Categorical Directors Meeting March 25, 2008 Presented By: Richard Graham Maria Reyes

1. Fiscal Considerations for Categorical Programs Categorical Directors MeetingMarch 25, 2008Presented By: Richard GrahamMaria Reyes

2. Agenda • 85 – 15 Requirements • Direct Services • Direct Costs • Administrative Costs • Allowable Costs • Timekeeping Requirements • Fiscal Schoolwide Programs Guidance

3. 85% – 15% Expenditure Rule

4. 85% – 15% Expenditure RuleFor Title I, Part A • At least 85% of program allocations must be budgeted and expended at school sites for direct services to students. (Education Code, Section 63000-63001) • Up to 15% may be spent for administrative costs, including indirect costs, incurred at the school and district office in support of these programs. Note: Some categorical programs may have additional, more stringent requirements. The 85 – 15 rule does not supersede those requirements.

5. What are direct services to students? Services delivered to students at the school site in which the student is the direct recipient or beneficiary of the service: Personnel providing “hands-on” instruction or Services that are integral to the quality of the instructional program and the academic success of the students For example, research supports activities that involve parents in the education of their children, and quality professional development opportunities as leading to student academic success Expenditures

6. 15% Expenditure Cap • What does the 15% administrative cap mean? • Indirect costs and direct administrative costs cannot exceed 15%. For example: If an LEA has already spent 12 percent on direct administrative costs, then it can claim only 3% for indirect costs, even if the approved indirect cost rate exceeds 3%.

7. Direct Costs= Costs that can be identified with a specific goal or cost objective. (CSAM 2007, 915-12) Indirect Costs= Costs not readily identifiable with a particular program but necessary for the overall operation of the LEA. (CSAM 2007, 915-13) Program Costs are either:

8. Any costs, direct or indirect, that are administrative in nature and support the management of a program. Examples of direct: salaries of district administrative personnel, program monitoring, preparing program plans, purchasing of supplies Examples of indirect: Payroll, accounting, budgeting, warehousing (CSAM 2007, 915-12 and 13) What are administrative costs?

9. 85 – 15 Expenditure Rule 85% Direct Services at school site 15% Administrative Administrative Costs DirectCosts Indirect Costs

10. 85% Expenditures • Examples of expenditures that are within the 85% direct services to students include: • Personnel providing “hands on” instruction/services to students (i.e. math or ELA coaches, resource teachers, school nurses, school librarians, counselors, instructional aides, etc.) • Instructional material/equipment that meet the specific needs of eligible students (i.e., books, supplies, and computers) • Professional development for teachers and other staff who are assigned eligible students • Supplemental student assessment or student data analysis tied to informing and improving instruction • Parental involvement activities to support student achievement

11. Examples Outside 85% • Examples of expenditures that are outside the 85% direct service limitation include: • District administrative personnel • District program personnel • Itinerant staff, except for the time directly related to the purposes of the categorical program, or travel to school sites to deliver instruction or staff development • School program administrators, to the extent they do not provide direct instruction or conduct staff development activities at schools sites to meet specific pupil needs consistent with the purpose of the program • District program evaluation • District advisory councils • General staff development not related to specific pupil instructional needs

12. Questions to Ask for 85% - 15% • Expenditures can fall into a gray area, so carefully evaluate the nature and extent of the expenditure’s benefit to the student. Ask yourself: • How direct is the educational benefit to student? • Does the expenditure have a clear education impact on the instructional program and the academic success of the students?

13. Questions to Ask for 85%-15%(Con’d) • Other questions to ask yourself: • Was decision to expend funds made at the school site or at the district level? (Determine the origin of the decision to make the expenditure.) • Is the educational objective of the categorical program furthered by the expenditure? (Evaluate the expenditure in relation to the categorical program objectives.)

14. Not Sure? • Suggestions to clarify uncertain expenditures: • Prepare written statement justifying and supporting your decision to include the item as a direct service (85%). • Maintain the written statement on file. • Also, maintain additional documentation to support your decision.

15. Allowable Costs

16. Program Expenditures Under SWP Plan (Section 1114) 1. Needs assessment 2. Schoolwide reform strategies that: a. Increase the amount & quality of learning time (extended year, before- and after-school) b. Address needs of all, but particularly low-achieving students

17. Expenditures in SWP (cont’d) 3. Instruction by “highly qualified” teachers 4. Professional development 5. Strategies to attract high quality teachers 6. Parental involvement 7. Transition from pre-school 8. Include teachers in assessment decisions 9. Timely, effective additional assistance 10. Coordination and integration

18. Reminder!: Supplement/Supplant TAS: • Funds used for services that supplement, and do not supplant, the services that would be provided, in the absence of Title I, from non-federal sources. • SWP: Fiscal analysis only; “Use Title I funds only to supplement the amount of funds that would, in the absence of federal funds, be made available from non-federal sources for the school.”

20. Timekeeping Requirements

21. Timekeeping Requirements • Salaries and wages, direct or indirect, must be substantiated by payroll documentation in accordance with generally accepted practice • No further documentation is required for salaries and wages of employees working in a single indirect cost activity • Salaries and wages charged to federal and state restricted programs will require additional documentation

22. Timekeeping Requirements (Cont’d) The level of documentation required is based on: • How an employee is funded (federal vs. state) • How many “cost objectives” the employee worked on (single vs. multiple cost objectives)

23. Timekeeping Requirements (Cont’d) What is a “cost objective?” OMB Circular A-87 defines a cost objective as a function, contract, grant award, or other category of costs that requires the grantee to track specific cost information.

24. Timekeeping Requirements: Federally Funded Programs

25. If federal funds are used for salaries: • Time distribution records must be kept • Employees must show that they actually worked on the federal program

26. Time distribution records for federally funded programs include: • Periodic Personnel Certification (at least semi-annually) • Personnel Activity Report (PAR) or equivalent documentation • Other (e.g. substitute system)

27. If employee works 100% on single cost objective or federal award: • Semi-Annual Certification • Signed every six months by supervisor or employee

28. Sample This sample is for informational purposes only.

29. If employee works on multiple cost objectives: • Personnel Activity Reports (PAR) • Signed every month by employee • Examples: • More than one federal award • A federal award and a non-federal award • An indirect cost activity and direct cost activity • 85/15—direct services and administrative services

30. Sample This sample is for informational purposes only.

31. Sample This sample is for informational purposes only.

32. Timekeeping Requirements (Cont’d) In order to meet documentation requirements the PAR (or equivalent documentation) must: • Reflect an after-the-fact distribution of the actual activity of each employee • Account for the total activity for which each employee is compensated • Be prepared at least monthly and coincide with one or more pay period • Be signed by the employee OMB Circular A-87, Attachment B, Section 8(h)(5) and the CSAM, Procedure 905

33. Maintenance of Effort Legal Authority: NCLB: Section 9521

34. Shifting an expenditure from a non-Federal account to a Federal account would constitute supplanting. An LEA may rebut this presumption by demonstrating that, in the absence of Federal funds, it would not fund this expenditure in the subsequent year. Maintenance of Effort

35. The reason provided by an LEA for shifting an expenditure in any particular circumstance would be critical in determining whether Federal funds were used to supplant State or local funds that would have been made available in the absence of Federal funds. Maintenance of Effort (cont.)

36. The LEA must maintain clear contemporaneous records of why the shift in funding source occurred. Example: LEA governing board eliminated position. Minutes from meeting. Maintenance of Effort (cont.)

37. MOE: Waiver • USDE Secretary may waive if: • Exceptional or uncontrollable circumstances such as natural disaster OR • Precipitous decline in financial resources of the LEA

39. New Guidance on Fiscal Requirements in SWP

40. Records Required in SWP If school consolidates* Federal, state, and local funds, then it is not required to maintain separate fiscal accounting records, by program, that ID the specific activities supported by those particular funds as long as it maintains records that demonstrate the SWP, considered as a whole, addresses the intent and purposes of each federal program. *Note: current California statute prohibits consolidation of state and federal funds

41. Records in SWP (con’td) • If LEA consolidates only Federal, LEA must keep records to demonstrate Federal funds were used for activities supporting specific educational needs of school • ID in needs assessment • Included in SWP description in SPSA • Need not identify, by program, specific activities supported by those funds

42. Records in SWP (con’td) • If LEA does not consolidate anything, it must maintain separate records for each federal program showing activities supporting educational needs. • Re Title I, need not show supplementary activities* for identified Title I students. *(Calif. Ed Code 64001- SPSA requires activities to be described in plan developed by SSC)

43. Questions: • In CA can schools consolidate federal, state and local funds in one single schoolwide pool? • If a school consolidates all federal funds in one single schoolwide pool, how do you document 85%/15%? • What role does SWP plan play in consolidation?

44. Ranking and Allocations to Title I Schools • (A) annually rank, without regard to grade spans, such agency's eligible school attendance areas in which the concentration of children from low-income families exceeds 75 percent from highest to lowest according to the percentage of children from low-income families; and • (B) serve such eligible school attendance areas in rank order.

45. Ranking and Allocations to Title I Schools • If funds remain after serving all eligible school attendance areas above 75% poverty a local educational agency shall— • `(A) annually rank such agency's remaining eligible school attendance areas from highest to lowest either by grade span or for the entire local educational agency according to the percentage of children from low-income families; and • `(B) serve such eligible school attendance areas in rank order either within each grade-span grouping or within the local educational agency as a whole.

46. Ranking and Allocations to Title I Schools 75% 35%

47. Ranking and Allocations to Title I Schools- Using School Poverty

48. Ranking and Allocations to Title I Schools- Using Gradespan School % Pov. Eligible Rank Gradespan

49. Ranking and Allocations to Title I Schools School % Pov. Eligible Grade Gradespan Lotsa Sand 26.1 no 8 K-8 Sand Paper 17.5 no 9 K-6 In this example schools below 35% poverty may not be served

50. Grandfathering school(s) To protect schools that may lose eligibility for one year due to fluctuations in attendance and percent poverty rate, the LEA may designate and serve that school attendance area or school that is not eligible under this section, but that was eligible and that was served in the preceding fiscal year, but only for 1 additional fiscal year `USC 6313 (b)(1)(C)