Career Education Finance Update

1. Career Education Finance Update MCCTA Summer Conference July 2016

2. Uniform Grant Guidance • Perkins • ePeGS • Compliance Plans • Tiered Monitoring • State CTE Funding • EIF • Salary Reimbursement • Due Dates • Ad Hoc CTE Funding Committee • Other Questions??

3. Federal Award Identification • Time and Effort • Required Certifications • Equipment • Food Costs • Written Policies and Procedures Uniform Grant Guidance

4. The financial management system of the LEA must include: • CFDA Title and Number • Federal Award Identification Number (FAIN) • Fiscal Year of Award • Name of the Federal Agency • Name of the Pass-Through Entity • This information must be included in the LEA accounts (chart of accounts, general ledger, accounting system). • Our Office includes the Federal award identification information on the Perkins Grant Allocation spreadsheet each year. Identification of the Award in the LEA Accounts

5. The Department created a Federal Award Identification spreadsheet that contains all of the required components of identification of Federal awards received and expended. • The spreadsheet may be used by LEAs to fulfill this requirement; however, the Department encourages LEAs to enter the Federal award identification information in their accounting systems, if possible. • The Federal Award Identification spreadsheet is located on the Perkins IV Finance page at the following address: • http://dese.mo.gov/financial-admin-services/career-education-finance/perkins-iv-finance Federal Award Identification Spreadsheet

6. The new Federal regulations do not require any specific documentation to support the charges for compensation of personal services. • However, our Department is more restrictive and requires the use of the semi-annual time certification, personnel activity report (PAR), and time and effort report to support charges to the Federal award for salaries and wages. • Our Department strongly recommends the use of the sample time and effort documents located on our website. Compensation for Personal Services

7. School Districts • Semi-Annual Time Certification—single cost objective (may also use Alternative form) • Personnel Activity Report (PAR)—multiple cost objectives • Institutions of Higher Education • Time and Effort Report • The sample time and effort documents are located on the Perkins IV Finance page at the following address: • http://dese.mo.gov/financial-admin-services/career-education-finance/perkins-iv-finance Time and Effort Documentation

8. Where employees work solely on a single Federal award or cost objective, charges for their salaries must be supported by periodic certifications that the employees worked solely on that program for the period covered by the certification. • These certifications must be prepared semi-annually and must be signed after-the-fact by the employee or supervisory official having firsthand knowledge of the work performed by the employee. • Employees who are paid 100% from Perkins funds or are paid a portion from Perkins funds and work on one cost objective. Time and Effort—School Districts

9. Where employees work on multiple cost objectives, a distribution of their salaries must be supported by Personnel Activity Reports (PARs). • The PAR must: • Reflect an after-the-fact distribution of actual activity of the employee • Account for the total activity for which the employee was compensated • Be prepared monthly • Be signed after-the-fact by the employee • Be reviewed quarterly to ensure the percentages reflect how the employee was actually paid. • Employees who are paid from Perkins funds and work on multiple cost objectives. Time and Effort—School Districts

10. The distribution of salaries must be supported by after-the-fact Time and Effort Reports. • The Time and Effort Reports must: • Reflect the distribution of activity expended by the employee • Reflect an after-the-fact reporting of the percentage distribution of activity of the employee • Be signed by the employee, principal investigator, or responsible official using suitable means of verification that the work was performed • Be prepared each academic term for professional staff and monthly for all other employees. Time and Effort—Institutions of Higher Education

11. Stipends and extra-duty pay must be supported by a signed written agreement between the employee and LEA. • The written agreement must: • Indicate the extra work to be performed, the date(s) of performance, and the amount or rate to be paid to the employee • Be signed by the employee and LEA to show the acceptance of the terms. • In addition, the employee must prepare time and effort documentation (i.e. semi-annual time certification, PAR, or Time and Effort Report). Stipends/Extra-Duty Pay

12. These salaries should normally be treated as indirect costs unless all of the following conditions are met: • Such services are integral to the project or activity • Individuals involved can be specifically identified with the project or activity • Such costs are explicitly included in the budget • Costs are not also recovered as indirect costs • For administrative (Directors, Assistant Directors, Coordinators, Deans, etc.) and clerical positions, our Office is eliminating the requirement that an LEA have a job/position description on file that indicates the percentage of time directly involved in the administration of the Perkins grant. Salaries of Administrative and Clerical Staff

13. To assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved budget, payment requests and FERs include the following certification statement: • “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.” • Employees of the LEA who are responsible for submitting payment requests and FERs must ensure the information is accurate and complete. All payment requests and FERs must have documentation (general ledger, accounting report, etc.) that supports the amount submitted. • The certification statement has been added to both the payment request and FER. Required Certifications

14. Equipment is defined as tangible personal property having a useful life of more than one year and an acquisition cost of $1,000 or more per unit. • LEAs must complete the Capital Outlay page in ePeGSto receive prior approval for equipment purchases from the Perkins Grant. • Equipment items must meet the following requirements: • Have an instructional use • Improve the career and technical education program • Strengthen and support academic and technical skill achievement Equipment

15. The following items are subject to the inventory management and control requirements: • Equipment items with an acquisition cost of $1,000 or more per unit • Items with an acquisition cost under $1,000 per unit which are considered attractive or easily pilfered: • Audio-visual equipment • Digital cameras • Laptops • Television sets • DVD players • iPads • Cell phones • Power tools • Computers Inventory Management

16. Equipment records must be maintained by the LEA and include the following: • Description of the equipment • Serial number or other identification number • Source of funding for the equipment • Federal Award Identification Number (FAIN) • Who holds title, if applicable • Acquisition date • Cost of the equipment • Percentage of Federal participation in the cost of the equipment • Location of the equipment • Use and condition of the equipment • Ultimate disposition data • One new data element was added to the requirements for equipment records—Federal Award Identification Number (FAIN). Our Office includes the FAIN on the Perkins Grant Allocation spreadsheet each year. Equipment Requirements

17. During the time that equipment is used for the program it was acquired, the LEA must also make equipment available for use on other programs provided that such use will not interfere with the work on the program for which it was originally acquired. • When acquiring replacement equipment, the LEA may use the equipment to be replaced as a trade-in or sell the equipment and use the proceeds to offset the cost of the replacement equipment. • Regardless of cost, the LEA must maintain effective control over and adequately safeguard all property and assets. • A physical inventory of the equipment must be conducted and the results documented in the equipment records at least once every two years. Equipment Miscellaneous

18. Our Office created a sample equipment inventory document similar to the sample time and effort documents. • The sample equipment inventory document contains all of the required data elements plus a physical inventory certification. • The sample equipment inventory document is located on the Perkins IV Finance page at the following address: • http://dese.mo.gov/financial-admin-services/career-education-finance/perkins-iv-finance Equipment Inventory

19. Meal costs at meetings or trainings are typically not allowable under Federal awards unless the LEA can document that the expenditures for food were reasonable in cost, necessary to accomplish program goals and objectives, and an integral part of the instructional program. • Our Office revised the guidance on food costs at LEA hosted meetings or trainings (effective July 1, 2015). • The supporting documentation for the food expenditures will be what is monitored related to the meal costs charged to the Perkins grant. Meal Costs at LEA Hosted Meetings or Trainings

20. The USDE has indicated that there is a very high burden of proof to show that paying for food with Federal funds is necessary to meet the goals and objectives of a Federal grant. • Therefore, LEAs must make a compelling case to justify food costs as reasonable and necessary. • The Uniform Grant Guidance—Food Costs is located on the Perkins IV Finance page at the following address: • http://dese.mo.gov/financial-admin-services/career-education-finance/perkins-iv-finance Guidance Related to Food Costs

21. LEAs must have written procedures on cash management. • Procedures must explain the process used to request reimbursement of Federal funds. • Employees of the LEA who are responsible for submitting payment requests and FERs must abide by these procedures. • These employees should obtain a copy of their LEA’s procedures and keep them on file. • These procedures and the process followed will be what are monitored related to the Perkins payment requests and FERs. Written Cash Management Procedures

22. LEAs must have written procedures on determining allowability of costs for the Federal award. • Procedures must explain the process used throughout the grant development and budget process (possibly reference Perkins Act, UGG, DESE Guidance, and/or List of Allowable and Unallowable Costs). • Procedures should serve as a “roadmap” that is used from beginning to end. • Procedures should indicate what employees are responsible for preparing and approving the budget, approving and expending funds, and reporting payments and final expenditures. • Procedures should be a training tool and guide for employees. • These procedures and the process followed will be what are monitored related to the Perkins budget, expenditure of funds, and the reporting of those expenditures. Written Allowability Procedures

23. LEAs must have a written policy on travel. • Policy must explain the requirements of travel status and the reimbursement of travel costs (actual cost basis or per diem basis). • This policy and the process followed will be what are monitored related to the travel expenses charged to the Perkins grant. Written Travel Policy

24. LEAs must retain documentation that participation of the individual is necessary to the Federal award and that the costs are reasonable and consistent with the LEA’s travel policy. • Written justification memo/statement • Travel approval/authorization form • Prior written approval • Documentation should also include a copy of the agenda for the conference/meeting (this proves allocability to the Federal award). • The supporting documentation will be what is monitored related to the travel expenses charged to the Perkins grant. Travel Documentation Justification

25. The written procurement procedures were effective July 1, 2016. • LEAs must have written procedures on procurement. • Procedures must reflect applicable Federal, State, and local laws and regulations. • LEAs must have written procedures on standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. • Procedures should include standards for situations in which a financial interest is not substantial or a gift is an unsolicited item of nominal value. • Procedures must provide for disciplinary actions to be applied for violations of such standards by employees of the LEA. Written Procurement Procedures

26. Our Office provided recommendations instead of mandatory requirements related to equipment and instructional furniture. • This guidance was effective July 1, 2015. • Equipment: Our Office recommends that all equipment items purchased with Perkins grant funds be received, installed, and available for student instruction by December 31 of each year. However, if the LEA does not meet this deadline, then a justification statement(s) should be written and kept locally as documentation to support the exception to this date. • Rationale: It is the expectation of this Office that equipment items are purchased early in the school year so the students can use them and benefit from their instruction. Students should have ready access to up-to-date equipment that enables improved instruction. The justification statement(s) should address these areas and also explain why the deadline was not met. Perkins Recommendations

27. Instructional furniture: Our Office recommends that LEAs not use Perkins grant funds to purchase instructional furniture. However, if the LEA determines there is a need for this type of item, then a justification statement(s) should be written and kept locally as documentation to support the purchase. • Rationale: The Perkins Act states that the funds must be used to improve the career and technical education programs. In addition, items purchased with Perkins funds should strengthen and support academic and technical skill achievement. Ultimately, the purpose of the Perkins program should be to develop more fully the academic and career and technical skills of students enrolled in CTE. The justification statement(s) should address these areas and also explain why Perkins grant funds were needed to support this type of cost. Perkins Recommendations (cont)

28. Perkins grant must be separated from other funding sources (i.e. local funds, state funds, and other Federal funds). • Perkins funds may not be co-mingled with other funds so that they lose their identity. • Expenditures must be traceable to the source of funding. • The LEA must have a separate account or accounting code for the Perkins grant that identifies the line items of the Perkins budget and expenditures. • Expenditures coded to the Perkins account can NOT exceed the Perkins allocation. Perkins—Separate Accounting

29. Perkins expenditures must be able to be traced back to a source document. • Accounting records must be supported by source documentation such as purchase orders, invoices, expense reports, time and effort records, contracts, etc. • Must retain the documentation for at least 3 years from the date of the submission of the FER. Perkins—Source Documentation

30. Perkins financial records must show the LEA spent the Federal funds as required by the Cash Management Improvement Act (CMIA). • The CMIA was implemented to prevent the earning of interest on Federal funds. • Payments must be for reimbursements only (no longer allow expenditures anticipated to be made within 3 days). • Advance payments are not allowed. Perkins—Cash Management

31. LEAs may begin to obligate Federal Perkins funds on the date in which the Perkins application was submitted to the Department in substantially approvable form. • Substantially approvable form is when the Perkins application (budget and plan) has been completed accurately and submitted in ePeGS and the Compliance Plans System without errors. Perkins—Substantially Approvable Form

32. Perkins funds must be used to supplement and not supplant non-Federal funds. • Supplanting is presumed to have occurred when: • An LEA used Federal funds to provide services which were provided with non-Federal funds in the prior year. • An LEA used Federal funds to provide services that the LEA was required to make available under other Federal, State or local laws. Perkins—Supplanting

33. Accounting records don’t agree with payment requests or FERs • Funds obligated and expended outside of the period of availability • Funds used for unallowable costs • Time and effort reporting issues • Inadequate stipend/extra-duty pay documentation • Equipment inventory issues • Inadequate physical inventory documentation • Consortium agreement issues Perkins Monitoring Findings

34. LEAs must complete the Capital Outlay page in ePeGS to receive prior approval for equipment purchases from the Perkins Grant. • Enter data on CTE program area, description of equipment, unit cost, and quantity. • System totals the amounts entered and populates the data on the Budget grid. ePeGS—Capital Outlay Page

35. LEA must only report FTEs and amounts paid from the Perkins grant. • Enter data on FTEs, salaries, benefits, stipends/extra-duty pay, and substitute pay. • Include explanation of new or increased amounts in FTEs, salaries, and benefits and also explanations of any stipends/extra-duty pay and substitute pay. • System totals the amounts entered and populates the data on the Budget grid. ePeGS—Salaries and Benefits Page

36. Enter data on purchased services and materials & supplies. The data for salaries, benefits, and capital outlay are populated from other pages. • Review budget and actual expenditures monthly or at least quarterly—must ensure good fiscal management. • Accurate budgets are important due to the reporting of expenditures on the payment request and final expenditure report. • Must have funds budgeted in a cell to report an expenditure. • Budget revisions—last date to create a budget revision is April 30. • Budgets are estimates—do not have to agree exactly to how funds are spent. Some budget revisions are not necessary—10% variance. ePeGS—Budget Grid

37. Must report actual cumulative expenditures (by both object code and function code). • Formula used to calculate the payment is: Actual cumulative program year expenditures to date – Amount paid to date. • Funds must be budgeted in a cell before a payment can be requested. • Expenditure cells will be grayed out where $0 has been budgeted. • Must be submitted by the 1st day of the month in order to receive a payment that month. • 10% variance—based on the total budget amount—then compares to program costs subtotal. • Certification statement (CMIA requirement). • Must maintain documentation (i.e. account ledger, accounting report) that supports the payment request. ePeGS—Payment Request

38. Opens July 1 of each year. • Due on or before September 30 of each year. • Must enter actual expenditures—budget amounts are shown above the cells. • Must have an amount budgeted in a cell to allow an expenditure to be reported. • 10% variance—based on the total budget amount—then compares to program costs subtotal. • May serve as the final payment request. • Must maintain documentation (i.e. account ledger, accounting report) that supports the payment request. ePeGS—Final Expenditure Report (FER)

39. The Department will still maintain the Three Cohort Model for monitoring; however, a risk assessment for all LEAs will be performed by the Department on an annual basis (regardless of cohort assignment). • Risk factors will include, but will not be limited to: audit findings, new personnel, prior experience/performance, prior monitoring findings, late reporting, allocation amount, overpayments/refunds, data submission errors, lapsed funds/carryover amounts, financial distress, indications of fraud and abuse, and impending school closures. • Based upon the results of the risk assessment, all LEAs will be categorized as high, moderate, or low risk. • Our Office will notify the LEAs that are identified as high risk. Some of these LEAs will receive an on-site monitoring while the others will complete the self-assessment, receive a phone monitoring, or be required to submit additional documentation through the Tiered Monitoring System. LEAs that are identified as moderate and low risk will only be required to complete the self-assessment, if applicable. Annual Risk Assessment

40. Desk Monitoring—review of Perkins Finance Self-Assessment. • For FY2017, this will be required for Cohort 3. • Access Perkins Finance Self-Assessment through Web Applications—Tiered Monitoring. • Perkins Finance Self-Assessment will be available on October 1, 2016 and due on January 31, 2017. • Responses to the self-assessment should be related to the previous year. • Perkins Finance Self-Assessment will be used to identify any LEAs not complying with requirements. Tiered Monitoring

41. On-Site Monitoring—review of financial records using the Perkins Finance Worksheet. • For FY2017, on-site reviews will be conducted for Cohort 2. • Perkins Finance Report and LEA Corrective Action Plan (CAP) will be completed in the Tiered Monitoring system. • Access On-Site Monitoring through Web Applications—Tiered Monitoring. • LEAs receiving an On-Site Monitoring will be determined by reviewing the Perkins Finance Self-Assessment and a risk-based assessment. Tiered Monitoring

42. Effectiveness Index Formula (EIF) is an incentive-based funding system comprised of two components: placement and enrollment. • The formula uses placement data to calculate 90% of the EIF allocation and enrollment data for the remaining 10%. • Data must be submitted through MOSIS. • Please review data for completeness and accuracy. • Questions on data, please contact Mike Griggs or Connie O’Brien in the Office of Data Management Effectiveness Index Formula

43. EIF allocations consist of: • Base funding ($5,000,000 for area career centers and $1,000,000 for comprehensive high schools). • Surplus funding (unspent funds from various programs and grants at the end of the fiscal year). • Only area career centers receive the surplus funding. Effectiveness Index Formula

44. The last several years, each LEA has received the maximum approved salary reimbursement amount that was established in FY2002. • The maximum amounts were based on the number of FTEs in the approved career education programs at each LEA. • This process will remain the same for FY2017. Secondary Salary Reimbursement

45. The Department uses an Adult/Postsecondary Reporting System to determine the salary reimbursement for adult and postsecondary programs. • Data must be submitted through MOSIS. • Please review data for completeness and accuracy. • Questions on data, please contact Mike Griggs or Connie O’Brien in the Office of Data Management Adult/Postsecondary Salary Reimbursement