Emerging Compliance Issues in Federal Program Administration

1
Emerging Compliance Issues in Federal Program
Administration

• Kristen Tosh Cowan, Esq.
• Brustein Manasevit
• www.bruman.com
• ktoshcowan_at_bruman.com

2
Office of Inspector General

• Keeping everyone busy. . .

3
Audits over last year . . .

• Columbus OH 2.3 million
• Time and effort records in schoolwide
• San Diego CA - 1.9 million
• Charging early retirement to fed without prior
  approval

4

• Elizabeth NJ
• Unsupported salary and non-salary expenses -
  822,796
• Unallowable costs - 618,392
• Supplanting - 505,737
• Insufficient internal controls

5

• Chicago, IL at least 16.8 million
• Ohio
• Arizona
• Comparability

6

• Hempstead NY - 121,000
• Unsupported and unallowable costs
• Inadequate internal controls
• Failure to track expenditures by school

7
Pending audits

• Urban district DRAFT audit report
• Lack of time and effort records 39.1 million

8
OIG Audit Reports

• OIG issues final audit report
• USDE Assistant Secretary responsible for
  resolving
• Program Determination Letter (PDL)
• May be appealed by grantee to Administrative Law
  Judge (ALJ)

9
OIG Work Plan 2008

• IDEIA
• Adult Education and Family Literacy
• Academic Competitiveness and SMART
• Monitoring of subcontractors and subgrant
  recipients
• SEA and LEA compliance with federal procurement
  requirements

10
Oversight of Federal ProgramsWho might come
knocking?

• USDE Program Office (SASA OSEP)
• Routine monitoring
• Special focused monitoring
• USDE Office of Inspector General
  (Audit Investigative Unit)
• State Education Agency (SEA)
• Single Auditors

11
Program Office Monitoring

• State Administered Programs
• Federal states
• States districts

12
Enforcement Tools (EDGAR)

• If material failure to comply with term of an
  award in statute or regulation, assurance in plan
  or application, notice of award or elsewhere,
  awarding agency may
• Temporarily withhold funds pending correction
• Disallow all or part of cost
• Suspend or terminate current award
• Withhold further awards
• Take other remedies

13
Emerging Compliance Issues

• Schoolwide Fiscal Issues
• Supplement Not Supplant/ Maintenance of Effort
• Response to Intervention (RTI)

14
Title I Fiscal GuidanceConsolidating Funds in
Schoolwide Programs
15
Schoolwide Programs Basic Requirements

• Consolidate federal, state, and local funds to
  upgrade the entire educational program
• Ensure all children meet standards, particularly
  those most at risk
• Requirement
• 40 poverty
• Schoolwide plan

16
What does it mean to consolidate funds?

• Treat funds like a single pool of funds
• Lose individual program identity
• School has one flexible pool of funds
• Use to support an activity of the schoolwide
  program without regard to which program
  contributed the specific funds used for a
  particular activity

17
Literal Consolidation? NO!

• LEA does not literally need to combine funds in a
  single account or pool with its own accounting
  code
• Pool is used conceptually
• IMPT Identify in SWP PLAN
• What programs are consolidated
• The amounts consolidated from each

18
Guidance Three scenarios

• Consolidate federal, state, and local
• Consolidate only federal
• Do not consolidate Title I with other federal,
  state, and local

19
How can consolidated Federal funds be used?

• 1. Activities to address the educational needs
  of the school
• Identified by needs assessment
• Articulated in SW Plan
• E-5, etc.

20
How can consolidated Federal funds be used?

• 2. OMB Circular A-87 applies
• Cost Principles for State, Local and Tribal
  Governments
• Applies to all federal funds not education
  specific
• General necessary and reasonable
• Specific Allowability of salaries/ wages (time
  and effort records), equipment, fines

21
What if there is NO consolidation at all? How
must Title I be used?
22
If Title I is not consolidated with other
federal, state, and local, then how must the LEA
use Title I funds?

• On the educational needs of school
• Identified in needs assessment
• Articulated in SW Plan
• OMB Circular A-87 applies
• E-7

23
If Title I not consolidated (cont.)

• All kids may participate
• Need not be supplemental
• Must account for and track the Title I funds
  separately, identifying the activities the Part A
  funds support

24
If Title I not consolidated (cont.)

• What is the impact on other federal programs (not
  Title I)?
• BM still have to meet all the requirements of
  those programs not just intents and purposes
• Possibly NEW interpretation

25
What if the LEA consolidates federal, state, and
local??

• When Title I Part A funds are consolidated with
  State and local funds. . . . they lose their
  identity.
• E-8
• Treat as non-federal funds

26
REMINDER The Plan!

• The SWP Plan tells the auditor
• What programs have been consolidated
• How much from each program

27
Supplement not Supplant

• Statute 1114(a)(2)(B) Title I must supplement
  the amount of funds that would, in the absence of
  Title I, be made available from non-federal
  sources.
• E-18
• The actual service need not be supplemental

28
SNS NEW!!

• Guidance School must receive all the state and
  local funds it would otherwise need to operate in
  the absence of Federal funds
• Includes routine operating expenses such as
  building maintenance and repairs, landscaping and
  custodial services

29
Can Title I be used for basic operational
expenses?

• If only federal combined
• No, must be for educational needs
• If federal and non-federal combined
• No, but impossible to determine which is federal
• Be sure sufficient state and local funds
  allocated to school to meet basic operational
  needs

30
What is educational need?

• Not addressed in guidance
• BM best guess
• Instruction yes.
• Instructional support probably yes
• Administration possibly yes
• Operational no.

31
State Budget Crises!

• Supplement not Supplant
• Maintenance of Effort

32
Maintenance of Effort
33
MOE The NCLB Rule

• LEA may receive funds only if SEA finds the
  combined fiscal effort per student or the
  aggregate expenditures of the LEA from state and
  local funds from preceding year not less than 90
  for second preceding year.

34
MOE Preceding Fiscal Year

• Need to compare final financial data
• Compare immediately PFY to second PFY
• EX To receive FY2005 funds (available July
  2005), compare FY2004 (2004-05) to FY2003
  (2003-04)

35
MOE Failure

• ESEA If LEA fails MOE, SEA must reduce amount
  of allocation in the exact proportion by which
  LEA fails to maintain effort below 90.
• Reduce all applicable NCLB programs, not just
  Title I

36
(No Transcript)
37
MOE Waiver

• USDE Secretary may waive if
• Exceptional or uncontrollable circumstances such
  as natural disaster
• OR
• Precipitous decline in financial resources of the
  LEA

38
Supplement Not Supplant
39
Supplement not Supplant

• Federal funds must be used to supplement and in
  no case supplant state and local resources
• What would have happened in the absence of the
  federal funds??

40
Presumptions of Supplanting(A-133 Compliance
Supplement)

• Presume supplanting occurred if federal funds
  used to provide services that
• 1. Were required to be made available under
  other federal, state, or local laws
• 2. Provided with non-federal funds in prior year

41
Presumption Rebutted!

• If SEA or LEA demonstrates it would not have
  provided services if the federal funds were not
  available
• NO non-federal resources available this year!

42
What documentation needed?

• Fiscal or programmatic documentation to confirm
  that, in the absence of fed funds, would have
  eliminated staff or other services in question
• State or local legislative action
• Budget histories and information

43
Presumption of Supplanting(A-133 Comp. Supp.)

• Presume supplanting occurred if federal funds
  used to provide services that
• 3. Were provided to Title I participating
  children, if those same services provided with
  non-federal funds to non-participating children

44
Exception 1120A(d)

• Exclusion of Funds
• SEA or LEA may exclude supplemental state or
  local funds used for program that meets intents
  and purposes of Title I Part A
• EX Exclude State Comp Ed funds

45
Supplanting in a Schoolwide

• Fiscal analysis only
• Use Title I funds only to supplement the amount
  of funds that would, in the absence of federal
  funds, be made available from non-federal sources
  for the school.
• School must receive all the state and local funds
  needed to operate

46
Response to Intervention

• Sorting through the confusion. . .

47
Response to Intervention

• Does child respond to high quality instruction?
• Tier 1 General classroom - diagnostic
• Tier 2 narrowing focus
• Tier 3 further narrowing focus
• Etc.

48
Can Title I Funds be used for RTI?
49
Can RTI be part of a Title I Program?
50
In Schoolwide Program

• Is RTI in Schoolwide Plan?
• Can it address needs identified through needs
  assessment?

51
In Targeted Assistance Program

• Is it focused on identified Title I students?
• At risk of failing to meet state standards
• Based on multiple, objective, educationally
  related criteria
• Is it providing a supplemental service to those
  identified students?

52
Remember

• Must meet all Title I requirements
• No independent authority to consolidate or
  combine funding streams
• No waiver

53
New Flexibility Announced

• Differentiated Accountability Pilot Program

54
Differentiated Accountability Pilot Program

• Creating a more nuanced system of interventions
• Distinguishing schools on fire vs. smoldering
• Get information to prepare for NCLB
  reauthorization

55
What states are eligible?

• System of standards and assessments fully
  approved
• No significant monitoring findings
• Approved HQT Plan
• Timely and transparent AYP info to public
• Priority States with high percentage of Title I
  schools ID for improvement

56

• Apply by May 2, 2008
• Peer Review
• Up to 10 states selected
• Implement for 08-09 year, based on 07-08 AYP
  results

57
Brustein Manasevit presents

• 10th National Spring Forum
• Managing Federal Education Grants
• Washington, D.C.
• May 7-9, 2008
• www.bruman.com

58
SOLD OUT!!
59
Brustein Manasevit Fall ForumManaging
Federal Education GrantsClark County,
NVDecember 4-5, 2008www.bruman.com
60
Thank You!

• And Good Luck!