EDGAR and GEPA Requirements

Acronyms and Abbreviations Education Department General Administrative Requirements EDGAR Office of Management and Budget OMB Financial Accountability System Resource Guide (FAR Guide) FASRG Individuals with Disabilities Education Improvement Act of 2004 IDEA Department of Education DOE Foundation School Program FSP Local Education Agency (District or Charter) LEA Notice of Grant Award NOGA

Acronyms and Abbreviations Maintenance of Effort MOE Public Education Information Management System PEIMS Student Attendance Accounting Handbook SAAH Summary of Finances SOF Shared Services Arrangement SSA Texas Education Agency TEA Texas Education Agency Secure Environment TEASE United States Department of Education USDE

Main Budgeting Objectives Developing and Monitoring Resources Funding Monitoring Main Budgeting Objectives What is EDGAR? How does it apply to IDEA? Who must follow EDGAR requirements? Each program administered by the Department of Education (DOE), including IDEA, is bound by laws and regulations that have specific requirements. DOE general administrative requirements are collectively known as EDGAR and include the important administrative requirements applicable to grants management of federal education funds. EDGAR addresses various topics such as threshold administrative systems that must be in place for recipients of all federal grants, application requirements, and enforcement requirements. Specific sections of EDGAR applies to a particular grant depends on: The nature of the organization receiving the grant What type of grant The EDGAR sections apply to grant are detailed in the NOGA issued by the DOE. SEAs and LEAs that receive IDEA grants are subject to EDGAR Part 76 (related to state-administered programs) and Part 80 ( retailed to state and local government recipients) The requirements of Part 80 are from the OMB circular A-102 which contains general administrative requirements that impact the recipients of federal education funds. It is often referred to as the grants management common rule. EDGAR also contains the enforcement provision of the General Education Provisions ACT (GEPA) which is codified in Part 81 of EDGGAR. IDEA is included as an “applicable program” and is subject to GEPA and Part 81 of EDGAR. Enforcement: All recipients of federal education grants from DOE must comply with EDGAR , including the threshold requirements to use fiscal controls and fund accounting procedures that ensure proper disbursement of and accounting for the funds.

Grant Management Systems What is required to be implemented before spending federal funds? All recipients of federal education grant funds must implement the following threshold systems: Financial management Procurement Equipment and inventory management What happens if the LEA or state does not follow the requirements of EDGAR or those more restrictive requirements of the state or local entity? The entity is at risk of an audit finding if it does not follow the applicable requirements; additionally the state may also be subject to audit findings since the state is responsible for monitoring the activities of the sub-recipients (LEAs). These systems must be in place before recipients can begin to spend federal funds. These systems help to ensure that the funds are being spent properly and grant programs are carried our in a compliant manner. State requirements and local requirements may be more restrictive that the federal requirements but can never be less restrictive.

Financial Managment What are the requirement of a financial management system? Required Standards in EDGAR: The system must maintain adequate information about the recipient’s activities to submit accurate, complete, and current reports to DOE; Must maintain records that adequately identify where funds come from, and how funds are spent. Accounting records must show: The amount of money authorized under the grant; Current obligations; Unobligated balances; Assets; Liabilities; Expenditures; and Income. Fiscal control and accounting procedures for the State, as well as the sub-grantees (LEAs), must be sufficient to: Permit preparation of reports required by the federal government for the federal program in question Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of the federal program statutes 34 CFR Part 80.20 Continue the discussion on the requirements on next slide

4. Must compare budgeted amounts to actual expenditures; 3. Must maintain effective control and accountability for all cash, real and personal property, and other assets. Must implement controls that safeguard property and ensure such property is used solely for authorized purposes under the grant; 4. Must compare budgeted amounts to actual expenditures; 5. Must ensure costs are allowable under their applicable OMB Circular as well as specific program statutes, regulations, and/or guidance; 6. Must maintain appropriate documentation to support all expenditures (such as time and effort, job descriptions, justification for Purchase orders or invoices, etc.; 7. Must adhere to cash management requirements and practices which minimize the time between drawdown and disbursement. LEAs must compare budgeted amounts to actual expenditures; must routinely reconcile actual expenditure with their grant budget to ensure they are spending the funds in accordance with their budget and allowable activities under the grant requirements. Refer to the Compliance resource Tab in the binder for Allowable Costs that TEA provides as part of the resources in the e-grant application process. Components 6 and 7 are covered in detail in other training modules in the Live binder so refer participants to pertinent slides and resources found in those sections.

Procurement System A procurement system is a purchasing process. A sound procurement system ensures that recipients obtain goods and services through processes that maximize the value of the federal funds and that these processes are documented appropriately. An LEA’s procurement system must meet the specific requirements as outlined in EDGAR Section 80.36. EDGAR provides baseline requirements for 4 types of procurement methods: small purchases procedures; procurement by sealed bids; procurement by competitive proposals; and non-competitive proposals. Records detailing the procurement and contracting process and history must be maintained. This includes materials on the rationale of the method of procurement; the selection of the contract type; contractor selection or rejection; and the basis for the contract price. (34 CFR 80.36(b)(9) ). Best practice may be a three way match: every purchase has a PO, and invoice, and a receiving record or voucher to demonstrate that the number and specifications for the goods received match the PO. Many audit findings are issued because files, receipts, or other documentation cannot be located, required signatures or dates are missing from the documentation, or there is a mismatch between the invoice and payment amounts.

Inventory Management Inventory management tracks items purchased with federal funds. EDGAR requires that all equipment be tracked and inventoried. The property records should include: A descripton of property; Serial number or other id number; Source of the property; Who holds title to property; Acquisition date and cost; The %age of federal participation in the cost; The location, use, and condition; and Any ultimate dispositions data including date of disposal and sale price if applicable. Equipment (property asset) is defined in EDGAR as tangible, nonexpendable personal property with a useful life of more than one year and an acquisition cost of $5000 or more per unit. This cost factor may be made more restrictive by state or LEA identifying cost at a lesser figure such as $1000. It is recommended that LEAs set a lower threshold or create an additional list of items that should be tracked. Agencies are responsible for safeguarding all property purchased with federal funds, not just equipment. It is advisable to inventory items that do not meet the definition of equipment, referred to as “small technological items” or “easily pilferable” items since these items are highly desirable and easily taken. It is recommended that recipients track these items to protect against adverse audit and monitoring findings. All property should be tagged and that tag should be a physical label with an inventory #, the funding source(s), and the name of the entity that holds the title to the property. Tags should not be easily removable. If equipment is not longer needed, the entity should follow the rules as applied in 34 CFR 80.32. According to federal rule, inventories must be conducted at least every 2 years and reconcile the results, however, an annual inventory is recommended. LEAs must ensure that inventory records are up-to-date so that recipient can account for all items purchased with federal funds at any time. If this training is done in isolation, refer the participants to the Inventory tab in the Live binder for more details concerning inventory management criteria.

Supplies Supplies are all tangile personal property not considered equipment. Grantees must assure that supplies are used in the program that purchased them and must maintain information about supply purchases to demonstrate that the purchase was necessary, reasonable, and allocable to the grant program. Discuss here the Supplement vs. Supplant aspects of purchases. Scenario: It is the first day of teacher in-service and all teachers at the new Bright Idea Elementary School are told to report to the campus secretary to pick up their teacher supplies (lesson plan book, general supplies, copier codes, etc.). When you arrive at the office, you are told that there are no supplies for you since you are a special education teacher. You need to get all of that from the special education office. Before you travel to the special education director’s office, you go to your assigned classroom and find that it is devoid of student furniture and no teacher’s desk – it is an empty room. You go back to the campus administration office and are told that when furniture was ordered, the sped office should have done that for you since it was a special education room – take it up with the director, so sorry about that– we might be able to scare up some used furniture from the old building until that can be done. By the way “good luck on your first day with kids and we are so glad you are a member of our staff.” Given what we know about “allowable costs” and the guidelines for excess costs in light of supplement not supplant, discuss what is happening at this campus. What is wrong with this practice? What process has not appropriately been implemented? Let’s talk about how internal controls could have helped avoid the issues raised in the scenario… next slide

Internal Controls These are cross-cutting tools to help program and financial managers achieve results and safeguard the integrity of their programs. Internal controls are designed to provide reasonable assurance that operations are effective and efficient, financial reporting is reliable, and the grantee is complying with all applicable laws and regulations. There are 5 major components: Control environment (policies, org structure, HR policies, and relationships with oversight agencies) Risk assessment Control activities Information and communications Monitoring It is important at all personnel are aware of the internal controls that your business office has in place to ensure that the intent and purpose of federal program grant are supported and carried out to meet the regulations of that program grant. Good communication between departments and administrative personnel are critical to ensure that these internal controls are implemented appropriately at every level. Discuss how your LEA provides training on business operating procedures to staff and campus administrators.

Enforcement If the Department of Education as granting agency believes that a recipient of federal funds is not in compliance, the federal government may enforce compliance under EDGAR mechanisms. Under EDGAR, the agency may: Require repayment of funds; Withhold further payments under the grant; Issue a complaint to compel compliance through a cease-and-desist order; and/or Take any other action authorized by the law. If the DOE wished to recover funds, it will provide a written notice to the grantee. The DOE has up to 5 years from the date of the receipt of the written notice to recover inappropriate expenditures. The amount may be determined as appropriate to the extent of harm it violation caused to an identifiable federal interest associated with the program under which the recipient received the award. Could the DOE withhold funds? Yes, the government office may withhold all or part of the recipient’s federal education funds if there is reason to believe that the recipient is failing to comply with any applicable legal requirement. The recipient could also be identified as “high risk” which could result in hiring a third-party fiduciary to administer the grantee’s federal funds. EDGAR dictates that states must monitor their sub grantees( LEAs) to ensure compliance with federal requirements. If the state determines that an LEA has not complied with an applicable requirement, TEA may take the following enforcement actions: Withhold approval of the IDEA application (chart is located at 34 CFR 76.401) Suspend payments Withhold payment Other actions as authorized by federal and state laws. Resources to provide additional information: Office of Management and Budget: http://www.whitehouse.gov/omb/circulars_default Education Department General Administrative Regulations: http://www2.ed.gov/policy/fund/reg/edgarReg/edgar.html

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