Perkins Fiscal Considerations 2018 CTE Fall Webinar Series www.minnstate.edu/system/cte/professionaldevelopment/index.html

Today’s Presenters Jeralyn Jargo State Director, Career Technical Education Jeralyn.Jargo@minnstate.edu 651-201-1650 Michelle Kamenov Career Development and Career &Technical Education Supervisor Michelle.Kamenov@state.mn.us 651-582-8434 Mary Beth Michalitsch Grants Accountant, Finance Division Marybeth.michalitsch@minnstate.edu 651-201-1729

Goals Overview of Perkins allocation from federal funding source to local consortium implementation Budget, plan, cash management, goal, and target monitoring Clarify reallocation and leadership funds Explain process for monitoring of fiscal assets and processes Jeralyn 3

Secondary/ Postsecondary Split ALLOTMENT AVAILABILITY OF FEDERAL FUNDS A cooperative agreement between the Commissioner of Education and Minnesota State Colleges and Universities will annually provide for the distribution of federal funds between secondary and postsecondary career and technical programs. Distribution to local education agencies must be determined by state and federal law. ~ Minnesota Rule 3505.1700 ~ Dependency on Approved State Plan What is the allotment of Perkins funds and how is it determined in Minnesota? Jeralyn The state allocation has been 16 million, six hundred and eighty four thousand, six hundred thirty seven dollars for several years. If there is good news it would be that a hold harmless clause in the current Perkins Law will not reduce our allocation below that 16.68 million. Section 111 of the law explains the formula that calculated our original allocation in detail. It is quite complicated. Two major factors however are the age cohort data (weighted most heavily towards 15-18 year old) and per capita income data. The division of state funds between secondary and postsecondary recipients is in Minnesota law as stated in this slide. 4

Leadership Primary Function: Fiscal Responsibility MN State Colleges & Universities as Fiscal Agent Implements federal regulations and cost principles State, local, and Indian tribal governments Educational institutions (colleges and school districts by consortium) Ensure compliance with federal and state statutes Perform monitoring of local consortia Provide technical assistance to the local consortia Jeralyn Minnesota State Colleges and Universities serves as fiscal agent for state Perkins CTE grants Implements federal regulations and cost principles for state, local, and Indian tribal governments and for educational institutions--(colleges and school districts by consortium) Ensure compliance with federal and state statutes Drive decisions based on policies and procedures mandated in the federal and state laws Perform monitoring of local consortia Provide technical assistance to the local consortia

MN Perkins Budget Distribution (Oct. 1, 2018) 85% of the State’s funding goes to local consortia by formula Distributing Perkins funds to the consortia is easier said than done. If people on this webinar have questions, they can type them into the chat box at anytime. This pie chart represents the overview of how Minnesota leadership distributes and uses Perkins funds. Jeralyn - The % of distribution is part of our State Plan and while the numbers recorded reflect 2014 there has not been significant changes since then as the federal allotment has remained unchanged. Some changes have occurred at the local distribution point. Federal Total allocation of just under 17 million comes to the state. That immediately gets split, by federal law, to reflect the 85% that will be distributed at the consortia level and the remainder divided between state leadership and state administration as allowed by federal law. The 85% that goes to the consortia is divided into 90% basic grant- formula calculation using secondary and postsecondary number and distributed to each consortium by Minnesota State Plan. The 10% reserve, in Minnesota, has also been distributed by formula calculation. The 15% that goes to state leadership and administration is split with NO MORE THAN 5% going to state administration which is split between Minnesota State Colleges and Universities and Minnesota Department of Education. The 10% leadership dollars are also split. Notice the post secondary award is a greater % and must provide the $50,000 for state institutions, and the $60,000 for non-trad training as required. The postsecondary leadership funds also support state wide initiatives such as CTE Works conference, TSA work, Mentor-mentee initiative; the MDE contribution includes the salary and expenses of their staff participation.

Local Consortium Award Allocations Local Consortium Perkins Plan Approval Notification and Fiscal Information include award emailed to the Superintendent and the President at the fiscal host district and college copies to local consortium fiscal and Perkins contacts upon state approval of the local consortium plan Approximately July 1st. Jeralyn Revenue from the State Perkins allocation comes to the consortium primarily through the formula based Allocation. Allocation Award letters were sent to each local consortium host President and Superintendent with copies to consortium contacts and fiscal contacts upon approval of Local Consortium plan after July 1, 2016. All FY19 consortium plans (one exception 9_19) have been approved and the award letter was emailed as an attachment to each consortium. If you do not have a copy, contact your Perkins consortium contact or fiscal host. Minnesota’s Perkins allocation for 2018-2019 was a nice surprise with just under a 3% increase. However, the amounts allocated to your consortium may vary from one year to the next dependent upon your census data, geographical area and Pell recipients. The factors involved in the calculation are explained with more detail in the operational handbook.

Sample Perkins CTE Award Letter Forward Funding Full Basic and Reserve Funding Jeralyn When the local consortium plans have been approved, and the distribution amounts calculated, award letters are sent to each local consortium host President or Superintendent with copies to consortium contacts and fiscal contacts. The letters indicate the amount of the full award, along with the corresponding GLs/FINs And the amount of the award that can be used during the forward funding timeframe.

Basic vs Reserve The separation of Basic and Reserve is based on the using two separate formulas Federal law separated Reserve dollars so states had the option to distribute additional dollars to rural or high number programs based on need Definitions of required, permissive, allowable expenditures are the same for Basic and Reserve Required and permissive use of funds http://www.mnscu.edu/system/cte/consortium_resources/documents/mn-perkins-consortium-required-and-permissive-use-of-funds-9-18-17dkw.pdf Jeralyn Allocation Award letters were sent to each local consortium host President and Superintendent with copies to consortium contacts and fiscal contacts upon approval of Local Consortium plan after July 1, 2018. All FY19 consortium plans have been approved and the award letter was emailed as an attachment to each consortium. If you do not have a copy, contact your Perkins consortium contact or fiscal host. The allocation has two parts: basic and reserve. Thought the calculation are a bit different for these two sources- the use of the dollars in both cases must fit the required and permissive use of funds according to Perkins and Federal funding guidelines. Minnesota’s Perkins allocation for 2018-2019 was consistent with the estimate provided to the consortium February, 2018. However, the amounts allocated to your consortium may vary from one year to the next dependent upon your census data, geographical area and Pell recipients. The factors involved in the calculation are explained with more detail in the operational handbook. All decisions for expenditures need to go back to THE PLAN- even if the expenditure is permissive-- was it part of the plan of the consortium? Changes can be made but it is a consortium decision not an individual decision.

Allocation Cycle MN Receives US DOE Grant Award Letter July 1, Year X State Receives Forward Funding Basic and Reserve Awards to Local Consortia October 1 Full Funding Year X June 30 Cut off for Year X-1 Spending Mary Beth- This is a funding cycle for a specific US DOE Perkins CTE Grant Award. The federal fiscal year starts Oct. 1 but the state usually receives a “forward funding” amount July 1 or shortly thereafter and we send that award/approval letter to the local consortia as soon as we have calculated the formulas for each consortia and approved the local application plan, usually beginning the second week in July. So let us go through the cycle for the Oct. 1 2017 grant award

Consortium Budget and Planning Considerations Consortium’s approved local application outlines budgeted spending for the entire award Spending should be reviewed throughout the year to verify and ensure spending is following approved plan All award monies must be encumbered by June 30th of the award year, with all transactions concluded prior to July 31. Cash Management Mary Beth Local consortium approved FY19 local application outlines budgeted spending for the entire award Spending should be reviewed throughout the year to verify and ensure spending is following approved plan To avoid the need for reallocation, all award monies should be encumbered prior to the June 30th cutoff Your consortium and Perkins coordinator will need to submit an adjusted Post Secondary Budget and Secondary Budget for the reallocated allocation on the FY19 Budget Summary in your online application at www.applyheremn.org at that time. It is essential that you work as a consortium to accomplish the goals of your approved plan AND pay attention to your budget. Six months into your academic year you should have spent 50% of your budget at a minimum. Even better, make all you equipment purchases in the first quarter of the year so that students can actually benefit from it. In a perfect world all plan goals are achieved and we have ZERO dollars reallocated because the money was spent as approved in the plan and in the time approved. A caveat: the majority of spending is targeted for personnel. Follow your budget so that your personnel dollars can actually be utilized for personnel. If your budget plan for a hire July 1- the Position Description would need to be ready. There are some other considerations for our secondary partners as the allocation funds use the SERVS system for draws. (Michelle……. 8

Secondary Funds: SERVS Draws Draws are made by UFARS FIN Code Course Code and Object Code Fin Code 428 – Basic Fin Code 475 – Reserve Course Code 000 – current year Course Code 011 – prior year Object Code While planning and calculations are done for a single consortium, secondary and post-secondary use different systems to manage cash flow. Secondary funds reside with MDE and are drawn using the SERVS accounting. Michelle -To draw funds, the Account Register will select the appropriate FIN Code – 428 for Basic and 475 for Reserve. Within a specific FIN Code the Account Register must select the appropriate course code – 000 for the current year award, 011 for the prior year award. 011 reflects any reallocated funds, these should be expended first. The object code is the expenditure identifier. For example Object Code 140 represents licensed instructional staff. Please keep in mind that SERVS draws and UFARS expenditures that are submitted to MDE must match.

State Educational Record View and Submission System (SERVS) SERVS (State Educational Record View and Submission System) is a password protected website where you can find all grant opportunities through the Minnesota Department of Education https://w1.education.state.mn.us/EGMS/ Michelle - The Minnesota Department of Education State Education Record View and Submission System commonly known as SERVS is a password protected web site for submitting formula grant applications, formula grant budgets and formula grant draws.

Submitting a Separate Secondary Basic and Reserve Placeholder Application Why do I have to submit a placeholder application in SERVS? Budgets in SERVS Financial Must Match your budget in your previously approved application Michelle The most common question I get is why do I have to submit another application for my secondary funds? I already submitted an application through the DULLES system. The Perkins grant applications found in SERVS are simply placeholder applications. You have already gone through a formal review process through the Dulles System. The SERVS process is a formality to allow MDE to load the Secondary FIN 428 Basic and FIN 475 Reserve allocations into the SERVS Financial System. If SERVS can’t match an allocation to an application then we are unable to load your secondary funds.

Placeholder Application in SERVS Michelle-------------------------------------------- You will then go through a series of screens that will take you through the grant submission process. Once that process is completed you will then receive the message “Your grant application has been successfully submitted”. But Wait You Are Not Finished Yet SERVS - External User Access Recertification System

Submitting your Secondary Placeholder Application Log into SERVS Financial and follow the steps to submit application Once the process is completed you will receive confirmation that your application has been successfully submitted Michelle/Laurie - You will then go through a series of screens that will take you through the grant submission process. Once that process is completed you will then receive the message “Your grant application has been successfully submitted”. But Wait You Are Not Finished Yet

Electronically Sign the Application Michelle -------------------------------------------- You must now contact your Agency Head (Superintendent or Executive Director) and ask them to electronically sign the application.

Reallocation Cycle MN Receives US DOE Grant Award Letter Mary Beth July 1, Year X State Receives Forward Funding Basic and Reserve Awards to Local Consortia October 1 Full Funding Year X January Reallocation Of Year X-1 Award Letters June 30 Capture Year X remaining to be reallocated in January Cut off for Year X and X-1 Spending Capture Year X-1 remaining to be returned to USDOE Mary Beth A second source of funding besides the original allocation may be reallocated funds. This is a graphic of the funding cycle for a specific US DOE Perkins CTE Grant Award that includes the added reallocated funds. The money awarded in year X –green circles- is being spent from July1 until June 30. On June 30 unspent money is recaptured and reallocated, by formula, to consortium. The money recaptured from secondary gets reallocated back to secondary; the money recaptured from postsecondary gets reallocated back to postsecondary. Because of the formula, what’s recaptured from your individual consortium could be more or less than any reallocation. This emphasizes the importance of the consortium’s need to spend their allocation in the first year of the award. The distribution of reallocated funds happens approximately January. On the graphic, you notice the blue circle indicating the reallocated award from Year X-1. That represents the previous year’s recaptured and reallocated dollars. Last year’s reallocated money, which you received last January, must be spent by June 30, or as the top blue circle indicates, would be returned to the Dept. of Education. In a perfect World there would be ZERO reallocated funds as each consortium would fully spend down their full allocation.

Reallocation Award Letter — Coming Later Prior Year Reallocation FIFO Jeralyn Each consortium may anticipate that there will be an additional reallocation later this year of recaptured Basic and Reserve funds not used by Perkins consortia during the 2017-2018 school year. Notification of these amounts and the process to receive the award will be sent after the funds to be redistributed are calculated, probably in November, 2018. Due to the First In, First Out principal the consortium should expend the reallocated amounts before the FY19 basic and reserve funds from the July1, 2018 allocations for activities in the approved local consortium plan. FIFO

Unexpended Consortium Funds Recaptured and Reallocated Local consortium contacts will need to review their approved local application and decide where to make necessary budget changes if reallocated funds are awarded Fiscal hosts and Perkins contacts will need to submit an adjusted Post Secondary Budget to add the reallocated basic and reserve dollars. www.applyheremn.org/index.do After the revised budget and plan expenditures is approved it is important to start spending the reallocated funds Critical to spend based on FIFO Jeralyn Your consortium and Perkins coordinator will need to submit an adjusted Post Secondary Budget and Secondary Budget for the reallocated allocation on the FY19 Budget Summary in your online application at www.applyheremn.org at that time.

How State Leadership Dollars are Expended 10% of the State Award may be used as Leadership funds Of that 10%, based on Federal requirements, $110,000.00 are set aside from the Postsecondary Leadership funds for State Institutions and Non-Trad Additional Leadership dollars may be awarded to campuses based on: Collaboration between the System Office and campuses for projects through Intra-agency agreement between system office and the receiving college Intra-agency agreement for Temporary Special Assignment of Personnel Professional-technical contracts Denise – If you have questions about reallocations, type them in the chat box. Jeralyn, in the distribution chart, 10% of Perkins funds are set aside for leadership projects. Can you explain how these are distributed? Jeralyn: At times the system office uses State Leadership or Administration funds to fund projects or activities at a particular college e.g. technical assessment projects, learning communities, OCR visits. For these purposes, we use either the Intra-agency agreement on the finance webpage or in some cases, the Intra-agency agreement or approval letter for Temporary Special Assignment of Personnel on the system human resources webpage. Communication among the system office CTE staff, the college supervisor of the employee and the college human resources prior to the execution of the Temporary Special Assignment is essential. This helps us track the fund usage throughout the year by Purchase Order Number and uses established finance procedures and forms available on the website, more familiar to finance staff. We have used Perkins agreements to distribute these funds to the college. In FY19 we will use only the intra-agency agreements to provide more consistent service and better accountability for funds. While these funds are federal Perkins funding, at the local level treat them as a separate funding source. DO NOT PUT THEN IN THE SAME GLS AS YOUR JULY PERKINS ALLOCATION.

Intra-Agency Agreements Between System Office and College The college sets up a separate cost center within a NON-PERKINS Appropriation for each intra-agency agreement To receive reimbursement: College invoices the System Office for expenditures incurred based on the agreement parameters, using object code 9806, Inter MnSCU transfer revenue System office pays the college College records the payment to the Non-Perkins cost center Mary Beth Once the Intra-Agency Agreement is executed, the Campus receiving Leadership funds will: Set up a CC within a non-perkins GL of your choice Generate a receivable for the total amount Send invoice(s) to System Office, att’n.: Florence Newton (or her replacement) System Office will pay the invoice 5) Campus receipts the funds to the outstanding receivable

Sub-Grants Secondary Sub-grants may be made from one district to another recipient district The fiscal agent granting a sub award Should use UFARS codes 303 or 304 whichever is appropriate to record the expenditure Complete UFARS Manual can be found at http://education.state.mn.us/MDE/dse/schfin/fin/UFARS/index.htm Specific UFARS questions contact: Deb Meier MDE UFARS Specialist debra.a.meier@state.mn.us Michelle - There are a few colleges that act as the fiscal agent and subgrant with another college. The fiscal agent records the expenditure in SERVS Financial under object code 303 if the expenditure is less than $25,000. Object code 304 is used for expenditures over $25,000. For specific UFARS question contact MDE’s UFARS specialist Deb Meier

Year End Considerations Based on the established time lines, the System Office will perform a year-end reconciliation of the Perkin’s grant ensuring all institutions have been reimbursed for all expenses incurred within the timeline, and that there is no overspending Unspent award money is recaptured and redistributed to either the system office or the consortia, based on Federal requirements. Unspent reallocated funds are returned to the System Office and potentially returned to the USDOE Unspent funds are recaptured and awarded (reallocated) back to the consortia based on a formula Mary Beth At the end of the fiscal year the system office reconciles the grant activity to verify eligible expenses have been reimbursed and within the grant award amount. Draws for the new year will not start until the previous year has been reconciled and all expenditures have been accounted for in the appropriate GLs Any unspent FY18 reallocated funds are returned to the system office and not redistributed back to the consortia. Any unspent FY19 funds are recaptured from all consortium. In January or February the recaptured funds are reallocated to the consortia based on a formula. Because of the recapture requirements it is important to starting spending the reallocated funds once they are awarded. Otherwise the consortia forfeits monies that should have gone towards plan expenses.

Consortium Monitoring The System Office conducts annual audits and monitoring visits at designated consortia Each consortium will be monitored at least once within a three year time frame Included in the monitoring, is a fiscal desk audit of the previous year’s fiscal activity Schedule and procedure: http://cte.mnscu.edu/directories/portal.html Mary Beth: In FY19, as in prior years, the system office and MDE will conduct fiscal audits at designated consortia. Prior to the visit we will send a list of FY18 transactions for which the fiscal contact will provide the requested documents. We are required to review your list of assets purchased with Perkins funds and documentation that this list is reviewed a minimum of once every two years. These documents will be reviewed for compliance with Perkins, State of MN, Minnesota State and MDE policy and procedures, and Generally Accepted Accounting Principles to determine if there are any findings that should be addressed. The consortium who will be monitored current academic year have been notified. The monitoring visits and post-secondary fiscal audit schedules will soon be posted on the CTE website. We have now confirmed the dates and provided information on the modifications of monitoring this year. Note that the process for the fiscal desk audit has not changed. In addition in the Operational Handbook you can find the fiscal desk audit procedures under the heading of “monitoring for local consortia”.

In conclusion: Due diligence of the Perkins plan is the responsibility of the consortia leaders, which includes proper fiscal management. Is the spending directed at improving career and technical education? Is it required, permissive, or allowable? Does it pass the supplement NOT supplant test? Business practice must be in compliance with Federal, EDGAR, guidelines as well as State, and Minnesota State Colleges and Universities policies and procedures. Jeralyn

Perkins CTE Federal Resources Perkins Act P.L. 109-270 www2.ed.gov/policy/sectech/leg/perkins/index.html US Department of Education General Administrative Regulations EDGAR -Code of Federal Regulations CFR www2.ed.gov/policy/fund/reg/edgarReg/edgar.html Here are the urls to federal laws and regulations related to Perkins CTE and federal grants.

Perkins MN Financial Resources Local Consortium Applications www.applyheremn.org Perkins IV Operational Handbook www.minnstate.edu/system/cte/consortium_resources/documents/Perkins-IV-Operational-Handbook-2016.pdf Required and permissive use of funds www.minnstate.edu/system/cte/consortium_resources/documents/mn-perkins-consortium-required-and-permissive-use-of-funds-9-18-17dkw.pdf Here are the urls to access state resources we have mentioned in the webinar.

CTE Professional Development Resources www.minnstate.edu/system/cte/ professionaldevelopment/monthly-webinars.html Webinar Recordings, PowerPoints Schedule for Fall Webinar Series Calendar of Monthly Webinars – Thursdays, 9am

Perkins Fiscal Considerations ~ Jeralyn.Jargo@minnstate.edu State Director, Career Technical Education 651 201-1650 MaryBeth.Michalitsch@minnstate.edu Grants Accountant, Finance Division 651-201-1729 Michelle.Kamenov@state.mn.us Career Development and Career &Technical Education Supervisor 651-582-8434 Enter your questions in the “Chat” field OR request to unmute your phone line and ask your questions OR call us direct.