Maximize Fiscal Flexibility: Consolidated Administration, Transferability, Waivers, and Schoolwide Programs Leigh M. Manasevit, Esq. Brustein & Manasevit, PLLC Spring 2012 Forum

Remembrance of Things Past... March 3, 2011 letter from Secretary Duncan to Governors “The New Normal” Focus on the effective, efficient and responsible use of federal funds Reminder of flexibilities around since 1994! 2

CONSOLIDATED ADMINISTRATION UNDER NCLB For those wearing multiple hats 3

Consolidated Administration Combine administration for all NCLB programs NOT non-administrative activities Single Cost Objective If you work 100% on NCLB consolidated administration, then do semi-annual certification 4

Prerequisites LEAs = Need approval of the SEA SEA must set % cap for administration, OR use “necessary and reasonable amount” SEAs = Need to demonstrate that majority of operating expenses come from non-federal sources 5

TRANSFERABILITY In the unlikely event you have more federal resources than you really need 6

Transferability- LEAs not ID SI May transfer up to 50% of funds under: Title II, Part A (Teacher Training) Title II, Part D (Enhancing Education through Technology Title IV (Safe and Drug Free) Title V (Innovative Programs) ED Tech State Grants Transfer to Title I, Part A or any of the above programs Increases the base on which calculating set asides 7

Transferability – LEAs ID for SI Transfer up to 30% May only use for school improvement activities (Section 1003 or 1116) 8

Transferability – How to use it Notify SEA Modify local plans (submit to SEA within 30 days) Consult with private school of ficials 9

WAIVERS Possible relief in absence of ESEA reauthorization 10

USDE Invitation to Submit Waivers – ARRA Funds In 2009 after ARRA Relief from set-asides expanding w/ ARRA $ Relief from carry over limitations Relief from 14-day notice Allow SES in year 1 Allowing ID LEAs/schools to be SES providers 11

Problem with Waivers? Lack of Transparency!! 12

Waiver Resources Statute – NCLB Section 9401 Guidance – Title I, Part A – July 2009 Maintenance of Effort – See program statutes 13

NCLB -What may be waived? The Secretary may grant a waiver of any ESEA statutory or regulatory provision EXCEPT:  Allocation or distribution of funds to SEAs, LEAs or other recipients of ESEA $  Comparability  Supplement not supplant  Equitable services to private school students  Parent involvement  Civil rights 14

What can be waived? (cont.) Secretary may waive any provision, EXCEPT:  Charter school requirements (Title V)  Prohibitions regarding state aid (Section 9522); using funds for religious purposes (Section 9505)  Selection of eligible school attendance areas under 1113, unless % low income students is less than 10% below the lowest eligible school 15

What must be included in waiver request? 1.Identify federal program affected; 2.Identify particular statutory or regulatory provision; 3.Describe how waiver will increase quality of instruction and improve academic achievement; 4.Identify the specific measurable educational goals for each school year and method used to measure; 5.How waiver will assist in meeting those goals; 6.How schools will continue to provide assistance to targeted populations; and 7.Evidence that notice & comment rules are met 16

Notice & Comment rules For SEA request: Notice and reasonable opportunity to comment for all LEAs Submit any LEA comments to USDE Notice to public in customary manner For LEA request: Notice to public in customary manner Submit to SEA for comment Submit SEA comments to USDE 17

ED Announcement on Waivers 18

“ESEA Flexibility” September 23, provisions subject to waiver timeline – develop new ambitious AMO’s 2.School improvement consequences: LEA not required to take currently required improvement actions in Title I Schools 3.LEA improvement identification: not required to identify for improvement LEA that fails 2 consecutive years 4.Rural LEAs Small Rural School Achievement or Rural and Low Income program Flexibility regardless of AYP status 19

Waivers 5.Schoolwide Operate as schoolwide regardless of 40% poverty threshold if SEA identified as a priority or focus school with interventions consistent with turnaround principles 6.School Improvement 1003a funds to serve any priority or focus school if SEA determines school in need of support 7.Reward Schools Rewards to any reward school if the SEA determines appropriate 20

Waivers 8.HQT improvement plans  LEA that does not meet HQT no longer must develop an improvement plan  Flexibility in use of Title I and II funds  LEA-SEA develop “more meaningful” evaluation and support systems which eventually will satisfy the HQT requirement  SEA still must ensure poor and minority children not taught at higher rates by inexperienced, unqualified or out-of-field teachers 21

Waivers 9.Transferability  Up to 100%, same programs 10.SIG  1003g awards for any priority school 22

Waivers  Optional #11 ◦ 21 st Century Community Learning Centers support expanded learning time during school day 23

CONSOLIDATING FUNDS IN SCHOOLWIDE PROGRAMS Balancing Flexibility with Responsible Planning 24

Schoolwide: Legal Resources Statute: Section 1114 Regulations: 34 CFR Federal Register Notice, July 2, /070204a.html -3/070204a.html

Non-Regulatory Guidance: Designing Schoolwide Programs Guidance: March designingswpguid.doc 26

Non-Regulatory Guidance: “Title I Fiscal Issues” February 2008 (replacing May 2006) fiscalguid.doc Consolidating funds in schoolwide programs, MOE, SNS, Comparability, Grantbacks, Carryover

Schoolwide Programs: Basic Requirements Consolidate federal, state, and local funds to upgrade the entire educational program. Ensure all children meet standards, particularly those most at risk. Requirement: 40% poverty Schoolwide plan

What federal programs can be consolidated?  Federal Register, July 2, 2004  All formula (non-competitive) ◦ Except Reading First  Consolidate, but with caveats - ◦ Includes IDEA - up to cap (but not exempt from programmatic requirements) ◦ Migrant; Indian Ed restrictions on consultation

All discretionary (competitive) Still must comply with application Need not account separately for specific expenditures ED only (no School Lunch, Head Start)

Recordkeeping in SWP  School operating SWP that consolidates is not required to maintain separate fiscal accounting records, by Federal program, that ID the specific activities supported by each program’s funds.

Guidance: Three scenarios # 1: Consolidate federal, state, and local # 2: Consolidate only federal # 3: Do not consolidate Title I with other federal, state, and local (nothing consolidated) 32

What does it mean to consolidate funds? Title I Fiscal Issues Guidance E-2 and E-3 Treat funds like a “single pool of funds” Lose individual program identity School has one flexible pool of funds “Use to support any activity of the schoolwide program without regard to which program contributed the specific funds used for a particular activity”

What does it mean to consolidate funds? (cont.)  LEA does not literally need to combine funds in a single account or pool with its own accounting code  “Pool” is used “conceptually” ◦ See Title I Fiscal Issues Guidance p. 51, footnote 2  IMPORTANT: Identify in SWP PLAN: “consolidated” programs and the amounts consolidated from each!

What about state limitations on consolidation? NCLB Section 1111(c)(9) and (10): Each State plan shall contain assurances that - Each SEA must “encourage schools to consolidate funds from Federal, State, and local sources in their schoolwide programs”, and...

 “Each State plan shall contain assurances that – the SEA will modify or eliminate State fiscal and accounting barriers so that schools can easily consolidate funds from other Federal, State, and local sources for schoolwide programs”

Scenario #1: Consolidating Federal, State, and Local Funds

What if the LEA consolidates federal, state, and local??  Title I Fiscal Issues Guidance Question E-8  “When Title I, Part A funds are consolidated with State and local funds... they lose their identity.”  No distinction between federal and non-federal.

For Formula Grants Meet “Intents and Purposes”  A school that consolidates federal funds with state and local is not required to meet most of the statutory and regulatory requirements of the specific federal programs applicable at the school level. ◦ Not required to ID particular children or provide supplemental services.  Must meet “intents and purposes” of program.

Examples of meeting Intents and Purposes See Federal Register Notice – July 2, 2004

For Discretionary / Competitive Grants Must still carry out all activities described in application. But do not need to account separately for specific expenditures of the discretionary grant funds.

Scenario #2: Consolidating Only Federal Funds

Can the LEA consolidate only federal in a SWP? Yes. Title I Fiscal Issues Guidance E-4 Single Federal consolidated pool “From an accounting perspective, the funds from the contributing Federal programs lose their individual identity when they become part of a consolidated schoolwide pool and would be accounted for as part of that pool rather than by the individual programs that contribute to the consolidated schoolwide pool.”

On what activities can consolidated Federal funds be used? 1. Activities to address the “educational needs” of the school: Identified by needs assessment Articulated in SW Plan Meet “intents and purposes” of federal programs Title I Fiscal Issues Guidance E-5, etc.

What is “educational need”? Not addressed in guidance B&M best guess: Instruction – yes Instructional support – probably yes Administration – possibly yes Operational – no

On what activities can consolidated Federal funds be used? 2. OMB Circular A-87 applies o “ Cost Principles for State, Local and Tribal Governments” o Applies to all federal funds – not education specific o General: “necessary and reasonable” o Specific: Allowability of salaries/wages (time and effort records), equipment, alcohol

Scenario #3: What if there is NO consolidation at all? Only Title I supports the plan. How must Title I $ be used?

If Title I is not consolidated with other federal, state, and local, then how must the LEA use Title I funds?  Title I Fiscal Issues Guidance E-7 1.On the “educational needs” of school ◦ Identified in needs assessment ◦ Articulated in SW Plan 2.OMB Circular A-87 applies

If Title I not consolidated (cont.) All kids may participate Need not be supplemental ** “Must account for and track the Title I funds separately, identifying the activities the Part A funds support”

Under #3, what about other federal programs? Not addressed in Title I guidance B&M: Must meet all requirements of those other federal programs

Supplement not Supplant in Schoolwide Programs

Supplement not Supplant Section 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. Title I Fiscal Issues Guidance E-18 The actual service need not be supplemental

SNS: Guidance: School must receive all the state and local funds it would otherwise need to operate in the absence of Federal funds Includes routine operating expenses such as building maintenance and repairs, landscaping and custodial services

Can Title I $ be used for basic operational expenses? Title I Fiscal Issues Guidance E-8 If only federal combined – No, must be for educational needs If federal and non-federal combined – Impossible to determine which is federal Be sure sufficient state and local funds allocated to school to meet basic operational needs

Schoolwide Planning Requirements 1)Comprehensive Needs Assessment 2)Plan 3)Annual evaluation

Components of the SW Plan 1)Identify reform strategies, aligned with the needs assessment, that are research-based and provide opportunities for all children to meet the State’s proficient or advanced levels of academic achievement; 2)Provide instruction by highly qualified teachers; 3)Offer high-quality, ongoing professional development; 4)Create strategies to attract highly qualified teachers; 5)Create strategies to increase parental involvement;

5)Develop plans to assist preschool students through the transition from early childhood programs to local elementary school programs; 6)Identify measures to include teachers in decisions regarding the use of academic assessments; 7)Conduct activities to ensure that students who experience difficulty attaining proficiency receive effective, timely, additional assistance; and 8)Coordinate and integrate Federal, State and local services and programs.  Identify what funding sources are being consolidated Components of the SW Plan (cont.)

The Mechanics of Consolidation

How to Report Expenditures?  “Use any reasonable basis”  Proportional basis Example: If 25% of combined funds are from Title I, then report 25% of expenditures as Title I expenditures

Proportional Basis (or “any other reasonable method”) Use for identifying: Carryover Amount of unused non-federal funding MOE Comparability Reporting expenditures back to State or USDE State Per Pupil Expenditure (SPPE) Title I, Part A ARRA Reporting

Carryover Rule: Section 1127: Not more than 15% of the LEA’s Title I, Part A allocation will remain available for obligation in the second year SEA may waive once every 3 years

Carryover in a SWP Title I Fiscal Issues Guidance E-22 How to calculate 15% limitation? Based on 15% of LEA’s Part A allocation How to calculate amount left over at school level? Look at $ left over in school pot – if Title I contributed 10%, then 10% of remaining funds are Title I, Part A

ESEA Maintenance of Effort RULE: Section 9521: LEA may receive ESEA funds only if the combined fiscal effort per student or the aggregate expenditures across LEA from non- federal funds from preceding FY was not less than 90% of the second preceding FY

Maintenance Of Effort in SWP Title I Fiscal Issues Guidance E-20 Must exclude federal funds Identify proportion of federal contribution, and allocate expenditures to federal in same proportion EX: If federal programs contributed 25%, then 25% of expenditures attributed to federal and excluded

Comparability RULE: Section 1120A: LEA may receive Title I funds only if nonfederal funds are used to provide services in Title I schools that are at least comparable to services in non-Title I schools Often measured by student/instructional staff ratios or salary ratios

Comparability in SWP Title I Fiscal Issues Guidance E-19 (refers to B-6) Must exclude federally-paid instructional staff Identify proportion of federal contribution -- assume same percentage of instructional staff in school was paid with federal funds and exclude from comparability determination

Time and Effort Documentation in Schoolwide Programs

Time and Effort Rules Depends on the extent of consolidation of federal, state, and local funding. Key Concept: Schoolwide Plan is a single cost objective. per Sandy Brown at NASTID, Jan. 2011

Schoolwide Time Records If LEA/school consolidates.... Then must keep... All federal, state, and local fundsNo time and effort records Federal only (“Consolidated federal pot”) Semi-annual – if works ONLY on SWP Plan (single cost objective) Monthly PAR – if works on SWP Plan and other programs not in Plan (multiple cost objectives) Nothing (only Title I funds SWP)Semi-annual – if works ONLY on SWP Plan (single cost objective) Monthly PAR – if works on SWP Plan and other programs not in Plan (multiple cost objectives)

SAFE: Under Full Consolidation IF: Works 100% on SWP Plan Paid 100% from consolidated pool that includes all federal, state, and local programs THEN: No records are required. No distinction between federal and nonfederal.

SAFE: Under Federal Consolidation IF: Works 100% on SWP Plan Paid 100% from consolidated federal pool THEN: Do semi-annual certifications “I spent 100% of my time on SWP”

SAFE: Under No Consolidation IF:  Works 100% on SWP Plan  Paid 100% from Title I, Part A (no consolidation) THEN:  Do semi-annual certifications  “I spent 100% of my time on SWP” 72

A verbal “OK” from USDE: IF:  Works 100% on SWP Plan  Paid 50% from Title I Part A and 50% from non-federal money (no consolidation) THEN:  Keep semi-annual certification – “I spent 100% of my time on SWP Plan” ◦ (per S. Brown – working on 1 cost objective - could have been funded 100% from Title I Part A, if had enough resources)

SAFE: IF: Works 50% on SWP Plan and 50% on Reading First (not included in Plan) Paid 50% from Title I, Part A and 50% from Reading First THEN: Keep monthly PARs “I spent 50% of my time on the SWP Plan and 50% on Reading First”

Questions? 75

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