The Administration of Federal and State Categorical (Restricted) Programs

1. The Administration of Federal and State Categorical (Restricted) Programs Presenter: Steve McClain-CBO Bakersfield City School District

2. Today you will learn about: • Categorical Programs (State & Federal) • Block Grants-Including AB 825 • One-time Grants • The Consolidated Application (CONAPP) • Indirect Cost Rates and Limitations • Unique Reporting Requirements

3. And…. • Accounting by Resource (Funding) • Time accounting and federal programs • Maximizing Program Transfers • Encroachment and Supplanting • Specific Programs

4. State & Federal Categorical (or Restricted) Programs • Good resources for information on school finance including restricted programs: • www.edsource.org • www.cde.ca.gov/fg

5. Categorical aid is distributed by the state and federal governments according to the needs of the children in the district and the special programs for which the district qualifies. This aid is quite substantial in some districts and minimal in others. Since the 1960’s, court decisions, legislative priorities, and pressure from interest groups have created a wealth of categorical programs. Overview • From the November 2006 issue, Ed Source summarizes grants and entitlements (categoricals) as follows:

6. Some programs are completely voluntary. Others provide money to help districts pay for services they are required by law to provide. Still others are incentive programs intended to encourage districts to implement a specific program or reform. • Funding for some programs can be used only to provide specific services, such as school lunches, or to serve the needs of particular students, generally those who were traditionally underserved. The largest of these programs is Special Education, which provides funds for extra services needed to educate students with disabilities.

7. Grant vs. Entitlement • Grant: A contribution, either in money or material goods, made by one governmental entity to another. Grants may be for specific or general purposes. • Entitlement: An apportionment that is based on specific qualifications or formula define in statute. (Do not use as a basis for determining how to account for unspent balances of categorical aid). *Source: California School Accounting Manual

8. More on Grants/Entitlements • The “CAT” form (for “Categorical), completed for the Unaudited Actuals (Closing) requires the accounting of programs as either Grant or Entitlement. This will determine the accounting entries made and will result in the unspent funds being “Deferred Revenue (D)” or “Ending Fund Balance (F)”

9. However… • If the word “grant” or “entitlement” is in the title of the categorical, don’t count on it being a “grant” or “entitlement” for accounting purposes. For example, the “Safety Block Grant” is an entitlement, resulting in a restricted ending fund balance. Title I is a grant and unspent revenues are deferred into the subsequent year and recognized as revenue in that year.

10. Categorical Block Grants • Block GrantAn allotment of money that is the sum of multiple special-purpose funds combined into one. A block grant tends to have fewer restrictions on how the money is spent than the original, disparate funding streams had; and it often combines funds that have similar purposes.

11. AB 825 Block Grants • In 2005 Assembly Bill 825 established 6 block grants: • Pupil Retention (7390), School Safety (7391), Teacher Credentialing (7392), Professional Development (7393), TIIG (7394), and School/Library Improvement (7395)

12. Basics of the Block Grants • Do not come through the ConApp • May transfer between 4 of the grants, but not Pupil Retention & Teacher Credentialing • Repealed the statues guiding most of the programs and “generally” provides that funds may be spent for the purpose of any program(s) included in the grant

13. Long-standing grants were pulled into the new block grants • BTSA (Beginning Teacher Support) became “Teacher Credentialing” • PAR (Peer Assistance) and Staff Development Buyback Days (previously unrestricted) became “Professional Development” • SIP (School Improvement Program) became “School/Library Improvement”

14. Other Block Grants • Discretionary Block Grant (one-time funding 06/07) for instructional materials, ed tech, professional development, home-to-school transportation, 1-time exp designed to close the achievement gap, 1-time fiscal obligations of district • Arts and Music Block Grant-ongoing, began in 06/07. A program to provide funding to support standards-aligned instruction in arts and music. • Charter School Block Grant-provides a blended per student amount in lieu of major state grants

15. One-time Grants • Can be competitive awards • Be careful to have one-time expenses, (nothing that eats!) • Does it align with the current district academic focus? • Will it require staff to implement paid from other funds? • Is an impact study needed? • What reports are required at the end of the grant?

16. And speaking of reports! • If a grant or entitlement is not included in the Consolidated Application, most likely a report is required to be filed. It may include an expenditure report, a program assessment report, etc. Make sure when a new grant is received future reports needed are recognized and assigned.

17. Indirect Cost Rate • The CDE describes indirect costs as agency wide, general management costs (i.e., activities for the direction and control of the agency as a whole)…consisting of accounting, budgeting, payroll, personnel, purchasing, and data processing.

18. Unique reporting requirements: • Some grants require permission to transfer more than a certain % from one category to another after the initial budget • Some grants require quarterly expenditure reports, other annual • Some grants are funded on pupil attendance (State After-School Grant)

19. For instance…(Federal Programs) • Reading 1st has a Sept-Aug cycle; interim report due in April • Migrant (Title I) has quarterly reports due 11/15, 2/15, and annual 10/31 • Special Ed Fed Grants—reports due 9/1 • Title II Part D (Ed Tech) 25% of grant must be spent on professional development

20. Homeless-1 interim and 1 final exp report. If moving budget category is more than 10% of total, approval required • State Programs… • ASES (After School Program)-budget revision is necessary of line item changes more than 10%; quarterly exp reports. Attendance reports required, and as long as attendance is maintained at 85%, funding is not affected • State Preschool-Attendance reports required. Unearned funds must be held in an interest-bearing reserve account with interest calculated

21. Retiree Benefits • You may charge restricted programs for retiree health benefits. The allocation must be based on total salaries or total FTEs. If all current salaries in the district equal $100,000, unrestricted salaries equal $90,000 and Title I salaries equal $10,000, 10% of retiree benefit costs may be charged to Title I.

22. Accounting by Resource • SACS (Standardized Account Code Structure) aligned California School Accounting Manual, uses the resource code or funding source to show if a program is federal or state: • Federal = 3000-5999 State = 6000-8999 For example, Title I is 3010

23. Time Accounting and Federal Programs • PAR-Personnel Activity Report • This applies to employees funded from more than one federally funded categorical program source, or a mix of federal and state categoricals. Depending on case, it is completed monthly or semi-annually.

24. Maximizing Program Transfers • Since restricted funding can only be for restricted purposes, it is appropriate that districts maximize the usage of this funding. • State--“Mega-Item transfer is restricted to fewer and fewer programs, but still includes: Home-to-School Transportation and Gate (10% out/15% in); but EIA is only allowed as an “in”!

25. Other Transfers • State--AB 825 “Flexible Four” allows for transfers in of 20% and out of 15% and include Professional Dev Block, Teacher Credentialing Block, TIIG Block, & School/Library Block • Federal—NCLB provides that Non-Program Improvement districts may transfer 50% of funding between certain federal programs (but only into, not out of Title I Part A)

26. Encroachment and Supplanting • Encroachment is the expenditure of a LEA’s general-purpose (unrestricted) funds for special-purpose (restricted) programs in which the cost of providing the programs exceeds the state or federal funding provided. • Supplanting usually relates to federal funds. This is a quote from the Title I handbook:

27. Uses of Funds (Fiscal Accounting) • “A central tension in Title I policy has always been balancing accountability for the use of federal funds with the need for allowing educators’ discretion. A key concern has been to ensure that Title I funds add to the educational resources available for disadvantaged children, not replace funds that states and LEAs would otherwise make available for such children.”

28. Some of the large Federal Programs • NCLB (No Child Left Behind) includes Title I through Title VI • Federal Special Ed Grants (IDEA) • Child Nutrition: School Programs

29. The Title Programs (not all listed) • NCLB Title I Part A-Basic Low Income and Neglected (3010) School Wide (3150) • NCLB Title I Part B-Reading 1st (3030) • NCLB Title I Migrant (3060) • NCLB Title I Even Start Fam Lit (3105) • NCLB Title II Part A Teacher Quality (4035)

30. More Title Programs • NCLB Title II Part D EETT (Technology) (4045) • NCLB Title III Immigrant Ed (4201) • NCLB Title IV Part A Drug Free Schools (3710) • NCLB Title V Part A Innovate Ed Strategies (4110)

31. Funding for Title Programs • Warning (Disclaimer from USDE) FISCAL YEAR 2008 (08-09) STATE ALLOCATIONS FOR SOME PROGRAMS AND ALL FISCAL YEAR 2009 (09/10) ALLOCATIONS ARE PRELIMINARY ESTIMATES BASED ON CURRENTLY AVAILABLE DATA. ALLOCATIONS BASED ON NEW DATA MAY RESULT IN SIGNIFICANT CHANGES FROM THESE PRELIMINARY ESTIMATES.

32. Funding for Title I Basic is based on Free and Reduced Lunch counts. • It is very important that schools claim all eligible students. The CBEDs data submitted via CSIS drives the allocation for Title I. Districts may estimate the allocation, but it is only final when received on the Consolidated Application, Part II.

33. The Special Ed Grants for IDEA (not all listed) • Basic Local Assistance Part B (3310)**Offsets district’s AB602 state funding • Preschool Grants (3315) • Preschool Local Entitlement (3320) • Infant Discretionary Part B (3330) • Preschool Staff Development (3345)

34. State Programs • The Block Grants (7390-7395) • SIP (Now in School/Library Block) (7395) • EIA (7090) • After School Learning and Safe Neighborhood Partnerships (ASES) (6010) • State Preschool (6055)

35. School & Library Improvement Block Grant • Combines SIP and School Library funds • LEA receives funding if they received funding for either in 03/04. Based on enrollment • Purposes, like other block grants are combined from previous grants, so in this case..books, software, instructional strategies, staff development, etc. • Must be approved by School Site Council & School Board • Can continue to be included in an SBCP (School Based Coordinated Program) (7250)

36. Economic Impact Aid (EIA) • “A program supporting compensatory educational services for educationally disadvantaged students and bilingual education services for English language learners” • Funded through ConApp, may be combined in SBCP • Can no longer be used for a transfer out in Mega-Item transfer provision

37. After School Education & Safety Program-- Purpose and Objectives Source: ASES Budget & Information Packet, CDE, 9/05 • It is the intent of ASES Program legislation to encourage schools and school districts to provide safe, constructive opportunities and educationally enriching alternatives for children and youth during non-school hours. The program creates incentives for establishing locally driven before and after school education and enrichment programs.

38. In addition to education and enrichment, the ASES Program adds the following provisions: local law enforcement must be included as part of the local collaborative; computer training, fine arts and physical fitness may be included among the enrichment activities offered; and programs may be in locations other than school sites.

39. ASES continued • Program Elements • Before and after school programs consist of two components: a literacy component and an educational enrichment component. ASES Program leaders work closely with the school site principal and staff to integrate these components with the school's curriculum, instruction, and learning support activities. Here is a brief description of the two program components:

40. The educational and literacy component provides tutoring and/or homework assistance in language arts, mathematics, history and social science, and/or science [California Education Code (EC) Section 8482.3(c)(1)]. • The educational enrichment component may include, but is not limited to, recreation and prevention activities [EC Section 8482.3(c)(2)]. Such activities might involve the visual and performing arts, music, physical activity, health promotion, general recreation, career awareness and work preparation activities, community service-learning, and other youth development activities based on students’ needs and interests.

41. State Preschool • State Preschool programs are part-day comprehensive developmental programs for three- to five-year-old children from low-income families. These funds will target underserved communities as defined by the Local Child Care and Development Planning Councils. • May be accounted for in separate Child Development Fund (12)

42. Questions?