Avoiding Financial Pitfalls of Managing Perkins Funds

1. Avoiding Financial Pitfalls of Managing Perkins Funds Steve Equall, Nebraska

2. What Federal rules apply to Perkins funding? • Perkins Act • EDGAR (Education Dept. General Administrative Regulations) • OMB Circulars (Office of Mgmt. & Budget) • Circular A-87 Cost Principles – State & Local • Circular A-21 Cost Principles – Educ. Institutions • Circular A-133 Single Audit Requirements

3. What are the basic cost criteria? • Allocable to the purposes of the act • Necessary and reasonable • Not for general purposes

4. What types of costs can generally be considered eligible? • Administrative Costs (5%) • Personnel Services (time records) • Operating Expense (watch supplanting) • Stipends • Consultants • Instructional materials (watch supplanting) • Travel • Instructional equipment

5. Student expenses or direct assistance to students Entertainment Awards and memorabilia Individual memberships Memberships with orgs. that lobby College tuition, fees, books Fines & penalties Insurance/self-insurance Expenses that supplant Audits except single audit Contributions & donations Contingencies Facilities and furniture General advertising Alcohol Fund raising General administration What types of costs arenot eligible?

6. Is there an exception to the rule on direct assistance to students? • YES! Legislative history indicates that the intent is there for this flexibility, however certain restrictions apply.

7. Strengthen academic, voc. & tech. skills of students Provide students with strong experience and understand all aspects of the industry Develop & expand use of technology Professional development Evaluate programs Initiate, improve, expand & modernize quality programs Be of sufficient size, scope and quality Link secondary & postsecondary programs What are the requirements for uses of funds at the local level?

8. Are local recipients required to budget and expend funds in all 8 categories? • No. • The 8 categories are elements required in programs eligible for funding • If deficiencies exists, Perkins funds can address those deficiencies • If all 8 are already met, funding can be used in the permissive areas

9. Involve parents, business and labor in planning & operation Career guidance & academic counseling Work-related experiences Programs for special pops Education & business partnerships Voc. Student organizations Mentoring & support services Upgrading equipment Teacher prep programs Improving, developing new vocational ed. courses Family & consumer science Adult vocational programs Job placement programs Non-traditional training & empl. Support other voc. programs What are the permissive uses of funds at local level?

10. What are the required uses of funds at the state level? (10%) • Assess programs • Develop, improve, expand use of technology • Professional development • Support programs that improve academic & technical skills of students • Non-traditional training • Partnerships • Service individuals in state institutions • Programs for special populations • May not be used for administrative costs

11. What are the permissive uses of funds at the state level? • Technical assistance to LEAs • Improve career guidance & counseling • Establish agreements between sec./postsecondary • Support cooperative education • Support vocational student organizations • Support charter schools • Support programs that include all aspects of industry • Support family & consumer science • Support business & industry partnerships • Develop new vocational educationcourses • Programs for adults and dropouts • Job placement services

12. When can funds be obligated? • EDGAR says that a subgrantee of the state may not obligate funds until the later of: • The date the state may obligate funds or • The date that the subgrantee submits its application to the state in substantially approvable form

13. Type of Cost Equip &supplies…….. Work of employees….. Contracted services….. Utilities………………. Rental………………… Travel………………… Obligation occurs: Date of purchase order When work is done Date agreement signed When used When used When travel is taken When are funds considered obligated?

14. How long are Federal funds available for obligation? • Perkins funds are available to states for 27 months (July 1, 2002 thru Sept. 30, 2004) • Section 417 of General Ed. Provisions Act (GEPA) called Tydings Amend. provides carryover period • Subgrants to LEAs are for one fiscal year

15. What are the Maintenance of Effort Requirements for a State? • State must maintain effort either per student or in aggregate • Separate maintenance of effort for state administrative costs • Year-to-year state costs must be equal or greater than year before • There are exceptions

16. May Federal funds be used to support a program that was supported last year with non-federal funds? • NO. This would be supplanting – • Exception • Must be evaluated case-by-case • If it would be impossible to continue the activity without the federal funds, then it may not be supplanting

17. Can Perkins funds be co-mingled with other funds to offer voc. programs? • Funds may not be co-mingled so that they lose their identity. Expenditures must be traceable to the source of funding. However, programs can be co-funded to maximize the available funds.

18. Can funds be used to provide vocational opportunities to 6th graders? • No. Section 315 prohibits the use of funds below the 7th grade level.

19. What are the rules on Perkins equipment usage and disposition? • May not be used to compete unfairly with business • When no longer needed for original purpose or other federal programs: • Current fair market value of $5,000 or less- keep, dispose of with no strings attached • Current fair market value of more than $5,000- keep equipment or sell and pay awarding party its share of sale price or fair market value

20. If a State fails to meet State adjusted levels of performance for 2 or more years – can Secretary withhold funds? If so, can another entity administer the funds? Sec. 123 allows both to happen but only after all other options including technical assistance from OVAE and failure to implement plans have been exhausted

21. Are vocational technical ed. students enrolled in programs receiving no Perkins funds subject to accountability requirements? • Yes. As I read Sec. 113, all students who participate in state-approved programs are subject to accountability requirements – including special pops

22. What areas will auditors be looking at? • In general – 3 main areas: • Financial statements & expenditure records • Internal controls • Compliance with laws and regulations

23. Expenditures are documented and allowable Recipients are eligible and formula is correct Monitoring requirements are met and documented Compliance issues: Program offerings Student participation Assessment Funds supplement and not supplant Time records Maintenance of Effort Minimal time between drawdown and disbursement What will auditors be looking for at the state level?

24. Expenditures are documented and allowable Compliance issues: Program offerings Student participation Assessment Funds supplement and not supplant Time records Minimal time between drawdown & expenditure Procurement methods provide free & open competition and prevent conflict of interest Equipment –locatable and inventoried Obligations incurred in time frame Expenditures are budgeted What will auditors be looking for at the local level?

25. Where can I find federal rules? • Catalog of Fed. Domestic Assistance (CFDA) www.gsa.gov/fdac • Code of Fed. Regulations (CFR) www.access.gpo.gov/nara/cfr/index.html • Ed. Dept. General Administrative Regs. (EDGAR) www.ed.gov/funding.html • Federal Legislation http://thomas.loc.gov • Federal Register www.access.gpo.gov/su_doc/aces/aces140.html • OMB Circulars http://www.whitehouse.gov/omb/circulars • US Department of Education www.ed.gov/

26. Your Turn Questions?