1. Introduction to Title I, Part A Fiscal Requirements Presented by Kristen Tosh Cowan, Esq. ktoshcowan@bruman.com Brustein & Manasevit, PLLC Fall Forum 2011

2. Overview 1) LEA-to-School allocations 2) Set asides 3) Equitable Services allocation 4) Carryover 5) MOE 6) Comparability 7) Supplement not Supplant 8) Reauthorization Predictions 2

3. Valuable Legal Resource “Title I Fiscal Issues” Feb. 2008 www.ed.gov/programs/titleiparta/ fiscalguid.doc Consolidating funds in schoolwide programs, MOE, SNS, Comparability, Grantbacks, Carryover 3

4. LEA-to-School Allocations “Ranking and Serving” Rules 1) Identify Eligible Schools 2) Rank Schools in Order of Poverty 3) Serve Schools Strictly in Accordance with Rank 4

5. STEP 1: IDENTIFY ELIGIBLE SCHOOLS 5

6. Eligible School Attendance Areas Percentage of children from low-income families who reside in area... AT LEAST AS HIGH AS... percentage of children from low-income families in LEA 6

7. LEA Discretion: Eligibility “35 Percent Rule” May designate as eligible Must still serve in order 7

8. LEA Discretion: Eligibility “Grandfathering” option Continue if served last year But, only continue for one year 8

9. 5 Poverty Measures: 1. Census data 2. Free and reduced lunch 3. TANF 4. Medicaid eligibility 5. Composite of above 9

10. STEP 2: RANK ELIGIBLE SCHOOLS IN ORDER OF POVERTY 10

11. Ranking and Serving Exceeding 75% poverty Strictly by poverty Without regard to gradespan At or below 75% poverty May rank by gradespan 11

12. Exception: NO Rank & Serve if Small LEA exclusion If <1000 students One school at each gradespan 12

13. STEP 3: SERVE SCHOOLS STRICTLY IN ORDER OF RANK 13

14. Allocation to Schools NOTE: first, reserve set-asides Allocate to schools based on total # of students from low income families residing in area (including nonpublic) Discretion on amount of PPA Higher PPAs must be in higher schools on ranked list 14

15. Allocations given without regard to schoolwide or targeted assistance model Title I funding...... To serve school based on poverty... To serve student based on academics

16. Title I Set-Asides

17. LEA MUST reserve specific percentage: 20% choice transportation and SES 1% parental involvement 10% professional development (if LEA ID) 17

18. LEA MUST reserve but not specific percentage: Administration (public and private) Homeless Neglected & delinquent 18

19. LEA MAY reserve: Incentives to teachers in ID schools (<5%) Professional development “other authorized activities” Summer school Preschool Districtwide program 19

20. CAUTION: DON’T CIRCUMVENT “RANKING AND SERVING” RULES!

21. Funds for Supp Ed Services and Choice Transportation Amount equal to 20% of LEA allocation (unless lesser amount needed) To pay transportation for choice To satisfy all requests for SES services Both 21

22. Credit for “Parent Outreach” Allow limited amount of funds for “parent outreach” to count toward 20% Capped at 0.2% of LEA Part A grant May spend more for outreach, but only 0.2% counts toward 20% EX. – $1 million LEA grant; 20% = $200,000 0.2% = $2,000 can count toward $200,000 22

23. What costs count as “parent outreach”? Parent notices, communication through the media, internet, and community, displaying information on LEA’s website, and parent fairs Allowance, not a requirement 23

24. Use 20% “unless a lesser amount is needed” How do you know if less is needed? 24

25. To spend less than 20%, LEA must: 200.48(d)(2)(i) 1. Partner, to extent practicable, with outside groups (CBO, FBO, etc.) 2. Send timely, accurate notice to parents 3. Ensure SES sign-up forms given directly to all eligible students/parents 4. Ensure SES sign-up forms made widely available through broad dissemination (Internet, other media, public agencies) 25

26. 5. Provide (at a minimum) two enrollment windows at separate points in school year of sufficient length 6. Ensure SES providers are given access to school facilities, using a fair, open and objective process, on same basis as others 26

27. Does LEA need SEA’s permission before reallocating the 20%? NO! 27

28. LEA must document and notify SEA! Before reallocating remainder of 20%, LEA must: Maintain records demonstrating it has met criteria Notify the SEA that it met criteria Notify SEA of amount of remainder it intends to spend on other allowable activities 28

29. Set Aside for Parent Involvement For LEAs with Part A allocations >$500,000 1% minimum reserved Proportional amount to private students 95% of remainder to schools 5% of remainder kept at LEA 29

30. Equitable Services for Private School Students

31. 31 Equitable Services: Deriving Allocation General Formula: Based on number of: 1. Private school students 2. From low-income families 3. Who reside in Title I-participating public school attendance areas

32. 32 Calculate Allocation for Instruction: 1. Identify eligible school attendance areas 2. Rank in order of poverty 3. Strictly serve in rank order (i.e., ID who is “Participating Public School”) 4. Calculate PPA for each area 5. Derive allocation amount for each area must include nonpublic low-income # 6. Reserve nonpublic amount PPA x # of nonpublic low-income students who reside in participating public sch area

33. 33 Reservation for districtwide instruction If LEA reserves for “districtwide instructional programs for public elementary and secondary” Then proportional amount goes to nonpublic 34 CFR sect 200.64(a)(2)(i)(A)

34. 34 Example LEA reserves $500,000 for districtwide reading initiative Of all low-income in LEA residing in participating attendance areas, 5% are private 5% of $500,000 to private allocation

35. 35 Applies to: Summer school After school programs Reading coaches DOES NOT APPLY TO: SES/Choice (20%) Preschool

36. 36 Reservation for teachers and families If LEA reserves funds for parental involvement or professional development Then proportional amount to nonpublic 34 CFR sect 200.65(a)

37. 37 Example LEA reserves 1% of $1,000,000 allocation for parental involvement ($10,000). Of all low-income families residing in participating attendance area, 6% are private. Then 6% of $10,000 used for families of participating private school students ($600).

38. Carryover

39. General Rule: May carryover up to 15% of Title I, Part A Reallocated by state if exceeds Waiver by SEA once every 3 years NOTE: FY 2009 flexibility 39

40. Use of Carryover Funds Flexible 3 Options: 1. Put back in LEA formula & redistribute 2. Designate for particular LEA activities 3. (Allow school to retain) Cannot use in ineligible school 40

41. 3 Pillars of Fiscal Accountability 1. Maintenance of Effort 2. Supplement not Supplant 3. Comparability

42. Maintenance of Effort Most Directly Affected by Declining Budgets

43. The combined fiscal effort per student or the aggregate expenditures of the LEA From state and local funds From preceding year must not be less than 90% of the second preceding year 43 MOE: The NCLB Rule

44. Need to compare final financial data Compare preceding FY to second preceding FY EX: To receive FY 2011 funds (available July 2011), compare preceding FY (2009-10) to second PFY (2008-09) 44 MOE: Preceding Fiscal Year (PFY)

45. MOE: Failure under NCLB SEA must reduce amount of allocation in the exact proportion by which LEA fails to maintain effort below 90% Reduce all applicable NCLB programs, not just Title I 45

46. 46 Aggregate expenditures Amount per student FY 081,000,0006,100 FY09 – must spend 90% 900,0005,490 09 – Actual amount 850,0005,200 Shortfall-50,000-290 Percent shortfall ** reduction in all ESEA programs -5.6%-5.3%**

47. USDE Secretary may waive for State Exceptional or uncontrollable circumstances such as natural disaster OR Precipitous decline in financial resources of the LEA 47 MOE: Waiver

48. July 2009 Draft Non-Regulatory Guidance SEA may apply for waiver on behalf of LEAs http://www.ed.gov/policy/gen/leg/recovery /programs.html http://www.ed.gov/policy/gen/leg/recovery /programs.html 48

49. Comparability May not be affected by declining non-federal revenue, if treat all schools equally

50. An LEA may receive Title I, Part A funds only if it uses state and local funds to provide services in Title I schools that, taken as a whole, are at least comparable to the services provided in non-Title I schools. If all are Title I schools, all must be “substantially comparable.” 50 General Rule- §1120A(c)

51. Guidance: Must be annual determination Review for current year and make adjustments for current year 51 Timing Issues

52. LEA must file with SEA written assurances of policies for equivalence: LEA-wide salary schedule Teachers, administrators, and other staff Curriculum materials and instructional supplies Must keep records to document implemented and “equivalence achieved” 52 Written Assurances

53. Student/instructional staff ratios; Student/instructional staff salary ratios; Expenditures per pupil; or A resource allocation plan based on student characteristics, such as poverty, LEP, disability, etc. (i.e., by formula) 53 How to show equivalence achieved?

54. Compare: Average of all non-Title I schools to each Title I school 54 How to measure??

55. Average of all non-Title I schools 10:1 For example: Using student/ instructional staff ratios Title I schools: Lincoln: 10:1 Washington: 9:1 Madison: 11:1 Jefferson: 12:1 55

56.  Basis for evaluation:  by similar grade- spans or  by similar size school 56

57. Exclusions: Federal Funds Private Funds 57

58. Exclusions: Need not include unpredictable changes in student enrollment or personnel assignments that occur after the start of a school year 58

59. Staff salary differentials for years of employment 59 Exclusions: LEA may exclude state/local funds expended for:

60. Consistent between Title I and non-Title I Teachers (art, music, physical education), guidance counselors, speech therapists, librarians, social workers, psychologists Paraprofessionals – up to SEA/LEA 60 Who is “instructional staff”?

61. Supplement Not Supplant

62. Federal funds must be used to supplement and in no case supplant state and local resources Supplement not Supplant 62

63. “What would have happened in the absence of these federal funds??” 63

64. Auditors’ Tests for Supplanting OMB Circular A-133 Compliance Supplement

65. #1: Provided with non- federal funds in prior year Auditors presume supplanting occurs if federally funded services were.... 65

66. Presumption Rebutted!  If SEA or LEA demonstrates it would not have provided services if the federal funds were not available  NO state or local resources this year! 66

67. What documentation needed? Fiscal or programmatic documentation to confirm that, in the absence of fed funds, would have eliminated staff or other services in question State or local legislative action Budget histories and information 67

68. 1. Actual reduction in state or local funds 2. Decision to eliminate service/position was made without regard to availability of federal funds (including reason decision was made) Documentation must show: 68

69. #2. Required to be made available under state or local laws Auditors presume supplanting occurs if federal funds were used to provide services... 69

70. USDE assumes state and local officials will work to find a way to comply with a state-mandated requirement. “While it is conceivable that an SEA or LEA could demonstrate that its loss of revenue is so great that it cannot meet a legal requirement, we believe that it typically would be extremely difficult to do so” “The bar for rebutting this presumption is very high” Letter from Asst. Secretary Melendez to Leigh Manasevit, January 2011. Can you rebut this presumption? 70

71. #3. Title I funds used to provide service to Title I students, and the same service is provided to non-Title I children using non- Title I funds. Auditors presume supplanting occurs if... 71

72.  Exclusion of Funds:  SEA or LEA may exclude supplemental state or local funds used for program that meets intents and purposes of Title I, Part A  EX: Exclude State Comp Ed funds Exception: 1120A(d) 72

73. Supplanting in a schoolwide program

74. Statute 1114(a)(2)(B): Title I must supplement the amount of funds that would, in the absence of Title I, be made available from non-federal sources. E-18 in schoolwide guidance The actual service need not be supplemental. 74 Supplement not Supplant

75. How will Reauthorization impact Title I Fiscal Requirements?

76. Reauthorization Predictions Based on the “Harkin” Bill in Senate Rank and Serve Priority to serve high schools must use feeder pattern 76

77. Reservations “Early childhood education and care” Homeless – needs assessment, transportation, liaison, support services Choice/SES – Not mandated for all ID schools, but one option Financial incentives for teachers and students 77

78. Reauthorization Predictions Comparability Move to measuring non-federal expenditures/student (personnel & nonpersonnel) Eliminate loophole of excluding salary differential to reflect seniority LEA must submit to SEA school level expenditure data Beginning in 2015-2016 78

79. Reauthorization Predictions Supplement not Supplant Better explanation of schoolwide approach 79

80. Questions??

81. 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, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. 81