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Tennessee Summer CTE Conference “Beltway Politics on the Future of CTE” July 16, 2008 Michael Brustein, Esq. Brustein & Manasevit 3105 South Street, NW Washington, DC 20007 (202) 965-3652 www.bruman.com mbrustein@bruman.com Bush’s “Lame Duck” Status has Resulted in Beltway Paralysis

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tennessee summer cte conference beltway politics on the future of cte july 16 2008

Tennessee Summer CTE Conference“Beltway Politics on the Future of CTE”July 16, 2008

Michael Brustein, Esq.

Brustein & Manasevit

3105 South Street, NW

Washington, DC 20007

(202) 965-3652

www.bruman.com

mbrustein@bruman.com

fy08 review veto omnibus
FY08 Review: Veto & Omnibus

Democrats sought over $20 billion above the President’s request, and increases for education programs.

Congress could not override Presidential veto.

The final bill contains only a few key increases:

Title I: Up $1.2 billion to $14 billion;

Special Education: Up $285.5 million to $12 billion;

Pell Grants: Up $544 million to $14.2 billion;

School Improvement Grants: Up $366 million to $491 million (a 293% increase), among others

fy08 review veto omnibus6
FY08 Review: Veto & Omnibus

And a number of cuts:

Reading First;

Career and Technical Education;

Title V Innovative Programs;

Safe & Drug Free Schools;

Even Start, and others.

All of the programs in the omnibus bill received an across the board cut of 1.747% from the already agreed upon levels.

president s fy09 request
President’s FY09 Request
  • “President proposes and Congress disposes.” – Secretary Spellings
  • Feb. 4: President requested a $3.1 trillion budget:
    • $59.2 billion for U.S. Dept. of Education;
    • $24.5 billion for NCLB;
    • Eliminates 47 ED Programs for a requested savings of $3.3 billion;
president s fy09 request8
President’s FY09 Request
  • 47 ED programs would be zeroed under the proposed FY09 Budget, including:
    • Career & Technical Education;
    • Tech Prep;
    • Arts in Education;
    • Advanced Placement;
    • Even Start, and others.
congressional budget act 302 a
Congressional Budget Act 302(a)

House FY09 Budget resolution:

$7.1 billion increase over the President’s request and about 9% over FY08 for “function 500” spending, (Labor, HHS and Education).

Senate FY09 Budget Resolution:

$5.4 billion over the President’s request and an 8% increase over fiscal year 2008 levels for Labor, HHS and Education).

reactions
Reactions
  • Democrats criticize President’s budget for continuing to ignore domestic priorities.
      • “Because either ... Clinton or Obama will be president in less than a year, if we have to delay with a [continuing resolution] next year, we'll deal with it," speculated Senate Majority Leader Harry Reid (NV).
reactions11
Reactions

“I’m not about to waste the time of this committee with a needless eight-month scramble over money if the president continues to stick by his original requests…. I want to work things out now or wait until a new president comes to act like an adult.” - House Appropriations Chairman David Obey (D-WI), House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, Feb. 27, 2008

reactions12
Reactions

President Bush will reject any bill exceeding the Administration's request:

“I want to reiterate that appropriations bills that exceed the president's reasonable and responsible spending levels will be met with a veto," OMB Director Jim Nussle told the appropriators in March.

how does the bush administration justify zero funding for cte

How does the Bush Administration justify ZERO funding for CTE?

“We are all about the same endeavor. How we arrive there is where we are going to disagree.”

-Troy Justesen, March 2008

slide14

Based on poor ratings (ineffective) for Perkins under the OMB Program Assessment Rating Tool (PART), funds should be dedicated to improving high school education through NCLB

slide15
So How has the Federal role in CTE changed?
  • Is OVAE the “Engine” driving the train?
what are the key implementation issues of perkins iv
What are the Key Implementation Issues of Perkins IV?
  • Opting out of Perkins
  • Unfunded Mandate
  • Remedial Courses
  • Direct Assistance to Students
  • Allocability
  • Supplanting
  • Support for Student Organizations
can my district institution opt out of perkins iv

Can my District / Institution opt out of Perkins IV?

Section 8(b) “no preclusion of other assistance”

unfunded mandates section 8 a

Unfunded Mandates (Section 8(a))

No employee of the Federal Government shall mandate a State or any subdivision thereof to spend any funds or incur any costs not paid for under this Act.

Who pays for 3rd party skills assessments?

prohibition on developmental remedial courses a 44 year change in federal policy

Prohibition on Developmental / Remedial CoursesA 44 Year Change in Federal Policy

Can tutoring be provided to “special population” students?

slide20

“Assistance may only be provided to an individual to the extent it is needed to address barriers to the individual’s successful participation in CTE.”-Congressional Record H5807 (7/25/06)

may direct assistance be provided to special populations
May Direct Assistance be provided to Special Populations?

“Special populations may need direct assistance to be able to participate successfully in CTE. These supportive services include such services as transportation, child care, dependent care, tuition, books, supplies, etc.”

-Congressional Record H5806

(7/25/06)

burden on eligible recipient to identify cte students and apply a 87 allocability to
Burden on Eligible Recipient to Identify CTE students, and apply A-87 “Allocability” to:
  • Salaries
  • Equipment
  • Supplies
  • Curriculum Development
  • Professional Development
supplement not supplant24
Supplement, NOT Supplant
  • Cannot use federal funds to pay for services, staff, programs, or materials that would otherwise be paid with state or local funds
  • Always ask: “What would have happened in the absence of federal funds?”
supplement not supplant cont
Supplement, NOT Supplant, cont…
  • A-133 Compliance Supplement presumes supplanting in 2 situations:
      • Used federal funds to provide services the SEA or LEA is required to make available under other federal, state or local laws
      • Used federal funds to provide services the SEA or LEA provided with state or local funds in the prior year
supplement not supplant cont26
Supplement, NOT Supplant, cont…
  • Presumption may be rebutted:
    • If SEA or LEA demonstrates it would have not provided the services with state or local funds if the federal funds were not available
supplement not supplant cont27
Supplement, NOT Supplant, cont…
  • To rebut presumption show:
    • Fiscal or programmatic documentation to confirm that, in the absence of federal funds, would have eliminated staff/services in question.
    • State or local legislative action
    • Budget histories and information
a road map to former regulations on student organizations

A Road Map to former Regulations on Student Organizations

104.513 Activities of Vocational Education Student Organizations

slide29
(a) State may use funds under its basic grant to support activities of vocational education student organizations which are described in its approved Five-Year Plan and annual program plan and which are:
slide30
An integral part of the vocational instruction offered
  • Supervised by vocational education personnel who are qualified in the occupational area which the student organization represents; and
slide31
Available to all students in the instructional program without regard to membership in any student organization.

(b) An integral part of vocational instructional:

slide32
(1) Training in an organized educational program which is directly related to the preparation of individuals for paid or unpaid employment in a career requiring other than a baccalaureate or higher degree; or

(2) Field or laboratory work incident to the vocational training; or

slide33
(3) Development and acquisition of instructional materials, supplies, and equipment for instructional services.
  • (c) An integral part of vocational instruction does not include:

(1) Lodging, feeding, conveying, or furnishing transportation to conventions or other forms of social assemblage;

slide34
(2) Purchase of supplies, jackets, and other effects for students’ personal ownership;

(3) Cost of non-instructional activities such as athletic, social, or recreational events;

(4) Printing and disseminating non-instructional newsletters;

slide35
(5) Purchase of awards for recognition of students, advisors, and other individuals; or

(6) Payment of membership dues.

slide36
USDE is relying less on Single Audits and more on conducting their OWN monitoring reviews of Internal Controls of Grantees/Subgrantees
slide37
New Risk Management Initiatives

“Risk Never Sleeps”

new in a 133
New in A-133
  • Stricter audit standards beginning FY 2007!
    • For every compliance requirement selected for audit, the auditor must assess the likelihood of whether agency’s internal controls can prevent and detect noncompliance that is “more than inconsequential” from occurring in a timely manner
    • Materiality threshold lowered

Bottom line: More internal control findings!

significant changes in ed monitoring

Significant Changes in ED Monitoring

OCFO will take Responsibility for Fiscal Side

grant administration
Grant Administration
  • Three major “systems” in grants management:
    • Financial management
    • Procurement
    • Inventory management
what rules apply
What Rules Apply?
  • State and local agencies must use fiscal control and fund accounting procedures that will ensure the proper disbursement of, and accounting for, federal funds
    • Section 441 of GEPA (general assurances)
    • Section 76.702 of EDGAR
what does that mean
What Does that Mean?
  • All recipients of federal funds must be able to:
    • Spend federal money correctly; and
    • Prove that they spent federal money correctly
financial management common problems
Financial Management: Common Problems
  • Controlling allowable costs
  • Clear record trail
  • Cash management
potential solutions allowable costs
Potential Solutions:Allowable Costs
  • Lists of allowable/unallowable costs
    • Florida – Reference Guide for State Expenditures: http://www.fldfs.com/aadir/reference_guide/
    • Tulane University – Policy for Unallowable Cost Categories: http://www.tulane.edu/~tams/forms/instructions/unallowable.pdf
potential solutions allowable costs cont
Potential Solutions:Allowable Costs (cont.)
  • Checklists
    • Is the cost consistent with federal cost principles
    • Is the cost allowable under the relevant federal program
    • Is the cost consistent with program specific fiscal rules
    • Is the cost consistent with EDGAR/special conditions imposed on the grant
potential solutions allowable costs cont49
Potential Solutions:Allowable Costs (cont.)
  • Guidance to subgrantees:
    • Ohio – Uses of Funds Manuals: https://ccip.ode.state.oh.us/ccip/doclib/doclib_group.asp?DocGroupID=1638
practical solutions allowable costs cont
Practical Solutions:Allowable Costs (cont.)
  • Strong application/budget process
    • Link program elements to use of funds
potential solutions clear record trail
Potential Solutions:Clear Record Trail
  • Roadmap identifying where documents should be maintained/for how long
    • Carnegie Mellon – Policy for Financial Records Retention: http://www.cmu.edu/policies/documents/FinancialRecords.html
    • Note federal law requires records to be maintained for 3 years, but statute of limitations on the recovery of funds is 5 years!
procurement

Procurement

Common Problems

Potential Solutions

procurement common problems
Procurement: Common Problems
  • Controls over purchase orders
  • Lack of descriptions in contracts/invoices
  • Lack of approval over payment process
potential solutions procurement issues
Potential Solutions:Procurement Issues
  • Policies/procedures:
    • University of Rochester – Purchase Order Types: http://nces.ed.gov/pubs2004/h2r2/appendixE.asp
  • Monitoring – even when monitoring is done by program officials!
    • Louisiana – Compliance Monitoring Procedures: http://doa.louisiana.gov/osr/lac/28v91/28v91.doc#_Toc148946300
inventory management

Inventory Management

Common Problems

Potential Solutions

inventory management common problem
Inventory Management:Common Problem
  • Determining between “equipment” and “supply”
  • Determining level of control over item
  • Tracking non-equipment items
potential solution determining level of control
Potential Solution:Determining Level of Control
  • NCES Manual – Financial Accounting for State and Local School Systems: http://nces.ed.gov/pubs2004/h2r2/appendixE.asp
    • Needs assessment – risk of loss, value of item
    • Divide assets into categories
      • Little control needed
      • Group control
      • Individual control
potential solutions tracking non equipment items
Potential Solutions:Tracking non-equipment items
  • Small and attractive item list:
    • Washington – State Administrative and Accounting Manual: http://www.ofm.wa.gov/policy/30.40.htm
      • Conduct risk assessment to identify items susceptible to loss
      • Implement specific measures to control such items
      • Certain pre-defined assets (IT equipment)
life cycle of the federal dollar the period for obligations liquidations and carryover

Life Cycle of the Federal Dollar – The Period for Obligations, Liquidations, and Carryover

obligations

Obligations

Definition

Period of Availability

Linking Obligations to FundsCost Allocation

obligations definition
Obligations: Definition
  • Obligation = Transaction that requires payment
obligations period of availability
Obligations: Period of Availability
  • Every grant has a “period of availability” = period in which grantee can obligate funds
    • Therefore, must be able to relate all costs to a specific transaction that occurred during the period of availability
  • Substantial difference between discretionary and formula funds
obligations period of availability65
Obligations: Period of Availability
  • Grantees and subgrantees may begin to obligate funds when:
    • Statutory start date (typically July 1st)

AND

    • Awarding agency approves application, or
    • Awarding agency determines application is “substantially approvable”
      • Reimbursement subject to final approval
liquidations

Liquidations

Drawdown

Payment

Cash Management

liquidation definition
Liquidation: Definition
  • Liquidation = Settle an obligation by paying funds
liquidations timeline
Liquidations: Timeline
  • Must liquidate all obligations within 90 days after the end of the period of availability
    • Example:
      • Period of availability: July 1 – September 30
      • Liquidation period ends: December 30
    • State may impose shorter deadline on LEAs
  • ED may extend this deadline
    • But only to liquidate valid & timely obligations
slide70
This presentation is intended solely to provide general information and does not constitute legal advice. Attendance at the presentation or later review of these printed materials does not create an attorney-client relationship with Brustein & Manasevit. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.