Preview of the TEA Special Allotments Monitoring Program

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1 1 Preview of the TEA Special Allotments Monitoring Program 2015 ACET Conference Houston, TX. PRESENTED BY MS. SUNNY SADLER, AUDITOR TEA DIVISION OF FINANCIAL COMPLIANCE FINANCIAL & FSP COMPLIANCE REVIEW UNIT

2 Scope 2 The new monitoring program is specifically designed to focus on ensuring local education agency (LEA) compliance and accountability related to supplemental state allotments. The supplemental state allotments that will be reviewed are: Special Education, Compensatory Education, Bilingual Education, Career and Technology Education, Gifted and Talented Education, and High School Education will be monitored for LEA compliance.

3 Who Is Subject To Being 3 Reviewed? The LEA s below are all subject to review: School Districts Open-enrollment Charter Schools including full-time Virtual Schools

4 Risk Assessment & Analysis 4 The monitoring program s risk assessment process is based on three consecutive state fiscal years of the LEA financial data reported in the Foundation School Program (FSP) System and the Public Education Information Management System (PEIMS). The risk assessment is designed to analyze LEA s special allotment spending and reporting requirements for the purpose of identifying potential non-compliance issues.

5 5 Risk Assessment & Analysis continued We also take into consideration findings and issues identified within the: Audit Follow-up and Financial Management Compliance Reviews Legislative Budget Board (LBB) Management and Performance Reviews Student Attendance Compliance Reviews Annual Financial and Compliance Reports (AFR) CPA Working Paper Reviews

6 6 Expenditure Requirements Supplemental state allotment expenditure requirements are as follows for each supplemental state allotment area. a) Special Education = 52% b) Compensatory Education= 52% c) Bilingual Education= 52% d) Career and Technology Education= 58% e) Gifted and Talented Education = 55% f) High School Education = 100%.

7 Monitoring and Compliance Activities 7 The monitoring program will incorporate established materiality thresholds during the testing of special allotment transaction samples to identify LEA s with high transaction error rates caused by inaccurate coding or the coding of unallowable program costs in PEIMS. o o The monitoring program reviews data from two reports called the: TEA Special Allotment Variance Report (currently in development) PEIMS EDIT PLUS + Reports Data Review called the Actual Allocated Expenditures by Program and Object code within Function General Fund

8 PEIMS REPORT EXAMPLE 8

9 Calculation Example 9

10 Most Common Findings 10 No. 1- Transactions that are missing source financial supporting documentation No. 2- Unallowable costs charged to the program No. 3- Coding errors in PEIMS No. 4- Booking errors in the general ledger No. 5- Underutilization of supplemental state allotments No. 6- Providing program services to ineligible students No. 7- Under budgeting for supplemental state allotments.

11 No. 1 Examples of Payroll Findings Transactions that are missing source financial supporting documents. The LEA split funded a school aid with both special compensatory education funds and local funds, however the LEA did not budget for this FTE in its campus/district improvement plans before the beginning of the school year. The LEA was missing financial supporting documentation such as time and effort sheets, signed/dated by both the employee and the program department supervisor for split funded FTEs. The LEA s employment contracts for split funded FTEs do not specify and document the employee s duties and responsibilities. The LEA s employment contracts for split funded FTEs are not signed and dated by the employee and employee s supervisor(s). 11

12 No. 2 Examples of Questioned Cost Findings Unallowable costs charged to the program The campus principal s salary charged to the compensatory education allotment program. Non-allowable FTE. Medical supplies for the school nurse s office charged to the high school education allotment program. Bilingual teacher s salaries charged to the bilingual education allotment program. Estimated costs versus actual costs charged to any of the supplemental state allotments. No evidence that costs incurred are supplemental versus supplanted. 12

13 No. 3 Examples of Coding Error Findings Common coding errors in PEIMS Coding allowable program expenses to the wrong Program Intent Code (PIC) Coding FTE salaries for either an unqualified teacher or an unallowable FTE expense to a supplemental state allotment program. Coding ineligible students to a supplemental state allotment program. Not coding shared service agreement expenses in PEIMS to the correct PIC code, under Function Code

14 No. 4 Examples of General Ledger Error Findings Booking the incorrect amount in the General Ledger. Booking errors in the general ledger Booking expenses in the General Ledger that fall outside of the current state fiscal year being reviewed. Booking expenses using estimated costs versus actual costs. Booking expenses for personal use that is not allowable, inappropriate or unsubstantiated by source financial documentation. 14

15 No. 5 Examples of Expenditure Requirement Findings Underutilization of supplemental state allotments Failing to meet direct cost expenditure requirements for each supplemental state allotment program. 15 Purchasing random large ticket item expenses at the end of the school year just to meet direct cost expenditure requirements that are not in the Campus Improvement Plan (CIP) or District Improvement Plan (DIP).

16 No. 6 Examples of Eligibility Findings Providing program services to ineligible students Inadequate or undocumented local policies and procedures that identify the LEA s local eligibility criteria used to identify students that are eligible for supplemental allotment program services. Inadequate or undocumented local policies and procedures for describing assessment tools that are used to determine student eligibility. 16

17 No. 7 Examples of Budget Findings Under budgeting for supplemental state allotments. Not incorporating campus teachers and principal s in the LEA budgeting process of supplemental state allotments funds. Not budgeting first for students that failed end of course (EOC) assessment instruments required for graduation. 17

18 18 Reporting A preliminary report will be issued to the LEA allowing for the LEA to respond with any additional information or explanation related to the non-compliance findings. Recommendations and/or corrective action plans will be provided to the LEA to address non-compliance issues.

19 19 Non-compliance can result in corrective actions and TEA monitoring. IMPACT Non-compliance can result in reduced supplemental state allotment funding from the TEA for future years. Non-compliance can result in recoupment of questioned cost by the TEA. Follow-up Audits.

20 20 Thank You! Please address your questions in writing to Ms. Sunny Sadler via at

Division of Financial Compliance Update and Relevant information

Division of Financial Compliance Update and Relevant information Region 20 Education Service Center September 21, 2016 Topics Charter School Depository Contracts letter GASB 68 letter 313 Reporting Changes