1 Arizona Handouts Perkins 101 Perkins

1 Arizona Handouts… • Perkins 101 • “Perkins 101 Library”

2 • Arizona Department of Education • Career & Technical Education Section • Phoenix, AZ • 602 -542 -5349 • ted. davis@azed. gov

3 Challenges • Sequestration • Hold Harmless • Reauthorization

4 Sequestration • - 5% converts to ≈ - 8. 5% reduction for all but 20 states & territories • The “hold harmless” provision of Perkins as written never envisioned “sequestration” • The full 8. 5% sequestration cut will come out of the last three months of the current federal fiscal year (July 1 – September 30, 2013) Section 111(a)(5) – Hold Harmless

5 Until October 1, 2013 you cannot obligate or spend more than your 1 st quarter grant award notification (16. 5% of total federal FY 13 award) • States – don’t forget to factor in any carryover monies you still have to reallocate o (Tydings-27 months)

6 • Perkins V ? ? ? • I wouldn’t count on reauthorization until after the next Presidential election….

7 • Concentrates on the OMB Circulars • For our purposes primarily – o Circular A-133 - Audit Requirements o Circular A-21 - Allowable Costs Postsecondary o Circular A-87 - Allowable Costs Secondary & State Agencies o Circular A-102 - The Common Rules (Admin. Regs) o Circular A-122 - Allowable Costs Non-Profit (OMB – Office of Management & Budget)

8 Time & Effort • More flexibility • Will iron out the differences between OMB Circulars A-21, A-87 & A-110

9 • Audit – o Single audit threshold increased to $750, 000 o Removes – • Procurement (including debarment) • Property management • Level of effort – Maintenance of Effort (MOE) • Etc. (7 out of 14 compliance areas) • Be careful! – It does not mean these requirements are gone! • A year or two from actual release?

10 EDGAR? Several years away…

11 There is a more advanced Perkins break-out session. Check your conference schedules.

12 • Perkins is “split-funded” between secondary and postsecondary • The average split nationally is 60% secondary & 40% postsecondary • The postsecondary splits range from 12% to 75% • Determined by each state

13 State Maintenance of Effort (MOE) & Dollar-for-Dollar Match • States have two ‘MOE’ requirements – • In the aggregate - (Section 311(b)) • Your 5% Admin funds also have an MOE requirement (Section 323) • States have a dollar-for-dollar administrative match requirement (Section 112(b)) Cuts in Perkins funding will make it easier for states to meet their Perkins MOE requirements and unfortunately for some state legislatures to cut what they are spending on CTE and not violate the Perkins MOE requirements (Section 311(b)(1)(C) & Section 323(b))

14 Allocations to States are Census Based • • 50% “population aged 15 to 19 inclusive, 20% population aged 20 to 24, ” etc. Poverty is not factored into the allocations to the states (Section 111(a)(2) ) In-State Allocations – Secondary • District census data • 70% based on 5 -17 census count at or below poverty guidelines • 30% total district census data (Section 131 (a)(1 -3)) In-State Allocations – Postsecondary • Based on Pell Grant recipient and BIE assistance recipient counts within a state and community college district (Section 132 (a)(2))

15 Exceptions - Area CTE/Vocational Schools • Most commonly funded via a cooperative agreement, based on the number of students served (Section 131 (e)) Exceptions - Secondary (Section 131(C)) • Formula award less than $15 k • Consortium or waiver approval

16 Exceptions - Charter Schools • May participate in a consortium • Waiver allowance for public charter schools receiving less than $15 K (Section 131(c)(A)(ii) Exceptions – Postsecondary (Section 132(C)) • Formula award less than $50 k • Consortium or waiver approval A secondary or postsecondary “split” of 15% or less allows for a state to develop its own allocation formula (Section 133(a)(2))

17 Where To Start States – Approved State Plan Recipients – Approved Local Application Pitfalls – • Just don’t write “something” to get the money • States – o State Plan – Follow it, change it or amend it. o You really want to avoid a formal amendment process • Local Applications – o Recipients - Follow it or amend it o Check your progress and budget at least midgrant and 90 days before your end date

18 Perkins is not an entitlement grant – • One or more programs of sufficient size, scope and quality to warrant the receipt of grant funds • Allocation is less than $15 K (Secondary) or less than $50 K (Postsecondary) you need to – o Request and receive a waiver, or o Enter into a consortium agreement with another district or college o Waivers – you need to be able to justify the waiver o The recipient has a viable program, and o They are not able to enter into a consortium due to: • Rural isolation • No one within a reasonable distance wishes to enter into a consortium with the recipient o Charter schools do not require a waiver (Section 131(c)(1 -2); Section 132(a)(3 -4); Section 132(C)(2))

19 States – Without an approved State Plan or a “substantially approvable plan” may not obligate Perkins funds Recipients – Are in the “same boat” – they can’t obligate new grant funds until their application is “substantially approvable”… Example – A recipient’s new fiscal year begins July 1 st. On July 6 th, in anticipation of school starting, the district buys some badly needed CTE equipment. Their Perkins application for the new school year is substantially approved two days later on July 8 th. This district may not use Perkins funds to pay for this equipment – even if the delay is the state’s fault. EDGAR 34 CFR § 76. 703(d) EDGAR 34 CFR § 76. 708(a)

20 You have an approved application - What can you spend $$$ on? • 1 st Rule – either follow your approved application or plan or amend it to meet your needs • States – o Section 3 Administration, your 5% Admin setaside o Section 124 – State Leadership Activities, your 10% setaside o Do Not Exceed These Percentages! • Recipients – o Section 134 – Your Local Plan o Section 135 – Local Uses of Funds o States, Tribes, K-12 schools – OMB Circular A-87 o Community Colleges – OMB Circular A-21 o Charter Schools – (Arizona utilizes OMB Circular A 122) • In all three, look for the section titled, “Selected Items of Cost” o A-87 – Appendix B o A-21 – Section J o A-122 – Appendix B

21 Sole State Agency Carl D Perkins Act • Section 112(a)(3) – 5% Administration • Section 124 – State Leadership Activities State Approved Plan Under OMB Circular A-87 – However, depending on the recipient you are working with you , might use • OMB Circular A-87 (Secondary) • OMB Circular A-21 (Postsecondary) • OMB Circular A-122 (Non Profit Charter Schools) State Statutes Procurement, Capital Assets, Gifts, Travel, Pre-paid Costs, Etc.

22 Eligible Recipient Secondary Postsecondary Carl D. Perkins Section 135 – Local Uses of Funds Your Approved Local Plan OMB Circular A-21; Selected Items of Cost OMB Circular A-87; Selected Items of Cost State Statutes - • Procurement • Capital Assets • Gifts • Travel • Pre-paid costs

23 General Test of Allowability • Fits with your application • Allowable per the appropriate OMB Circular • Reasonable • Allocable • Consistently treated • Consistent with your organization’s policies • Incurred in accordance with GAAP • Not charged elsewhere • Adequately documented…

24 SALARIES • Yes – You must do “time-and-effort” (T&E) reporting • Employee works full time on Perkins you – o Must ‘certify’ the employee at least semi-annually o T&E records must be signed by the employee or a supervisor with first-hand knowledge o Multiple cost objectives requires regular Personnel Activity Reports (PARs) o The cost has to be “allocable” to your Perkins grant o After-the-fact reporting o Signed by employee o Coincide with pay periods; at least monthly Secondary, SEAs, Governments, BIE - OMB Circular A-87 Appendix B. 8. h. Community Colleges OMB Circular A-21 Appendix J. 10. Non-Profit Charter Schools – OMB Circular A-122 Appendix B. 8. m.

25 Time & Effort (T&E) – • A major source of audit findings • The Super Circular will make T&E reporting more uniform but it will still be a major compliance area

26 EQUIPMENT • EDGAR (34 CFR § 80. 1) defines equipment as personal property that costs $5, 000 or more – The issue has more to do with a state’s inventory requirements (and the associated costs) than the purchase price • If your state elects a lower dollar threshold for inventory purposes (or has “stewardship” requirements) you must comply with your state’s lower capitalization limit ( EDGAR 34 CFR § 80. 32(b)) • The OIG (Office of Inspector General) has been issuing findings relative to items of equipment that are considered “attractive theft” items – cell phones, digital cameras, flat screen monitors, etc. that cost a lot less than $5, 000 • When is something a supply and not equipment? • • Use a “reasonable person approach” – Does it have a useful life of a year or more, would you throw it away or repair it, does your own state’s criteria treat it as a supply or equipment? Colleges often won’t budget anything under $5, 000 as “capital” – You’ll see terms like “non-capitalized capital”… The issues are more about what line you budget the money on and at what dollar amount do you have to inventory the equipment?

27 EQUIPMENT CONT. • Get it written into your approved application • Items like your CTE computer lab • Specialized workstations • The cost of connecting equipment • Etc. • Avoid paying for items your district typically supplies to all your district’s educational programs – desks, chairs, PCs • USE NON-PERKINS FUNDING WHERE POSSIBLE • Trade Perkins-funded CTE costs for those CTE costs funded with non-federal $$$ • Pursue donated equipment where possible

28 EQUIPMENT CONT. • Tag equipment purchased with Perkins funds Equipment & Real Property Management – • The Super Circular may drop property management relative to the Single Audit, but… • Failure to safeguard and manage property and supplies purchased with federal funds – o Can still generate an audit finding o Can still result in “questioned costs” • Failure to follow your own state’s property management rules and requirements can still generate an audit finding • Responsibility shifts to states to ‘police’ program fiscal monitoring requirements

29 STUDENT ORGANIZATIONS Little guidance – the Feds typically refer you back to 34 CFR § 403. 71(c) – The last regulatory guidance for Perkins, under Perkins I • Allowed – Instructional related costs (very narrow) • Disallowed – All the fun stuff… States – Section 124(c)(4) Local Recipients – Section 135(c)(5)

30 (3) The support of vocational student organizations may not include— (i) Lodging, feeding, conveying, or furnishing transportation to conventions or other forms of social assemblage; (ii) Purchase of supplies, jackets, and other effects for students' personal ownership; (iii) Cost of non-instructional activities such as athletic, social, or recreational events; (iv) Printing and disseminating non-instructional newsletters; (v) Purchase of awards for recognition of students, advisors, and other individuals; or (vi) Payment of membership dues; (d) Leadership and instructional programs in technology education; and (e) Data collection. My guess, they mean non-instructional, out-of-the-classroom-type activities that don’t meet the conditions of 34 CFR § 403. 71(c)(2)(iv) & – “all students…”

31 • Practices vary from state to state… • Use the “reasonable person” approach • Make them a part of your Program of Study approach • Seek local Board approval where you deem it appropriate

32 NOT ALLOWED • Alcohol • Entertainment expense • Awards (gifts) • Promotional items (freebies) • Promotional advertising o o o OMB A-87 B. 3; OMB A-21 J. 3 OMB A-87 B. 14; OMB A-21 J. 17 OMB A-87 B. 20; OMB A-21 J. 22 OMB A-87 B. 1. f. (3); OMB A-21 J. 1. f(3) OMB A-87 B. 1. f(4); OMB A-21 J. 1. f(4)

33 FOOD & BEVERAGES • “NO” OMB A-87 B. 3; OMB A-21 J. 3 OMB A-87 B. 14; OMB A-21 J. 17 OMB A-87 B. 27; OMB A-21 J. 32 OMB A 87 B. 43; OMB A-21 J. 53 • Unless it is related to – • Approved travel (subject to your state’s per diem guidelines) • Included in your approved registration • Not considered entertainment • Included as part of an approved conference or meeting (attending or sponsoring) • A consumable training supply (culinary arts) • Alcohol never allowed Read Goods or services for personal use – A-87 Attachment B. 20 & A-21 Section J. 22.

34 TRAVEL FOOD & BEVERAGES • Travel is allowable when it supports your approved grant or plan • Meals, lodging, all the usual stuff is allowable, when approved • Should be reasonable • DOES NOT INCLUDE ENTERTAINMENT COST What about those conferences where entertainment is included in the registration fee? o It’s your state’s call… If the cost is separate and identifiable and the employee wants to participate they must cover the cost out of their own pocket OMB A-87 Attachment B. 43 or OMB A 21 Section J. 53

35 MEETINGS & CONFERENCES/FOOD & BEVERAGES OMB A-87 B. 27 (Comparable language in OMB A-21 J. 32) Meetings and conferences. Costs of meetings and conferences, the primary purpose of which is the dissemination of technical information, are allowable. This includes costs of meals, transportation, rental facilities, speaker’s fees, and other items incidental to such meetings or conferences. (Also see OMB A-87 B. 14; OMB A-21 J. 17, “Entertainment Costs”. • Must be reasonable • Must be able to stand the, “Would you like to see this on the front page of your local paper? ” test • Does NOT include internal staff meetings

36 MEETINGS & CONFERENCES/FOOD & BEVERAGES Prepaid Fees – Early Registration Are they a professional service cost or a travel cost? • Prepaid registration fees can lead to accounting headaches related to the issue of, “When is a cost incurred? ” (See EDGAR 34 CFR § 76. 707) • May need to transfer the expense from one fiscal year to the next if the fee is paid prior to the fiscal year in which the activity will occur

37 MEMBERSHIPS, SUBCRIPTIONS & PROFESSIONAL ACTIVITY COSTS • Memberships for a state or district are OK. For example, the cost would be OK for your State CTE Director’s position, regardless of who the individual is – but not for the individual who is the CTE State Director • Must be “allocable” to your Perkins project or plan • Use the “reasonable person” approach • It is recommended that you utilize your procurement system procedures if you are looking at a • Significant cost • Sole source provider (speakers, intellectual property, copyrighted, etc. )

38 AWARDS Awards or Gifts -Typically Not Allowed • However you can purchase nice frames through your approved state or local office supply contract, print out a nice certificate on your color laser printer and hand the result to folks… • Hand out donated items from your state’s Chamber of Commerce, local industry groups, etc. OMB A-87 B. 1. f(3); OMB A-21 J. 1. f(3) OMB A-87 B. 20; OMB A-21 J. 22

39 Do Not Use Perkins Funds For - • Promotional items (freebies) • Promotional advertising The Most Common Ways To Cover Such Costs – • At a state-wide level - Conference registration fees and conference accounts • Districts - Many states allow districts to maintain extra curricular programs, student activity accounts. Some states even allow for tax credits for donations made • Outside groups, professional organizations, etc.

40 The most common problems, goofs!

41 • Failure to follow your approved application/plan • Review it at least at the six and nine month points • Follow it, or • Amend it • The OMB Circular A-133 CTE Supplement – 4 -84. 048 (15 pgs. )

42 PROCUREMENT – • Inadequate documentation If your procurement shop or business office are not known for their attention to details - Cover Thy Butt • Failure to comply with your own state’s procurement rules o Bidding and quotation requirements o Government credit card (PCard) problems o Don’t sign anything unless you are authorized by your agency, district or college to obligate them o Inadequate internal controls • Professional service contracts - Check the federal “Debarment” website. If your vendor is on there you can’t use them (OMB Circular A-133 §___. 220

43 Property Management Issues – • An inventory system that does not meet your own state’s property management requirements • If you have to, keep your own set of documents • Purchase orders • Receiving documents • A mini-inventory, with item location info • Keep it current • Does your state have a lower dollar threshold? • Does it have “stewardship” requirements? • You need to put special procedures in place for items that cost less than $5 K but are high-theft items • Do your approved purchases agree with your approved application? • Does your annual fiscal completion report reconcile to your actual purchases?

44 Time and Effort – Personnel Activity Reports (PAR) • Nationally there have been some significant questioned costs audit findings – in the $100 K plus range… • Key factors – o First, you have a time and effort reporting system in place, not just an attendance (time clock) reporting system o Your system accurately reflects the activities for which the employee is paid o You are reporting after-the-fact o It’s signed by the employee o There is a suitable means of verification

45 Time and Effort Cont. - • A semi-annual certification is acceptable for an employee that only works on Perkins (one cost center) • Your system accounts for the full time for which the employee is paid • If an employee works on more than one cost center their activity must be reported at least monthly and must coincide with the employee’s pay period o A red light to an auditor – time reported spent exactly as budgeted… • In rare cases payments could be on a budgeted basis o Reconciled quarterly o Within 10% of actual

46 Time and effort Cont Monthly Report, Certifications… for community colleges? Where does it say that? Circulars A-87 and A-122 are easier to read. For community college recipients, I recommend the following paragraph, OMB Circular A-21 Section J. 10. c. (2)(e)… “(e) For professorial and professional staff, the reports will be prepared each academic term, but no less than every six months. For other employees, unless alternate arrangements are agreed to, the reports will be prepared no less frequently than monthly and will coincide with one or more pay periods. ” (AZ Examples – https: //www. ade. az. gov/gme/ Select Federal Fiscal requirements)

47 States - Fiscal Monitoring • Also on the list of “frequent” new audit findings – “States need to do fiscal monitoring” (EDGAR 34 CFR § 80. 40) • Your folks don’t need to be auditors • If they find something that “doesn’t look right”, then you can send in real auditors • Build fiscal questions into your monitoring tool – o Compare actual activities to their approved application o Compare equipment purchases to their reported end-of-year equipment purchase documents - Compare to P. O. s and receiving documents; did it end up on their inventory; check to see if you can physically locate a couple of items from their inventory on a sample basis o Are they paying salaries? Ask to see either the employee’s semi -annual certification or a personnel activity report (PAR) o Purchased professional services – Did they check the federal debarment website? o Etc.

48 The ‘MANTRA’ is back - Monitoring needs to be RISK BASED… • As resources dwindle you will see the rebirth in emphasis on “risked –based “ monitoring or auditing • Our fiscal folk’s ranking is based on – o The amount of money awarded o Other audit reports o On-time reporting o Cash management issues o Only one or two approved programs • This information is then supplied to our program staff who have their own weighting system based on program staff input and ratings

49 States – Cash Management • In the absence of electronic transfers, most payments to your sub-recipients and contractors need to be on a “reimbursement basis only” • Many states have statewide bidding networks that meet the state’s bidding and procurement guidelines, including having 90 days to pay for equipment and supplies purchased through such agreements – States, school districts and community colleges need to take advantage of such agreements

50 • You need to argue your point as to why you should not have to return funds before the final audit exit conference • State your case. Find alternate documentation. Reconstruct what is needed, etc. • Agree to put corrections in place, but try like heck to talk them out of returning $$$ • MAKE SURE THAT YOUR ADMINISTRATION GIVES YOU INPUT INTO DECISIONS THAT AFFECT CTE!

51 Questions?