Transcript Presented by OSPI: Daniel Lunghofer, MPA and Jennifer Carrougher 11/7/2015 8:00 am 10:00 am 11/7/2015

Presented by OSPI:
Daniel Lunghofer, MPA and Jennifer Carrougher
11/7/2015
2
8:00 am
10:00 am
11/7/2015
Federal Laws and Regulations
What they are and where to find them
Administrative Regulations (EDGAR Part 80)
OMB Circulars
Non-Regulatory Guidance
OSPI Bulletins
Cross-Cutting Federal Fiscal Requirements
Audit Requirements
Other Resources
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Statutes
Regulations
Non-regulatory Guidance
Federal Agency Memos
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•Highest level of authority
•Can apply to various
levels/programs
Statutes
•Single Audit Act applies to all federal
programs
•General Education Provisions Act (GEPA)
applies only to Department of Education
Programs
•No Child Left Behind (NCLB) applies to
specific programs
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•Clarify legislative language that is open for
interpretation
•The Federal Register is where all final
regulations are published
Regulations
•The Code of Federal Regulations (CFR)
contains all regulations
•Title 34 of the CFR is where all Department of
Education (ED) regulations are published
•Education Department General Administrative
Requirements (EDGAR) - administrative
requirements applicable to ED (also published
in 34 CFR)
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NonRegulatory
Guidance
• Published by applicable
agencies
• Less binding as legal authority
• Federal agency interpretation
in more easily understood
language, typically Q and A
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• Published by the Federal Office of
Management and Budget (OMB)
Circulars
• Govern the administration of federal
programs
• The main circulars you need to be aware
of:
• A-102 Administrative Requirements
• A-87
Allowable cost principles
• A-133 Audit Requirements
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•OMB Circular A-102 (codified
in most agencies CFR)
Administrative
Regulations
•ED has codified administrative
regulations in 34 CFR Part 80
and has included those
regulations in EDGAR
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
EDGAR Part 76
 34 CFR PART 76 – STATE-ADMINISTERED
PROGRAMS

EDGAR Part 80
 34 CFR PART 80—UNIFORM ADMINISTRATIVE
REQUIREMENTS FOR GRANTS AND COOPERATIVE
AGREEMENTS TO STATE AND LOCAL GOVERNMENTS
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OMB Circular A-87 (codified as 2 CFR 225) – Cost
Principles for State, Local and Indian Tribal
Governments
•
•
•
Establishes the standards for determining
allowable direct and indirect costs that can be
charged to federal programs
Direct Costs: Can be directly associated to a
particular program
Indirect Costs: Benefit multiple programs and
cannot easily be associated with a particular
program
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To be allowable under federal awards, costs
must meet the following general criteria:
 Be necessary and reasonable for the
performance of the program
 Be allocable to federal programs: In other words
“To what extent are the expenditures
benefitting the program being charged?”
 Be authorized (or not prohibited) under state or
local laws
 Conform to any limitations in A-87 or other
governing regulations as to the type and
amount of cost items
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 Be consistent with policies, regulations and
procedures that apply uniformly to other
nonfederal activities
 Be accorded consistent treatment
 Be determined in accordance with generally
accepted accounting principles
 Not be included as a cost of any other federal
program (unless specifically allowed by federal
law/regulation)
 Be net of all applicable credits
 Be adequately documented
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Indirect Costs
 Common examples are accounting (including payroll
and purchasing), data processing, and human
resources.
 Districts are entitled to charge their calculated share of
indirect costs to applicable programs (with some
exceptions like administrative caps).
 Calculated by School Apportionment and Financial
Services and posted on their website. They are also
uploaded in iGrants.
 When charged, they become part of the district’s
general operating revenue and there is no additional
accountability for those funds from a federal
perspective.
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There are separate calculations for federal
restricted, federal unrestricted. In addition, some
programs and/or entities use a fixed rate
percentage.
Restricted rates, which are the most common,
are used for programs that contain a
supplanting provision
Unrestricted rates, on the other hand, are for
those programs without a supplanting
provision
Fixed rates are used by ESD’s, colleges, and in
some cases, may be used for programs that
have a cap on administrative costs
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
Exceptions to OMB Circular A-87
◦ If a program is exempted from A-87 or any other
OMB Circular, it will be noted in the CFDA for that
program
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Cash Management requirements are in place
to minimize the time that lapses between the
disbursement of federal funds and the receipt
of those funds.
 Reimbursement Basis – low risk
 The time that lapses should not be longer
than 3 days (general rule)
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Some issues to consider:

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Transfer of funds out of federal programs
Claim for reimbursement of expenditures
must reconcile to your accounting system
Advances
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Program Income is gross income generated by a
grant supported activity or earned only as a result of
the grant agreement, less costs incurred as a result of
the activity.
Generally, shall be deducted from total allowable
costs prior to claiming for reimbursement.
If it not anticipated at the time of award shall be used
to reduce federal contributions, rather than to
increase the funds committed to the project.
Only if specifically authorized, program income may
be added to the funds committed to the grant and
may be used for cost sharing/matching.
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Some typical examples of activities that may
generate program income:


Registration for a conference funded by
federal dollars
Item or service generated in a CTE class and
sold for profit
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EDGAR 80.32
• Definition of Equipment: Tangible,
nonexpendable personal property that has a
useful life of more than one year and an
acquisition cost of $5,000 or more
• Districts should follow state and local
procedures for use, management and
disposal of equipment purchased with
federal funds
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Must have a system in place to ensure
safeguards are in place to prevent loss,
damage or theft
Must take physical inventory of equipment
at least every two years and reconcile to
property records
Must ensure adequate maintenance
procedures are in place to keep equipment
purchased with federal funds in good
condition
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Elements that must be included in the districts property
records for each item of property purchased with federal
funds:
 Description
 Serial number or other identification number
 Source
 Who holds title
 The acquisition date and cost
 The percentage of cost paid for with federal funds
 The location, use and condition of the property
 Disposition data, including date and sale price
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
Small and attractive items
◦ Items that are below the threshold for requiring
formal tracking, but are easily susceptible to theft
or damage
◦ Should ensure a formal system of tracking these
items
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Disposition of Equipment
•
•
Can use the equipment for another program that is
currently, or was previously, funded with federal
funds (record transfer in property records)
If not transferring to another program:
– If FMV < $5,000, can keep with no further
obligation to federal government
– If FMV > $5,000, must pay the federal
government a share based on a percentage of the
federal participation in the initial acquisition
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Supplies
 Any tangible property not considered equipment
 Do not have to be recorded in property records or
have a physical inventory
 Disposition: Use same thresholds as equipment
and value in the aggregate
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Matching (also known as cost sharing) is a
requirement to provide contributions of a certain
amount to match Federal awards.
Some federal programs require that a district provide
matching funds in order to receive the federal funds.
The following criteria should be considered when
determining whether an expenditure is an acceptable
match:


Must be able to be verified from the districts records
Cannot be included as contributions for other
federal programs (unless specifically allowed by
Federal program laws and regulations)
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Must be able to show how it is necessary and
reasonable to the accomplishment of the program
objectives
Must be allowable under applicable cost principles
Must not be federal funds from another program
(unless specifically authorized by federal statute)
Must be included in the approved budget when
required
Must conform to other provisions of A-102
(common rule) and laws, regulations, and
provisions of contract or grant agreements
applicable to the program
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Requires federal funds be used to supplement
the amount of funds available from nonfederal
sources.
Therefore, you cannot use federal funds to
supplant nonfederal funds that would have
been used regardless of whether the federal
funds were available or not.
In other words, “Would the activity that the
federal funds were used for have occurred
whether or not the federal funds were
available?”
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Three scenarios for supplanting are when the
district uses federal funds to provide services:
1) Required to be provided for with other
funds.
2) That were provided with nonfederal funds in
the prior year.
3) For participating children when the district
provides the same services with nonfederal
funds for nonparticipating children.
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Rebutting the presumption of supplanting


The district must be able to demonstrate that
it would not have provided the services in
question with nonfederal funds if the federal
funds had not been available.
Documentation of budget
discussions/decisions is extremely important
 School Board Minutes
 Itemized Budget Documents
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Districts must demonstrate that the level of
state and local funding remains relatively
constant from year to year.
A district must meet maintenance of effort
requirements under certain programs. If a
district is found to fail the MOE test, their
subsequent years grant award will be reduced
by the amount of failure.
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Cross-Cutting MOE
 The MOE calculation is performed by School
Apportionment and Financial Services (SAFS) at OSPI
using a district’s F-196 financial information.
 Determines whether the combined fiscal effort per
student or the aggregate expenditures of the district
from State and local funds for free public education for
the preceding year was not less than 90 percent of the
combined fiscal effort or aggregate expenditures for
the second preceding year, unless specifically waived
by the Department of Education.
 The cross-cutting MOE test is generally completed and
issued in January of each year.
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Effects of Failing MOE
 The district can see some federal allocations
reduced by the percentage amount the
district failed MOE.
 The subsequent year’s MOE test is performed
against the amount the district would have
needed to pass in that year, not the amount
of the prior year test.
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Special Education MOE
 Also calculated by SAFS based on F-196 data.
 Determines whether a district spent an amount of
local funds, or a combination of State and local
funds, for the education of children with
disabilities that is at least equal, on either an
aggregate or per capita basis, to the amount of
local funds, or a combination of State and local
funds, expended for this purpose by the district in
the prior fiscal year.
 If a district relies on a local test to pass, OSPI is
required to look back at the last fiscal year the
district relied on local resources and compare
against that year.
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One major difference with Special Education
MOE is the 50% provision. For any fiscal
year that a district’s allocation of special
education funds exceeds the allocation for
the previous fiscal year, the district may
reduce the level of local or State and local
expenditures by up to 50% of the excess.
If a district chooses this option, it must use
an amount of local funds equal to the
reduction for activities authorized under
ESEA.
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Special Ed MOE Continued
Districts that fail the initial test will receive a letter from
SAFS notifying them of the process for submitting
additional documentation for review by the OSPI Special
Education department. The exceptions considered during
this review process are:
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The voluntary departure, by retirement or otherwise, of special
education staff
A decrease in the enrollment of children with disabilities,
The termination of the obligation to serve an exceptionally
costly program for a particular child with a disability
The termination of costly expenditures for long-term purchases
The assumption of costs by the state safety net fund
The special education MOE test is generally completed and
issued in February of each year.
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This requirement establishes minimum and/or
maximum amount or percentage of the
program’s funding that must/may be used for
specified activities.
Important considerations:
– You should account for earmarking/set-asides
separately (sub-code) so that you can show they
were used for only allowable activities
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Important considerations (continued):
– If expenditures for employee compensation are
used to satisfy a set-aside requirement,
appropriate time and effort reporting must be
maintained
– For districts in school improvement, there are
different set-asides for professional development
at the building and district levels which need to
be tracked and accounted for separately
•
OSPI Bulletin 076-11 provides additional
guidance/specific program set-asides at
http://www.k12.wa.us/BulletinsMemos/bull
etins2011/B076-11.doc
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Federal awards contain a specified period of
time that funds are available:
Generally 15 months (July 1 through
September 30 of succeeding year)
12 month additional period that allowable
carryover funds may be obligated (Tydings
Period)
Exception to Tydings: Direct grants to districts from ED – the
funding period is stated in the award notification and no
additional 12 months applies – flexibility to extend without
prior department approval if you meet criteria (see EDGAR part
75)
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Limitations on Carryover
Generally carryover is eligible for the additional
12 months.
Exceptions are:
 Title
I, Part A (CFDA 84.010) – district that
receive in excess of $50,000 are limited to a
15% carryover (a waiver may be obtained once
every three years (see Non-reg guidance:
fiscal issues) – (OSPI requested waiver)
 Career and Technical Education (CFDA
84.048) – carryover is returned to the state
for reallocation
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When are funds initially available to spend?
Formula Grant:
 When the district submits a “substantially
approvable” application (except special ed which
requires a fully completed application)
 When the state can begin obligating the funds
(generally July 1)
Competitive Grant:
 Competitive grants can include pre-award costs
with prior OSPI approval, so generally the funds
are available as of July 1 of each year
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Period of Availability
2013 SAS Timeline for Grant Administration Process for Federal Formula Grants
REAP; Special Education; Title I, A & C; Title II, A; and Carl Perkins
Date
Process
May 1, 2013
Preliminary allocations released and applications are ready in iGrants.
Note: While May 1st is OSPI’s target date, preliminary allocations and applications
will be posted as soon as available. Districts will be notified through iGrants as
allocations and applications are made available.
June 30, 2013
Last day for districts to submit a substantially approved status request for a July 1
spending start date. Applications received after July 1, 2013 are subject to
a spending start date of no earlier than the date received at OSPI.
Applications for a single, consolidated Special Education form packagedue in order
to receive July 1 spending start date.
Summer 2013
Turnaround time for approval of submitted applications either
substantially approvable or final approval status is no more than 30 calendar days.
August 15, 2013
August 22, 2013
August 29, 2013
First Notice
Second Notice
Third Notice
Districts who have not submitted or started process are identified and notice is sent
to district program manager, business manager, superintendent (first notice – at the
discretion of the OSPI Program Director), and ESDs.
Period of Availability
2013 SAS Timeline for Grant Administration Process for Federal Formula Grants
REAP; Special Education; Title I, A & C; Title II, A; and Carl Perkins
DATE
PROCESS
September 3, 2013
Applications due.
Applications for a single, consolidated Special Education form package
due to receive September 1 spending start date.
September 9, 2013
OSPI Program Director notifies appropriate OSPI Assistant
Superintendent (for follow-up phone calls) of all districts that have not
submitted or started the grant process.
September 2013
Districts that have approved grant applications may begin submitting
reimbursement requests.
October 15, 2013
District deadline to notify OSPI of intent to participate in all programs.
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Obligation of Funds
An obligation occurs when the district has entered into a binding commitment to pay out
federal funds. When an obligation occurs depends on the type of activity the funds are
being used for.
The following table shows when an obligation is made:
IF THE OBLIGATIONS IS FOR -
THE OBLIGATION WAS MADE -
Acquisition of real or personal property
On the date on which the district makes a binding
written commitment to acquire the property
When the services are performed
On the date on which the district makes a binding
written commitment to obtain the services
On the date on which the district makes a binding
written commitment to obtain the work
When the district receives the services
When the travel is taken
When the district uses the property
Personal services by an employee of the district
Personal services by a contractor who is not an
employee of the district
Performance of work other than personal
services
Public utility services
Travel
Rental of real or personal property
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 Federal procurement regulations apply to obtaining
supplies, equipment, services, and construction
under federal programs.
 Districts will use their own procurement procedures
(purchasing processes) that include applicable state
and local laws and regulations as long as they
conform to federal laws and standards.
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There are different allowable methods of procuring
goods/services:
 Small purchases (informal) - These are purchases
less than $100,000
 Competitive sealed bids (formal advertising) –
over $100,000
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Washington State Laws for purchases of
furniture, equipment or supplies are found in
RCW 28A.335.190, which requires competitive
basis for items over $40,000 and formal bid
process for items over $70,000.
Since the state thresholds are less than the
federal, you must use the state when
procuring furniture, equipment and supplies
(except books) with federal funds.
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Districts are prohibited from contracting with,
or making subawards under covered
transactions to, parties that are suspended or
debarred or whose principals are suspended
or debarred.
Covered transactions include:

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Procurement contracts for goods and services over
$25,000
Subawards (regardless of amount)
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When a district enters into a covered transaction
with a lower tier, they must verify the lower tier
entity is not suspended or debarred.
This requirement can be accomplished in different
ways:
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By checking the Excluded Parties List System (EPLS) at
http://epls/arnet.gov
Collecting a certification from the entity
Adding a clause or condition to the covered transaction
NOTE: If you use the EPLS system, make sure you document this
verification for the auditors.
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Large % of Federal Education Funds Used for
Staffing
 Staff Turnover
 Decentralized responsibilities
 Communication
 Complexity of applying requirements to a
variety of situations
 People don’t like it because it takes time away
from already busy schedules

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As a state agency that subawards federal
funds to districts, OSPI is responsible for:
Providing guidance on time and effort
requirements (Bulletin 051-11)
 Providing technical assistance on implementing
a time and effort system that meets federal
requirements
 Monitoring district’s compliance with time and
effort requirements
 Reviewing and approving district applications
for substitute time and effort systems

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
Time and effort reporting is required under
the Federal Office of Management and
Budget’s Circular A-87, Cost Principles for
State, Local, and Indian Tribal Governments
(Attachment B, Selected Items of Cost, Item
11, Compensation for personnel services)

OSPI has issued bulletin No. 051-11 to
provide further guidance and clarification
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Time and effort reports should be prepared
by anyone with salary and benefits that are
charged:
– Directly to a federal award.
– Directly to multiple federal awards, or any
combination of a federal award (direct or indirect)
and other federal, state or local fund sources.
– To any source that is used as a match for a
federal program.
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Single cost objective
→Semi annual certification
Multiple cost objectives
→Monthly time reports or Personnel
Activity Reports (PARs)
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A particular set of work activities for which
cost data is accumulated.
For purposes of T&E reporting: Define cost
objectives according to the set of work
activities allowable under the terms and
conditions of each funding source.
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A single cost objective is a single activity that may be
funded by single or multiple fund sources.
Single cost objectives may include:
 A single federal program
 Title I, Part A & Learning Assistance Program (LAP)
 Federal Special Education & State Special Education
 Schoolwide Program (if 100% dedicated to the
programs combined in the plan)
 A single federal program & its state match
There could be exceptions, such as set-asides/reserves
within a single program.
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The work activities of:
 A federal program with set-asides/reserves
 A federally-funded program & a state-funded
program
 More than one federally-funded program
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
Statement individual(s) worked solely on
activities related to a single cost objective

Completed at least every six months

Currently: Signed by employee or supervisor
with first-hand knowledge of work performed
(may want to have both sign for internal
control purposes)
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
Accounts for total time / activity

Prepared & signed at least monthly


Signed by employee after the work has been
completed (district may also want a
supervisor with first-hand knowledge of work
performed to sign for internal controls
purposes)
Reflects actual work performed (not
budgeted)
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
Yes and No.
◦ Federal program directors can do so as long as they
maintain monthly time and effort documentation
supporting time charged to each federal and state program
under their supervision.
◦ Chief Executive Officials are considered a general
government cost, and generally may not charge time to
federal awards. The only exception to this rule is when any
such official has specific program administration or direct
student service duties and documents time spent in the
performance of those duties by completing time and effort
records.
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Chief executive officials are:
Superintendents
Assistant Superintendents
Building Principals
Assistant Building Principals
Support staff for those listed
above
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Federal
guidance allows grantees and
subgrantees subject to time and effort
requirements the option of developing
substitute time and effort systems
Substitute
systems must be approved by the
grantor agency (OSPI) prior to being used
See
bulletin 051-11 for more details regarding
substitute systems
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Yes, such as:
Failing to recognize a change in position, duties, or funding may
result in a change in time and effort reporting. This occurs due to
lack of coordination/communication between fiscal, central program,
and school building offices within the district.
Failing to provide training to staff who are responsible for
completing, approving, and/or reconciling time and effort
documentation.
Reporting time according to the ratios/hours budgeted without
regard to how the individual actually worked.
No independent review by someone other than the
employee/supervisor to ensure that necessary payroll adjustments
are performed to reflect actual time worked.
Time and effort not reviewed and signed by appropriate staff.
Entire days schedule not accounted for (only federal).
JV’s transferring funds to federal programs (from state/local
sources), with no time and effort being documented.
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
They result in:
◦ Inappropriate charges to federal programs
◦ Inaccurate management information for decisionmaking
◦ Increased risk of audit findings/questioned costs
and resulting potential recovery
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


Districts that expend $500,000 or more in
federal awards are required to have an
audit that meets the requirements of A133.
Also referred to as a Single Audit
A-133 governs the entire audit process
from the auditors selection of
entities/programs to audit to the
resolution of any audit findings
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
District Responsibilities:
Identify all federal awards received and expended in
accounting system and Schedule of Expenditures of
Federal Awards (SEFA)
Maintain internal control over federal programs
Comply with laws and regulations
Prepare financial statements
Prepare the SEFA
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
District Responsibilities (continued):
◦ Ensure audits are conducted in accordance with A133 and submitted when due
◦ Follow-up and take corrective action on audit
findings (includes preparation of a Schedule of Prior
Audit Findings
◦ Mail the Data Collection Form and reporting
package
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
OSPI Responsibilities:
◦ Identify federal awards including: CFDA Title/#,
Award Name/#, Award Year
◦ Advise subrecipients of requirements
◦ Subrecipient Monitoring
◦ Audit Resolution
 Ensure audit requirements met
 Issue decision on resolution of findings within 6
months
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
Auditor Responsibilities:
◦ Express opinion on financial statements
◦ Evaluate internal controls related to accounting
systems and major federal programs
◦ Identify noncompliance w/ material effect on
financial statements and federal programs
◦ Express opinion on SEFA
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It is important to distinguish between
subrecipients and vendors when identifying
federal awards:
◦ Only subrecipient expenditures are subject to audit
under A-133.
◦ Generally, compliance does not pass down to the
vendor. If it does, the district is required to ensure
the vendor met compliance. This may include a
review of the vendors records.
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Subrecipient Characteristics are when the
organization:
• Determines who is eligible
• Has performance measured against objectives of
program
• Has responsibility for programmatic decision making
• Has responsibility for adherence to compliance
requirements
• Uses the funds to carry out a program of the
organization
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Vendor Characteristics are when the
organization:
• provides the goods and services within normal
business operations
• provides similar goods or services to many different
purchasers
• operates in a competitive environment
• provides goods or services that are ancillary to the
operation of the federal program
• is not subject to compliance requirements of the
federal program
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•
•
•
•
•
•
Chapter 11 of ABFR provides guidance/examples at
http://www.k12.wa.us/safs/INS/ABF/1213/ch11.pdf
Required if expend over $500,000 in federal awards
Submitted annually to the auditor’s office (they will
notify your district of the due date each year)
Prepared on the same basis of accounting as financial
statements
Expenditures include those incurred during the audit
period, not when received
Make sure your SEFA reconciles to your accounting
records
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•
•
•
Include federal awards received both directly
from a federal agency and indirectly from a
state agency or local government
ARRA Funds – Must be listed in a separate
row on the SEFA and the title should begin
with the prefix “ARRA”
An excel template is available at
http://www.k12.wa.us/safs/TT/tools.asp
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
A-133 Compliance Supplement
◦ Developed to assist auditors
◦ Identifies requirements to be included in a single
audit including a matrix of requirements by program
◦ A great resource for preparing for a single audit
◦ Provides specific program information for many of
the programs the auditor will audit
◦ Provides guidance on implementing internal controls
for compliance
◦ The compliance supplement can be found at:
http://www.whitehouse.gov/omb/circulars/a133_co
mpliance_supplement_2012
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◦ Schoolwide Programs
 OSPI Bulletin 054-12 - combining funds in a schoolwide
program
◦ Special Education
 OSPI Bulletin 049-11 - appropriate uses of Special Education,
IDEA Part B funds
◦ Title I, Part A – Allocation of Funds and Comparability
 OSPI website – Ranking and allocating funds to buildings
http://www.k12.wa.us/TitleI/Workshops/RankingandAllocatin
gFunds-2010.pdf
 OSPI Bulletin 053-12 - ensuring comparability of services
among buildings
◦ Private Schools
 OSPI Bulletin 069-12 - Private School Participation in Federal
Programs
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QUESTIONS??
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