2. Office of Federal Programs
Federal Programs Fiscal Compliance
Hello everyone, my name is Kay Townsend. This afternoon I will be discussing Fiscal Compliance as it relates to MOE, Comparability, and Supplement not Supplant. I will also discuss the Period of Availability of funds (now known as the Period of Performance) as it relates to current year, 1st year, and 2nd year funds, tracking your federal funds, the Title I carryover limitation, Fiscal Flexibility Options, and lastly, common issues received on district’s Independent Audit Finding, Exception or Comments.

3. Fiscal Compliance Agenda Fiscal Compliance Period of Performance
Maintenance of Effort
Comparability
Supplement not Supplant
Period of Performance
Tracking Federal Funds
Title I, Part A Carryover Limitation
Fiscal Flexibility Options
LEA Independent Audit Findings
Significant Due Dates
Resources
Questions

4. LEA Administrative Responsibilities
An LEA shall comply with applicable statutes, regulations, and approved applications.
An LEA shall use federal funds in accordance with those statutes, regulations, and applications. (EDGAR §76.700)
An LEA shall use fiscal control and fund accounting procedures that ensure proper disbursement of and accounting for federal funds. (EDGAR §76.702)
READ FIRST There are certain rules and regulations that govern LEAs that receive federal funds and as a condition of receiving federal funds LEAs shall….. READ BULLETS
AFTER YOU READ THE BULLETS READ– EDGAR is the Education Department General Administrative Rules. In addition to EDGAR we have the new Uniform Grant Guidance (UGG) that consists of federal administrative rules, cost principals and audit requirements. UGG replaced the old A-87 Cost Principals, A-133 Audits and other administrative circulars. The purpose of UGG is to strengthen accountability by improving policies that protect against waste, fraud and abuse.
These resources are listed at the end of this PowerPoint

5. Fiscal Compliance
Three requirements that are critical to the success of Title I, Part A because they ensure that the Federal investment has an impact on at-risk students the program is designed to serve. The focus is on the use of state and local resources to ensure there is a fair distribution of resources between Title I schools and non-Title I schools.
Maintenance-of-Effort
Comparability
Supplement, not Supplant
READ FIRST Maintenance of Effort, Comparability , and Supplement, not Supplant are ……. THEN READ SLIDE

6. Maintenance-of-Effort (MOE)
At the district level
A provision which requires that an LEA maintain a 90% level of it’s expenditures for public education from State and local funds from one year to the next. (ESEA, Section 1118(a) and 8521(a))
READ AFTER SLIDE
USDE allows three different ways to calculate Maintenance of Effort under ESSA. A LEA meets MOE based on its aggregate expenditures or per pupil expenditures based on average daily attendance or enrollment. The state applies the method most favorable to the LEA.

7. Reduction for Failure to Meet MOE
The SEA must reduce the amount of allocation under Title I, A and other covered programs by the exact proportion by which the LEA failed if the LEA failed to maintain effort in the target year (2017) and also failed to maintain effort in one or more of the 5 previous years. (ESEA, Section 8521(b)(1))
READ FIRST If the LEA falls below 90 percent ……THEN READ SLIDE
NOW READ For example, if the LEA failed MOE at 88 percent in 2017 and it also failed in 2014, then its Title I, Part A, Title I, Part D, Delinquent, Title II, Part A, Title III, Part A, 21st Century and Rural and Low-Income (RLIS) allocation would be reduced by 2 percent.

8. Reduction for Failure to Meet MOE
Conversely, if the LEA failed to met MOE in the target year (2017) but met MOE in the previous 5 years, the SEA would not reduce the LEA’s allocation.
READ SLIDE FIRST
THEN READ For example, if the LEA failed to maintain effort in FY2017, but meet MOE in 2016, 2015, 2014, 2013, and 2012, then the SEA would not reduce the LEAs allocation, however, the LEA’s failed status remains.
Previously under NCLB, the SEA would reduce the LEA’s allocation each time the LEA failed to meet MOE. So, ESSA is providing some flexibility by only reducing an LEA’s allocation only if it fails based on the new requirement.

9. Waiver USDE may waive the MOE requirement if it is determined that:
Exceptional or uncontrollable circumstances such as a natural disaster;
A precipitous decline in the financial resources of the LEA. (ESEA, Section 8521(c)) or
“New” A change in the organizational structure of the LEA
READ FIRST With that being said, LEA’s may appeal to USDE to waive the MOE penalty if they can prove their failure was due to an ………..NOW READ SLIDE
NOW READ For example, In FY2016 a storm caused major damage to your elementary site, this caused a spike in your expenditures so in FY2017 there is no way the LEA could have maintained spending 90 percent of what it spent the previous year, because in FY2016 the spike in expenditures was due to an uncontrollable circumstance beyond the LEAs control.
Another example, in FY2017 the LEA failed to maintain 90 percent of what was expended in the previous year 2016 and the reason was due to a sharp decline in state/local revenue therefore, the district could not maintain the same level of spending as it did in the previous year.
ESSA has also added as a reason to grant a waiver cab be based on a “change in the organizational structure of the LEA” For example, the LEA merges with another LEA, the LEA divides into two or more LEAs, or if an LEA eliminates grade levels (e.g., previously served grades K-12 and now serves grades K-9
If your district has experienced one of these circumstances, I would advise you to appeal so that a waiver can be granted removing the failed status.
A FISCAL TIP MOE Calculation Sheet can be found in the OCAS manual in the Policy and Procedures section on Page 52 Each District’s ADA MOE Check Page can be found on OCAS transparency link

10. Maintenance of Effort and Schoolwide Flexibility
Schoolwide Defined
Schoolwide flexibility allows the use of federal funds to be spent to upgrade the entire educational program in a Title I school as long as it is integrated in the LEAs Schoolwide Plan
LEAs exercising Schoolwide flexibility must ensure that the 90 percent level of state and local expenditures remain constant.
READ SLIDE FIRST
THEN READ Schoolwide flexibility does not release the LEA from meeting Maintenance of Effort.
Shifting nonfederal salaries to federal salaries causes a decrease in state/local spending and an increase to federal spending. MOE is about maintaining state/local expenditures and not decreasing so you have to be aware of how decreasing state/local spending would affect MOE.
When you shift non-federal salaries to federal in operating schoolwide flexibility are you still able to maintain a 90 percent level of state and local spending in meeting Maintenance of Effort? If your answer is yes, then Maintenance of Effort is being met.

11. Comparability At the building level
Comparability requires that LEAs be able to document that services provided with state and local funds in Title I schools are comparable to those provided in non-Title I schools (ESEA, Section 1118(c)(A))
Moreover, if an LEA serves all of its schools with Title I funds, the LEA must use state and local funds to provide services that, taken as a whole, are “substantially comparable” in each school. (ESEA, Section 1118(c)(B))
Before you go to the next few slides regarding Comparability, you can ask the audience “How many district are single site districts?” That is one elementary, one junior high, and one high school? If they are single site, you can tell them they are exempt from demonstrating Comparability because Comparability compares grade spans that are exactly alike.
*Comparability applies to districts with 2 or more like grades to compare. Single site districts (1 elementary, 1 junior high, and 1 high school) are exempt from demonstrating Comparability. No Like grades to compare.
No reporting to the Office of Federal Programs that you are exempt.

12. Criteria for Meeting Comparability
The LEA is considered to have met the comparability requirement if it submits to the SEA, a written assurance that it has established and implemented one of the following:
An LEA may establish a district-wide salary schedule.
A policy to ensure equivalence among schools in teachers, administrators, and other staff, and a
Policy to ensure equivalence among schools in the provision of curriculum materials and instructional supplies.
READ FIRST There are a number of ways an LEA may meet the Comparability requirement. NOW READ SLIDE
NOW READ According to guidance, a written assurance is not sufficient to demonstrate comparability,
LEAS must keep records to document that the salary schedule and policies were actually implemented and resulted in schools being comparable.

13. Criteria for Meeting Comparability
An LEA may also meet the comparability requirement if it establishes and implements other measures for determining compliance:
Student/teacher salary ratio,
Expenditures per pupil, or
Student/teacher ratio
The Office of Federal Programs has established and uses the student/teacher ratio as the preferred method of determining comparability.
READ FIRST Besides written assurances NOW READ SLIDE

14. Comparability Measure
Based on Student/Teacher Ratio
By category: elementary, middle, high school
Compare the total average non-Title I student/teacher ratio to each Title I site or if all sites are Title I, then the total average student/teacher ratio is compared to each Title I site.
READ SLIDE
NOW READ Comparability compares apples to oranges and oranges to oranges. This ensures that the student/teacher ratio in Title I schools is comparable to the student/teacher ratio in the non-Title I schools or if all sites are Title I sites then the student/teacher ratio is comparable to each other.

15. Compare Non-Title to Title I
READ FIRST This screen shot is comparing Non-Title I to Title I. In order to demonstrate Comparability the LEA would have to show that it has no more than students per staff in each Title I site. The one Title I site student/teacher ratio is below the total average of the non-Title I sites. So it is comparable.

16. Compare Title I to Title I
This screen is comparing Title I to Title I. In order to demonstrate Comparability the LEA would have to show that it has no more than students per staff in each Title I site. Each Title I site’s student/teacher ratio is below , at 10.57, 10.83, and
If an Title I site does not meet the total student/teacher ratio, the LEA would need to make adjustments in staff in order to bring the Title I site into compliance.

17. Developing Procedures for Compliance
An LEA must develop procedures for complying with the Comparability requirements. (ESEA, Section 1118 (c)(2)) These procedures should be in writing and should, at a minimum, include the LEA’s timeline for demonstrating comparability, identification of the office responsible for making comparability calculations, the measure and process used to determine whether schools are comparable, and how and when the LEA makes adjustments in schools that are not comparable.
READ Procedures

18. Comparability and Schoolwide Flexibility
Schoolwide schools still have to comply with Comparability requirements of Title I.
READ SLIDE
NOW READ Because Comparability focuses on staff paid with state and local funds. The Comparability Report opens in November and will be due December 14

19. Supplement not Supplant
At the student level
Ensures services provided with Title I resources cannot replace, or supplant, services that a LEA would ordinarily provide to all students. (ESEA, Section 1118(b)(1))
READ FIRST Supplement not Supplant is the third fiscal requirement and it is …………
NOW READ Schoolwide flexibility, however, loosens supplement not supplant, as it allows the use of federal funds to be spent to upgrade the entire educational program in a Title I, Part A school, as long as it is integrated in the LEA’s Schoolwide Plan.

20. Period of Performance of Federal Funds
Current Year, 1st Year, 2nd Year Funds
Period of availability for FY2017 funds for school year is 27 months, beginning July 1, 2016 and ending September 30, 2018.
Example
Current year funds are FY2017 funds in FY /1/16-6/30/ months
LEA 1st year carryover funds are FY2017 funds in FY2018
7/1/17-6/30/ months
LEA 2nd year carryover funds are FY2017 funds in FY /1/18-9/30/ months
27 months
READ FIRST Now I want to switch over to and focus on the Period of Performance and tracking federal funds.
Federal funds are made available to LEAs for a maximum period of 27 months. This maximum period includes an initial 15 month Period of Performance plus a 12 month period for carryover. The additional 12 months is know as the Tydings Amendment.
At the state level, funds are available from July 1 to June 30 and are represented as current year, 1st year, and 2nd year funds
NOW READ THE SLIDE then say I want to focus on 2nd year carryover funds this will lead you to the next slide.

21. Period of Performance Determining 2nd Year Carryover
READ FIRST At the end of the fiscal year after closeout is performed one way to determine if you’ll have a 2nd year carryover balance going into the following year is to go to GMS’s Consolidated Application and click on Payments to view this snapshot. This example shows that the LEA expended $43, during the entire year, which is less than what it had in prior year carryover funds available (red amount $71,748.12), resulting in the district carrying over to the next fiscal year $28, in 2nd year carryover funds that must be encumbered in the following fiscal year, by the end of September 30. These funds must be encumbered and claimed quickly so that no funds are lost, failure to submit claims for 2nd year carryover funds in a timely manner will result in loss of 2nd year carryover funds. See the Reporting Requirements Documents for the due date for 2nd year carryover.
Please review your balances to ensure that you know how much you have in carryover and what these funds represent, in terms of 1st or 2nd year funds.

22. Period of Performance Current Year, 1st Year, 2nd Year Funds
READ FIRST Here is a snap shot of the Revised Allocation Notices another example of tracking your funds but it can only be seen after closeout is performed to allow prior year funds to roll over into the current fiscal year. This example is key because it gives you a picture of your funds in terms of current year, 1st year carryover and 2nd year carryover funds available to the LEA. This snapshot shows the $28, that is now 2nd year carryover funds in the current year that that must be encumbered by September 30.
The Revised Allocation Notice can be found on the Single Sign On under Allocation Notices Systems.
A Fiscal tip to remember , 2nd year carryover funds must be encumbered by September 30 and the state has to liquidate those funds by December 31. See the Uniform Grant Guidance Section (b).

23. Tracking Funds -Funding Summary
READ FIRST Again another way to track federal funds is the funding summary in GMS. Click on Click to view Funding Summary. Go to the next slide.

24. Tracking Funds by Funding Summary
READ FIRST This snap shot displays what programs you have, the funds available, approved budget amount, expenditures paid to date and the remaining balance.

25. Fiscal Flexibility Options
Transferability- allows LEAs to transfer up to 100% of the funds they receive under certain Federal programs to other programs that can more effectively address the district’s needs.
However, there is a limitation on the 100 percent transferability for Title II, Part A. (ESEA, Section 5103(b)(1)) requires an LEA to provide, at a minimum, equitable services to private schools teachers and students based on an amount of the LEA’s overall allocation under Title II, Part A.
Consolidated Administrative Funds- allows LEAs to consolidate 5, 7, or 8 percent (based on ADA) of its funds to a unique project code in order to carryout administrative duties.
Schoolwide Consolidation of Federal Funds – Project 785
READ FIRST Here are some fiscal flexibility options offered to LEAs that can help in spending their federal funds more effectively.

26. Title I Carryover Limitation
Title I A: 15 Percent Limitation (ESEA, Section 1127(a))
Not more than 15 percent of the funds allocated to
a local educational agency for any fiscal year under this subpart (but not including funds received through any reallocation under this subpart) may remain available for obligation for one additional fiscal year.
Fiscal Tip: 15 cap is calculated on the Title I current year allocation plus any funds transferred into Title I.
READ FIRST Title I Part A (511) is the only program that limits the amount of current year funds a district may carryover from the previous year (2018) to the next year (2019).
NOW READ SLIDE
NOW READ THIS This rule applies to LEAs whose current year allocation is greater than $50,000. Districts whose current year allocation is less than $50,000 are not subject to the 15 percent carryover limitation.

27. 9/30 Reporting is used to determine if an LEA has excess Title I, Part A funds after September 30.
READ FIRST here is snapshot of the 9/30 report. The 9/30 report is used to determine if an LEA has excess funds after September 30.
Waivers are granted once every 3 years

28. Independent Audits Most Common and Repeat Findings
OCAS data overstated/understated did not match amount actually paid from the federal program
Equipment purchased with federal funds not properly labeled as required by federal program guidelines (UGG)
Corrective Action Response
May require LEA to provide additional information/documentation
READ SLIDE FIRST THEN READ It’s important to have written procedures and follow them and update them as needed. Also ensure staff members are familiar with these procedures.
Fiscal compliance as it relates to monitoring. There is a fiscal piece that is assessed for determining risk for monitoring LEAs each year. LEAs that have returned 2nd year carryover funds, failed MOE, lost excess carryover funds, and received audits are more at risk to receive a site visit from the Office of Federal Programs because each ding is counted as risk.
I hope this presentation assists you in being familiar with these requirements and prove to be a resource tool in meeting federal fiscal compliance .

29. Good Stuff To Know
For OSDE Significant Due Dates for all departments see Reporting Requirements Document accessed through Single Sign-On (links and docs) or the Accreditation homepage.

30. Good Stuff To Know

31. Resources
Non-Regulatory Guidance, Title I Fiscal Issues: Maintenance of Effort, Comparability, Supplement, Not Supplant, Carryover, Consolidating Funds in Schoolwide Programs, and Grant Back Requirements, Revised 2008
Non-Regulatory Guidance: Fiscal Changes and Equitable Services Requirements under the Elementary and Secondary Education Act of 1965 (ESEA) as Amended by the Every Student Succeeds Act (ESSA)
Maintenance of Effort Calculation can be found on the OSDE website in the Oklahoma Cost Accounting System (OCAS) Manual
Uniform Grant Guidance (UGG) CFR 200 on Federal Programs Link
Education Department General Administrative Regulations (EDGAR) found on the USDE website

32. Contact Kay Townsend, Financial Analyst Office of Federal Programs
(405)

33. Questions???