900.16 Reimbursement.
(a) The operational plan for each shelter for families must include on
forms and in the manner prescribed by the department a financial statement for the
facility's most recently completed fiscal year, if any. In addition, the operational plan
must contain a proposed one year budget, including estimated income and expenditures. Such
budget must set forth the costs reasonable and necessary to operate and maintain the
facility consistent with each of the requirements of the operational plan and this Part.
The reasonableness of any such costs must be evaluated by the department, taking into
account factors including, but not limited to
(1) a comparison of cost data from other types
of facilities housing similar populations or incurring similar expenditures, and
(2) a comparison of costs incurred by other
shelters utilizing similar operational structures or incurring similar expenditures. The
budget must be based upon the estimated net actual expenditures for the operation and
maintenance of facilities and for the care of the residents with respect to items approved
under the operational plan. For tier I and tier II facilities, the budget must include a
schedule of per diem rates for families of various sizes, unless another methodology is
presented by which the department will be able to allocate facility charges to appropriate
programs pursuant to subdivision (f) of this section. The budget must be presented in
sufficient detail to enable the department to identify costs which are not subject to
Federal financial participation. Budgets of facilities not operated by social services
districts must be agreed upon between the district and the facility operator. All budgets
must be formulated to ensure that the costs of resident services that may be paid from
other funding sources, including but not limited to the Medical Assistance program, are
not included as costs in the proposed shelter budgets.
(b) Costs reasonably necessary under any operational plan shall be
limited as follows:
(1) (i) Related party transactions. Actual
costs for rental of land, building and equipment and other personal property owned or
controlled by organizations or persons affiliated with an organization operating a
facility, or owned or controlled by members, directors, trustees, officers or other key
personnel of such operator or their families either directly or through corporations,
trusts or other similar arrangements in which they hold more than 10 percent interest in
such land, building and equipment or an interest valued at $1,000 or more, whichever is
less, are allowable only to the extent that such rentals do not exceed the amount the
operator would have received had legal title to the rented items or facilities been vested
in it.
(ii) Actual charges in
the nature of rent between or among organizations under common control are allowable to
the extent such charges do not exceed the normal costs of ownership, such as depreciation,
taxes, insurance and maintenance; provided that no part of such costs shall duplicate any
other allowed costs.
(iii) Nonrelated party
transaction. Rental costs of land, building and equipment and other personal property are
allowable if the rates are reasonable in light of such factors as rental costs of
comparable facilities and market conditions in the areas, the type, life expectancy,
condition and value of the facilities leased, options available and other provisions of
the rental agreement. Application of these factors, in situations where rentals are
extensively used, may involve, among other considerations, comparison of rental costs with
the amount which the operating organization would have received had it owned the
facilities.
(iv) Sales/leaseback
transactions. Rental costs specified in sale and leaseback agreements, incurred by persons
or organizations through selling facilities to investment organizations, such as insurance
companies, associate institutions or private investors, and concurrently leasing back the
same facilities, are allowable only to the extent that such rentals do not exceed the
amount which the organization would have received had it retained legal title to the
facilities.
(2) Capital costs and depreciation are limited
as follows:
(i) Capital costs are
not allowable, except as provided in section 600.3(b)(7) of this Title.
(ii) Compensation for
the use of buildings, capital improvements and capital equipment may be made through
either depreciation or the allowance provided in section 609.5(f)(2) of this Title with
respect to office space. Capital equipment is any equipment with an acquisition cost
exceeding $1,500 and having a useful life of more than two years. No depreciation
allowance is permitted with respect to the cost of land. Costs incurred for improvements
which add to the permanent value of buildings and equipment or which appreciably prolong
their intended life must be treated as capital expenditures. Costs incurred for necessary
maintenance, repair or upkeep of buildings or equipment which neither add to nor
appreciably prolong their useful life, but keep them in an efficient operating condition
must not be treated as capital costs.
(iii) Depreciation
allowances must use the straight-line method with a useful life reflecting the probable
period of useful service, which in the case of a building must not be less than 25 years;
provided, however, that the department may authorize a shorter period for privately owned
shelters, but in no case less than 10 years and then only when private financing cannot
otherwise be obtained and a longer period would cause undue financial hardship. When a
depreciation period less than 25 years is used, the aggregate amount by which the
reimbursement paid exceeds the amount which would otherwise be payable over the same
period constitutes an advance of reimbursement and the social services district must
obtain and file a mortgage agreement securing any such advances. Such debt becomes due and
owing upon the conversion of the facility to any use other than as a family shelter
earlier than 25 years. With respect to publicly owned shelters, the department may permit
a depreciation period shorter than 25 years, but in no event less than the applicable
period of probable usefulness under section 11.00 of the Local Finance Law. Any
determination to use a period shorter than 25 years must be approved by the Director of
the Budget.
(iv) If less than a 25
year useful life is approved, then in the case of privately owned shelters subject to a
mortgage, or similar financial arrangement, the amount allowed in any year for
depreciation and interest will in no event exceed the amount paid by the facility for
interest and principal on the mortgaged premises. With respect to publicly owned shelters,
the amount allowed for the depreciation and interest will in no event exceed the allocable
amount paid by the social services district for principal payments and costs for debt
service with respect to the premises.
(v) Interest costs may
be considered an allowable cost subject to the following:
(a) the capital indebtedness does not exceed the current approved value of the property;
(b) the interest rate charged for the borrowed funds is competitive with existing interest
rates;
(c) the interest is necessary and proper for the operation, maintenance or acquisition of
the facility; and
(d) the interest must be supported by a contractual agreement for the payment of interest
and for the eventual repayment of the loan for which the interest was incurred.
(vi) In the case of
privately owned shelters, depreciation shall be limited to the Costs Of acquisition,
renovation and rehabilitation of the facility. The costs of acquisition shall be the
lesser of the actual costs incurred by the provider to acquire the facility or the fair
market value of the facility. Shelter operators must provide an appraisal of the property
compiled by an independent appraiser with the financial material submitted with the
operational plan to the department.
(3) Costs of a shelter may include a reasonable
allowance for reserve beds or standby capacity based upon the intended use of the
facility, the family capacity of the facility and foreseeable fluctuations in resident
population.
(c) (1) Revised budgets must be submitted (i) prior to finalizing any
purchase or rate agreement, and (ii) annually with respect to any publicly operated
facility subject to this Part.
(2) For the State fiscal year beginning April
1, 1992, and ending March 31, 1993, no rate adjustments will be approved relating to any
salary enhancements, additional or enhanced fringe benefits, or cost of living, or other
adjustments for operational or nonpersonal service cost increases, except for increases
mandated by Statute or regulation or debt service schedules previously approved by the
department.
(d) The department must review the material provided and the proposed
budget. State reimbursement is available for costs found by the department to be
reasonable, subject to the approval of the director of the Division of the Budget.
(e) The social services district may within 30 days request a review of
the department's determination of reimbursable costs by requesting consultation. The
consultation period begins when a letter requesting consultation is received by the
department and continues until agreement is reached or the department affirms or, subject
to the approval of the director of the Division of the Budget, redetermines the costs
allowable; provided, however, that if' within 30 days of a request for a review no
decision is reached, the department's determination will be deemed affirmed unless the
district requests and the department grants an extension of time for a decision.
(f) A district may claim and receive reimbursement from the office for
costs approved under subdivisions (d) and (c) of this section. Such reimbursement must be
adjusted to reflect actual allowable costs in any fiscal period covered by an operational
plan. Requests for adjustment for a fiscal period may be submitted during, but in no event
later than 90 days after the end of, such fiscal period. No requests for adjustments will
be approved if the actual occupancy rate of the facility falls below the minimum occupancy
rate assigned to the facility under section 900.3(a)(2)(v) of this Part. Reimbursement for
the costs of shelter for families eligible for or receiving benefits under the Emergency
Assistance to Needy Families with Children, Family Assistance, Safety Net Assistance,
Veteran Assistance, or Emergency Assistance to Aged, Blind and Disabled Persons programs
must be charged to the applicable program. In addition, districts are subject to the
rccordkeeping requirements contained in Part 600 of this Title with respect to all shelter
care for which reimbursement is claimed.