1. FFATA, Section1512 Reporting and ARRA Monitoring Steven Spillan sspillan@bruman.com Brustein & Manasevit, PLLC Spring Forum 2011 1

2. SFSF: Refresher – 4 Core Reform Priorities  In order to receive SFSF funding, states provided assurances to advance four core areas of education reform: (1) increase teacher effectiveness and address inequities in the distribution of highly qualified teachers; (2) establish a pre-K-through-college data system to track student progress and foster improvement; (3) make progress toward rigorous college- and career-ready standards and high-quality assessments that are valid and reliable for all students, including students with limited English proficiency and students with disabilities; and (4) provide targeted, intensive support and effective interventions to turn around schools identified for corrective action or restructuring. 2

3. SFSF: Refresher – Federal Education Activities  Subject to limited statutory prohibitions, a Local Educational Agency (LEA) may use Education Stabilization funds for any activity that is authorized under the following Federal education acts: The Elementary and Secondary Education Act of 1965 (ESEA); ○ Under Impact Aid authority, an LEA may use Education Stabilization funds for educational purposes consistent with State and local requirements, subject to ARRA and other applicable Federal requirements. The Individuals with Disabilities Education Act (IDEA); The Adult Education and Family Literacy Act (AEFLA); or The Carl D. Perkins Career and Technical Education Act of 2006 (Perkins Act). 3

4. SFSF: Refresher – State Maintenance of Effort (MOE)  A State must maintain State support for elementary and secondary education, in each of fiscal years (FYs) 2009, 2010, 2011, at least at the level that the State provided in FY 2006.  Same rule for supporting public Institutions of Higher Education (IHEs) 4

5. SFSF: Refresher – State MOE Waiver  The ARRA authorizes the Secretary of Education to waive these MOE requirements if a State demonstrates that: It has provided for elementary, secondary, and public higher education, for the fiscal year under consideration, a % of the total revenues available to the State that is equal to or greater than the percentage provided for that purpose in the preceding fiscal year. 5

6. SFSF: Refresher – Track and Account!  An entity that receives SFSF funds must maintain records that separately track and account for those funds.  In accordance with the requirements of Section 443(a) of GEPA (20 U.S.C. §1232f (a)): Each recipient of SFSF funds must maintain records that fully disclose how those funds were used, the total cost of the activity for which the funds were used, the share of that cost provided by other sources, and such other records as will facilitate an effective audit. 6

7. SFSF: Refresher – Time & Effort  There are no specific Federal time and effort requirements that apply to individuals whose salaries may be supported with SFSF funds.  Entities must maintain documentation to support the time & effort of these individuals in the same manner that it supports the time and effort of individuals performing similar duties who are paid with State or local funds. 7

8. SFSF: Refresher - 1512  Under section 1512 of ARRA, recipients of SFSF funds must submit a quarterly report that describes, among other things, how the entity used those funds.  For purposes of reporting under section 1512 of ARRA, an entity must report expenditures under the CFDA number under which the SFSF funds are awarded (i.e., 84.394 or 84.397). 8

9. ARRA Reporting Key Guidance ED Clarifying Guidance on Recovery Act Section 1512 Quarterly Reporting (Revised—April 2, 2010), http://www2.ed.gov/policy/gen/leg/recovery/section-1512.html http://www2.ed.gov/policy/gen/leg/recovery/section-1512.html Government-wide guidance for reporting under the requirements of Section 1512 of the Recovery Act was published by the Office of Management and Budget (OMB) on June 22, 2009. (OMB M-09-21) Please see: Guidance on reporting, http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09- 21.pdf http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09- 21.pdf OMB, M-10-14, Updated Guidance on the American Recovery and Reinvestment Act (March 22, 2010) (including “continuous corrections” period). 9

10. ARRA Reporting Structure 10

11. 11 ARRA Reporting Timelines 11

12. 12 ARRA Reporting Timelines 12

13. 13  In January 2010, the Recovery Accountability and Transparency Board (RATB) modified the process for correcting data in FederalReporting.gov by initiating a “continuous corrections” period.  Recipients can correct reported data for the immediately preceding reporting quarter after that reporting quarter has ended and after the data is published on FederalReporting.gov. ARRA Reporting Timelines Source: OMB M-10-14, March 22, 2010

14. 14  The prime recipients are non-Federal entities that receive Recovery Act funding as Federal awards in the form of grants, loans, or cooperative agreements directly from the Federal government. Federal agencies are not considered prime- or sub- recipients.  The movement of Recovery Act funds between Federal agencies is not subject to Section 1512 reporting. ARRA Reporting Roles Source: OMB M-09-21, June 22, 2009

15. 15  A sub-recipient is a non-Federal entity that expends Federal awards received from another entity to carry out a Federal program but does not include an individual who is a beneficiary of such a program.  Non-Federal entities that are awarded Recovery funding through a legal instrument from the prime recipient to support the performance of any portion of the substantive project or program for which the prime recipient received the Recovery funding. ARRA Reporting Roles Source: OMB M-09-21, June 22, 2009

16. 16  A vendor is defined as a dealer, distributor, merchant, or other seller providing goods or services that is required for the conduct of a Federal program.  Prime recipients or sub-recipients may purchase goods or services needed to carry out the project or program from vendors.  Vendors are not awarded funds by the same means as sub-recipients and are not subject to the terms and conditions of the Federal financial assistance award. ARRA Reporting Roles Source: OMB M-09-21, June 22, 2009, see also Circular A-133

17. The prime recipient is ultimately responsible for the reporting of all data required by Section 1512 of the Recovery Act and this Guidance, including the Federal Funding Accountability and Transparency Act (FFATA) data elements for the sub-recipients of the prime recipient required under Sec. 1512(c)(4). Source: OMB M-09-21, June 22, 2009 ARRA Reporting Roles 17

18. Delegation: the prime recipient may require the sub-recipients to report the FFATA data elements required under Sec. 1512(c)(4). BUT…the prime recipient needs to collect data about sub-recipients’ jobs created & retained, and sub-recipients’ infrastructure investments. These fields are only in the prime recipient report. ARRA Reporting Roles 18

19. 19  Key reporting requirements: Section 1512 quarterly reporting applies to all ARRA funds “recipients” List of Programs Subject to Recipient Reporting, available in OMB Guidance Memorandum 09-21- supp1.  Exceptions: Division B of ARRA not required to report Mandatory programs Individuals receiving awards ARRA Reporting Exception

20. ARRA Reporting: Jobs  Description of Jobs Created or Retained Prime recipients are required to generate estimates of job impact by directly collecting specific data from sub- recipients and vendors on the total FTE resulting from the sub-award MAY NOT BE DELGATED to sub- recipient, and it includes vendor information. 20

21. 21 ARRA Jobs Saved! U.S. Department of Education American Recovery and Reinvestment Act Report: Summary of Programs and State-by-State Data, November 2, 2009

22. 22  Overall, about 400,000 jobs were retained or created through the education funding. According to figures given to the federal government by the states, 325,000 were education jobs -- teachers, principals and other educators -- and an additional 75,000 were other public service positions. - “ Education jobs boost connected to stimulus,” Washington Post, Tuesday, November 3, 2009 ARRA Jobs Saved! “ ”

23. 23  [E]conomic recovery program saved 935 jobs at the Southwest Georgia Community Action Council, an impressive success story for the stimulus plan. Trouble is, only 508 people work there. …” - "Stimulus Watch: Salary raise counted as saved job," Associated Press, November 4, 2009. ARRA Jobs Saved?

24. 24  One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But … the college made a mistake and the actual number of new jobs was ‘almost nothing’’ …. - "Stimulus job boost in state exaggerated, review finds," Boston Globe, Nov. 11, 2009. ARRA Jobs Saved? ” “

25.  Updated guidance changes the job estimate calculation  Recipient will now report job estimate totals by: dividing the hours worked in the reporting quarter (i.e., the most recent quarter) by the hours in a full-time schedule in that quarter.  Recipients will no longer be required to sum across multiple quarters of data as part of the formula. 25 ARRA Reporting: Jobs

26.  The updated guidance eliminates this subjective “indirect job” assessment and defines jobs created or retained as those funded in the quarter by the Recovery Act. Jobs funded with non-Recovery Act funds will not be counted unless they will be reimbursed. Jobs funded partially with Recovery Act funds will only be counted based on the proportion funded by the Recovery Act. 26 ARRA Reporting: Jobs

27. 27 ARRA Reporting: Jobs Source: OMB M-10-08, Updated Guidance on the American Recovery and Reinvestment Act – Data Quality, Non-Reporting Recipients, and Reporting of Job Estimates (Dec. 18, 2009)

28. 28 Source: Id.

29. 29

30.  The $25,000 vendor payment trigger: If any payments less than $25,000 from a grant or subgrant, then the data may be aggregated into a category of total number and amount of payments. More detailed reporting required only if a single payment is for $25,000 or more. The full costs of the contract are not considered. 30 ARRA Reporting: Vendor

31.  Data quality is an important responsibility of key stakeholders identified in the Recovery Act.  Prime recipients, as owners of the data submitted, have the principal responsibility for the quality of the information submitted.  Sub-recipients delegated to report on behalf of prime recipients share in this responsibility. ARRA Reporting Data Quality 31 Source: OMB M-09-21, June 22, 2009, revised by M-10-14, March 22, 2010

32.  Data quality reviews are intended to emphasize the avoidance of two key data problems:  Material omissions,  Significant reporting errors, and  Administrative/Technical (NEW).  Data quality means accuracy, completeness and timely reporting of information. Source: OMB M-09-21, June 22, 2009, revised by M-10-14, March 22, 2010 ARRA Reporting Data Quality 32

33.  Penalties!  On a case-by-case basis, findings of systematic or chronic problems can result in termination of Federal funding and/or initiation of suspension and debarment proceedings of either the recipient or sub-recipient, or both.  In some cases, intentional reporting of false information can result in civil and/or criminal penalties. Source: OMB M-09-21, June 22, 2009 ARRA Reporting Data Quality 33

34. SFSF: USDE ARRA Monitoring 34

35. SFSF: USDE Monitoring - Fiscal  SFSF monitoring is producing well worn findings… (1) whether services provided in schools receiving ESEA Title I, Part A funding were comparable to those services provided to students in other district schools not receiving ESEA Title I, Part A funding; (2) Whether federal funding had been used to “supplant” local or state funds by paying for services that had previously been provided using local or state funds; or (3) Time and effort documentation regarding employees funded through multiple funding sources. 35

36. SFSF: USDE Monitoring - T&E  OMB Circular A-87 Cost Principles do not apply But expenditures must be “necessary and reasonable” and consistent with state and local requirements. ○ See Guidance for Grantees and Auditors: State Fiscal Stabilization Fund Program (United States Dept. of Ed., Dec. 2009).  Track ARRA funds separately. GEPA Section 443(a) – Maintain records that fully disclose how funds were used, total cost of the activity, share of costs provided by other sources, and such other records to facilitate an effective audit. 36

37. SFSF: USDE Monitoring - Set Aside  Some districts had not included Recovery Act funding in their calculations as required. Title I Part A ARRA set-aside waivers 37

38. SFSF: MOE  State budget issues are apparent: ED has granted two states —NJ & RI — an SFSF MOE waiver. Allows the state to reduce 2009 state support for education below 2006 levels. ○ (P.L. No. 111-5, § 14012 (2009)). ED is reviewing SC’s and FL’s waivers. 38

39. OIG: ARRA - Key Lessons 39

40. OIG: ARRA: 40

41. GAO/OIG Lessons - Not Surprising  SEA/LEA: adequate tracking of funds  SEA: sub recipient monitoring policies and practices  Reporting data accuracy and completion  Better documentation of policies and procedures regarding payroll certification  Better SEA cash management 41

42. OIG – Recent Audit  Recent OIG audit in Oklahoma could lead to $16 million monetary finding.  Moral of the Story: ARRA may be coming to an end, but dangers linger. 42

43. Ed Jobs: Accountability & Reporting  A State and its LEAs must fulfill the reporting requirements under § 1512 of ARRA.  Specifically, the State will submit quarterly reports on its own behalf and on behalf of its LEAs that describe, among other things, how those funds were used. 43

44. Ed Jobs: Accountability & Reporting  States will submit annual reports to the Department for this program that include information on the number of education personnel impacted by the program.  See ARRA § 14008. 44

45. Ed Jobs: Accountability & Reporting  LEAs must ensure that all reported data is properly documented and supported. Supporting documentation should provide an adequate audit trail between reported data and source documents such as: ○ Timesheets, payroll records, invoices, executed contracts, financial system reports and other information stored in grant files. 45

46. Federal Funding Accountability and Transparency Act (FFATA)  Open Government Initiative Applies to contracts and grants awarded on or after Oct. 1, 2010, other than those funded by ARRA. If the initial award is equal to or over $25,000, the prime recipient must report on subaward and executive compensation, if required. Reported at www.fsrs.govwww.fsrs.gov 46

47. FFATA – Who and What  The prime recipient must report on all subawards and subcontracts over $25,000. Info required: Name of entity receiving award Amount of award Funding agency NAICS code for contracts / CFDA program number for grants Program source Award title descriptive of the purpose of the funding action Location of the entity (including congressional district) Place of performance (including congressional district) Unique identifier of the entity and its parent; and Total compensation and names of top five executives (same thresholds as for primes) 47

48. FFATA – Who and What (cont.)  Prime Recipients must report the total compensation and names of the top five executives if: More than 80% of annual gross revenues from the Federal government, and those revenues are greater than $25M annually and Compensation information is not already available through reporting to the SEC. 48

49. FFATA - How  Prime awardees will report using the FFATA Sub-award Reporting System (FSRS). The tool will pre-populate, to the maximum extent possible, recipient information from existing Federal agency databases, such as the Central Contractor Registration System (CCR), to reduce the burden associated with this new FFATA reporting. All Federal contractors and prime grant recipients are required to register in CCR. 49

50. FFATA - Timing  The prime recipient will have until the end of the month plus one additional month after an award or sub-award is obligated to fulfill the reporting requirement. For example, if a sub-award was made on October 15, 2010, the prime recipient has until November 30, 2010 to report the sub-award information. 50

51. FFATA Guidance  OMB: April 6, 2010 memo requiring the reporting of first-tier sub-awards  OMB guidance containing specific instructions on the sub-award reporting on August 27, 2010: http://www.whitehouse.gov/omb/open 51

52. FFATA – Federal Assistance  Despite guidance already released, open questions remain. How to report on grants funded through reimbursements? How much, if any, sub-recipient reporting effort can be required by prime?  Individual federal agencies ill equipped to respond to prime recipient questions.  Full reporting required as of March 1, 2011, so still working on implementation; may be some time before compliance issues arise. 52

53. Resources 53 Education Department General Administrative Regulations (EDGAR) Title 34, Code of Federal Regulations (CFR), Parts 74- 86 and 97-99 December 2008 edition. http://www2.ed.gov/policy/fund/reg/edgarReg/edgar.ht ml FFATA FAQs: https://www.fsrs.gov/#a-faqshttps://www.fsrs.gov/#a-faqs

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