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You Should Have Two Handouts… My Slides One Titled “Recommended Reading Library” 1.

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1 You Should Have Two Handouts… My Slides One Titled “Recommended Reading Library” 1

2 Arizona Department of Education Career & Technical Education Section Phoenix, AZ 602-542-5349 2

3 My main “claim to fame” is that I have been around a long time – Everything I say is “Unofficial” or worse… The greater the “Risk” the more you need to check out any answers discussed and “document” the how’s and why’s of the option you choose… 3

4 There has been some type of CTE/Vocational program funded since 1917 (Smith-Hughes Vocational Act) In terms of raw dollars, Perkins is not a major educational grant However, it is still the largest grant targeted at our high-school-age population 4

5 Perkins is “split funded” between the secondary (high school) and the postsecondary (community college) programs The average split nationally is 59.24% secondary & 38.89% postsecondary The postsecondary split ranges from 13.5% low (Delaware) to a 75% high (Guam) The splits are determined by each state 5

6 Perkins has basically been “flat funded” over the past decade The President’s Administration has agreed to the : Elimination of Tech Prep (Title II of Perkins) relative to federal FY 2011 A 3.2% reduction in the federal FY 2011 Basic Grant funds that will become available July 1, 2011 A larger cut in the Basic Grant (Title I of Perkins) federal FY 2012 funding that will become available July 1, 2012. Prior to the 3.2% cut to next years funds, the proposed reduction was 13.9%. (It is not known how the 3.2% cut for next year will be factored into federal FY 2012?) The July, 2012 cuts will trigger the “hold harmless” provisions of Section 111(a)(5) of the Act which is based on fiscal 1998 allocation amounts (and by default 1998 estimated census counts) 6

7 If the hold harmless Perkins provisions aren’t changed, 14 states and territories (that have had relatively small population growth) will see a modest cuts in Basic Grant funding starting July 1, 2012 Everyone else will see larger cuts up to a reduction in Perkins funding for Nevada Nevada population has grown 35.1% since the 2000 census Is a funding cut equitable? The proposed cuts appear to be inversely related to population growth, which does not make sense for a funding formula based on census counts “My gut feeling” is that states counting on small cuts in Perkins funding need to plan on the conservative side 7

8 STATES – Maintenance-of-Effort (MOE) & Dollar-For-Dollar Match YOU HAVE TWO ‘MOE’ REQUIREMENTS – IN THE AGGREGATE (Section 311(b)) YOUR 5% ADMIN FUNDS ALSO HAVE AN MOE REQUIREMENT (Section 323) STATES HAVE A DOLLAR-FOR-DOLLAR ADMINISTRATIVE MATCH REQUIREMENT (Section 112(b)) This is a Perkins 101 session. If you have MOE questions please see me at any time during the conference and we can talk about MOE Cuts in Perkins funding will make it easier for states to meet their Perkins MOE requirements as states also cut CTE funding (Section 311(b)(1)(C) & Section 323(b)) 8

9 9

10 State Allotments Are Census Based 50% “population aged 15 to 19 inclusive, 20% population aged 20 to 24,” etc. Poverty is not factored into the allocations to the states (Section 111(a)(2) ) In-State Allocations – Secondary District census data 70% based on 5-17 census count at or below poverty guidelines 30% total district census data (Section 131 (a)(1-3)) In-State Allocations – Postsecondary Based on Pell Grant recipient and BIE assistance recipient counts within a state and community college district (Section 132 (a)(2)) 10

11 Exceptions - Area CTE/Vocational Schools Most commonly funded via a cooperative agreement, based on the number of students served (Section 131 (e)) Exceptions - Secondary (Section 131(C)) Formula award less than $15k Consortium or waiver approval Exceptions – Postsecondary (Section 132(C)) Formula award less than $50k Consortium or waiver approval A Secondary or Postsecondary “Split” of 15% or less allows for a state to develop its own allocation formula (Section 133(a)(2)) 11

12 GETTING STARTED STATES – Your approved State Plan RECIPIENTS – Your approved Local Application Pitfalls – Just don’t write “something” to get the money State Plan – States follow it, amend it or negotiate a change to avoid the more complicated formal amendment process Local applications – Recipients, follow it or amend it Check your progress and budget at least mid-grant and 90 days before your end date 12

13 Perkins is not an entitlement grant – You have to have one or more programs of sufficient size, scope and quality to warrant the receipt of grant funds If your allocation is $15k or less (Secondary) or $50k or less (Postsecondary) you will need to either – Request and receive a waiver or Enter into a consortium agreement with another district or college Waivers – you need to be able to justify the waiver The recipient has a viable program, and They are not able to enter a consortium due to: Rural isolation No one within a reasonable distance wishes to enter into a consortium with the recipient (Section 131(c)(1-2); Section 132(a)(3-4); Section 132(C); Section 132(C)(2)) 13

14 States – Without an approved State Plan or a Plan judged to be in a “substantially approvable form” a state may not obligate Perkins funds Recipients – Are in the “same boat” – they can’t obligate their new grant funds until their application is “substantially approvable”… Example – A recipient’s new fiscal year begins July 1 st. On July 6 th, in anticipation of school starting, the district buys some badly needed CTE equipment. Their application for the new school year is substantially approved two days later on July 8 th. This district may not use Perkins funds to pay for this equipment – even if the delay is the state’s fault. EDGAR 34 CFR §76.703(d) EDGAR 34 CFR §76.708(a) 14

15 You have your approved application – You’re ready to go and spend your money! What can I spend $$$ on? Again, follow your approved application or plan States – Section 3 Administration, your 5% Admin setaside Section 124 – State Leadership Activities, your 10% setaside Do Not Exceed These Percentages! Recipients – Section 134 – Your Local Plan Section 135 – Local Uses of Funds States, Tribes, K-12 schools – OMB Circular A87 Community Colleges – OMB Circular A21 Charter Schools – (Arizona utilizes OMB Circular A122) In all three, look for the section titled, “Selected Items of Cost” A87 – Appendix B A21 – Section J A122 – Appendix B 15

16 Sole State Agency Carl D Perkins Act Section 112(a)(3) – 5% Administration Section 124 – State Leadership Activities State Approved Plan Under OMB Circular A87 – However, depending on the recipient you are working with you might use OMB Circular A87 (Secondary) OMB Circular A21 (Postsecondary) OMB Circular A122 (Non Profit Charter Schools) State Statutes - Procurement, Capital Assets, Gifts, Travel, Pre-paid costs, Etc. 16

17 Eligible Recipient Secondary Postsecondary Carl D. Perkins Section 135 – Local Uses of Funds & 203 Tech Prep Your Approved Local Plan OMB Circular A-87; Selected Items of Cost OMB Circular A-21; Selected Items of Cost State Statutes - Procurement Capital Assets Gifts Travel Pre-paid costs Carl D. Perkins Section 135 – Local Uses of Funds & 203 Tech Prep Your Approved Local Plan 17

18 General Test of Allowability Fits with your application Allowable per the appropriate OMB Circular Reasonable Allocable Consistently Treated Consistent with your organization’s policies Incurred in accordance with GAAP Not charged elsewhere Adequately Documented.. 18

19 Yes – You must do “time-and-effort” (T&E) reporting Employee works full time on Perkins you – Must ‘certify’ the employee at least semi-annually T&E records must be signed by the employee or a supervisor with first hand knowledge Multiple cost objectives requires regular Personnel Activity Reports (PARs) The cost has to be “allocable” to your Perkins grant After-the-fact reporting Signed by employee Coincide with pay periods; at least monthly SALARIES Secondary, SEAs, Governments, BIE - OMB Circular A87 Appendix B.8.h. Community Colleges OMB Circular A21 Appendix J.10. Non-Profit Charter Schools – OMB Circular A122 Appendix B.8.m. 19

20 EDGAR (34 CFR §80.1) defines equipment as personal property that costs $5,000 or more – The issue has more to do with a state’s inventory requirements (and the associated costs) than the purchase price If your state elects a lower dollar threshold for inventory purposes (or has “stewardship” requirements) you must comply with your state’s lower capitalization limit ( EDGAR 34 CFR § 80.32(b)) The OIG (Office of Inspector General) has been issuing findings relative to items of equipment that are considered “attractive theft” items – cell phones, digital cameras, flat screen monitors, etc. that cost a lot less than $5,000 When is something a supply and not equipment? Use a “reasonable person approach” – Does it have a useful life of a year or more, would you throw it away or repair it, does your own state’s criteria treat it as a supply or equipment? Colleges often won’t budget anything under $5,000 as “capital” – You’ll see terms like “non-capitalized capital”… The issues are more about what line you budget the money on and at what dollar amount do you have to inventory the equipment? EQUIPMENT 20

21 Get it written into your approved application Items like your CTE computer lab Specialized workstations The cost of connecting equipment Etc. Avoid paying for stuff your district typically supplies to all your district’s educational programs – desks, chairs, PCs USE NON-PERKINS FUNDING WHERE POSSIBLE Trade Perkins-funded CTE costs for those CTE costs funded with non-federal $$$ Pursue donated equipment where possible EQUIPMENT CONT. 21

22 Little guidance – the Feds typically refer you back to 34 CFR §403.71(c) – The last regulatory guidance for Perkins, under Perkins I Allowed – Instructional related costs (very narrow) Disallowed – All the fun stuff… STUDENT ORGANIZATIONS States – Section 124(c)(4) Local Recipients – Section 135(c)(5) 22

23 (i)Lodging, feeding, conveying, or furnishing transportation to conventions or other forms of social assemblage; (ii) Purchase of supplies, jackets, and other effects for students' personal ownership; (iii) Cost of non-instructional activities such as athletic, social, or recreational events; (iv) Printing and disseminating non-instructional newsletters; (v) Purchase of awards for recognition of students, advisors, and other individuals; or (vi) Payment of membership dues; (d) Leadership and instructional programs in technology education; and (e) Data collection. (3) The support of vocational student organizations may not include— My guess, they mean, non-instructional, out-of-the-classroom-type activities that don’t meet the conditions of 34 CFR § 403.71(c)(2)(iv) & – “all students…” 23

24 Alcohol Entertainment expense Awards (gifts) Promotional items (freebies) Promotional advertising NOT ALLOWED OMB A87 B.3; OMB A21 J.3 OMB A87 B.14; OMB A21 J.17 OMB A87 B.20; OMB A21 J.22 OMB A87 B.1.f.(3); OMB A21 J.1.f(3) OMB A87 B.1.f(4); OMB A21 J.1.f(4) 24

25 “NO” Unless it is related to – Approved travel (subject to your state’s per diem guidelines) Included in your approved registration Not considered entertainment Included as part of an approved conference or meeting (attending or sponsoring) A consumable training supply (culinary arts) Alcohol never allowed Read Goods or services for personal use – A87 Attachment B.20 & A21 Section J. 22. FOOD & BEVERAGES OMB A87 B.3; OMB A21 J.3 OMB A87 B.14; OMB A21 J.17 OMB A87 B.27; OMB J.32 OMB A87 B.43; OMB J.53 25

26 Travel is allowable when it supports your approved grant or plan Meals, lodging, all the usual stuff is allowable, when approved Should be reasonable DOES NOT INCLUDE ENTERTAINMENT COST What about those conferences where entertainment is included in the registration fee? It’s your state’s call… If the cost is separate and identifiable and the employee wants to participate they must cover the cost out of their own pocket OMB A87 Attachment B.43 or OMB A21 Section J.53 TRAVEL FOOD & BEVERAGES 26

27 OMB A87 B.27 (Comparable language in OMB A21 J.32) “Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental facilities, speaker’s fees, and other items incidental to such meetings or conferences. See OMB A87 B.14; OMB A21 J.17, “Entertainment Costs”. Must be reasonable Must be able to stand the, “Would you like to see this on the front page of your local paper?” test Does NOT include internal staff meetings MEETINGS & CONFERENCES/FOOD & BEVERAGES 27

28 Prepaid Fees – Early Registration Are they a professional service cost or a travel cost? Prepaid registration fees can lead to accounting headaches related to the issue of, “When is a cost incurred” (See EDGAR 34 CFR §76.707) May need to transfer the expense from one fiscal year to the next if the fee is paid prior to the fiscal year in which the activity will occur MEETINGS & CONFERENCES/FOOD & BEVERAGES 28

29 Memberships for a state or district are OK. For example the cost would be OK for your State CTE Director’s position, regardless of who the individual is – but not for the individual who is the CTE State Director Must be “allocable” to your Perkins project or plan Use the “reasonable person” approach It is recommended that you utilize your procurement system procedures if you are looking at a - Significant cost Sole source provider (speakers, intellectual property, copyrighted, etc.) MEMBERSHIPS, SUBCRIPTIONS & PROFESSIONAL ACTIVITY COSTS 29

30 Awards or Gifts -Typically Not Allowed However you can purchase nice frames through your approved state or local office supply contract, print out a nice certificate on your color laser printer and hand the result to folks… Hand out donated items from your state’s Chamber of Commerce, local industry groups, etc. AWARDS OMB A87 B.1.f(3); OMB A21 J.1.f(3) OMB A87 B.20; OMB A21 J.22 30

31 Promotional items (freebies) Promotional advertising Do Not Use Perkins Funds For - The Most Common Ways To Cover Such Costs – At a state-wide level - Conference registration fees and conference accounts Districts - Many states allow districts to maintain extra curricular programs, student activity accounts - Some states even allow for tax credits for donations made Outside groups, professional organizations, etc. 31

32 The most common problems, goofs! 32


34 OUR APPLICATION WAS APPROVED – WE’RE GETTING THE MONEY – “LIFE IS GOOD” & I AM DONE! Review it at least at the 6 and 9 month points. Follow it, or AMEND IT The OMB Circular A133 CTE Supplement – 4-84.048 (15 pgs.) 34

35 PROCUREMENT – INADEQUATE DOCUMENTATION If your procurement shop or business office are not known for their attention to details - Cover your “butt” FAILURE TO COMPLY WITH YOUR OWN STATE’S PROCUREMENT RULES Bidding and quotation requirements Government credit card (PCard) problems Don’t sign anything unless you are authorized by your agency, district or college to obligate them Inadequate internal controls Professional Service Contracts - Check the federal “Debarment” website. If your vendor is on there you can’t use them (OMB Circular A133 §___.220 35

36 PROPERTY MANAGEMENT ISSUES – An inventory system that does not meet your own state’s property management requirements If you have to, keep your own set of documents Purchase orders Receiving documents A mini-inventory, with item location info Keep it current Does your state have a lower dollar threshold? Does it have “stewardship” requirements? You need to put special procedures in place for items that cost less than $5K but are high-theft items Do your approved purchases agree with your approved application? Does your annual fiscal completion report reconcile to your actual purchases? 36

37 TIME AND EFFORT – Personnel Activity Reports (PAR) Nationally there have been some significant questioned cost audit findings – in the $100K plus range… Key factors – First, you have a time and effort reporting system in place; not just an attendance (time clock) reporting system Your system accurately reflects the activities for which the employee is paid You are reporting after-the-fact It’s signed by the employee There is a suitable means of verification 37

38 TIME AND EFFORT - A semiannual certification is acceptable for an employee that only works on Perkins (one cost center) Your system accounts for the full time for which the employee is paid If an employee works on more than one cost center their activity must be reported at least monthly and must coincide with the employee’s pay period A red light to an auditor – time reported spent exactly as budgeted… In rare cases payments could be on a budgeted basis Reconciled quarterly Within 10% of actual 38

39 TIME AND EFFORT - Monthly Report, Certifications… for community colleges? Where does it say that? Circulars A87 and A122 are easier to read. For community college recipients, I recommend the following paragraph, OMB Circular A21 Section J.10.c.(2)(e)… “(e) For professorial and professional staff, the reports will be prepared each academic term, but no less than every six months. For other employees, unless alternate arrangements are agreed to, the reports will be prepared no less frequently than monthly and will coincide with one or more pay periods.” (AZ Examples – Select Federal Fiscal requirements) 39

40 Also on the list of “frequent” new audit findings – “States need to do fiscal monitoring” (EDGAR 34 CFR §80.40) Your folks don’t need to be auditors If they find something that “doesn’t look right”, then you can send in real auditors Build fiscal questions into your monitoring tool – Compare actual activities to their approved application Compare equipment purchases to their reported end-of-year equipment purchase documents - Compare to P.O.s and receiving documents; did it end up on their inventory; check to see if you can physically locate a couple of items from their inventory on a sample basis Are they paying salaries? Ask to see either the employee’s semiannual certification or a personnel activity report (PAR) Purchased professional services – Did they check the federal debarment website? Etc. New audit findings for States - No FISCAL MONITORING… RISK BASED… 40

41 Our fiscal folk’s rank is based on – The amount of money awarded Other audit reports On-time reporting Cash management issues Only one or two approved programs This information is then supplied to our program staff who have their own weighting system based on program staff input and ratings New audit findings for States - Monitoring needs to be RISK BASED… 41

42 You need to argue your point as to why you should not have to return funds before the final audit exit conference State your case. Find alternate documentation. Reconstruct what is needed, etc. Agree to put corrections in place, but try like heck to talk them out of returning $$$ MAKE SURE THAT YOUR ADMINISTRATION GIVES YOU INPUT INTO DECISIONS THAT AFFECT CTE! 42

43 Questions? 43

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