there is no CFO, Comptroller or person on staff qualified to complete CFR than reimbursable.
    3. Are you saying SED may disallow the cost for an independent consultant to prepare the CFR? 
      1. Answer: Yes
    4. How would you define justified, necessary and reasonable? 
      1. Answer: No one on staff qualified to complete CFR. 
    5. Is there a criteria?
      1. Answer: Qualifications to hold the position of Business Mgr.
  2. (1/08/15) What is the process for a school to transfer ownership?
      1. Answer: A modification application is in order and perhaps an initial application process for new owner if it is a sale. New owners may have to pass character and competence criteria.
  3. (1/08/15) Could you please confirm my understanding that the naming of a new 4410/853 CFO does NOT require NYSED consent, but does require notice to RSU? I understand a change in CEO is reflected on the approval letter and therefore is an essential element which must be shared with SED. We wanted to makes sure we understood that it was ONLY CEOs that required submission of an approval packet.
    1. Answer:  Notification is all that is necessary for change in CFO.    
  4. (1/08/15) I am trying to determine the effective date of the rule on non-allowable paid employee lunch [RCM Section II(13)A.(12)].
      1. Answer: The effective date is January 13, 2014. 
  5. (1/08/15) I have a question regarding employment vs contractor status for preschool providers.  Teachers who provide SEIT services must be employees as per the state and cannot be contractors.   The guidelines tell us a SEIT must be an employee but Related Service providers do not have to be an employee.  My question is, under preschool services a teacher assistant is considered a related service not SEIT service, under the regulations, does the TA have to be employee of can that person be a contractor?
    1. Answer: further clarification may be needed but essentially if the individual is providing services in a program that requires the individual to be supervised and controlled as they fulfill the position's responsibilities, then the individual under IRS and NYS DOL requirements is an employee.  Related Service Therapists are professionals who are governed by professional licensing regulations. They are the "experts" who decide how to implement IEP. They can be considered independent contractors since their work may or may not be supervised and controlled. There should be a written agreement/contract spelling out expectations for both sides.
  6. (1/08/15) Can related services be provided outside of school hours?
    1. Answer: In accordance with the Special Education Field Advisory issued September 2012, related services should be provided during school hours in accordance with the IEP.
  7. (1/08/15) I have a question regarding the RCM. In the RCM Section II part 13.C it speaks about pensions. Our program has a pension plan and many employees paid into the plan over the years. The plan was a 401(k) and according to 13.C (1) c. is a reimbursable expense for the company.

 Recently many employees decided to roll their pensions over into IRA's. The question is, the money that they roll over into IRA’s is it considered compensation for personal service for this year? Do we have to report it as such? Is it reimbursable? Do we have to notify anyone in RSU?

  1. Answer: If rolled over into IRA within 60 days there is no taxable distribution. Even if were a taxable distribution and reported on a 1099R it would never be considered as compensation and reimbursed again in the tuition rate. It is not reimbursable, as these dollars were already considered for funding as a pension cost in prior years' rates.




Last Updated: July 6, 2018