Relates to establishing a fiscal stabilization reserve fund as part of the tuition reimbursement methodology for school age programs and to providing an annual growth amount for the tuition reimbursement for school age programs operated by in-state approved private schools for the education of students with disabilities and special act school districts.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6514A
SPONSOR: Nolan TITLE OF BILL: An act to amend the education law, in relation to
establishing a fiscal stabilization reserve fund as part of the tuition
reimbursement methodology for school age programs and providing an annu-
al growth amount for the tuition reimbursement for school age programs
operated by in-state approved private schools for the education of
students with disabilities and special act school districts
PURPOSE OF THE BILL:
To establish a fiscal stabilization reserve fund as part of the tuition
reimbursement methodology for school age programs and to provide an
annual growth amount, correlating with New York State personal income
growth, in the tuition reimbursement rate for school age programs oper-
ated by in-state approved private schools for the education of students
with disabilities and special act school districts.
SUMMARY OF THE PROVISIONS OF THE BILL:
Section one amends paragraph c of subdivision 4 of section 4405 of the
education law to provide that for the 2017-18 school year and thereaft-
er, annual tuition rates for special act school districts and in-state
approved private residential or non-residential schools educating
students with disabilities that are located within the state shall
increase by the greater of: (i) a three-year average of State-wide total
personal income; (ii) a percentage recommended by the Commissioner and
approved by the Director of Budget; (iii) or zero.
Section two amends section 4004 of the education law by adding a new
subdivision 5 to provide that special act school districts may establish
a fiscal stabilization reserve fund.
Section three amends subdivision 4 of section 4405 to provide that the
approved tuition methodology for the 2017-18 school year and thereafter
shall authorize school age programs operated by in-state approved
private schools for the education of students with disabilities and
special act school districts to retain funds up to one percent of their
annual allowable and reimbursable costs not to exceed a total of four
percent of such costs.
Section four is the effective date.
STATEMENT IN SUPPORT OF THE BILL:
Tuition reimbursement for Special Act School Districts and Approved
Private Schools Serving Students with Disabilities (853 Schools) is
based on a rate methodology that is established by the Department and
approved by the Division of Budget (DOB). Following four years of zero
growth in tuition reimbursement, the 2013-14 rate methodology included a
three percent trend factor for direct care costs of school age provid-
ers. The 2014-15 rate methodology included a three and eight tenths
percent trend factor, which equaled the three year average of state-wide
total personal income growth, and the 2015-16 and 2016-17 rate methodol-
ogy included a four percent trend factor. The increases of recent years
have provided relief, but have not addressed many of the shortcomings of
the current system.
At the November 2012 meeting of the Board of Regents, the Board directed
the Department to create a Special Education Financial Advisory Work-
group to allow all interested stakeholders to provide input on the
current tuition rate-setting structure for special education providers
and discuss recommendations to maximize the efficient and effective use
of state and local resources. This workgroup held two meetings in May of
2013. Based on provider testimony at the Special Education Financial
Advisory Workgroup meetings, and SED analysis of submitted cost data, a
lack of predictable growth to fund increasing costs and many technical
aspects of the current rate setting methodology, have endangered the
capacity of Special Act School Districts and 853 Schools to operate
essential special education programs for some of the most severely disa-
bled school age children.
To assist in the financial recovery of Special Act School Districts and
853 Schools, the Work Group representatives strongly endorsed the need
for statutory changes - with particular emphasis on the establishment of
an annual tuition rate growth factor as well as the creation of a fiscal
stabilization reserve fund. This legislation would create a statutory
index for consideration in determining the growth in annual tuition
rates with a protection that rate growth would be held harmless to zero.
As the current growth in tuition rate is established administratively,
and is not based on a predetermined index, there is potential for an
administrative request to exceed a statutorily-based growth factor.
Therefore, the legislation includes three options for establishing
growth in tuition, of which the greater number would be utilized: a hold
harmless, an amount equal to the three-year average of personal income
growth of taxpayers in the state, or an amount recommended by the
Commissioner and approved by the Division of the Budget. A statutory
growth index based on an average of state personal income growth would
set a benchmark for predictable and timely tuition increases and allow
for improved budget planning.
Special Act School Districts and 853 Schools have historically relied on
lines of credit to pay for unplanned or emergency expenditures until
tuition revenue is received. Authorizing these schools to accumulate a
small percentage of tuition revenue in a general reserve fund would
reduce the reliance on private borrowing and enable schools to better
respond to unanticipated events. Administrative parameters would be
developed by the Department to specify the amount that may be deposited
and to identify the allowable uses for the funds in addition to corre-
sponding reporting requirements to ensure appropriate oversight.
BUDGETARY IMPLICATIONS OF THE BILL:
There is no cost to the state during the 2017-18 school year. Using past
data, it is projected that funding one percent of total annual allowable
and reimbursable costs of the 853 Schools and Special Act School
Districts would equal approximately $7.6 million in additional
reimbursement to the schools. It is also projected that a trend increase
for tuition based on a three-year average in total personal income
growth (3.4%) would provide approximately an additional $26 million in
billable tuition for these schools in the 2017-18 school year. For the
2017-18 school year, the Division of the Budget approved 4% in tuition
growth, greater than the three-year average total personal income
growth, which will provide approximately $31 million in additional fund-
ing.
This amount would be paid by the placing school district or social
services district as part of the annual tuition amount and for the plac-
ing school district and these costs would be eligible for private excess
cost aid and July and August aid under Education Law § 4408.
PRIOR LEGISLATIVE HISTORY:
This is a new bill. However, bills containing similar provisions were
previously introduced in 2014, 2015, and 2016. Specifically, in 2014,
the similar bill was introduced by the Senate as S.7638, was referred to
the Education Committee and no further action was taken. It was also
introduced by the Assembly as A.9767 and was reported from the Education
Committee and referred to the Ways and Means Committee and no further
action was taken. In 2015 and 2016, the similar bill was introduced in
the Senate and Assembly (S. 7916 Flanagan/A.5061-A Nolan) and remained
in the Education Committees of both houses.
EFFECTIVE DATE:
The bill would take effect immediately.
