What Laws Apply to Federal Grants: A Historical Perspective

1. What Laws Apply to Federal Grants: A Historical Perspective Leigh M. Manasevit, Esq. lmanasevit@bruman.com Brustein & Manasevit, PLLC www.bruman.com Spring Forum 2013 Brustein & Manasevit, PLLC

2. 1960s: Congress began recognizing unmet educational needs • Children in Poverty • Students with Disabilities • Vocational Training • Limited English Proficient Students • Homeless Students Brustein & Manasevit, PLLC

3. Federal education programs • Designed to address specific unmet needs Brustein & Manasevit, PLLC

4. Limited Federal Capacity • State administered programs created Brustein & Manasevit, PLLC

5. Department of Health, Education, and Welfare • Education responsibility generally given to the U.S. Department of Health, Education, and Welfare (HEW) • United States Office of Education • Divided into program bureaus with specific responsibility • Elementary and Secondary Education • Vocational Education • Special Education, etc. Brustein & Manasevit, PLLC

6. Office of Education • Bureaus: Responsibility for individual program • Individual programs contained separate administrative rules • Not always consistent • Burdensome due to differing requirements Brustein & Manasevit, PLLC

7. U.S. Department of Education (ED) in 1980 • Education responsibility transferred • HEW becomes ED and Health & Human Services (HHS) Brustein & Manasevit, PLLC

8. ED • Separation of program function is preserved • Funds allocated to States for program administration • Funds allocated to States for distribution to school districts – local education agencies (LEAs) Brustein & Manasevit, PLLC

9. State Education Agencies (SEAs) • SEAs expanded • Significant function: Administer federal programs • Divided into program offices • Generally reflect federal organization • Examples • Elementary and Secondary • Students with Disabilities • Career Education Brustein & Manasevit, PLLC

10. Federal Government recognizes inefficiency! • Programs with separate administrative requirements • Duplication of efforts • Inconsistent requirements • Changes need to be program by program • Leads to administrative standardization Brustein & Manasevit, PLLC

11. Administrative Standardization • General Education Provisions Act (GEPA) • Education Department General Administrative Regulations (EDGAR) • Single Audit Act • Office of Management and Budget (OMB) Circulars Brustein & Manasevit, PLLC

12. GEPA • Part of the organic law establishing ED’s structure • Cross-cutting provisions Brustein & Manasevit, PLLC

13. EDGAR • Department of Education administrative rules covering all ED programs Brustein & Manasevit, PLLC

14. Single Audit Act OMB Circular A-133 • Standardized audit requirements for all entities expending > $500,000 federal $ annually Brustein & Manasevit, PLLC

15. OMB Circulars • Government-wide principles for determining what costs are allowable Brustein & Manasevit, PLLC

16. Example: Application of Federal Laws/Authorities • Title I of the Elementary and Secondary Education Act (Title I) • Authorized by No Child Left Behind in 2002 • Analysis of applicability of federal laws/authorities to Title I Brustein & Manasevit, PLLC

17. Example: Title IHow much money will we receive? • Congress appropriates a total amount for the Nation • Title I formula allocates to • Local Education Agencies (LEA) • Funds flow SEA LEA • All based on formula in the law Brustein & Manasevit, PLLC

18. How can we spend these funds? • Always begin with program statute… • Ask: • What can we do? • Who can we serve? • Any specific restrictions? Brustein & Manasevit, PLLC

19. Title I, Part A – Targeted Assistance • Congress mandates Title I is for: • Educational Supports • What qualifies as an educational support? • Educationally Disadvantaged Student • Who are the educationally disadvantaged students? • Supplemental Services • What are the additional fiscal rules? • Non supplant • Maintenance of Effort • Comparability Brustein & Manasevit, PLLC

20. Title I, Part A – Targeted Assistance (cont.) • Services to students in private schools • How do I determine amount of funding? What are the uses? • Schools served on basis of poverty rates • Which schools can be served with Title I funds? Brustein & Manasevit, PLLC

21. Title I, Part A • Law contains basic requirements • Further explanations: • Regulations • Guidance • Letters Brustein & Manasevit, PLLC

22. What controls the State – LEA relationship regarding the federal programs? • Part 76 – 34 CFR Part 76 (Code of Federal Regulations) • LEA applies to the State for funding • State notifies LEA • Amount • Timing • Federal requirements applicable • SEA assures intended uses are within the law • LEA commits to follow the plan it submits to SEA Brustein & Manasevit, PLLC

23. General Education Provisions Act (GEPA) • GEPA: Is the program subject to the cross-cutting authority of ED on State Administered Programs? • “Applicable program” • Program for which the Secretary of Education has administrative responsibility • No Child Left Behind Act • Individuals with Disabilities Education Act • Carl D. Perkins Career and Technical Education Act Brustein & Manasevit, PLLC

24. GEPA – EDGAR • EDGAR applies and expands GEPA requirements • Application Process • State applies to ED • Local Education Agency (LEA) applies to State (SEA) Brustein & Manasevit, PLLC

25. GEPA – EDGAR • Funds flow ED  SEA  LEA • States are responsible for, and must monitor, LEA compliance • SEAs are responsible to ED to properly administer federal grant funds Brustein & Manasevit, PLLC

26. GEPA – EDGAR • Privacy rights of students protected Brustein & Manasevit, PLLC

27. GEPA – EDGAR • Funds flow to SEA after ED approves application • Funds flow to LEA after SEA approves local application • Available for 27 months for obligation • Obligation is not expenditure • 90 days additional for liquidation • Obligation defined Brustein & Manasevit, PLLC

28. GEPA - EDGAR • Record requirements and retention rules • Services to private school students • See also program statute rules on private school student participation Brustein & Manasevit, PLLC

29. EDGAR • Uniform Grant Rules • Pre/post award requirements • Program income • Property management • Procurement process • Subgrants • In most major education programs, LEAs are allocated funds based on a formula enacted by Congress • May not subgrant unless authorized by law Brustein & Manasevit, PLLC

30. Single Audit Act – OMB Circular A-133 • Historically: • Audit requirements historically separate and within program statutes • Requirements inconsistent • Single Audit Act (A-133) • Requires audit by independent auditor of federal programs whenever recipient expends over $500,000 federal funds – all services • Creates uniform standards of • Independence • Selection of items to be audited • Auditing standards • Contains program guides for auditor use • Compliance supplements Brustein & Manasevit, PLLC

31. Single Audit Act – OMB Circular A-133 • Compliance Supplement • Each major program • Guide developed by ED/OMB • Important resource • ED view of important elements • Auditor responsibility Brustein & Manasevit, PLLC

32. OMB Circulars • Government-wide • Contain general principles for determining allowable costs • http://www.whitehouse.gov/OMB/circulars/ Brustein & Manasevit, PLLC

33. OMB Circular A-87 • Covers state-local governments • Applicable to SEAs, LEAs Brustein & Manasevit, PLLC

34. OMB Circular A-87 – Title I, Part A Example – • Can I use Title I to buy a computer to provide educational support? • Necessary • Reasonable • Allocable Brustein & Manasevit, PLLC

35. EDGAR • What procurement process do I use? • What property management (inventory) do I need? Brustein & Manasevit, PLLC

36. OMB Circular A-87 – 43 Items of Cost • Can I pay for attendance at a professional development meeting for a Title I teacher? • What documentation do I need to support salary payments? Brustein & Manasevit, PLLC

37. Possible Massive Changes to Circulars • NPRM – 2/1/13 • Close of comment period: Extended 06/02/13 • Analysis of public comment • Final regulation – not likely before 1/1/14 • EDGAR revisions – within one year of final regulation? • No splitting FY Brustein & Manasevit, PLLC

38. Why “Supercircular”??? • Greater simplicity • Greater consistency • Obama Executive Order on Regulatory Review – 2011 • Increase efficiency • Strengthen oversight Brustein & Manasevit, PLLC

39. Single Audits • Single Audit Threshold is raised from $500,000 in federal annual expenditures to $750,000 Brustein & Manasevit, PLLC

40. Cooperative Audit Resolution • Improve communication, foster collaboration, promote trust, develop understanding between auditor and auditee Brustein & Manasevit, PLLC

41. Cooperative Audit Resolution • This approach is based upon “Federal Agencies offering appropriate amnesty for past noncompliance when audits show prompt corrective action” Brustein & Manasevit, PLLC

42. Reforms to A-21, A-87, A-122 • Consolidating to one Circular • Significant changes to Time and Effort!! Brustein & Manasevit, PLLC

43. What is covered? • Administrative Requirements (A-102, A-110) • Cost Principles (A-87, A-21, A-122) • Audit Requirements (A-133) Brustein & Manasevit, PLLC

44. GEPA • And finally… • What happens if I don’t follow the rules? • Enforcement procedures • Recovery of funds • Termination of program • High Risk States • Compliance Agreement Brustein & Manasevit, PLLC

45. Questions? Brustein & Manasevit, PLLC

46. This presentation is intended solely to provide general information and does not constitute legal advice.  Attendance at the presentation or later review of these printed materials does not create an attorney-client relationship with Brustein & Manasevit, PLLC.  You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular circumstances. Disclaimer Brustein & Manasevit, PLLC