Fiscal Monitoring for RDA

1. Fiscal Monitoring for RDA Processes & Tools to Impact Student Incomes

2. 2019 OSEP Leadership Conference DISCLAIMER: The contents of this presentation were developed by the presenters for the 2019 OSEP Leadership Conference. However, these contents do not necessarily represent the policy of the Department of Education, and you should not assume endorsement by the Federal Government. (Authority: 20 U.S.C. 1221e-3 and 3474)

3. Presenters Anthony Mukuna, CPA Funding and Accountability Coordinator Idaho State Department of Education, Special Education Dean Zajic State and Federal Programs Coordinator Kansas State Department of Education, Special Education and Title Services Jana Rosborough Senior Program Associate, WestEd National Center for Systemic Improvement (NCSI)

4. Session Objectives • Provide examples on how systematic review of fiscal risk allows for better programmatic decisions at the SEA level • Describe and demonstrate programmatic impacts of common fiscal issues at the LEA level • Share how the resolution of fiscal issues directly impact program outcomes at the SEA and LEA level

5. Agenda • Overview of the Uniform Grant Guidance (UGG) Requirements • Idaho Subrecipient Monitoring • Description, Examples, and Discussion • Kansas Subrecipient Monitoring • Description, Examples, and Discussion • Reflection and Discussion

6. Goals and Purpose of the Uniform Grant Guidance (UGG) • Streamlines guidance for Federal financial assistance to ease administrative burden • Strengthens oversight over Federal funds to reduce risks of waste, fraud, and abuse • Increases the efficiency and effectiveness of Federal financial assistance to ensure best use of Federal funds Kniseley, C. and Jennings, D., OSEP Priority Update: Uniform Guidance, presented IFF 2016.

7. Subpart D: Post-Award Requirements 2 CFR §200.300 • Procurement standards • Monitoring and reporting program performance • Subrecipient monitoring/requirements for pass-through entities • Record retention and access

8. Quick Regulatory Requirements Subrecipient means a non-Federal entity that receives a subaward from a pass-through entity to carry out part of a Federal program (2 CFR §200.93). Grantees, as pass-through entities, must: • Assess risk of subrecipients. (2 CFR §200.331(b)) • Monitor to ensure the subaward is used appropriately and in compliance with the award and all associated regulations. The monitoring plan should be based on the results of the risk assessment. (2 CFR §200.331(d)) The risk assessment and monitoring should address both financial and programmatic considerations.

9. Fiscal Monitoring for RDA Idaho State Department of Education – Special Education Anthony Mukuna

10. Idaho Fiscal Monitoring Purpose • Set the standards for fiscal monitoring and oversight • Standardize evaluation and monitoring guidelines • Identify each component of subrecipient fiscal monitoring • Fiscal technical assistance for better outcomes

11. Procedures and Methodology Annual Risk Assessment • Using data collected at SEA level in normal operations Desk Review • Performed remotely • Review of accounting and fiscal records Field Review • On-site visit of subrecipients • Thorough review of accounting and fiscal records

12. Monitoring Selection Methods

13. Student Outcome • Good student outcomes means more resources • Resources are purchased with money • Idaho testing procedures were designed around student outcomes • Examples will show how funds were secured or retained in special education which technically contributed to better results

14. System Implementation and Outcome Changing relationships between and at the SEA and LEA

15. Risk Assessment

16. Risk Assessment and Outcomes • Internal tool designed to direct our monitoring activities • Allows for better use of our resources • Initially not intended to be shared with LEAs • Effective communication tool between SEA and LEA • Expectation reduces frustration

17. Procedures for Reasonable Assurance

18. Testing and Outcome - Example 1 Cost Principles Testing • Test the allowability of costs in compliance with IDEA Part B and Uniform Grant Guidance Review Finding • LEA used $54,000 IDEA funds for non special education expenses • Business operations controlled by the superintendent • Basic accounting coding issues • No special education program expert in the approval chain Program Impact/Outcome • LEA implemented a new approval process for IDEA fund • Trained staff on allowability of IDEA costs

19. Testing and Outcome - Example 2 Private School Proportionate Share Testing • Test IDEA requirements related to Private School Proportionate Share Review Finding • $15,000 private school funds used for staff trainings unrelated to special education • No adequate documentation of the consultation • Inadequate internal controls • Lack of due diligence from Business manager Program Impact/Outcome • Private school students with disabilities potentially penalized • Funds could have been used to buy additional resources • Implemented good practices to control private school proportionate share funds

20. Testing and Outcome - MOE Example

21. Testing and Outcome - Example 3 Maintenance of Effort Expenditures Testing • Test IDEA requirements related to MOE expenditures Review Finding • $80,000 MOE failure after general fund budget reduction • Reported non special education expenditures in MOE Program Impact/Outcome • Budget reduction affected special education program • LEA Director should protect special education program • MOE could be an effective budget request tool at the LEA level • Fiscal technical assistance helped LEA better understand the importance • LEA Director identified good reasons to justify general funds budget request in the program

22. Testing and Outcome - Example 4 Financial Management System Testing • Test financial management and accounting systems for efficiency and effectiveness Review Finding • IDEA budget was inflated by approximately $30,000 for years • Reconciliation between systems revealed that LEA internal budget was inaccurate Program Impact/Outcome • LEA made programmatic decision misled by erroneous budget • LEA needed to urgently find a solution to cover a $30,000 deficit • LEA implemented effective budget management process to prevent this in the future

23. Testing and Outcome - Example 5 Written Fiscal Policies and Procedures Review • Test the existence of written policies and procedures in compliance with the UGG Cross Collaboration with Idaho School Board Association (ISBA) • ISBA policies and procedures not adequately updated since UGG • Most rural LEAs rely on ISBA updates • Significant number of findings in first monitoring cycle • SEA collaborated with ISBA for policies and procedures update • Removed pressure on LEAs who were using limited resources for policies development

24. Fiscal Monitoring Activities Year 1 & 2 • Fewer resistance by LEAs for scheduling and documents submission • Fewer finding between year 1 and year 2 • Corrective actions prior to the review • Implementation encouraged LEAs to become proactive instead of reactive • No reviews in May and more in July based LEA’s recommendations

25. Monitoring for Technical Assistance

26. Participant Reflection • Reflect on your own state. • What have you heard from Idaho that challenges you or the system that you are in? • What have you heard from Idaho that affirms you or the system that you are in?

27. Fiscal Monitoring for RDA Kansas State Department of Education Dean Zajic

28. Kansas Fiscal File Review An automated, online system that utilizes a combination of LEA self-reporting and random verification to ensure LEA compliance with both ESEA and IDEA specific- and crosscutting- requirements.

29. Does the LEA have a system in place to track and inventory all equipment purchased with federal funds? (2 CFR 200.313)

30. Kansas Integrated Accountability System (KIAS) Accountability System Overview LEA Single Audits Consolidated Fiscal Monitoring Timely & Accurate Data Correction of Findings Youth Outcomes Driven Accountability (YODA) Analysis IDEA File Review ESEA Program Monitoring Identification of LEAs Requiring Most Intensive Support

31. Factors Included In YODA Analysis • Graduation Rate • Student Chronic Absenteeism • Participation Rate in State Assessments • State Assessment Results • IDEA Level of Determination • Early Childhood Least Restrictive Environment • Early Childhood Outcomes • New Personnel • New Programs • New or Changing Systems • Single Audit Results • Timely Reporting of Data • Monitoring Findings • Timely Correction of Findings • Complaint & Due Process • Emergency Safety Interventions • Participation in Alternate Assessments

32. Factors Included In YODA Analysis • Graduation Rate • Student Chronic Absenteeism • Participation Rate in State Assessments • State Assessment Results • IDEA Level of Determination • Early Childhood Least Restrictive Environment • Early Childhood Outcomes • New Personnel • New Programs • New or Changing Systems • Single Audit Results • Timely Reporting of Data • Monitoring Findings • Timely Correction of Findings • Complaint & Due Process • Emergency Safety Interventions • Participation in Alternate Assessments

33. Incorporating Fiscal Into the System Total Federal Funds Expended • Focuses oversight on LEAs that receive the most funding and therefore pose the greatest risk to the federal interest • This can allow smaller LEAs to fly under the radar Single Audit • Provides an additional layer of consistent fiscal oversight by external entities for most LEAs, on an annual basis • Need to differentiate between LEAs that have no significant findings vs. not required to be audited because of expenditure threshold Consolidated Fiscal Monitoring • Comprehensive review across federal programs • Utilizes a combination of sampling and random verification on a three-year cycle

34. YODA Process Summary for Audit

35. Results Driven vs. Risk Based The terms Results Driven and Risk Based are not synonymous. But Risk Based metrics can be calibrated and integrated into a Results Driven system to ensure the most intensive supports are targeted to those LEAs that most need it.

36. Setting High and Low Risk Thresholds Risk thresholds must be commensurate with the level of support the SEA is able to provide. Identifying 20% of LEAs as High Risk doesn’t give sufficiently actionable information to an SEA that only has capacity to provide intensive support to 5% of LEAs.

37. Coordinating and Sharing Information Kansas Integrated Accountability System Core Team • Standing Monthly Meeting • Responsible for overseeing and updating the fully system of supports • Composed of staff responsible for ESEA and IDEA programs as well as fiscal Youth Outcome Driven Accountability Leads • Standing Monthly Meeting • Reports on, and coordinates support for, YODA LEAs • Includes the KIAS Core Team as well as the assigned lead to each YODA LEA

38. Systemic Review of Fiscal Risk Leads to Better Program Decisions SEA Level analysis of multiple metrics leads to better differentiation in the nature and intensity of technical assistance for each district

39. Programmatic Impacts of Fiscal IssueExample: Single Audit of Cooperative Finding related to internal controls - significant deficiencies or material weaknesses or significant instances of abuse identified. Management's Response: The District agrees with the finding. We believe it would be inefficient and cost prohibitive for our staff to attempt to stay current on all the requirements of GAAP. We do not plan to make any changes at this time. However, we will monitor this situation and periodically determine if it is cost effective for us to perform these functions.

40. Fiscal Issues and Program OutcomesExample: LEA Flagged for Early Childhood LRE • District operates a centralized early childhood center • Head Start, State Funded At-Risk Pre-K, Special Education, Migrant Program, and Fee-based • The center has a single curriculum that is consistently implemented in all 20+ classrooms • And yet, kids were being segregated by funding: • Students with Disabilities • Migrant Students • Student Eligible for At-Risk • Head Start

41. Participant Reflection • Reflect on your own state. • What have you heard from Kansas that challenges you or the system that you are in? • What have you heard from Kansas that affirms you or the system that you are in?

42. Participant Discussion Is there a mechanism for your fiscal staff and program staff to coordinate outcome data to drive decision making at the SEA level? At the LEA level? • If so, what opportunities have you experienced? • If not, what barriers exist? What did you hear in today’s presentation that challenges (or affirms) you or the system that you are in? Questions?

43. Resources Idaho: http://www.sde.idaho.gov/sped/funding/files/monitoring/IDEA-Part-B-Fiscal-Monitoring-Procedures-Manual.pdf Kansas: https://www.ksde.org/Portals/0/ECSETS/KIAS/FileReviewSelfAssess-Fiscal.pdf Federal: GAO – The Green Book, available at http://www.gao.gov/greenbook/overview Uniform Grant Guidance, DOE resources, available at https://www2.ed.gov/policy/fund/guid/uniform-guidance/index.html

44. 2019 OSEP Leadership Conference DISCLAIMER: The contents of this presentation were developed by the presenters for the 2019 OSEP Leadership Conference. However, these contents do not necessarily represent the policy of the Department of Education, and you should not assume endorsement by the Federal Government. (Authority: 20 U.S.C. 1221e-3 and 3474)