1. PRESENTED BY MICHAEL BRUSTEIN, ESQ. WWW.BRUMAN.COM MBRUSTEIN@BRUMAN.COM NEVADA AEFLA DIRECTORS A DISCUSSION OF FEDERAL ISSUES NOVEMBER 28, 2012 HYATT PLACE LAS VEGAS, NV 1

2. AGENDA 1.Funding 2.Sequestration 3.Ryan Budget 4.Cash Management Issues 5.OMB Super Circular 6.Time and Effort 7.Reauthorization 8.Questions 2

3. FUNDING - AEFLA FY 11FY 12 National$521,270,370$520,284,799 Nevada$4,829,004$4,943,602 3

4. EL CIVICS FY 11FY 12 National$74,850,000$74,708,534 Nevada$776,346$768,631 4

5. FY 13 – 7/1/13 6/30/14 Continuing Resolution (CR) but only through March 2013 increase of.612 of 1% 5

6. SEQUESTRATION Budget Control Act, August 2011 6

7. SEQUESTRATION Supercommittee tasked with cutting $1.5 trillion in spending over next decade by Thanksgiving 2011 Total failure to come to an agreement means automatic cuts triggered Only intended as a threat – never meant to happen Cuts take effect January 2, 2013 Automatic, across-the-board cuts Little discretion for appropriators, agencies Apply to FY 2013 federal spending numbers Could exacerbate effect of any cuts made in FY 2013 7

8. WHEN WILL SEQUESTRATION HAPPEN? President Obama must issue a sequestration order no later than January 2, 2012 Funds received by States July 2012 and earlier are NOT subject to sequestration Advance funding received in October of 2012 will not be subject to sequestration when allocated BUT cuts will be calculated and applied to July 2013 funds Funding received in July of 2013 will be subject to cuts After July 2013, cuts will be incorporated into annual appropriations 8

9. RYAN BUDGET Passed House 5% cut on 7/1/13 15% cut on 7/1/14 9

10. CASH MANAGEMENT ISSUES Minimize time elapsing between transfer from ED to SEA, and from SEA to AEFLA provider for actual expenditure – 72 hours – 34 CFR 80.20(b)(7) 10

11. Interest accrued over $100 must be remitted 34 CFR 80.21(i) 11

12. PERIOD OF AVAILABILITY AEFLA requires multiyear funding Each AEFLA $ subject to 27 month availability 90 day liquidation 34 CFR 80.23 12

13. AEFLA Providers Cannot Obligate Funds until Local Plan Approved 34 CFR 76.708(c) 13

14. Obligations in carryover period subject to current statute and applications 34 CFR 76.710 14

15. Administrative Costs = Indirect Costs 15

16. OMB SUPER CIRCULAR ADVANCE NOTICE NPRM FINAL RULE 16

17. EXPECT REVISIONS TO: 1)Cost Principles A-21 A-87 A-122 2)Administrative Principles A-110 A-102 3)Federal Agency Audit Resolution A-50 4)Single Audit A-133 17

18. SUPER CIRCULAR Increase consistency Decrease complexity But allows for disparate treatment depending on type of entity 18

19. Will the shifting of Audit Thresholds reduce burden on SEAs? 19

20. SINGLE AUDIT THRESHOLD a)Under $1 million in total federal expenditures: No single audit Augmented pass-through role b)Between $1 million and $3 million More “focused” single audit c)Over $3 million Full single audit 20

21. “FOCUSED SINGLE AUDIT” ($1 TO $3 MILLION) Single auditors to review 2 Compliance Requirements 1)Allowable/Unallowable 2)Federal agency determines – but priority on risk of improper payments, or fraud, waste, abuse (look to Compliance Supplement) 21

22. Can SEA impose additional compliance requirements?? 22

23. “FULL SINGLE AUDIT” OVER $3 MILLION “UNIVERSAL COMPLIANCE REQUIREMENTS” 1.Allowable Costs 2.Eligibility 3.Reporting 4.Subrecipient Monitoring 5.Period of Availability of Federal Funds 6.Procurement Practices Comply with Suspension/Debarment 23

24. TIME AND EFFORT A-87 Requirements New Flexibility on Cost Objectives 24

25. REAUTHORIZATION 1.Current law authorized through 2003 2.Congress may consider WIA Reauthorization next year 3.AEFLA is relatively non controversial 4.EL Civics likely to be folded into Basic Grant 5.DOL Administration? 25

26. QUESTIONS 26

27. 27 This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein & Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances.