PUBLIC HEARINGS BY THE NEW JERSEY COMMISSION OF INVESTIGATION ON THE MISUSE OF PUBLIC FUNDS IN THE OPERATION OF NONPUBLIC SCHOOLS FOR HANDICAPPED CHILDREN DISCLOSED OBVIOUS AREAS NEEDING REFORM INCLUDING THE STAFFING AND FUNCTIONING OF THE BRANCH OF SPECIAL EDUCATION AND PUPIL PERSONNEL SERVICES (BSEPPS), THE SPECIFIC DESCRIPTION OF ALLOWABLE AND NONALLOWABLE PRIVATE SCHOOL EXPENSES, THE RECORDKEEPING AND REPORTING REQUIREMENTS OF PARTICIPATING SCHOOLS, AND THE PROCEDURES FOR RATE SETTING. THE COMMISSION'S RECOMMENDATIONS EMPHASIZED BOTH COST CONSCIOUSNESS AND COST EFFECTIVENESS. RECOMMENDATIONS ENCOMPASSED THE FOLLOWING AREAS: COST ACCOUNTING AND RATE ESTABLISHMENT; METHODOLOGY IMPLEMENTATION; ADMINISTRATIVE RESPONSIBILITY; AND ALLOWABLE AND NONALLOWABLE COSTS, INCLUDING SALARIES TO OWNERS OF AN EDUCATIONAL INSTITUTION AND MEMBERS OF THEIR FAMILIES, EXPENSES FOR OFFICES NOT LOCATED ON SCHOOL GROUNDS, ENTERTAINMENT COSTS, CARRYING COSTS FOR LAND AND BUILDING, INTEREST CHARGES, RESEARCH AND DEVELOPMENT COSTS, FUNDRAISING EXPENSES, DIVIDENDS AND LOSSES, LEGAL EXPENSES, CAPITAL EXPENDITURES, BAD DEBTS, CONTRIBUTIONS, MEDICAL EXPENSES, DONATED GOODS AND SERVICES, TRANSFERS OF AMOUNTS OF FUNDS TO RESERVE OR CONTINGENCY ACCOUNTS, INTANGIBLE COSTS, AND NONCURRENT COSTS. RECOMMENDATIONS ALSO COVERED REPORTING REQUIREMENTS AND RATE SETTINGS. FOR EACH RECOMMENDATION, BACKGROUND INFORMATION AND COMMENT WERE PROVIDED. THE REPORT INCLUDED TESTIMONY FROM WITNESSES AT THE COMMISSION'S PUBLIC HEARINGS, FOOTNOTES, AND A SAMPLE WORKSHEET.