Categorical Program Monitoring Fiscal Considerations

1
Categorical Program Monitoring Fiscal
Considerations
2
Agenda

• Areas addressed in the CPM Cross-Program
  Instrument
• Program Costs
• Indirect Costs
• Direct Costs
• Administrative Costs
• 85-15 Requirements
• Centralized Services

3
Agenda (cont.)

• School Plan Fiscal Considerations
• Allowable Costs
• Supplement vs. Supplant
• Red Flags

4
CPM Cross-Program Funding

• Verify that Categorical Funds are
• Disbursed in accordance with the Consolidated
  Application
• 85 at school sites for direct services
• Used to supplement, not supplant, state and local
  funds
• Expended for salaries and wages that are
  adequately supported

5
Program Costs
6
Program Costs

• Costs of an LEA can be categorized as direct or
  indirect
• A costs related activity (instruction, school
  administration) rather than its type (salaries,
  benefits, supplies) is what determines if it is a
  direct or indirect cost.
• CSAM 2005, Procedure 915, Indirect Cost Rate,
  Page 915-1

7
Indirect Costs

• Indirect costs are district-wide general
  management costs that are not readily
  identifiable with a particular program but are
  necessary for the overall operation of the LEA
  (i.e., accounting, budgeting, payroll,
  purchasing, etc.).
• The standardized method for distributing these
  indirect costs to programs is referred to as the
  indirect cost rate.
• CSAM 2005, Procedure 915, Indirect Cost Rate,
  Page 915-1

8
Indirect Costs

• LEA indirect cost rates may be used, as
  appropriate, to budget, allocate, and recover
  indirect costs for federal programs and grants
• Indirect cost rates are published annually by the
  CDE at www.cde.ca.gov/fg/ac/ic

9
Indirect Costs

• An estimate of indirect costs may be used for
  budgeting purposes, but the claiming of indirect
  costs must be done using the approved rate and
  actual program expenditures (not the award
  amount).
• CSAM 2005, Procedure 915, Indirect Cost Rate,
  Page 915-5
• Indirect Costs and Indirect Cost Rates, FAQ 12

10
Indirect Costs

• To estimate indirect costs for budgeting
  purposes
• Divide the award amount by 1.xx, where xx equals
  the LEAs approved indirect cost rate
• Subtract the result from the original award
  amount to arrive at the budgeted indirect costs

11
Indirect Costs

• For Example
• Indirect Cost Rate 4
• Award Amount 100,000
• 100,000 1.04 96,153.85
• 100,000 96,153.85 3,846.15
• 3,846.15 may be budgeted for indirect costs
• Note 96,153.85 x 4 3,846.15

12
Direct Costs

• Direct costs are expenditures that can be
  identified with a specific goal or objective.
• CSAM 2005, Procedure 915, Indirect Cost Rate,
  Page 915-11

13
Direct Costs

• Do not confuse direct costs with direct services.
• A direct cost does not mean it is a direct
  service to students.

14
Administrative Costs

• What are administrative costs?
• Any costs, direct or indirect, that are
  administrative in nature and support the
  management of a program
• Examples of direct administrative costs include
  salaries of district administrative personnel,
  costs of program monitoring and preparing program
  plans, and purchase of program-specific supplies.
• Examples of indirect costs include payroll,
  accounting, and procurement systems.
• CSAM 2005, Procedure 915, Indirect Cost Rate,
  Page 915-11

15
Categorical Programs Funded Through the Con
App85 15 Requirements

• At least 85 of program allocations must be
  budgeted and expended at school sites for direct
  services to students.
• (Education Code, sections 63000-63001)
• Up to 15 may be spent for administrative costs,
  including indirect costs, incurred at the school
  and district office in support of these programs.
• Note Some categorical programs may have
  additional more stringent requirements. The
  85-15 rule does not supersede those requirements.

16
85-15 Requirements

• What are direct services to students?
• Services delivered to students at the school site
  in which the student is the direct recipient or
  beneficiary of the service
• Personnel providing hands-on instruction
• or
• Services that are integral to the quality of the
  instructional program and the academic success of
  the students

17
85-15 Requirements

• What does the 15 administrative cap mean?
• Indirect costs and direct administrative costs
  cannot exceed 15.
• If an LEA has already spent 12 percent on direct
  administrative costs, then it can claim only 3
  for indirect costs, even if the approved rate
  exceeds 3.

18
85-15 Requirements

85 Direct Services
15 Administrative
Administrative Costs
Direct Costs
Indirect Costs
19
85-15 Examples

• Examples of expenditures that are within the 85
  direct services to students include
• Personnel providing hands on instruction to
  students (i.e. specialist or resource teachers,
  school nurses, school librarians, counselors,
  instructional aides, etc.)
• Operating expenses and material/equipment that
  meet the specific needs of eligible students
  (i.e., instructional materials, supplies, and
  computers)

20
85-15 Examples

• Examples of expenditures that are outside the 85
  direct service limitation include
• District administrative personnel
• District program personnel
• Itinerant staff, except for the time directly
  related to the purposes of the categorical
  program, or travel to school sites to deliver
  instruction or staff development

21
85-15 Examples

• Examples of expenditures that are outside the 85
  direct service limitation include
• School program administrators, to the extent they
  do not provide direct instruction or conduct
  staff development activities to meet specific
  pupil needs consistent with the purpose of the
  program
• District program evaluation
• District advisory councils reporting to local
  board
• General staff development not related to specific
  pupil instructional needs

22
Questions to Ask for 85-15

• Expenditures can fall into a gray area, so
  carefully evaluate the nature and extent of the
  expenditures benefit to the academic success of
  the student.
• Ask yourself
• How direct is the benefit?
• Does the expenditure have a clear educational
  impact on the instructional program and the
  academic success of the students?

23
Questions to Ask for 85-15(Continued)

• Other questions to ask yourself
• Was the decision made at the school site council
  level or at the district level? (Determine the
  origin of the decision to make the expenditure.)
• Is the educational objective of the categorical
  program furthered by the expenditure? (Evaluate
  the expenditure in relation to the student
  academic achievement gains.)

24
Questions to Ask for 85-15(Continued)

• Other questions to ask yourself
• Does the school plan identify the goal addressed,
  service provided, and evaluation process for your
  decision to include the item as a direct service
  (85)?

25
Questions to Ask for 85-15(Continued)

• Other questions to ask yourself
• Is the activity essential to the academic success
  of the students served?
• Does the evaluation of the expenditure indicate
  that student academic achievement improved?

26
Not Sure?

• Suggestions to help clarify uncertain
  expenditures
• Prepare written statement justifying and
  supporting your decision to include the item as a
  direct service (85).
• Maintain the written statement on file.
• Also, maintain additional documentation to
  support your decision.

27
Centralized Services

• A centralized service is an activity that is
  conducted at the school site, but is administered
  centrally by the district.
• Expenditures for centralized services can include
  direct services to students (85) and direct
  administrative costs (15). For example
• Shared staff members such as resource teachers,
  content coaches, staff development specialists,
  instructional aides (direct services to students)
• District library and media services (direct
  administrative costs)
• Title 5 CCR, Section 3947

28
Centralized Services(Continued)

• Each school plan must contain the amounts
  budgeted for centralized services and a
  description of the centralized services to be
  provided to the school program when expenditures
  are charged to the 85.
• Centralized services included in the school plan
  must be approved by the school site council.
• Title 5 CCR, Section 3947

29
School Plan Fiscal Considerations

• The school plan must
• Include the proposed expenditures of all state
  and federal funds allocated to the school in
  accordance with the Consolidated Application.
• Justify expenditures in accordance with
  categorical program requirements.
• Provide evidence how the proposed expenditures
  clearly relate to the purpose of their funding
  source and planned activities to meet specific
  identified educational student needs and goals.

30
School Plan Fiscal Considerations(Continued)

• The school plan must also include
• Evidence that proposed expenditures support
  research-based strategies and effective
  practices.
• Detailed budgets and justifications for planned
  expenditures in the school plan tied to students
  educational needs.

31
School Plan Fiscal Considerations(Continued)

• Compliance involves
• Close collaboration between LEA fiscal and
  program staff.
• The District providing technical assistance to
  schools and school site councils on appropriate
  budgeting and approval processes of all
  categorical expenditures.
• Systems in place to ensure that proposed
  expenditures are allowable under federal, state,
  and local requirements

32
Allowable Costs
33
Basic Guidelines

• To be allowable under federal awards, all costs
  must be
• Necessary to program goals
• Reasonable
• Allocable to Federal awards
• Allowable under state or local laws or
  regulations
• OMB Circular A-87, Attachment A, Section C(1)

34
Basic Guidelines

• Additionally, all costs must
• Conform with federal law grant requirements
• Receive consistent treatment (each year)
• Be in accordance with Generally Accepted
  Accounting Principles (GAAP)
• Not be included elsewhere
• Be adequately documented
• OMB Circular A-87, Attachment A, Section C(1)

35
Helpful Questions

• Is the proposed cost
• Consistent with federal OMB cost principles
• Allowable under program requirements
• Consistent with fiscal requirements
• Consistent with federal rules and regulations (US
  Code, Code of Federal Regulations, EDGAR)

36
Supplement, Not Supplant
37
Golden Rule

• Federal funds must be used to supplement, not
  supplant existing state and local fiscal efforts
  and schools which receive the funds shall have
  base expenditures comparable to nonparticipating
  schools
• U.S. Code, Section 6321(b) and Ed Code Section
  52852.5(c)

38
Supplement, Not Supplant

• To determine if supplanting exists, ask the
  questions
• What would have happened in the absence of the
  federal funds?
• What services would have been provided to
  students in the absence of federal funds?

39
Supplement, Not Supplant

• Targeted Assistance School
• The District must show that funds used at the
  school are
• Paying for additional services that would not
  otherwise be provided
• Only used for specific target populations
• Separately tracked once they reach the school

40
Supplement, Not Supplant

• Schoolwide Program School
• The District must show that funds are only used
  to supplement the amount of funds that would, in
  the absence of federal funds, be made available
  from non-federal sources

41
Supplement, Not Supplant

• Supplanting may exist when an LEA uses federal
  funds to provide services
• That it is required to make available under
  federal, state, or local law.
• That the LEA provided with non-federal funds in
  the prior year(s)
• That were provided to participating children, if
  those same services were provided with
  non-federal funds to non-participating children

42
However

• It is not Supplanting
• If an LEA can demonstrate that it would not have
  provided the services in question with
  non-federal funds, had the federal funds not been
  available
• If state and local funding was reduced or
  unavailable in the current year

43
Supplement, Not Supplant

• Necessary Documentation
• Programmatic and fiscal documents showing that
  the funding was eliminated
• State or local legislative action
• Budget and financial information
• School Board Minutes documenting the Boards
  decision to eliminate service or position and
  reasoning for the decision

44
Fiscal Red Flags
45
Red Flags

• Material discrepancy between Consolidated
  Application and what the District distributed to
  schools
• Title I funding is being used at non-Title I
  schools
• General Fund positions being funded with Title I
  funds (Comparability)
• Questionable funding transfers
• District does not maintain documentation to
  support program expenditures

46
Resources

• OMB Circular A-87 http//www.whitehouse.gov/omb/ci
  rculars/a087/a87_2004.html
• Title 34, Code of Federal Regulations
  http//www.access.gpo.gov/cgi-bin/cfrassemble.cgi?
  title200534
• California School Accounting Manual
  http//www.cde.ca.gov/fg/ac/sa/
• Title 20, United States Code http//www.access.gpo
  .gov/uscode/title20/title20.html
• EDGAR http//www.ed.gov/policy/fund/reg/edgarReg/e
  dgar.html
• California Education Code http//www.leginfo.ca.go
  v/calaw.html
• Title 5, California Code of Regulations
  http//www.calregs.com/