Transcript Slide 1

NACTEI – New Mexico 2009
Ted Davis –
• Arizona Department of Education
• Career & Technical Education Section
• Phoenix, AZ
• 602-542-5349
• [email protected]
• Ted’s doing the best that he can…
• The greater the “Risk” the more you need to check
out any answers discussed and “document” the
how’s and why’s of the option you choose…
 Current Audit Issues
 Grant Period
 Maintenance of Effort (MOE)
 Supplanting
 Fiscal Monitoring – Risk-Based Monitoring
 ARRA, Title XIV – Stabilization Funds
Written Guidance
 Most useful
 Where to find it
 Use of Perkins Funds
 Questions & Attempted Answers
OMB Circular A-133
OMB Circular A-133
 Look at the matrix & cross-cutting sections of the compliance
 Look at the Vocational Compliance Supplement
• 4-84.048
• Basically two specific requirement questions –
 Did the recipient follow its approved application?
 Did the recipient “Supplant”?
OMB Circular A-133
 Criticism of the A-133 Process
• More aggressive audits needed
• Expansion of audits under the “risk” provisions of A133 (§ ___ . 520 - .525.)
• Encouraged to focus on more than just Type ‘A’
 States - $50 Mill
 Locals - 50% of federal awards expended
• In Arizona more CTE audit findings are being seen
2009 OIG Audit Activities
March 2, 2009
Cash Management
• If everyone is operating on a “reimbursement” basis how can
there still be cash management issues?
 At the local level we see districts and colleges requesting
funds to buy equipment before they are actually ready to
make the actual purchase –
 Most vendors that work with governmental entities
give them 60-90 days to pay. Order the items, get a
projected delivery date, then order the $$
 Staff turnover – Individuals that don’t understand the
cash management rules
 Intentional excessive draws??
(34 CFR 74.22 & 80.21, 31 CFR 205, A-133 Compliance Requirement C.)
Property Management
• The Audit Finding That Won’t Die & I Don’t Get It?
 Inadequate documentation
 A system to safeguard equipment that costs less than $5,000
….34 CFR §80.20(b)(3)… “safeguard all”
 Inaccurate property/inventory listings –
 You have to be able to physically find equipment you have placed. Conduct
your own inventory periodically…
 Remove equipment from the list that has been disposed of, transferred, sold,
lost, etc.
 If necessary, keep your own ‘handy dandy’ inventory & stewardship list – the
“3 hole binder” backup approach…
In many cases your state and LEA inventory laws are more restrictive than the
34 CFR § 80.32 equipment guidelines. If so, you need to comply with your local or state
Follow your state’s procurement rules –
34CFR §80.36 leaves the procurement rules up to each state’s laws
Leave procurement up to your agency’s experts – However, you still need a
working awareness of your state’s procurement requirements
Go to your own state’s Auditor General or Inspector General website and
look for the laws relative to your type of agency and the audit guide a state
auditor would use to audit your procurement rules compliance… “You can
see the test before you potentially have to take it” …
Anything you purchase must align with your approved application, plan
or grant
Use the “reasonable person approach”
Use the “Would it be OK to see on the evening news?” approach
Document, document, document…. Keep copies of the essential documents
Time & Effort
• (OMB Circular A-87, Attachment B, Item .8.h.
(secondary) Or OMB Circular A-21, J.8. (Higher
• Almost Everyone Has A System – So Why Findings?
 Budgeted vs. actual
 A lack of semi-annual certifications for 100%
grant employees
 Failure (colleges in AZ) that fail to have T&E
reports approved by a manager or supervisor
 Position descriptions that don’t even mention
CTE or Perkins …
EDGAR 34 CFR § 34 CFR 76.707 & 76.708.
• Perkins is not an “entitlement” grant – You cannot carry over
unexpended funds at the local level – SO WHAT?
• A grant recipient cannot obligate Perkins funds prior to their grant
being “approved” or the state receives a “substantially approvable”
application (as determined by the state) …
• While the fiscal year starts 7/01/XX you can’t obligate your new
dollars until your application is approved or at least substantially
If your application is not received in a substantially approvable form
until (let’s say) July 15th, you cannot use any of your new Perkins
funds to cover the cost for anything for the period 7/01/XX to
• In the absence of new guidance from the USDOE the
Perkins MOE requirements have not changed.
• The MOE guidance in Title XIV of the American
Recovery & Restoration Act (ARRA) focuses on local
MOE and ESEA and IDEA programs – Not Perkins.
• Perkins MOE is still measured at the state level
Aggregate MOE
MOE relative to state administration expenditures
Plus a dollar-for-dollar match requirement on your
state administration expenditures
 States may request a waiver. The maximum waiver
amount is 5% and you must apply for each year
separately. Historically waivers are very rare.
• Perkins is a “supplement” not supplant program.
• You cannot request a waiver to the non-supplanting provisions
of Perkins.
• The only successful argument I am aware of relative to
“beating” a supplanting finding is based on a 2003 letter from
Eugene Hickok wherein they dismissed a State of Oklahoma
supplanting finding based on the fact that in –
That the position would have been eliminated “in the
absence of Federal funds”.
You can find the letter at –
• With as many states and school districts potentially in the “RED”
relative to money and their annual budgets, auditors will be looking
for evidence of supplanting.
• A significant amount of documentation is required and it has to
reflect decisions that are not arrived at easily – public Education
Board meeting minutes is one example that documents that in the
absence of the Federal funds the education activity, program, staff
position would disappear….
• Also look at –
• Everyone says they monitor – The problem is a lack of “fiscal”
• Have you heard this one? – “My people are not auditors!”
Not that hard –most states have “monitoring guides”.
Build fiscal questions into them–
• Property Management Ask if they have an inventory system for items $5,000 or per
their state threshold
Ask about “stewardship” systems – 34 CFR §80.20(b)(3)…
“safeguard all”
Ask them to sample their own equipment purchases, to
review the documentation and to physically locate
randomly selected items
T&E –
 Ask about individuals that work on more than one program
 Ask if they do biannual certifications for individuals who only work
100% on CTE programs
 Ask if each T&E report is approved by a supervisor
 Ask if they can be tracked back to the entity’s general ledger
 Ask if the duties being performed align with the employee’s job
Their Approved Grant Application - Ask –
 Do their written narrative reports align with their approved
application’s goals and objectives?
 Do the expenditures, in general, “align and support their approved
application?” – If not why?
 Fiscal Completion Report
 Compare to the their approved application, in particular
approved equipment costs
 Compare completion report expenditures to their
procurement records and general ledger
For Example …
(Where the employee works on multiple activities or cost
objectives….services). Does the district have a formal time and effort
reporting system in place? Yes
If yes,
Does the district time and effort reporting system meet the following standards:
(For any “no” response , provide a corrective action plan to address
a. Reflect an after-the-fact distribution of the actual activity of each
employee ? Yes
b. Account for the total activity for which the employee is compensated?
c. Are the reports prepared…
To See Arizona’s complete Monitoring Document go to –
• Other Recommendations –
 Train your educational specialists
 Train your own fiscal staff
 Take advantage of regional conferences and
meetings and train your grant recipients…
 Share your monitoring document with as many of
your recipients as possible. The questions and
documentation you ask for should not be a surprise
Risk-Based Monitoring – on the USDOE’s “radar”
Arizona uses a weighting system, but the final choice is up to
the people that do the actual visits
Factors include –
• The amount of $$ received
• Specialist input from programmatic visits
• Desk audit guides returned by the LEA
• State or A-133 audit findings – questioned costs are
weighted more than other types of findings
• LEA has only one or two approved programs
Last date monitored – over four years is a concern
Funding hold status – reason for hold
Compliance with approved grant application
Fiscal completion report
Cash management issues
High staff turnover
Performance measures outcomes
While there is a score generated, the final ranking plus the
determination how many sites will be monitored and in what
order is determined by our federal program staff
Instructions on Sheet 2
Grants Off to Supply
Jan Brite/Dennis Fiscus Team Input
Rank Assigned by Fed Prog Staff
Comments or Indicate Comments
Last On-Site Over 4 Yrs Ago
Reverted 10% or More of Allocation
Cash Mgt
Fiscal Completion Report
State Supervisor Concerns
Special Pops Issues
Application Compliance
Hold status
High Staff Turnover
Audit findings
Desk Monitoring Doc
On Site Visit or Monitoring
3 or less approved programs
2009 Allocation
Allocation Rank
Eligible Recipient
State ID Number
(0-3) (0-2) (0-5) (0-3) (0-3) (0-3) (0-3) (0-5) (0-3) (0-5) (0-3) (0-3) (0-2) (0 or 3)
The American Recovery & Reinvestment Act - (ARRA)
 Title VIII - $0 For CTE – $$$ primarily for
Title I & IDEA
 Title XIV – The Stabilization Fund
CTE - An “After Thought” it would appear
Use of $$$ Determined at the Local
Educational Level (LEA)
(a) In General. _ A local educational agency that receives funds under this
title may use the funds for any activity authorized by the Elementary
and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) ("SEA''),
the Individuals with Disabilities Education Act (20 U.S.C. 1400 et seq.)
("IDEA''), the Adult Education and Family Literacy Act (20 U.S.C.
9201 et seq.), or the Carl D. Perkins Career and Technical Education Act
of 2006 (20U.S.C. 2301 et seq.) ("the Perkins Act'') or for modernization,
renovation, or repair of public school facilities, including
modernization, renovation, and repairs that are consistent with a
recognized green building rating system.
• How you view the “Bailout” Bill depends primarily
on whether your state is
 In the “black” or in the “red”?
 Arizona’s percent of revenue lost is among the worst
in the nation - the last data I saw put my state’s
projected revenue shortfall at 17.8¹ %; second only to
 If you are Nebraska you will still receive Title XIV
Stabilization funds regardless of the fact that you are
in the black.
¹ January 15, 2008, Ctr. On Budget & Policy Priorities, “29 States Faced Total Budget Shortfall of at
Least $48 Billion in 2009”
 The funds come with new reporting requirements and
funding that will end in 2011… But it beats layoffs and
some of the issues recipients’ in states who are in the red
are dealing with are…
 These funds must still be spent under the provisions of the
Perkins Act
 The decision as to how these monies are spent will be made
at the local level and there is no guarantee that a recipient
would choose to spend any of the money on CTE as I
currently read the provisions of Title XIV
 Do we have anyone here from an “in the black” state?
How is your state proceeding?
(a) Education Fund.
(1) In general. For each fiscal year, the Governor shall use 81.8 percent
of the State's allocation … for the support of elementary, secondary,
and postsecondary education…
(2) Restoring state support for education.
(A) In general. The Governor shall first use the funds described in
paragraph (1)—
(i) to provide the amount of funds… that is needed—
(I) to restore, in each of fiscal years 2009, 2010, and 2011, the level
of State support provided ….to the greater of the fiscal year
2008 or fiscal year 2009 level; and…
 The State must still “maintain effort” (MOE)
 Remember, Perkins MOE is measured at the “state
level”. The language regarding MOE at the 2006
level implying that a state may request to have
their MOE waived by the Secretary is really
talking about MOE at the local level – Title I &
IDEA… not Perkins
 You still cannot “supplant”
 You will need to push for CTE’s share of the
Stabilization funds
 Reporting requirements – they must tell –
 How many teachers were saved…
 Etc…
 Push for equity relative to CTE staffs
 Use charm, guilt … whatever works for you in
your districts
Spending $$$$$
Most Used
• Your Approved Plan
• 2006 Perkins – Section 135, Local Uses of Funds
• 2006 Perkins – Section 203, Tech Prep Programs
• Equipment – EDGAR 34 CFR § 80.3, 80.20 & 80.32
• Assigning Cost To The Correct Fiscal year – EDGAR
34 CFR § 76.707
• K-12 – OMB Circular A-87, Attachment B (Allowable Costs)
• Colleges – OMB Circular A-21, Section J (Allowable Costs)
• Request For Guidance – EDGAR 34 CFR § 81.33
• Single Audit – OMB Circular A133; the Cross-Cutting” matrix, the
actual Vocational Education Compliance Supplement
Most Used (Cont.)
• Request For Guidance – EDGAR 34 CFR § 81.33
• State statutes (yours) – education, procurement, etc.
• State educational financial reporting guidelines (yours)
• Any specific guidance from your state agency responsible
for Perkins
• State audit guidelines. Ideally, you want a copy of what
your auditors will use to review your fiscal practices if you
are audited
• Etc.
• Any time you have to look up a law or regulation, make
a copy and keep the cite, some history, etc. in a paper or
digital folder so it’s easier to find the next time around
• Transfer notes from you prior year’s state education
law documents every time you receive the newest edition
– the same would be true if a new edition of EDGAR
were to come out, audit guidance, etc.
• The three-hole-binder approach or a digital folder on
your desktop will save you time later when you attempt
to hunt down guidance you don’t use every day
• Any time you give someone fiscal advice, make a
significant fiscal decision, etc…. document,
document, document. Save your backup.
• It makes it easier to consistently respond to a
similar question in the future…
• If any answer can cost you your job, document,
document, document…
• Federal Program Offices –
• Perkins Act –
• OMB Circulars –
• Your state’s educational statutes
• Your state’s Auditor or Inspector Generals website(s)
• OIG Website – (Click on “Offices”, left-hand column, then
select “offices”, then “offices” again, then select the “Office of Inspector
General “ and “home-page”.)
Make sure you have the most current document…
General Test of Allowability
• Fits with your application
• Allowable per the appropriate Circular
• Reasonable
• Allocable
• Consistently Treated
• Consistent with your organization’s policies
• Incurred in accordance with GAAP
• Not charged elsewhere
• Adequately Documented..
Eligible Recipient
Carl D. Perkins Section 135 – Local
Uses of Funds & 203 Tech Prep
Your Approved Local Plan
OMB Circular A-87;
Selected Items of Cost
State Statutes • Procurement
• Capital Assets
• Gifts
• Travel
• Pre-paid costs
Carl D. Perkins Section 135 – Local
Uses of Funds & 203 Tech Prep
Your Approved Local Plan
OMB Circular A-21; Selected
Items of Cost
Sole State Agency
Carl D Perkins Act
• Section 112(a)(3) – 5% Administration
• Section 124 – State Leadership Activities
State Approved Plan
Under OMB Circular A87 – However, depending on the recipient you are
working with you will use both –
OMB Circular A87 (Secondary)
OMB Circular A21 (Postsecondary)
State Statutes • Procurement
• Capital Assets
• Gifts
• Travel
• Pre-paid costs
• Etc.
• If you attended my presentation last year in Idaho –
some of these slide will look familiar…
• Need to be repeated – especially for anyone new to
• Take a nap or be thinking of questions you wish to ask
in a few minutes…
• Yes
• Don’t forget –
• To include the costs in your application for
• “Time & Effort” reporting requirements (Item 8 in
both the OMB Circulars A87 & A21)
• The individual has to be working on Perkinsrelated activities
The definition of “equipment” in EDGAR (34 CFR 80.1) aside,
anything that your state defines as equipment (can be less than
$5,000) needs to take into consideration –
• “General purpose equipment” is not allowed – A87 & A21
Selected Items of Cost
• Definition – A87.15.a.(4) & A21 Section J.16.b(1)
• Restriction – A87.15.b.(1) & A21 Section J.16.b(1)
“Examples of general purpose equipment include office
equipment and furnishings, … reproduction and printing
equipment,… automatic data processing equipment.”
• Get it written into your approved application
Items like your CTE computer lab
• Specialized workstations
• The cost of connecting equipment
• Etc.
• Avoid paying for stuff your district typically supplies to all your
district’s educational programs – desks, chairs, PCs
• Trade Perkins-funded CTE costs for those CTE costs funded
with non-federal $$$
• Pursue donated equipment where possible
• “NO”
• Unless it is related to –
• Approved travel (subject to your state’s per diem guidelines)
• Included in your approved registration
• Not considered entertainment
• Included as part of an approved conference or meeting
• A consumable training supply (culinary arts)
• Alcohol never allowed
Read Goods or services for personal use – A87 Attch B.20 &
A21 Section J. 19.
• Travel is allowable when it supports your approved grant or plan
• Meals, lodging, all the usual stuff is allowable, when approved
• Should be reasonable
What about those conferences I go to where entertainment is included
in the registration fee?
There are two lines of thought – I participate as long as the cost can’t
be broken out from the registration fee with the end result being a
lower registration fee
Ultra conservative managers will tell their staff they can’t participate
in the activity even if it appears to be free… Individual state’s call
A87 Attch. B.43 or A21 Section J.48
A-87 Attch. B.27 (Comparable language in A-21 Section J.28)
“Meetings and conferences. Costs of meetings and conferences, the
primary purpose of which is the dissemination of technical
information, are allowable. This includes costs of meals,
transportation, rental facilities, speakers fees, and other items
incidental to such meetings or conferences. But see Attachment B,
section 14, Entertainment costs”.
• Must be reasonable
• Must be able to stand the, “Would you like to see this on the six
o’clock news?” test
• Does NOT mean your Monday morning CTE teachers meeting, with
coffee and donuts provided courtesy of the federal grant
• Etc
Prepaid Fees – Early Registration
Are they a professional service fee or part of your travel?
• Prepaid registration fees can lead to accounting headaches
related to the issue of “when is a cost incurred”
• May need to transfer the expense from one fiscal year to the next
if the fee is paid prior to the fiscal year in which the activity will
Little Guidance – the Feds typically refer you back to 34 CFR
§403.71(c) – The last regulator guidance for Perkins, under
Perkins II
• Allowed – Instructional related costs (very narrow)
• Disallowed – All the fun stuff…
34 CFR §403.71(c)
(3) The support of vocational student organizations may not
(i) Lodging, feeding, conveying, or furnishing transportation to conventions or other
forms of social assemblage;
(ii) Purchase of supplies, jackets, and other effects for students' personal ownership;
(iii) Cost of non-instructional activities such as athletic, social, or recreational events;
(iv) Printing and disseminating non-instructional newsletters;
(v) Purchase of awards for recognition of students, advisors, and other individuals; or
(vi) Payment of membership dues;
(d) Leadership and instructional programs in technology education; and
(e) Data collection.
My guess, they mean, non-instructional, out of the classroom type activities that don’t meet
the conditions of 34 CFR § 403.71(c)(2)(iv) & – “all students…”
• Memberships for the state or district are OK – but not
• Should be a “reasonable fit” for your grant
• If a significant cost, it is recommended that you utilize your
procurement system procedures
• Significant cost
• Sole source provider (speakers, intellectual property,
copyrighted, etc.)
• Must be reasonably related to Perkins activities
• Awards or Gifts -Typically Not Allowed
• However you can purchase nice frames through your approved state
or local office supply contract, print out a nice certificate on your
color laser printer and hand the result to folks..
• Handout donated items from your state’s Chamber of Commerce,
local industry groups, etc
• Alcohol
• Entertainment expense
• Awards (gifts)
• Promotional items (freebies)
• Promotional advertising
• You can always ask the federal program office for an
• I have never been successful – Typically you need to
figure out another way to get what you want if it’s that
• Use State/Local CTE funds
• If your first thought is “you can’t use state or local funds for
• Seek donations from :
• Professional organizations
• Fraternal organizations
• Business and Industry (can include new or used equipment)
• Work with your local and state professional CTE organizations –
• ACTE/Az – Arizona’s ACTE organization
• ACOVA – Arizona Council of Vocational Administrators
Co-Sponsorship of Activities
• Let the other group pick up the cost of those things
you can’t –
• Give-Away’s (need to fit the definition for
“nominal value” under your state’s law)
• Typically more flexible procurement restrictions
(however “don’t be stupid”.. The “Would you
like to see it on the six-o’clock news?” rule still
Conference Registration Fees
• Typically treated differently than federal funds
• Have lot more flexibility
• You can build in the cost of “stuff” –
• Give-Away’s (nominal value)
• Awards
• Activities that could be classified as entertainment – that
sight-seeing bus tour of Atlanta, Boise, where ever…
• Warning – If your conference receipts exceed your conference
costs you basically have “program income”. A “gray area” for
most states