Ohio Department of Education Perkins CTE Workshop January 21, 2014 MICHAEL BRUSTEIN, ESQ.

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1 Ohio Department of Education Perkins CTE Workshop January 21, MICHAEL BRUSTEIN, ESQ. MBRUSTEIN@BRUMAN.COM

2 Agenda 1. Update on Reauthorization 2. Funding / Obligations 3. Allowable Uses of Perkins Funds 4. Navigating EDGAR 5. Navigating the Omni Circular 6. Perkins Implementation Issues 7. Questions 2

3 Perkins CTE Funding to Ohio 3 July 1, 2012 to June 30, 2013 $42,750,001 July 1, 2013 to June 30, 2014 $42,750,001 July 1, 2014 to June 30, 2015? Administration s Budget: $42,601,938

4 FY 2014 Budget Bill 4 Bipartisan Budget Act H.J. Res. 59 Allows for restoration of sequester-related cuts Which federal education programs will be protected?

5 5 State State Leadership Administration 10% 5% Pass Through 85%

6 What is the window for obligating these funds? July 1 to June 30 if Local Plan submitted to State by July 1 in substantially approvable form 6-34 CFR

7 May unobligated funds be carried over? NO! 7 Section 133(b) of Perkins

8 What are the allowable uses of Perkins funds? 1. Perkins Act 2. EDGAR Basic Roadmap 3. OMB Omni Circular 8

9 Perkins Act 1. Serve only CTE students 2. Meet the Local Plan requirements on Section 134 (Budgets) 3. Satisfy the Section 135 requirements on uses of funds 4. Accountability Section Local Improvement Plans Section 123 9

10 Section a) Improve b) Mandatory uses c) Permissive uses d) Administrative costs

11 EDGAR Part 76 State Administrative Rules Part 80 General Administrative Rules 11

12 EDGAR Part Standards for Financial Management* 2. Payments* 3. Allowable Costs* 4. Period of Availability of Funds* 5. Program Income* 6. Non Federal Audit* 12 * Omni Circular Changes

13 EDGAR Part 80 (cont.) Changes* 8. Equipment* 9. Supplies* 10. Procurement* 11. Monitoring* 12. Retention of Records *Omni Circular Changes

14 In developing your Perkins Budget, follow this roadmap: 1) Is the item allowable under a) Perkins b) State Plan c) State / Local Policies d) Omni Circular 14

15 15 2) Is the item necessary?

16 3) Is the cost reasonable? 16

17 4) Is the cost allocable to Perkins? 17

18 5) Is the cost adequately documented? 18

19 OMB Revised Administrative, Cost, Audit Rules Governing All Federal Grants The Super Circular Omni Circular The One-Stop Shop for Federal Assistance

20 Key Dates: 20 Feb 1, 2013 Dec 19, 2013 Dec 26, 2013 April 2014 June 26, 2014 Dec 26, 2014 NPRM Final Federal Register New OMB Compliance Supplement ED Draft EDGAR Changes Final EDGAR Published

21 Date of Applicability of Revised Rules 21 OMB stated on 12/20/13 after December 26, 2014 All Drawdowns,???

22 What is covered? 22 A-102 Administrative Rules State / Local Part 80 EDGAR A-110 Administrative Rules Postsecondary Part 74 EDGAR A-87 Cost Rules State / Local A-21 Cost Rules Rules Postsecondary A-122 Cost Rules Nonprofit A-133 Audit Rules (>$750,000)

23 Who is covered? 23 All nonfederal entities expending federal awards

24 Reasons for the Change? Simplicity 2. Consistency 3. Obama Executive Order on Regulatory Review Increase Efficiency Strengthen Oversight

25 Who crafted the changes? 25 COFAR Council on Financial Assistance Reform, and Key Stakeholders

26 Inconsistency Between Program Statute and Circular 26 If federal program statute or regulation differs from Omni Circular, then statute / regulation governs.

27 Most Significant Change 27 Shift from focus on Compliance to focus on PERFORMANCE!!!

28 Performance 28 Auditors (A Federal OIG) and Monitors (Federal and State Pass Through) must look more to outcomes than to process

29 Flexibility 29 The Omni Circular adds significant flexibility to way grantee / subgrantee can adopt their own processes

30 Flexibility 30 Example of new flexibility = Time and Effort certifications

31 The Current Law: 31 Employee effort is one cost objective Semi Annual Certification Employee effort is two or more cost objectives PAR

32 Personnel Activity Report After the fact 2. At least monthly % of effort 4. Certified by employee

33 New Law: ( ) 33 Charges to federal awards must be based on records 1. Supported by a system of internal controls 2. Incorporated into official records of grantee 3. Reasonably reflect total activity for which employee compensated

34 Compare reasonably reflect to current law: Philadelphia $123 million Detroit $51 million Orleans Parish $26 million

35 New requirements are less prescriptive Grantees encouraged to adopt substitute systems

36 Acceptable now to allocate sampled employee s supervisors, clerical and support staffs, based on results of sampled employees

37 BUT, if records of grantee do not meet new standards, ED may require PARs

38 What about employees assigned to administrative functions? 38 Salaries of administrative and clerical staff should be treated as indirect unless all of following are met: 1. Such services are integral to the activity 2. Individuals can be specifically identified with the activity 3. Such costs are explicitly included in the budget 4. Costs not also recovered as indirect

39 New Emphasis on Risk ( ) 39 ED and Pass-Through must have in place a framework for evaluating risks before applicant receives funding

40 Risk Factors: Financial Stability 2. Quality of Management System 3. History of Performance 4. Audit Reports 5. Applicant s Ability to Effectively Implement Program

41 ED or Pass Through May Impose Additional Conditions 41 Require reimbursement Withhold funds until evidence of acceptable performance More detailed reporting Additional monitoring Require grantee to obtain technical or management assistance Establish additional prior approvals

42 Monitoring by Pass Through ( ) 42 Monitor to assure compliance with applicable federal requirements and performance expectations are achieved Must cover each program, function or activity Must submit performance reports at least annually Depending on assessment of risk, pass through should provide subgrantees with: 1. Training + technical assistance on program-related matters 2. On-site reviews 3. Arranging for agreed-upon-procedures

43 Accountability Major emphasis on strengthening accountability by improving policies that protect against waste, fraud and abuse ( )

44 Accountability 44 Official authorized to legally bind the non-federal entity must certify on annual and final fiscal reports or vouchers requesting payment: By signing this report, I certify to the best of my knowledge and belief that the report is true, complete and accurate and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the federal award. I am aware that any false, fictitious, or fraudulent information or the omission of any material fact, may subject me to criminal civil or administrative penalties for fraud, false statements, false claims, or otherwise.

45 Conflict of Interest ( ) 45 All non federal entities must establish conflict of interest policies, and disclose in writing any potential conflict to federal awarding agency

46 Mandatory Disclosures ( ) 46 Non federal entity must disclose in writing in timely manner to federal agency or passthrough all violations of federal criminal law involving fraud, bribery or gratuity violations potentially affecting federal award

47 Significant Changes to Core Financial Management Standards ( ) 47 Written Procedures on Cash Management Written Procedures on Allowability of Costs

48 Cash Management ( ) 48 For States CMIA For all others payments must minimize time elapsing between drawdown from U.S. Treasury and disbursement by check, warrant or other means Payment must be made to subgrantee at time it disburses funds to vendors

49 Cash Management 49 Pass Through cannot require subgrantees maintain separate depository accounts Subgrantee must be able to account for the receipt, obligation and expenditure Interest amounts up to $500 may be retained for administrative expense

50 Program Income ( ) 50 Deduction method, rather than addition method, shall be used if ED does not specify otherwise in GAN

51 Meals / Conferences / Travel ( ) (Family Friendly Policies) 51 Allowable conference costs include rental of facilities, costs of meals and refreshments, transportation, unless restricted by the federal award Costs related to identifying, but not providing, locally available dependent-care resources (but ) allows for above and beyond regular dependent care Conference hosts must exercise discretion in ensuring costs are appropriate, necessary and managed in manner than minimizes costs to federal award

52 Travel costs may be charged on actual, per diem, or mileage basis Travel charges must be consistent with entity s written travel reimbursement policies

53 Travel 53 Grantee must retain documentation that participation of individual in conference is necessary for the project

54 Travel 54 Travel costs must be reasonable and consistent with written travel policy / or follow GSA 48 CFR (a)

55 Computing Devices (200.20) 55 Machines used to acquire, store, analyze, process, and publish data electronically

56 Supplies ( ) 56 Now includes computing devices Residual inventory of unused supplies exceeding $5,000 in total aggregate value must compensate federal government

57 Changes to Equipment Rules ( ) Subgrantee cannot encumber the property without approval of pass-through Shared use interfere 57 if such use will not 1 st preference projects supported by federal awarding agency 2 nd preference project funded by other federal agencies 3 rd preference use for non federally funded programs

58 User Fees 58 User fees on equipment should be considered if appropriate But user fees should not be less than private companies charge for equivalent services

59 Trade-In on Equipment 59 When grantee acquiring replacement equipment, the equipment to be replaced may be used as a trade-in without recourse to federal agency

60 Disposition of Equipment 60 Upon disposition federal agency may permit grantee to retain $500 or 10% of proceeds, whichever is less, for handling expenses

61 Internal Controls on Equipment, Supplies, Computing Devices ( (b)(4)) 61 Regardless of cost, grantee must maintain effective control and safeguard all assets and assure that they are used solely for authorized purposes.

62 Micro-Purchases Acquisitions of supplies or services which do not exceed $3,000 may be solicited without competitive quotations if the non federal entity considers the price to be reasonable 62

63 Insurance Coverage ( ) 63 At a minimum, grantee must provide equivalent insurance coverage on equipment purchased with federal funds as provided to equipment purchased with nonfederal funds

64 Audit Resolution ( ) 64 Federal Compliance requirements do not pass through to contractors Auditee is responsible for ensuring compliance for procurement transactions

65 2014 OIG Audit Work Plan Oversight of OVAE and selected states compliance with Perkins 65

66 The federal agency, OIG, or GAO may arrange for audits in addition to single audit

67 Audit Follow-Up Auditees must prepare a summary schedule of prior audit findings and a corrective action plan for current year audit findings

68 Federal Agency Audit Responsibility ( ) 68 The federal awarding agency must use cooperative audit resolution to improve federal program outcomes

69 Audit Findings ( ) 69 The auditor must report known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Auditor will not normally find questioned costs for a program that is not audited as a major program But if auditor becomes aware of questioned costs > $25,000 for non-major program, must report

70 Major Program Determination 70 See chart in

71 Implementation Issues 71

72 Supplanting Perkins funds must supplement, not supplant, state and local funds for CTE 72

73 Non-Supplant Tests 1. Perkins funds used for same activity that was paid for in prior year with state / local funds 2. Perkins funds paid for activity mandated by state / local law 73

74 74 But what if activity would be discontinued in absence of fed funds? a) Documentation on reduction b) Documentation that activity would have been eliminated

75 Programs of Study How many programs of study? 75

76 Questions? 76

77 Disclaimer 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. 77