1. Reimbursement Training for High-Risk Grantees Texas Education Agency Division of Federal Fiscal Monitoring February 18, 2016

2. 2 Presentation Agenda Specific Conditions Required Information Financial Accounting System Basic Fiscal Requirements Requesting Reimbursements Federal Fiscal Requirements Adequate Source Documentation Common Findings Questions to Consider Important Links

3. 3 Acronyms Used in Presentation CFRCode of Federal Regulations CIPcampus improvement plan DIPdistrict improvement plan IDEAIndividuals with Disabilities Education Act of 2004 LEAlocal educational agency NCLBNo Child Left Behind Act of 2001 P.L.Public Law TEATexas Education Agency

4. 4 Course Objective and Scope Upon completion of this course, participants will be able to identify the basic fiscal requirements for complying with their specific conditions.

5. 5 Your organization will not be able to draw down its funds automatically using TEA’s expenditure reporting system. Your organization must submit all expenditures not previously reimbursed by TEA at least once a month for each federal grant. Monthly submission is still required when no expenses are incurred and paid. Your organization must ensure that all expenditures claimed for reimbursement have been incurred and paid by your organization. If your organization does not have any expenditures for a given month, you must still notify TEA. Specific Conditions

6. 6 Your organization must submit supporting documentation to TEA for each request for reimbursement. Your organization must reconcile each request for reimbursement to the general ledger, your organization’s budget, and the federal grant application budget approved by TEA. Your organization must participate in a reimbursement training provided by TEA. Specific Conditions (continued)

7. Required Information for TEA Contact person name and contact information to be submitted by authorized school official. Accounting software name. Employee listing for each grant, including their functional titles and the percentages funded from each grant. District or campus improvement plans. Statement verifying campuses are operating Title I, Part A schoolwide programs. 7

8. Copy of your organization’s procurement policies and procedures that identify whether your organization is following new procurement standards set forth in 2 CFR 200.317–326 or has chosen to take advantage of two-year grace period. 8 Required Information for TEA (continued)

9. 9 Financial Accounting System Basic requirements Must allow for fund accounting. Must use 15-digit account code structure. Must use required account codes. Must be current, complete, accurate. Must use budgetary controls and encumbrances. Must be able to produce year-to-date detailed reports and payroll distribution reports for each employee paid with grant funds.

10. Legal Structure of Federal Requirements Statues Authorizing Program Statutes o NCLB P.L. 107-110 o IDEA P.L. 108-446 Regulations Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) 10

11. 11 Financial management system Accurate, complete, current data for each federal award to support total reimbursements. Procurement standards Comply with federal, state, and local policies including program specific rules, as applicable. Reasonable and necessary. Allocable to the grant program. Inventory management system Effective control-inventory records. Basic Fiscal Requirements

12. New EDGAR (2 CFR 200) 2 CFR 200.302, Financial management 2 CFR 200.305, Payment, cash management 2 CFR 200.310, Property standards 2 CFR 200.317, Procurement standards 12

13. Procurement Standards Your organization must select 34 CFR 80.36, Procurement or 2 CFR 200.320, Methods of procurement 13

14. New EDGAR Time Distribution Records 2 CFR 200.430, Compensation— personal services 14

15. 15 Requesting Reimbursement 1.Submit Request for Reimbursement Summary Worksheet for each request for reimbursement using Accellion to FFM_Monitoringreview@ tea.texas.gov (a separate worksheet for each grant program). 2.Submit year-to-date detailed general ledger, and payroll journal if applicable, generated directly from your organization’s financial accounting system. 3.TEA staff may select transactions from each request for reimbursement for transaction testing and request additional supporting documentation.

16. Reimbursement by TEA After reviewing the selected transactions and supporting documentation, TEA will reimburse your organization for only those costs determined to be adequately documented. TEA will notify your organization about the area of noncompliance for which the expenditures are not being reimbursed. 16

17. Your organization must acquire the documentation to address any inadequacies or address the area of noncompliance identified by TEA, as applicable, before resubmitting the expenditure for reimbursement. 17 Source Documentation

18. Grant Close-Out All high-risk grantees must submit their final expenditure reports (including revised final reports) within 30 days after the ending date of the grant. 18

19. TEA will follow its standard process when reviewing final expenditure reimbursement requests (including any revised final expenditure reports). TEA may selected certain transactions, including reclassification journal entries, for additional review. 19 Review of Final Expenditure Reports

20. Payroll Transactions (Class Object Code 6100) Employee certifications (such as educator certifications, licenses, and TEA highly qualified teacher determination forms). Time distribution records (such as Personnel Activity Reports [PARs], semi-annual certifications, substitute time and effort system certifications, and other records that comply with applicable standards). If your organization has chosen to use the Ed-Flex waiver, TEA will require less detailed records. Employment contracts and letters of agreement. Salary authorizations and payroll distribution sheets indicating the approved source of funds from which an employee is paid. Job descriptions. YTD payroll distribution journals that include all payments from all funding sources made to an employee. 20 Adequate Source Documentation (6100)

21. Professional and Contracted Services (Class Object Code 6200) Executed contract agreements between the vendor and your organization made in accordance with applicable federal, state, and local regulations. Purchase orders or purchase requisitions with appropriate approvals. Itemized invoices and receipts that include dates and details of services rendered. Proof of payment (such as cancelled checks). Certifications or licenses for contractors, if applicable. 21 Adequate Source Documentation (6200)

22. Supplies and Materials (Class Object Code 6300) Itemized receipts, invoices, or billing statements that include dates of purchase and delivery. Inventory records for technology devices and other controllable assets purchased with federal funds, whether capitalized or not. Records must include elements such as descriptions and serial numbers, source of funding, acquisition date and cost, and percentage of federal grants funds used to acquire the property. Proof of payment (such as cancelled checks). 22 Adequate Source Documentation (6300)

23. Other Operating Costs (Class Object Code 6400) Receipts for expenses such as meals, lodging, transportation, and parking. Itemized invoices that including dates of service and dates of purchase. Mileage reimbursement logs. Travel reimbursement reports or vouchers completed at the end of a grant-related trip. Copies of after-the-fact proof of training, such as a certificate of completion or sign-in sheet. Detailed meeting or training agenda. Proof of payment (such as cancelled checks). 23 Adequate Source Documentation (6400)

24. Property Management Records 2 CFR 200.313(d)(1) Equipment records shall be maintained accurately and shall include: Description of the equipment. Serial number, model number, or other identification number Funding source of the equipment, including the award number. Acquisition date and cost, including the unit acquisition cost. Percent federal participation. Location and condition of the equipment and the date reported. Ultimate disposition of the equipment. 24

25. Common Mistakes Incomplete worksheet. Incomplete financial records. Post-dated transactions. Inadequate campus improvement plans. Failure to respond to requests for documents. 25

26. Allowable use of funds Source documentation o Unsupported expenditures. Budgetary control o Exceeding approved budgets. Allocable costs o Do not benefit the program. Period of performance o Costs incurred outside of grant period. Necessary costs o Not reasonable and necessary. 26 Common Areas of Noncompliance

27. 27 Monitors find expenditures that Do not meet statutory purpose. Are not reasonable or necessary. Support activities and functions that are not required or necessary to carry out state mandates or general operations. Common Findings

28. 28 Monitors find expenditures that Are not related to instruction Are prohibited or not allowed o Entertainment o Food Are limited o Travel Are not supported Common Findings (Continued)

29. Time distribution records Not maintained Not after the fact Staff qualifications Not adequately maintained for: o Highly qualified teachers o Special education credentials 29 Common Findings (Payroll)

30. Positions not approved in the budget. o Number of positions exceed number approved in the budget. o Stipends not included as “other.” Items requiring specific approval (IDEA-B). Exceeding total amount budgeted. Class object codes not budgeted. 30 Common Findings (Budgeting)

31. Credit card statements. Gift cards without additional support. Incomplete receipts and invoices. Certificate of completion for professional development or conferences. 31 Common Findings (Source Documentation)

32. 32 Loss of records Number one reason for cost adjustments. Access Records must be maintained at a physical location that is readily accessible to TEA personnel and the public, such as: o Office of charter holder o Charter central administrative office o Charter campus Records must be maintained within the State of Texas. Common Findings (Records)

33. Necessary and reasonable o Educational fieldtrips o Not aligned with CIP/DIP Travel o Maximum allowable rates exceeded o IDEA-B requires specific approval Food costs o Food for staff meetings/development o Full meals for parental involvement o Food as incentives for student participation o Non-nutritional snacks 33 Common Findings (Unallowable Costs)

34. Pre-award costs that aren’t approved. Annual subscriptions or software licenses outside of the grant period 34 Common Findings (Period of Performance)

35. 35 Questions to Consider Does the activity meet the intent and the objectives of the enabling legislation?  Intents and purposes  Intended program beneficiaries

36. 36 Does the program, activity, or strategy address a need previously identified in the campus comprehensive needs assessment? The needs assessment is critical as it reveals the priority areas on which the program will focus. Provides basis for goals, strategies, and activities. Driving force of the program. Guides the program. Questions to Consider (continued)

37. 37 Is the cost allowable per the federal cost principles? Costs must be allocable to a particular grant award in accordance with relative benefits received. o Be incurred specifically for the grant. o Benefit the grant. o Be distributed in reasonable proportion to the benefits received. Questions to Consider (continued)

38. 38 Is the cost allowable per the federal cost principles? Costs must be reasonable and necessary for operation of the program. o Reasonable costs are consistent with prudent business practice and comparable to current market value. o Necessary costs essential to accomplishing the objectives of the project. o Must be allowable expenditures under the authorizing program statutes, regulations, and rules. Questions to Consider (continued)

39. 39 Did your records comply with the federal fiscal regulations in 2 CFR 200? Standards for Financial and Program Management Financial Reporting o Emphasis on accurate, current, and complete disclosure. Accounting Records o Emphasis on maintenance of records which adequately identify the source and application of funds. Internal control o Emphasis on effective control over all grant and subgrant cash, real and personal property, and other assets. Questions to Consider (continued)

40. 40 Budget control Emphasis on comparison of actual expenditures to budgeted expenditures. Allowable cost Emphasis on following rules to determine the reasonableness, allowability, and allocability of costs. Source documentation Emphasis on the maintenance of source documentation to support accounting records. Payment and cash management Must be able to support all amounts being requested and only reimbursed for expenditures that have been incurred and paid by your organization. Questions to Consider (continued)

41. 41 Is the expense supporting an activity or cost approved in the application? Number of approved positions. Professional and contracted services. Capital outlay. Budget amendments. Questions to Consider (continued)

42. 42 Did you encumber, obligate, and expend funds between the beginning date and ending date listed in the Notice of Grant Award? An obligation occurred depending upon the expenditure as follows: Expenditure TypeDate of Obligation Acquisition of propertyDate of binding written commitment Personal services by employee When services are performed Personal services by contractor Date of binding written commitment TravelActual dates of travel Utility servicesWhen the services are received Rental or lease of property When the property is actually used or occupied Questions to Consider (continued)

43. 43 Obligation of funds: All services must be rendered between the beginning and ending dates of the grant. All materials and equipment must be delivered before the ending date of the grant and must be ordered and delivered in time to substantially benefit the current grant period and in no case after the ending date of the grant. All travel must occur by the ending date of the grant. Pre-award costs with approval only. Questions to Consider (continued)

44. Do we need to secure receipts for meals and other incidental expenses reimbursed to school employees? Federal and state rules require that any expenses reimbursed to an employee be for actual costs incurred. However, depending on your school policy, employees may submit a reimbursement request and attest certain actual costs, as stipulated in guidance, instead of submitting actual receipts. 44 Questions to Consider (continued)

45. 45 What Does “Necessary” Mean? “Necessary” means essential to accomplish the objectives of a project. “Necessary to accomplish the objectives of a project” means the project will not be successful without the expenditure of funds for certain items, purposes, or activities. “Necessary” does not mean “nice to have.”

46. 46 A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Cost is not extreme or excessive. What Does “Reasonable” Mean?

47. 47 Important Links TEA Grant Opportunities TEA Grant Management ResourcesGrant Management Resources TEA Federal Time and Effort Reporting Guidance HandbookFederal Time and Effort Reporting Guidance Handbook TEA Substitute System for Federal Time and EffortSubstitute System for Federal Time and Effort

48. 48 Copyright Notice The materials are copyrighted © and trademarked ™ as the property of the Texas Education Agency (TEA) and may not be reproduced without the express written permission of TEA, except under the following conditions: 1.Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from TEA. 2.Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of TEA. 3.Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way. 4.No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts, Texas Education Service Centers, or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from TEA and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty. For information contact: Office of Copyrights, Trademarks, License Agreements, and Royalties, Texas Education Agency, 1701 N. Congress Ave., Austin, TX 78701- 1494; phone 512-463-9270 or 512-936-6060; email: copyrights@tea.state.tx.us.