Presented by Michael Brustein, Esq. bruman mbrustein@bruman

1. NACTEI Pre-ConferencePhoenix, AZMay 6, 2013Flying under the Radar:Measuring Compliance with Federal Rules Presented by Michael Brustein, Esq. www.bruman.com mbrustein@bruman.com

2. Agenda • Update on Perkins Funding • Perkins Reauthorization Status • WIA Reauthorization Status • Navigating the Legal Authorities • New OCFO Guidance on Time and Effort • Proposed Super Circular

3. Appendices • Perkins Q & A • OCFO Guidance • Perkins Statute • Federal Education Audit Resolution - Key Events Timeline

4. (1) CTE Funding • FY 13 (7/1/12 – 6/30/13) $1,123,030,274 • FY 14 (7/1/13 – 6/30/14) $1,066,878,760 • FY 15 (7/1/14 – 6/30/15) $?

5. sequestration • The 1/2/13 trigger date deferred by ED to 7/1/13 • Congress delayed effective date from 1/2/13 to 3/1/13 • Delay reduced uniform cut from 8% to 5% • OMB increased cut from 5.0% to 5.2%

6. Perkins Hold Harmless – Section 111(a)(5) • No State to receive less than base amount received in 1998 • Payments to all states shall be ratably reduced

7. OVAE Interpretation • Depending on population growth since 1998, some states witnessing disproportionate reductions

8. OVAE estimates do not reflect bifurcation of Perkins findings • 25% - 7/1/13 • 75% 10/1/13

9. Because ED deferred March 1, 2013 cut 5.2% deducted from 7/1/13 25% amount

10. There will be a second cut on October 1, 2013, because 75% award is based on next year’s appropriation

11. What will amount be of second cut? • Not uniform • In range of 8%

12. Obama 2014 Budget • Released two months late on 4/10/13 • ED would get $71.2 billion increase of 4.6% over 2012 (not 2013) • IDEA / Title I Flat • Focus on Competitive Grants (RTT) and Pre-K

13. (2) Perkins V Reauthorization • Perkins IV authorized from 7/1/06 through June 30, 2012 • Congress will continue to fund Perkins until reauthorized (GEPA)

14. Will Perkins be reauthorized in 2013? • ESEA • IDEA • AEFLA • WIA

15. Obama Administration Issued “Blueprint” • Alignment Allow states to identify in demand occupations in high growth industry sectors

16. Collaboration Consortia funding to ensure collaboration, with private sector match

17. Accountability Move from formula funding to competitive funding Common definition Incentives for high performance

18. Innovation A competitive innovation and transformation fund

19. NASDTEC Base funding on POS

20. (3) Status of WIA Reauthorization

21. 113th Congress WIA Proposal Supporting Knowledge and Investing in Lifelong Skills (SKILLS) Act (H.R. 803) Sponsor: Representative Virginia Foxx (R-NC) Introduced February 25, 2013 House Education and the Workforce’s Subcommittee on Higher Education and Workforce Training hearing February 26, 2013 Bill markup on March 6, 2013 and passed on a party-line vote

22. Consolidation of Programs Proposed elimination of “duplicative” and “ineffective” workforce programs 35 programs would be consolidated Provides authority to Governors to consolidate additional workforce programs Consolidated programs would be part of a single funding stream called the Workforce Investment Fund (WIF)

23. Workforce Investment Fund (WIF) • WIF is a unified and flexible funding source for employers, workers, and job seekers • Larger focus on Workforce Investment Boards (WIBs) • 2/3 of local WIBs must be businesses • Eliminates the requirement that unions be represented on WIBs

24. Community Colleges Role State agency officials may designate CEOs of community colleges to serve on Workforce Investment Boards (WIBs) Community colleges may serve on local WIBs Eligible agencies for administering workforce activities includes community and technical colleges State Unified Plan should include consultations with community and technical colleges

25. (4) Navigating the Legal Authorities for the allowable uses of Perkins funds Perkins Act EDGAR OMB Circulars

26. Perkins Act Serve only CTE students Meet the Local Plan requirements on Section 134 (Budgets) Satisfy the Section 135 requirements on uses of funds Accountability – Section 113 Local Improvement Plans – Section 123

27. Section 135 Improve Mandatory uses Permissive uses Administrative costs

28. EDGAR Part 76 – State Administrative Rules Part 80 – General Administrative Rules

29. OMB Circulars A-87 / A-21 Cost Principles A-133 Audit Principles

30. EDGAR Part 80 Standards for Financial Management Payments Allowable Costs Period of Availability of Funds Program Income Non Federal Audit

31. EDGAR Part 80 (cont.) Changes Equipment Supplies Procurement Monitoring Retention of Records

32. A-87 / 21 Cost Principles • In developing your Perkins Budget, follow this roadmap: • Is the item allowable under • Perkins • State Plan • State / Local Policies • A-87 Appendix B (43 items)

33. Is the item necessary?

34. Is the item reasonable?

35. Is the cost allocable to Perkins?

36. Is the cost adequately documented?

37. OMB Circulars Time and Effort Rule Compensation for Personnel Services: If federal funds used for salaries, then time distribution records are required. Must demonstrate - If employee paid with federal funds, then employee worked on that specific federal program/cost objective.

38. Who must participate? • Any employee who is working on a federal program • Not contractors • All employees paid with federal funds • Some employees paid with non-federal funds

39. New Time and Effort Guidance by OCFO!! http://www2.ed.gov/policy/fund/guid/gposbul/time-and-effort-reporting.html

40. A-87: If employee works 100% on single cost objective • Semi-Annual Certification • Completed at least every six months • Signed by a supervisor with knowledge or the employee • After-the-fact record (dated) • Accounts for the total activity for which employee compensated • Must coincide with one or more pay periods

41. A-87: If employee works 100% on single cost objective Semi-Annual Certification “This is to certify that Michael Brustein has worked 100% of his time for the period July 1, 2012, through December 31, 2012, on Perkins Administration.” Signature of employee: /s/ Date: January 5, 2013

42. A-87: If employee works on multiple cost objectives Personnel Activity Reports After-the-fact record (dated) Accounts for the total activity for which employee compensated At least monthly (unless substitute system) Signed by the employee Must coincide with one or more pay periods

43. A-87: PARs Personnel Activity Reports (PAR) “For the month of December 2012, I, Michael Brustein, spent my time 50% on the Perkins Basic Grant and 50% on Perkins Administration.” Signature of Employee: /s/ Date: January 1, 2013

44. WHAT IS A SINGLE COST OBJECTIVE??? OCFO: “The criteria for whether an employee may document time and effort using a semiannual certification or must fill out a monthly PAR can be confusing.”

45. What is a “Cost Objective”? A-87 Definition: A function, organizational subdivision, contract, grant or other cost activity for which cost data are needed and for which costs are incurred.

46. Multiple activities or cost objectives for which a PAR is required — that is, if an employee works on • More than one Federal award. • A Federal award and a non-Federal award. • An indirect cost activity and a direct cost activity. • Two or more indirect activities that are allocated using different allocation bases. • An unallowable activity and a direct or indirect cost activity.

47. OCFO Guidance It is possible for multiple programs to have the same cost objective, which creates confusion over whether the presence of a single cost objective or being funded by multiple programs should determine what time-and-effort documentation an employee must complete.

48. OCFO Guidance (cont.) It is possible to work on a single cost objective even if an employee works on more than one Federal award or on a Federal award and a non-Federal award. The key to determining whether it is a single cost objective is whether the employee’s salary and wages can be supported in full from each of the Federal awards on which the employee is working or from the Federal award alone if the employee’s salary is also paid with non-Federal funds.

49. OCFO Guidance Examples of Single Cost Objectives: State leadership funds under the Carl D. Perkins Career and Technical Education Act of 2006 (Perkins IV) and State funds A State curriculum specialist who develops new career and technical education courses and initiatives is funded 50 percent with Perkins IV funds reserved under section 112(a)(2) for State leadership and 50 percent with State general funds. Career and technical education curriculum development is a single cost objective because it can be fully supported with State leadership funds under Perkins IV. Only a semiannual certification, therefore, is required even though the employee’s salary is supported by a Federal award and State funds.

50. Substitute Systems and OCFO Changes