Transcript Title I Fiscal Responsibilities

Federal Grant Fiscal Responsibilities
Presented by:
Anthony Hearn, CPA
New Jersey Department of Education
Office of Supplemental Educational Programs
Office of Management and Budget
Uniform Grant Guidance (UGG)
 Easy Link to guidance in readable format

http://grants.complianceexpert.com/agency-guidance-and-regulations?qr=1
 Sweeping changes to put all grant recipients on the same guidance
 Risk Analysis at NJDOE Level
 Purchasing
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Responsible Person
Limited Use of Sole Source
 Internal Controls
 Allowable Costs
 Watch out! OMB Looking to recover $50 Billion a year from Grantees to
help balance budget
 Not finalized until EDGAR Changes come out
 Effective Date December 26, 2014 (or grant year that starts after that)
Office of Management and Budget
Uniform Grant Guidance (aka UGG)
Intent of new guidance
 Streamline the federal government’s guidance on
Administrative Requirements, Cost Principles, and Audit
Requirements for federal awards.
 Reduce administrative burden
 Promote flexibility
Grant Info - Overview
 Over $600 Billion in Grants
 $480 Billion flow through States
 Over 2,000 Grant Programs
 Education funding is now 14% of total grants awarded (up
from previous years)
 The responsibility for K-12 education rests with states under
the Constitution.
 There is also a compelling national interest in the quality of
the nation's public schools.
Education Funding
 The federal government, through the legislative process,
provides assistance to the states and schools in an effort to
supplement, not supplant, state support.
 The primary source of federal K-12 support began in 1965
with the enactment of the Elementary and Secondary
Education Act (ESEA).
 ESEA - The law's express purposes are to raise achievement
for all students and to close the achievement gap.
Education Grants
A Closer Look at Education Funding
 ESEA, Title I: $13.3 billion
 IDEA, Part B, Grants to States: $11.1 billion
 Improving Teacher Quality: $2.9 billion
 21st Century Community Learning Centers: $991.1 million
 English Language Learners: $675.8 million
 Impact Aid (schools impacted by military bases and other
facilities): $1.2 billion
Why OMB is Worried !!!
 2009: $110 billion in improper payments
 2010: $125 billion in improper payments
 2011: $115 billion in improper payments
 Payments in error over a three-year period include:
 $180 million to 20,000 individuals who were dead
 $230 million in benefits to 14,000 fugitive or jailed felons who
were not eligible
Grant Info – UGG Solutions
New under the uniform grant guidance, we may see
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Timelines and deliverables
Sub-budgets for each objective
Need to tie financial spending to objectives
Level of risk (determined by NJDOE)
Specified performance expectations
NJDOE to Help
“The most terrifying words
in the English language are:
I’m from the government and
I’m here to help.”
President Ronald Reagan
RISK ANALYSIS
Feds want a Risk Analysis Approach before grant is given –
Factors for higher risk include:
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Change of Program Managers
Financial Stability
Quality of Management System
History of Performance
Audit Reports
Ability to Implement
Late Reports in the Past
PROCUREMENT
Required verbiage on purchase order (200.415)
“By signing this report, I certify to the best of my knowledge and belief that
the report is true, complete, and accurate, and the expenditures,
disbursements and cash receipts are for the purposes and objectives set
forth in the terms and conditions of the Federal award. I am aware that
any false, fictitious, or fraudulent information, or the omission of any
material fact, may subject me to criminal, civil or administrative penalties
for fraud, false statements, false claims or otherwise. (U.S. Code Title 18,
Section 1001 and Title 31, Sections 3729-3730 and 3801-3812).”
Who will be “accountability officer”?
PROCUREMENT
Just Remember:
“No law or ordinance is mightier
than understanding.”
Plato
PROCUREMENT
(§200.320)
Procurement by micro-purchases.
 Acquisition of supplies or services, the aggregate
dollar amount of which does not exceed $3,000 To
the extent practicable, the non-Federal entity must
distribute micro-purchases equitably among
qualified suppliers.
 May be awarded without soliciting competitive
quotations if the non-Federal entity considers the
price to be reasonable.
PROCUREMENT
(§200.320)
Procurement by small purchase procedures.
 Small purchase procedures are those relatively
simple and informal procurement methods for
securing services, supplies, or other property that
do not cost more than the Simplified Acquisition
Threshold ($100,000).
 Price or rate quotations must be obtained from
an adequate number of qualified sources.
PROCUREMENT
(§200.320)
New Jersey Thresholds only important if more restrictive
 18A:18A-3(a) and (c) Limits for bid and quote not
important
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Bid Threshold with QPA - $36,000
Quote Threshold with QPA - $5,400
Bid Threshold without a QPA - $26,000
Quote Threshold without a QPA - $3,900
FEDERAL UNDER $3,000 Aggregate
State Limit for Bid is less than Federal of $150,000
PROCUREMENT – SOLE SOURCE
(§200.320)
(f) Procurement by noncompetitive proposals. Procurement by
noncompetitive proposals is procurement through solicitation of a
proposal from only one source and may be used only when one or more
of the following circumstances apply:
 (1) The item is available only from a single source;
 (2) The public exigency or emergency for the requirement will not
permit a delay resulting from competitive solicitation;
 (3) The Federal awarding agency or pass-through entity expressly
authorizes noncompetitive proposals in response to a written request
from the non-Federal entity; or
 (4) After solicitation of a number of sources, competition is determined
inadequate.
*** Watch Vendor Names in Grant Application***
INTERNAL CONTROLS
§ 200.61 Internal controls
 Process, implemented by a non-Federal entity,
designed to provide reasonable assurance regarding
the achievement of objectives in the following
categories:
(a) Effectiveness and efficiency of operations;
(b) Reliability of reporting for internal and external use;
and
(c) Compliance with applicable laws and regulations.
INTERNAL CONTROLS
§ 200.62 Internal control over compliance requirements for Federal awards
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Internal control over compliance requirements for Federal awards means a process
implemented by a non-Federal entity designed to provide reasonable assurance
regarding the achievement of the following objectives for Federal awards:
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(a) Transactions are properly recorded and accounted for, in order to:
(1) Permit the preparation of reliable financial statements and Federal reports;
(2) Maintain accountability over assets; and
(3) Demonstrate compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award;
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(b) Transactions are executed in compliance with:
(1) Federal statutes, regulations, and the terms and conditions of the Federal award that could have
a direct and material effect on a Federal program; and
(2) Any other Federal statutes and regulations that are identified in the Compliance Supplement;
and
(c) Funds, property, and other assets are safeguarded against loss from unauthorized use or
disposition.
ALLOWABLE COSTS
Covered in Subpart E: Cost Principles
200.400 of the Uniform Grant Guidance
Protect allowable costs
Internal policies may need revision to better align with the UGG
and to protect allowable costs.
ALLOWABLE COSTS
1.
2.
3.
4.
5.
6.
7.
EQUIPMENT
Property records must be maintained that include
a description of the property,
a serial number or other identification number,
the source of funding for the property (including the FAIN),
who holds title,
the acquisition date, and cost of the property,
percentage of Federal participation in the project costs for the Federal
award under which the property was acquired,
the location, use and condition of the property, and any ultimate
disposition data including the date of disposal and sale price of the
property.
ALLOWABLE COSTS
EQUIPMENT – CONTINUED
A physical inventory of the property must be taken and the results
reconciled with the property records at least once every two years.
A control system must be developed to ensure adequate
safeguards to prevent loss, damage, or theft of the property. Any
loss, damage, or theft must be investigated.
Adequate maintenance procedures must be developed to keep
the property in good condition.
ALLOWABLE COSTS
Advertising and public relations (§200.421)
 Advertising is not allowable, except for:
 Hiring of personnel for the grant
 Procurement of goods and services for the
grant
 Disposal of scrap (per the grant program)
 Program outreach (new)
 Social media advertising for personnel
(new)
ALLOWABLE COSTS
MEALS
§ 200.456 Participant support costs
Participant support costs as defined in § 200.75
Participant support costs are allowable with the prior
approval of the Federal awarding agency.
ALLOWABLE COSTS
ENTERTAINMENT
§ 200.438 Entertainment costs
Costs of entertainment, including amusement, diversion, and social activities
and any associated costs are unallowable, except where specific costs that
might otherwise be considered entertainment have a programmatic
purpose and are authorized either in the approved budget for the Federal
award or with prior written approval of the Federal awarding agency.
ALLOWABLE COSTS
WAGES
§ 200.430 Compensation—Personal services
 Must account for Non-Charged Time (Issue was with
charging over 100% to multiple grant)
 If you use the prescribed model, you should be
covered
ALLOWABLE COSTS
CONFERENCES
§ 200.432 Conferences. (Family Friendly or Not)
A conference is defined as a meeting, retreat, seminar,
symposium, workshop or event whose primary
purpose is the dissemination of technical information
and is necessary and reasonable for successful
performance under the Federal award.
ALLOWABLE COSTS
§ 200.432 Conferences. (Family Friendly or Not)
Allowable conference costs paid by the non-Federal entity as a sponsor or
host of the conference may include rental of facilities, speakers' fees, costs of
meals and refreshments, local transportation, and other items incidental to
such conferences unless further restricted by the terms and conditions of the
Federal award. As needed, the costs of identifying, but not providing, locally
available dependent-care resources are allowable. Conference
hosts/sponsors must exercise discretion and judgment in ensuring that
conference costs are appropriate, necessary and managed in a manner that
minimizes costs to the Federal award. The Federal awarding agency may
authorize exceptions where appropriate for programs
ALLOWABLE COSTS
§ 200.474 Travel costs (Family Friendly or Not)
(2) The costs are reasonable and consistent with non-Federal entity's
established travel policy.
(c)(1) Temporary dependent care costs (as dependent is defined in 26 USC
152) above and beyond regular dependent care that directly results from
travel to conferences is allowable provided that:
(i) The costs are a direct result of the individual's travel for the Federal
award;
(ii) The costs are consistent with the non-Federal entity's documented travel
policy for all entity travel; and
(iii) Are only temporary during the travel period.
Grant Specific
 Title I – Very Programmatic: Be able to identify
additional programs in place (that are funded) for
low performing students in Targeted Assistance
 Title I – Schoolwide: Plan dictates
 Other ESEA
 Title IIA
 Will Sample Staff and HQT Status
 Review of Professional Development Plan
 Title III
 What additional Programs in place
Common Issues and Resolutions
Summary
 Financial Management, Procurement and EDGAR
80.36
 Time Sheets
 Equipment
 Non Allowable Uses of Funds
 Lack of Identified Programs
 Lack of Nonpublic Consultation Process (IDEA and
Title I)
Time Sheets, PARs, Funded Staff, etc.
 VERY IMPORTANT to Understand
 Need to Show
 What they are doing (e.g.: In Class Support)
 Where they are doing it (e.g.: Room or Ms. Jones
Class)
 When they are doing it (e.g.: Time Schedule)
OIG Time and Effort Findings
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2006 – Columbus - $2.3 million
 2008 – Detroit - $49 million
 2009 – Houston - $238 million
 2010 – Philadelphia - $123 million
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Staff Funding
What should be in my Board minutes?
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Appointment of Teachers
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Name
Salary
School
Funding Percentage for Each Program
Appointment of Secretaries, Aides, Program
Directors, etc.
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Name
Salary
Work Location
Funding Percentage for Each Program
Staff Funding and Time Sheets
Fully-funded Salaries
Applies to all Fund 20 Federal
Grants
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Periodic certification signed
at least semi-annually
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Clarification on Funding vs.
Cost Objective – UGH !!!!!! –
New Model Implemented
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Signed by employee and
supervisor
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NEW EXAMPLE IN OCT of
2012
Staff Funding and Time Sheets
Multiple Cost Objectives
or Split-funded Salaries
• Personnel activity reports
• Signed by employee and
supervisor
• Must be an after-the-fact
distribution of actual activity
• Prepared at least monthly and
must coincide with pay periods
• NEW EXAMPLE IN OCT of 2012
Non-Allowable Uses or What is
Allowable
OMB Circular A-87, Attachment B
Supplanting
Schoolwide – Is it in the Plan ?
OMB Circular A-87- requires the use of funds for a specific
purpose be necessary and reasonable for the proper and
efficient performance and administration of the program and be
authorized and not prohibited under State and local laws and
regulations.
Selected Items of Cost
 Special rules for specific
expenses
 Still subject to basic guidelines
 Examples:
 Alcohol: Never allowable
 Salaries and Wages: Allowable if
time distribution
 Meetings and conferences:
Allowable if dissemination of
technical information
 Entertainment !!!!!!!!!!
Select Expenditures and Support
Needed
General Purchases
 Must have purchase orders
 Must have account number on P.O.
 Should indicate Grant on P.O. (Not Just Account #)
 Signed by Business Administrator
 If split P.O., Title I should be easily identifiable
REMEMBER Title I – Money spent in Individual Schools should
EQUAL amount in Step 4 of Eligibility
Select Expenditures and Support
Needed
General Purchases –
New Omni Circular Rules
 Must have good controls in place
 Cash Management (EWEG Draw down policies and support)
 Written procedures by districts that determine allowability
 Must have conflict of interest policy
 Cost Price Analysis softened (more to come)
0
60000
Reserves
Public
Nonpublic
Total
Administration
60000
Preschool Programs
0
Homeless Students
0
District-wide Instructional Programs
0
0
LEA Professional Development
70000
0
LEA Parent Involvement
67187
0
Choice-Related Transportation
0
Supplemental Educational Services
0
Teacher Incentives and Rewards
0
Priority/Focus Interventions
491237
Neglected
0
Delinquent
0
Total Reserves:
688424
0
688424
Total Distribution Amount:
949033
Districts with Less than 35% Poverty - Minimum Per-Pupil Amount
0
Districts with 35% Poverty or Higher Must Follow the Instructions
40
Attendanc
e Centers
SW / TA
Not
Served
School
Designati
on
Public
Low
Income
Nonpublic
Low
Income
Low
Income
Percent
Total
Allocated
Public
Allocation
Per-Pupil
Amount
Nonpublic
Allocation
050 - ESSEX
CTY V N
13TH ST
NWK
SW
OTHER
570
0
85.97 %
307009
$539
$0
020 - ESSEX
CTY VOC
BLOOMFIELD
SW
OTHER
406
0
83.54 %
218676
$539
$0
070 - WEST
MARKET
STREET
CENTER
SW
OTHER
606
0
83.01 %
326398
$539
$0
080 - ESSEX
CTY VOCWEST
CALDW
SW
PRIORITY
180
0
81.82 %
96950
$539
$0
Total Allocated
$949,033
Difference
$0
41
$949,033
$0
Supplement Not Supplant
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Funds must be“supplemental” to local
spending
 Supplemental Defined:
“In the absence of federal funds, would funds
have been spent (prior year funding is one
distinguishing factor)”
Supplement Not Supplant
If it is“REQUIRED, then you can NOT fund it!
Supplement Not Supplant
 If all students/classroom get items, district can’t pay
for Title I / IDEA part out of grant.
 Items purchased should not be used by non-eligible
students (can have some incidental benefit, but
need to document).
 Presentations/Trips should not benefit non-eligible
students (identify Title I and in IEP for IDEA).
 Special rules apply to approved and implemented
“Schoolwide Programs.”
Student Incentives
 The US Dept. of Education(ED) has indicated that an LEA may
use Title I funds to provide“non-monetary” rewards
of“nominal”value (e.g., Plaque, gift certificate, or book,
etc.) in an effort recognize Title I students for good
performance.
 Title I funds may NOT be used to pay students a stipend or
provide some other type of award as an incentive for student
participation in a Title I program
Parent Incentives
 To encourage parents of Title I students to participate in
school activities in the evening, an LEA may use Title I funds to
provide light refreshments.
 Note, ESEA § 1118(e)(8) authorizes LEAs to use Title I funds
for“parent-related” activities that are reasonable and
necessary for expenses associated with parental involvement
activities, including child care and transportation to enable
parents to attend“school-related”meetings and training
sessions
Helpful Questions to Ask When
Analyzing Proposed Costs
 Is it consistent with federal cost principles? OMB A87, Attachment B
 Is it allowable under the relevant program? (Title I,
IDEA, etc.)
 Is it consistent with an approved program plan and
budget? (EWEG)
 Is it consistent with program specific fiscal rules?
(Supplement not Supplant)
 Is it consistent with EDGAR?
Allowable Costs
All Costs must be:
 Necessary
 Reasonable
 Allocable
 Legal under state and local law
(A5)
Allowable Costs
 Must be necessary for the performance or administration of
the grant
 Must follow sound business practices:
 Arms length bargaining (hint: procurement
processes)
 Follow federal, state and local laws
 Follow terms of the grant award
Schoolwide Program & Expenses
• MUST have approved plan that addresses all schoolwide issues
• Time sheets are required (except in a blended resource fund,
e.g., Fund 15 for former Abbott districts)
• Key questions to be addressed:
– Do the activities budgeted support the intent of the law?
[Federal Register: July 2, 2004 (Volume 69, Number 127)]
– Are supplemental services provided to the students enrolled in
the school?
Lack of Identified Funded Programs
 Programs for Title I must be clear and distinct.
 Programs for Title I must be the “icing on the
cake” for low performing students.
 Watch for funded programs that
 Are replacement programs (in lieu of core math or English)
 Pull children away from elective classes
Allowable Nonpublic Expenses
 IDEA and Title I have different coverage areas for services
to students
 Title I – Students that would have attended, but are out of district –
anywhere
 IDEA – Just resident students
 Remember allowable cost rules are the same for
Nonpublic as for Public Schools
 If Third-Party contractors hired
 District needs to maintain plans
 Responsibility for all areas should be addressed in the contract
 Only allow to bill for actual services, not flat fee monthly
Closing Out the Grants
 Must be consistent with budget (amendments filed through
EWEG) – EWEG Monitors
 CANNOT:
 Move more than 10% of total funds without State
approval (EWEG amendment) - $50K threshold removed
 Add a budget category without State approval (EWEG
Amendment)
 Transfers to and from Equipment Lines
 Carryover more than 15% of Title I total amount received
more than once every three years without State approval
(Must have good reason)
Watch Transfers
 Must be able to state WHY transfer and how not
SUPPLANTING
 Transfers:
 Just can’t move expenses to“Use up leftover money”
 Make sure consistent with program plans
 Can’t move ½ a chair
Restrictions and Reserves
Title I
 Parental Involvement
 RAC Reserve
 Spending by location
 Non Public Funds
NJ Top 10 Monitoring Findings
1. Time Sheets
2. Supplanting (vs being Supplemental)
3.Not Tracking Reserves
4.Not Tracking Expenses by Location
NJ Top 10 Monitoring Findings
5. Competitive Contracting and Other Fiscal
Policies (Draw downs, Disbarred Vendor
checking)
6. Title I Program Related (Student
Identification and Identifiable Program)
7. Title I Non Public vs IDEA Non Public
Service Areas
8. Title I Non Public Services
NJ Top 10 Monitoring Findings
9. Required Parent Notifications
10. Title I Parental Involvement (activities and
polcies)
Fiscal News from Washington
New Haven Audit Report from Office of Inspector
General
 Supplanting in a Schoolwide Program
http://www.ed.gov/about/offices/list/oig/auditreports/a02f0005.
pdf
Fiscal News from Washington
William Floyd Audit Report from Office of Inspector
General
 Unsupported Expenses
 Unsupported Adjusting Journal Entries
 Supplanting of Textbooks
 Weak Internal Controls
http://www.ed.gov/about/offices/list/oig/auditreports/a02f0030.p
df
Fiscal News from Washington
City of Detroit and Parent Involvement Fund
2005
 Disallowed Charges for Entertainment, Promotional Items
and Public Relations
 Need to be necessary, reasonable, allocable and documented
 Disallowed items include advertising for an event and live
musical entertainment at parent volunteer function
http://www.ed.gov/about/offices/list/oig/auditreports/a05f0018.pdf
Fiscal News from Washington
City of Detroit -Revisit in 2008
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Over $131 Million in 2005 and $126 Million in 2006
No Time Sheets – Almost $50 Million
Teaching non-Title I students – even though most of Detroit is
schoolwide some schools are not (no plan submitted) and OIG looked to
these schools and found staff being funded that were teaching non-Title
I identified students. Detroit argued they could have been schoolwide if
they did a plan and the OIG rejected this argument
Over $21 M for adjusting entries for employees that were charged to
other programs and then charged to Title I
Gift cards they could not show got to students
$150,000 for martial arts training
Fiscal News from Washington
St. Louis OIG Audit
 Lost 125 Computers
 Serving Ineligible Schools
http://www.ed.gov/about/offices/list/oig/areports.html
Fiscal News from Washington
Philadelphia
•
Findings totaling $138,376,068
• Unsupported Salaries (some direct and some thru adjusting
entries)
• School Police paid from Title I Funds
• Supplanting (moving company, etc)
• No backup for School Choice Charges of $1.3M
• Weak internal controls
Fiscal News from Washington
Maryland
Title I ARRA Funds
 Findings totaling $540,013
 $8,736 in gifts to staff
 $4,352 in Dinner Cruises in Baltimore Harbor
 Lack of Receipts for Expenses
 $200,323 in Unsupported Title I and IDEA Salaries
 3,922 Tablets with no controls over them or applications that
are downloaded (Items against policy – 22%)
US Dept. of Education- Office of
Inspector General
Four Jefferson Parish Public School System Employees Sentenced
(Louisiana).
 Four former sentenced for their roles in an embezzlement scheme.
 Two employees submitted fraudulent documents for themselves
and their co-conspirators to receive supplemental pay and stipends
for various district tutoring, testing, and remediation programs
 None of the employees were certified teachers or qualified to
perform those activities.
 Two ringleaders sentenced to 6 months of home confinement and 5
years of probation.
 Also ordered to pay more than $132,000 in restitution.
 Two co-conspirators sentenced to serve between 3 and 5 years of
probation and ordered to pay $9,700 and $11,800, respectively, in
restitution.
What Happens When Federal $$$
Are Misspent??????
Accountability. Efficiency. Effectiveness. Oversight
US Dept. of Education
Office of Inspector General
Former Charles County Public Schools Title I
Coordinator Sentenced (Maryland).
 The former Title I coordinator sentenced to 27
months in prison and 36 months of supervised
release.
 Also ordered to pay more than $115,300 in
restitution for theft.
 Used Title I grant funds to purchase technology items
for herself, family, and friends, including computers,
video games consoles, portable media players, tablet
computers, and televisions.
US Dept. of Education
Office of Inspector General
 Sandra Campbell, 57 a former Detroit Public Schools contract accountant
and school board candidate, and her daughter, Domonique Campbell, 38,
a Detroit Public Schools teacher convicted by a federal jury on charges of
program fraud conspiracy, money laundering conspiracy, and tax charges
Between 2004 and 2008, the employees obtained in excess of $530,000
from the Detroit Public Schools through a fraudulent scheme
 Employees placed orders for books and educational materials with their
sham company
 The women conspired to launder the fraud proceeds and to defraud the
Internal Revenue Service and failed to report the money they fraudulently
obtained from the Detroit Public Schools as income on their tax returns.
 United States Attorney Barbara L. McQuade said, “Anyone who considers
stealing from our school children should take note that we are scrutinizing
records and conduct, and will prosecute wrongdoers.”
Available Research & Where to Find It
ESEA / No Child Left Behind
www.ed.gov/legislation/ESEA02/index.html
OMB Circular A-87, Attachment B
www.whitehouse.gov/omb/circulars/a087/a087_2004.pdf
OMB Uniform Grant Guidance
http://grants.complianceexpert.com/agency-guidance-and-regulations?qr=1
EDGAR (New Changes Coming)
http://www.ed.gov/policy/fund/reg/edgarReg/edgar.html
Conclusion
Remember:
 “If the district takes the money, they are responsible
for knowing the rules and regulations concerning
the grant.”
 If you need further help contact Anthony Hearn
 (609) 633-2492
 [email protected]