1 Requirements for American Recovery and Reinvestment Act Funds Administered by NYSED Deborah H. Cunningham New York State Education Department Educational Management Services Coordinator June 2010

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 2

1. Legislation and Appropriations Signed into Law February 17, 2009 $787 Billion New Federal Spending $393 Billion for: -State and Local Fiscal Relief -Infrastructure and Energy -Health and Human Services -Education, and -Public Safety $26 Billion allocated to NYS Unprecedented level of transparency and accountability 3

4 ARRA funding is a one-time appropriation to be provided over a 27 month period (mainly and ). Quarterly reporting is required. The first quarter reporting period was for the quarter ending September 30, Grant Recipients have reported three times.

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6 Purpose and Requirements The intent of these funds is to create jobs and avert layoffs while promoting education reforms. Reporting will focus on the number of jobs created and retained. Calculations for all positions reported as a percentage of “Full-Time Equivalents”. For example, the number of hours worked is divided by the number of hours of full time employment. ARRA funds are federal grants and subject to all federal reporting requirements.

Four Basic Principles Spend the funds quickly to save and create jobs Improve student achievement through school improvement and reform Ensure transparency and accountability and report publicly on the use of funds Invest one-time ARRA funds thoughtfully to minimize the “funding cliff” 7

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 8

2. ARRA Quarterly Reporting Reporting Period and Deadlines * * 2010-Q1 implemented 12/18/09 OMB Revised Guidance to report expenditures cumulatively from the beginning of the Act but to report jobs directly paid for in the quarter being reported. 9

10 Roles Prime recipient: NYSED is serving as the prime recipient for most ARRA education funds in New York State. Sub-recipient: Entities whose mission requires them to perform certain functions regardless of grant funds received, such as local education agencies. Vendors: Organizations or businesses which sub- recipients contract for services, but which are not required to provide services absent the grant funding. Some entities can serve more than one role.

11 NYSED and LEAs NYSED and Sub-recipients Approximately 1,000 sub-recipients, many with multiple awards. Sub-recipients first submitted over 3,000 reports to NYSED through the ARRA system on October 1, 2009 for the first quarter of the fiscal year (July 1-September 23, 2009). Sub-recipients, e.g., school districts, report on vendor contracts. Sub-recipient vendors do not report directly to NYSED. NYSED reviews, approves and aggregates the data from sub- recipients and reports it to the federal government on their behalf.

12 Sub-recipients Report Limited Amount of Data Quarterly through NYSED Online System Online ARRA System collects: - Brief Program Narrative -Jobs created and retained -Vendor information limited to: Payment amount Sub-award ID Name and zip of vendor OR DUNS number -Infrastructure amount (IDEA and Stabilization)

13 The Department Uses Expenditure Information From Existing Financial Systems Expenditure information is provided directly to the agency payment office as part of the claims process. At NYSED, payment offices are the Office of Grants Finance or Fiscal Management. Sub-recipients do not need to report expenditure information through the ARRA Reporting System. –For ARRA funds that NYSED pays to other State agencies, the agency payment office must report expenditure information to NYSED through the program office. For example, OMRDD would report on the use of ARRA-IDEA funds received from NYSED to their VESID program office contact.

Applications Must be Approved For ARRA-funded programs, sub-recipients must apply and have their application approved by NYSED. Sub-recipients then submit ARRA reporting data on each funded program, subject to approval by NYSED. 14

15 Proposed Reporting Timeline Online System opens on the Portal: 6/2/10 Deadline for data from sub-recipients: 6/30/10 NYSED submits report to federal government: 7/10/10 NYSED makes corrections: 7/11/10-7/12/10 Federal review and SED corrections: 7/13/10-7/29/10 Reports published on 7/30/10www.recovery.gov Next quarterly report cycle begins: 9/1/10

16 Accessing the Online Portal through NYSED Currently, only the CEO, using their user identification and password can access the ARRA Reporting option on the SED portal. The CEO must delegate access to the application through SEDDAS for others (including auditors) to use the portal or view the data. Technical assistance options are available on-line for any difficulties with the SEDDAS system or questions on how to delegate access to other administrators. Office of Management Services provides individual phone assistance during working hours.

17 The NYSED Application Business Portal

18 ARRA Reporting System Reporting will answer key questions: -Who is receiving Recovery Act funds and in what amounts? -What projects or activities are being funded with Recovery Act dollars? -What is the completion status of such projects or activities and what impact have they had on job creation and retention? Reporting is required for each grant a sub-recipient receives. Recipients select the appropriate fund from a drop-down list. For Education Stabilization Funds, the system also includes an application and will include a final expenditure report.

Sub-recipient Information 19

Sub-recipient Information Data Universal Numbering System (DUNS) number Date for Central Contractor Registration (CCR) -Additional information about DUNS and CCR can be found at: Review guidance at Chief executive must certify and submit data 20

Program Narrative and Summary Describe the programs to be provided Enter jobs saved and directly funded during the quarter Enter jobs created and directly funded during the quarter Enter amount for infrastructure from inception (7-1-09) to end of reporting period (e.g., 6/15/10)—ESF and IDEA only Guidance on job estimates is at 21

Sub-recipient Vendor Data 22

Sub-recipient Vendor Data Sub-recipients must provide data on funds awarded to vendors including BOCES. Sub-recipients must report: –vendor/organization name and zip OR DUNS number, sub-award number and payment amount –FTE’s for jobs retained or created by the vendor 23

CEO Certify and Submit 24

New York State Education ARRA Jobs Reported and Compliance 25

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 26

3. Requesting Payment District staff must have a thorough understanding of the processes and requirements summarized in the Department's Fiscal Guidelines for Federal and State Grants and A Guide to Grants Administration and Implementation Resources. Some funds have an automatic 20 percent first payment upon SED approval of the application Grant recipients draw down funds using FS-25 forms up to 90 percent of the grant amount for actual expenditures to date Districts submit final expenditure information using the FS-10F long form or the on-line system for ESF. For information: –Web— 27

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Payment and Accounting Information (Continued) 29

Payment and Accounting Information (Continued) 30

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 31

4. Accounting ARRA grant recipients should have separate accounting of ARRA funds within their financial system The Comptroller has specified revenue codes: The grant recipient must create separate expenditure codes. 32

Education Stabilization Funds - Revenues and expenditures must be accounted for in the General Fund - Use A4285 to coincide with ST-3 Title 1 and IDEA -Must be accounted for in the Special Aids Fund -Accounting must be separate from all other funds 33

Annual Financial Report Changes Every item that was added as a projection item on last year's ST-3 will now have an actual amount reported (in the upcoming ST-3) as well. SED will be collecting a separate supplementary schedule as part of the ST-3 on which districts will need to report ARRA expenditures in a certain format to comply with federal reporting requirements. We also are preparing our full annual ST-3 changes document, as we try to release a draft by June. 34

Personnel Activity Reports –Not needed for ESF –Needed for Title 1 and IDEA Employees work solely on single federal award Prepared at least semi-annually Signed by employee or supervisor having first-hand knowledge of activities –Employees who work on multiple activities Must reflect after-the-fact activities Account for the total activity Prepared at least monthly to coincide with payroll Must be signed by employee 35

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 36

5. Allowable Expenses Most grants are governed by the requirements of the particular program (e.g., Title I, Mentor-Teacher Intern Program, etc.) and OMB Circular A-87 Cost Principles Education Stabilization funds can be use for any ESEA or IDEA purposes –Non-allowable expenses are detailed (see Education Stabilization Fund, CFDA No Supplemental Application- Guidance Document Feb 2010) 37

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 38

6. Education Stabilization Funds Allowable uses –Retain existing teachers, administrators and support staff –Establish data systems –Turn around the lowest-performing schools –Improve results for all students (through technology, early learning or accelerated tracks to college) Non-allowable uses –Maintenance costs –Stadiums or facilities used primarily for athletics –Purchase or upgrade of vehicles or school buses –Stand alone facilities not for educating children –Financial assistance for students to attend nonpublic schools (except special education services) –School modernization, renovation or repair inconsistent with State law 39

Closing out ESF ESF will be treated as two separate years with an application for each year (two applications for to handle the two separate appropriations of funds) A final expenditure report will close out each year. 40

ESF Final Expenditure Report Process Districts should complete the final expenditure report process for before applying for new funds for –There currently is no statutory provision to allow school districts to carry over funds from to ; if this is enacted, SED will incorporate. –Districts should be able to begin the application process by July 1. –Upon approval districts will be able to draw down funds. 41

ESF Final Expenditure Report Process Districts will report expenditures of approved funds. SED is working on a close out process and a Year 2 application to be available to districts by July A comparison of actual expenditures with the approved budget and a final narrative noting any deviations from the approved budget. If a district has claimed and received funds in excess of the final allowable cost, SED will recover the overpayment although the district should have safeguards in place to assure this does not occur. 42

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 43

7.State Legislation and Recommendations State Appropriations of ARRA ESF for the Current School Year  The State Budget adopted in April 2009 included a Deficit Reduction Assessment (DRA) for  The DRA was offset with $1.2 billion in federal Education Stabilization Funds, known as a Deficit Reduction Assessment Restoration (DRAR).  In December 2009, Chapters 502 and 503 of the Laws of 2009 were adopted and included a Supplemental Deficit Reduction Assessment (SDRA). This was a second, i.e. supplemental DRA (the initial DRA was adopted in the April budget).  The SDRA is being offset with $391 million in federal ARRA funds. 44

Supplemental ARRA ESF Funds For  Although ARRA Education Stabilization Funds (ESF) are being used to offset reductions in State Aid, they are administered as federal grants and federal requirements apply.  District amounts of Total General Aid and SDRAR amounts can be viewed on the General Aid output report via SAMS online  Districts first reported on the additional ARRA funds, used to offset the Supplemental Deficit Reduction Assessment Restoration (SDRAR), resulting from Chapters 502 and 503 of the Laws of December 2009, for the quarter ending March 31,  NYSED provided a supplemental Education Stabilization Fund (ESF) application for districts to complete in early 

Additional Information on Supplemental Education Stabilization Funds  The supplemental ESF application will require districts to detail their proposed purposes and budgets for the supplemental funds.  Allowable and non-allowable expenses for the SDRAR will be the same as for other Education Stabilization Funds.  Information can be found at:  NYSED will review and approve supplemental ESF applications and districts will be authorized to spend funds between July 1, 2009 – June 30,  Districts should account for supplemental funds and other ESF funds together.  Districts must account for ESF funds separately and follow administrative requirements of the Office of Management and Budget Circular (OMB Circular A-87) and Federal Education Department General Administrative Regulations (EDGAR). 46

Executive Budget Recommendations for  Continue the Mid-Year DRP reductions: a $1.4 billion, 5 percent, cut to state aid to school districts  The cut to State Aid to school districts includes a partial restoration of $726 million in Recovery Act funds.  Eliminate aid increases resulting from data submissions following Executive Budget. Aid limited to amount generated by data used for district estimates accompanying Executive budget. Subsequent data submissions would not increase aid.  Limit growth of county costs for Preschool Special Education by making districts responsible for any year-to-year growth in county costs exceeding 2%.  Consider wealth as a factor in reimbursing districts for Summer School Special Education Program costs.  Limit payments with appropriation for Summer School Special Education Program for obligations prior to the school year to $50.0 million.  Apply same requirements for regulatory adoption procedures to NYSED that apply to other state agencies, including local impact, cost-benefit analysis and identify funding sources for any new regulations. 47

ARRA Funding in The Executive Proposal recommends appropriation authority for the following: PROGRAMARRA APPROPRIATION Support of Elementary and Secondary Education$843,000,000 Preschool Special Education Program$194,000,000 Math and Science High Schools$1,382,000 Teacher Mentor Intern Program$2,000,000 Say Yes to Education Program$350,000 Race to the Top*$750,000,000 Teacher Incentive Fund*$20,000,000 Statewide Data Systems Grant*$10,000,000 Title I Part A Grants to School Districts$454,000,000 Title I School Improvement Grants$135,000,000 Homeless$1,700,000 Title II-D Technology$28,000,000 IDEA$398,000,000 Vocational Rehabilitation$15,000,000 Educational TV and Radio$5,587,000 TOTAL$2,858,019,000 * Competitive 48

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 49

8. ARRA Monitoring Plan for New York State Desk audits of applications and quarterly reports On-site monitoring of Education Stabilization Funds, Cafeteria grants and programs funded with Other Government Services Funds On-site audits of ARRA ESF, ARRA Title I and ARRA IDEA 50

ESF ARRA Monitoring Monitoring—to verify that funds are spent as intended and to receive feedback on SED data collection and communication –12 districts visited selected randomly or for reporting anomalies –Collaborated with ARRA audits –Draft and final reports in process –Allowable costs reviewed –Job calculations reviewed –Supporting documentation reviewed 51

ESF Monitoring Findings Some districts did not recalculate jobs retained or created each quarter Some districts misunderstood the revised guidance to report jobs directly funded during the quarter as meaning that once jobs are reported they didn’t need to be reported in subsequent quarters. Some districts had discrepancies between FTE’s reported on the ARRA Reporting System and FTE data on personnel records. District errors in incorrectly coding journal entries were identified and resolved. Some districts spent large amounts of ESF for contracts with vendors but reported no jobs saved or created by vendors 52

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.ARRA Audits 10.Non-compliance 11.Common Misunderstandings 12.Resources 53

OAS District Selection for Audit Used Existing Data From –Annual Independent Audits –Single audit findings –OSC audit findings –Any other audits Identified 68 At Risk Districts Plan to audit 30 by June 30,

Risk Assessment of Financial Factors Selection based on quantified risk assessment approach -Level of Title 1 and IDEA funding -Amount of and unreserved- undesignated fund balance -ARRA funds as a percent of budget unreserved-undesignated fund balance as a percent of the following year’s adopted budget 55

Risk Assessment of Financial Factors -External auditor’s qualified opinion -Deficiencies or material weaknesses in internal controls for or Timeliness of financial statement submission -Timeliness of A-133, OSC, federal audit, and OAS audit corrective action plans -Number of audit findings by type 56

OAS Audit Objectives Verify the allowability and accuracy of amounts expended to-date (for FS-25) or amounts reported for each expense code (FS-10F) Verify the appropriateness of any requests for additional funding (FS-25) Determine if the District has sufficient control systems in place to administer ARRA funds Assess compliance with pertinent federal requirements for the use of federal funds 57

OAS Typical Findings Allowability and accuracy of reported expenditures -Some were reporting anticipated costs for the next month for ESF -Some costs claimed were not approved Financial control system –Some districts were not accounting for ESF separately in the general fund 58

Compliance with federal grant requirements –No time and effort certifications –When paid from multiple sources Not accounting for the full efforts of the employee Not certifying at least monthly to coincide with payroll Not signed by the employee Not reflected after the fact activities Section 1512 reporting –Incorrect number of FTE’s reported for jobs created/retained Cash management –Lacking procedures to minimize time elapsing between receipt and disbursement of funds OAS Typical Findings (Cont’d) 59

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.Non-compliance 10.Common Misunderstandings 11.Resources 60

9. ARRA Non-Compliance Make the reporting task easy by streamlining reporting retrieving many data elements from available databases and thus reducing the burden on sub- recipients; Provide good information and training on ARRA reporting in order to win compliance with reporting requirements; and Continue to watch for noncompliance and take steps as appropriate on case-by-case basis. 61

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.Non-compliance 10.Common Misunderstandings 11.Resources 62

10. Common Misunderstandings True: Sub-recipients submit requests for payments through a payment office (Grants Finance in most cases) –False: Quarterly reporting is a request for payment True: a Full-time employee is 1.0 FTE per quarter –False: A full-time employee is.25 FTE per quarter True: Job creation refers to jobs created with ARRA funds compared with school year A job created and funded throughout the year remains a job created. –False: That a job created in one quarter is a job saved in the next 63

Common Misunderstandings True: ARRA funds appropriated for school year must be obligated by June 30, 2010 and expended by September 30, 2010 (without legislative change) –False: Supplemental ESF funds can be used next year True: Quarterly reports are due at the end of each quarter: 3/31, 6/30, 9/30, 12/31. This is when quarterly reports are due for each and every ARRA grant (even if there are no changes). –False: Not knowing when the report is due! Fact: Regular updates are available at –False: Forgetting to check the ARRA website 64

Topics 1.Legislation and Appropriations 2.ARRA Quarterly Reporting 3.Requesting Payment 4.Accounting 5.Allowable Expenses 6.Education Stabilization Funds 7.State Legislation and Recommendations 8.ARRA Monitoring 9.Non-compliance 10.Common Misunderstandings 11.Resources 65

11. Resources usny.nysed.gov/arra/ your reporting questions to NYSED: Grants Finance Questions to: s for Federal guidance: SFSF: IDEA: Title I: Office of the Inspector General hotline: Inspector General: 66

67 Use of all ARRA Funds Must Comply with Federal Guidance Saving and Creating Jobs and Reforming Education: An Overview Federal ARRA Legislation: OMB Circular A-87 are the cost principles that are applicable for school districts. Office of Management and Budget: EDGAR ARRA Federal Reporting

Description of ARRA Programs Funded Through NYSED 68

Description of ARRA Programs Funded Through NYSED (Continued) 69