THE DEPARTMENT MICHIGAN DEPARTMENT OF EDUCATION

THE DEPARTMENT MICHIGAN DEPARTMENT OF EDUCATION

ACCOUNTING & AUDITING ALERT - AUDITS GRANT AUDITOR REPORTS HTTPS://MDOE.STATE.MI.US/CMS/GRANTAUDITORREPORT.ASPX HAS THE CFDA, GRANT AND PROJECT NUMBERS TO BE REFLECTED IN THE SEFA A NOTE TO THE SEFA THAT MANAGEMENT HAS UTILIZED THE MDE CASH MANAGEMENT SYSTEM (CMS) GRANT AUDITOR REPORT (GAR) IN PREPARING THE SEFA DIFFERENCES BETWEEN CURRENT PAYMENTS (GAR) AND AMOUNTS REPORTED IN THE SCHEDULE SHOULD BE RECONCILED

ACCOUNTING & AUDITING ALERT - AUDITS PAL REPORTS MUST SAY FINAL ON THE REPORT TO BE THE FINAL VERSION TOTAL ENTITLEMENT IS THE NUMBER ON THE TOTAL DISTRIBUTION LINE UNDER THE TOTAL COLUMN PILOT AMOUNTS ARE CONSIDERED ENTITLEMENT TOTAL BONUS IS THE NUMBER ON THE TOTAL DISTRIBUTION LINE UNDER THE BONUS COLUMN THE ENTITLEMENT DOLLARS LINE BETWEEN THE TABLES IS THE ELIGIBLE AMOUNT, NOT NECESSARILY WHAT WAS ACTUALLY PAID TO THE DISTRICT THE LOWER TABLE IS A BREAKDOWN OF USAGE AND BALANCES

ACCOUNTING & AUDITING ALERT - AUDITS AUDIT DUE DATE NOVEMBER 1, 2017 ELECTRONIC FILING REQUIRED ONE PDF DOCUMENT CONTAINING AUDITED FINANCIAL STATEMENTS, SINGLE AUDIT (IF REQUIRED), CORRECTIVE ACTION PLAN AND MANAGEMENT LETTERS CORRECTIVE ACTION PLAN REQUIRED TO BE A SEPARATE DOCUMENT (2CFR PART 200) SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR BOTH FINANCIAL STATEMENT FINDINGS AND FEDERAL PROGRAM FINDINGS SUBMISSION MUST BE LESS THAN 4MB IN SIZE NO ADDED SECURITY/PASSWORD PROTECTION OR ZIP FILES

AUDIT AND FID DUE DATE Audit Due Date

ACCOUNTING & AUDITING ALERT - AUDITS UNIFORM BUDGETING & ACCOUNTING ACT (MCL 141.437-440) ESTABLISHES BUDGET AND ACCOUNTING REQUIREMENTS FOR LOCAL GOVERNMENTS MDE HAS SET AN ALLOWABLE VIOLATION OF 0% FOR THE 2016-2017 SCHOOL FISCAL YEAR. THIS MEANS THAT ALL VIOLATIONS FOR EXPENDITURES IN EXCESS OF BUDGET AND FOR UNDERACHIEVED REVENUES AND FINANCING SOURCES (USES) THAT NEGATIVELY AFFECT THE ENDING GENERAL FUND BALANCE, WILL GENERATE A LETTER FROM MDE OFFICE OF FINANCIAL MANAGEMENT. THE LETTER WILL REQUIRE: MDE ANALYSIS AT THE GENERAL FUND LEVEL ONLY: TOTAL REVENUE, TOTAL EXPENDITURES, TOTAL FINANCING SOURCES (USES), AND ENDING GENERAL FUND BALANCE. BUDGETING PROCEDURES/POLICIES ANSWER TO SIX QUESTIONS IDENTIFYING HOW THE VIOLATION OCCURRED AND HOW IT WILL BE CORRECTED

ACCOUNTING & AUDITING ALERT - AUDITS FRAUD, ILLEGAL ACTS, CONTRACT VIOLATIONS, GRANT VIOLATIONS, ABUSE AUDITORS ARE REQUIRED TO REPORT KNOWN OR LIKELY VIOLATIONS DIRECTLY TO PARTIES OUTSIDE THE AUDITED ENTITY IN THE FOLLOWING TWO CIRCUMSTANCES: WHEN ENTITY MANAGEMENT FAILS TO SATISFY LEGAL OR REGULATORY REQUIREMENTS TO REPORT SUCH INFORMATION TO EXTERNAL PARTIES SPECIFIED IN LAW OR REGULATION WHEN ENTITY MANAGEMENT FAILS TO TAKE TIMELY AND APPROPRIATE STEPS TO RESPOND TO KNOW OR LIKELY FRAUD, ILLEGAL ACTS, VIOLATIONS OR PROVISIONS OF CONTRACTS OR GRANT AGREEMENTS, OR ABUSE THAT IS LIKELY TO HAVE A MATERIAL EFFECT ON THE FINANCIAL STATEMENTS AND INVOLVES FUNDING RECEIVED DIRECTLY OR INDIRECTLY FROM A GOVERNMENT AGENCY.

ACCOUNTING & AUDITING ALERT - AUDITS CORRECTIVE ACTION PLANS UNIFORM GRANT GUIDANCE, 2CFR PART 200 REQUIRES THE AUDITEE TO PREPARE A CORRECTIVE ACTION PLAN FOR EACH FINDING IN THE AUDIT REPORT. THE CORRECTIVE ACTION PLAN MUST PROVIDE: THE PLANNED CORRECTIVE ACTION THE NAME OF THE CONTACT PERSON RESPONSIBLE FOR THE CORRECTIVE ACTION THE ANTICIPATED COMPLETION DATE THE VIEW OF RESPONSIBLE OFFICIALS INCLUDED WITH MOST AUDIT FINDINGS DOES NOT MEET THE DEFINITION OF A CORRECTIVE ACTION PLAN UNLESS IT INCLUDES ALL OF THE ABOVE REQUIREMENTS. THE CORRECTIVE ACTION PLAN IS NOW REQUIRED TO BE A SEPARATE DOCUMENT.

UNIFORM GRANT GUIDANCE WRITTEN POLICIES AND PROCEDURES TITLE 2 CODE OF FEDERAL REGULATIONS UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS CASH MANAGEMENT - 200.302(B)(6) ALLOWABILITY OF COSTS - 200.302(B)(7) CONFLICT OF INTEREST - 200.318(C) PROCUREMENT - 200.319(C) METHOD FOR CONDUCTING TECHNICAL EVALUATIONS - 200.320(D)(3) TRAVEL REIMBURSEMENT - 200.474(B)

MICHIGAN SCHOOL AUDITING MANUAL REPORTING FEDERAL REVENUE OVER $750,000 WITH NO SINGLE AUDIT DISTRICT RECEIVED IN EXCESS OF $750,000 BUT DID NOT EXPEND $750,000 NOTE SHOULD BE INCLUDED IN THE FINANCIAL STATEMENTS, WITH A RECONCILIATION EXAMPLE: REVENUES FROM FEDERAL SOURCES STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE $ 817,596 FEDERAL EXPENDITURES RELATED TO ARRA QUALIFIED SCHOOL CONSTRUCTION BONDS THAT ARE NOT REQUIRED TO BE REPORTED ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND ARE NOT COVERED BY THE SINGLE AUDIT ACT. (116,712) FEDERAL EXPENDITURES $ 700,88

ESSA: STATUS OF MICHIGAN S ESSA PLAN MICHIGAN S ESSA PLAN SUBMITTED TO U.S. EDUCATION DEPARTMENT (USED) ON MAY 3, 2017 CURRENTLY UNDER REVIEW BY USED (LAW ALLOWS UP TO 120 DAYS FOR REVIEW) FOCUS IS ON WHOLE CHILD, WELL-ROUNDED EDUCATION. SUBMITTED ESSA PLAN AND ADDITIONAL INFORMATION AVAILABLE AT: HTTP://WWW.MICHIGAN.GOV/ESSA

KEY PROVISIONS IN MICHIGAN S ESSA PLAN THREE ACCOUNTABILITY SYSTEM OPTIONS WERE DESCRIBED IN THE ESSA PLAN. FINAL SYSTEM IS PENDING STATE LEGISLATIVE ACTION WILL DEFAULT TO OPTION 3 (TRANSPARENCY DASHBOARD) IF NO LEGISLATIVE ACTION BY JUNE 30, 2017 PROCESS FOR DETERMINING ESSA-REQUIRED LABELS (COMPREHENSIVE AND TARGETED SUPPORT SCHOOLS) WILL BE DETERMINED ONCE THE STATE ACCOUNTABILITY SYSTEM HAS BEEN FINALIZED ACCOUNTABILITY DESIGNATIONS WILL DRIVE SUPPORTS. MDE WILL IMPLEMENT PARTNERSHIP MODEL TO SUPPORT DISTRICTS WITH IDENTIFIED SCHOOLS.

WHAT TO EXPECT IN ESSA FORMULA GRANTS GUIDANCE AVAILABLE ON OFS WEBSITE HTTP://WWW.MICHIGAN.GOV/MDE/0,1607,7-140- 6530_30334_51051---,00.HTML: UNDER CURRENT TOPICS: GUIDANCE ON SUPPLEMENT NOT SUPPLANT UNDER TOOLS & RESOURCES: TECHNICAL ASSISTANCE FOR WORKING WITH PRIVATE SCHOOLS PROGRAM ALLOCATIONS HTTPS://WWW.MICHIGAN.GOV/MDE/0,1607,7-140-6530_30334-127227--,00.HTML

ESTIMATED STATE ALLOCATIONS (UPDATED BASED ON MAY 23 RD INFORMATION) NOTE CHANGES IN STATE ALLOCATIONS DO NOT TRANSLATE TO SIMILAR CHANGES AT THE LEA LEVEL, BUT STATE ALLOCATION CHANGES FOR 2017-18 ARE: TITLE I, PART A NET DECREASE BY 4% TITLE I, PART C MIGRANT NET DECREASE BY 10% TITLE I, PART D NEGLECTED AND DELINQUENT POSSIBLE INCREASE BY 7% TITLE II, PART A -SUPPORTING EFFECTIVE INSTRUCTION NET DECREASED BY ABOUT 13%

ESTIMATED STATE ALLOCATIONS TITLE III, PART A ENGLISH LANGUAGE ACQUISITION EXPECT LEVEL FUNDING TITLE IV STUDENT SUPPORT AND ACADEMIC ENRICHMENT STATE GRANT RECEIVED ENOUGH TO COVER ALL OF THE LEA S BASE GRANT $10,000 AND THE REST WILL FOLLOW THE TITLE I, PART A FORMULA. TITLE V, PART B RURAL AND LOW-INCOME SCHOOLS PROGRAM - EXPECT LEVEL FUNDING TITLE IX, PART A HOMELESS CHILDREN AND YOUTH EDUCATION POSSIBLE INCREASE BY 13%

CHANGE NOTICE #25 FEBRUARY 9, 2017 NOTICE AS A RESULT OF JANUARY 30, 2017 1022 REFERENT GROUP MEETING CHANGES TO BE IMPLEMENTED FY18 NOTICE INCLUDES RECORD OF CHANGES AND MANUAL PAGES TO REPLACE HTTP://WWW.MICHIGAN.GOV/DOCUMENTS/MDE/CHAN GE_NOTICE_25_551162_7_551201_7.PDF 17

CHANGE NOTICE #25 REVISED BUDGETING GUIDANCE FOR FUNDS RECEIVED AS SUBGRANTEE/FLOW-THROUGH FROM ISDS DEFERRED INFLOWS AND DEFERRED OUTFLOWS ARE NOW SEPARATE CODES NO LONGER NETTED IN FID, SEPARATE FIELDS ON DDE PAGE REVISED DEFINITIONS OF FOOD SALES MAJOR CLASS CODES FUNCTION 231 NOW ALLOWABLE IN CAPITAL PROJECTS FUNDS GRANT CODES UPDATED 18

FID UPDATES DUE NOVEMBER 1 ST NOVEMBER STATE AID WILL BE WITHHELD IF NOT RECEIVED COMPRESSED TIMELINE FOR ANALYSIS AND CORRECTIONS ~2 WEEKS TO CORRECT IF NOTIFIED CEPI & MDE COMMUNICATIONS ON TIMELINE EXPECTED DUAL ENROLLMENT COSTS EXPECTED TO BE ADDED TO DDE SCREEN (PREVIOUSLY COLLECTED IN SID) 19

FID CHECKS MOST CRITICAL CHECKS: GENERAL FUND BALANCE TOTAL FEDERAL REVENUE USDA ENTITLEMENT AND BONUS COMMODITIES NET PENSION LIABILITY SELECT CATEGORIES OF STATE REVENUES, AVERAGE TEACHER SALARIES, AND FUND TRANSFERS ARE ALSO REVIEWED SECTION 18(10): STATE AID WITHHOLDING FOR INCONSISTENT DATA 20

FID CHECKS ADDITIONAL CHECKS BUILT INTO FID: STATE AID REVENUES (THREE CATEGORIES) REVIEW CODING USING ACCOUNTING FOR STATE SCHOOL AID REVENUES DOCUMENT: HTTP://WWW.MICHIGAN.GOV/DOCUMENTS/SAACCT03_45776_7.PDF ENHANCED AVERAGE TEACHER SALARY COMPARISON NET PENSION LIABILITY AND DEFERRED INFLOWS & OUTFLOWS BUILDING CODE REQUIREMENT FOR SELECT FUNCTIONS SELECT CATEGORIES OF REVENUES, EXPENDITURES, AND FUND BALANCES ALSO REVIEWED AFTER SUBMISSION 21

ESSA REPORT CARDS PER-PUPIL EXPENDITURE ITEM ON ESSA REPORT CARDS REQUIRED AT BOTH SCHOOL/BUILDING AND DISTRICT LEVELS ENHANCED REPORTING BEGINNING 2017-18 100% OF FUNCTION CODES 1XX AND 24X AT BUILDING LEVEL (CURRENTLY 80%), FID WARNING IN 2016-17, ERROR IN 2017-18 ADDITIONAL FUNCTION CODES AT BUILDING LEVEL (SUPPORT SERVICES) MAY BE REQUIRED IN THE FUTURE CRA ACTION AFFECTED PREVIOUS DOE GUIDANCE, QUESTIONS ON SPECIFIC REQUIREMENTS AND LOGISTICS REMAIN 22

BULLETINS 1011 AND 1014 2015-16 PUBLICATIONS RELEASED FEBRUARY 2017 BULLETIN 1011: SELECT DATA PREPARED IN GROUPINGS BASED ON PUPIL MEMBERSHIP BEST PUBLICATION FOR DISTRICTS TO ANALYZE REVENUES AND EXPENDITURES COMPARED TO DISTRICTS OF SIMILAR SIZE BULLETIN 1014: SELECT PER-PUPIL DATA PREPARED BY DISTRICT, ORGANIZED BY COUNTY INCLUDES REVENUES, EXPENDITURES, AND OTHER RELEVANT FIGURES (COE, PUPIL COUNT, TAXABLE VALUES, PUPIL-TEACHER RATIO, ETC.) BEST PUBLICATION FOR DISTRICTS TO ANALYZE FINANCIAL AND NONFINANCIAL DATA AND FOR COMPARISON OF NEARBY DISTRICTS.

FINANCIAL DATA FILES BULLETIN 1011 AND 1014 DATA FILES AVAILABLE IN EXCEL FORMAT BALANCE SHEET, REVENUE, EXPENDITURE, AND ESP DATA FILES PUBLISHED BY CEPI THROUGH MI SCHOOL DATA PORTAL EACH YEAR RELEASED CLOSE TO PUBLICATION DATE OF BULLETINS HTTPS://WWW.MISCHOOLDATA.ORG/OTHER/DATAFILES/FINANCIALINFORMATION/HISTORICALFINANCIALREPORTS. ASPX CUSTOMIZED DATA REQUESTS MAY BE AVAILABLE THROUGH MDE AND/OR CEPI

STATE SCHOOL AID BUDGET NO NEW INFORMATION AT THIS TIME.

REGULATIONS 7 CFR PART 210 - USDA PROGRAM REGULATIONS 210.14 RESOURCE MANAGEMENT 210.9(B)(2) & 210.19(A)(1) EXCESS FUND BALANCES 2 CFR PART 200 - UNIFORM GUIDANCE 200.313 & 200.407 EQUIPMENT 200.318-.326 PROCUREMENT 200.403 ALLOWABLE COSTS 200.414 INDIRECT COSTS 26

EXCESS FUND BALANCES Spend Down Plan of Action required for MDE approval Equipment or Other Capital Outlay Requests also require MDE approval prior to incurring cost Timeline is very tight Check previous 3 schools years during RM Review Now submitted through GEMS-MARS 27

EQUIPMENT OR OTHER CAPITAL OUTLAY PURCHASES MDE ADMINISTRATIVE POLICY #13 SY 2015/2016 USDA PREAPPROVED LIST OF EQUIPMENT PURCHASES MUST SUBMIT AN EQUIPMENT OR OTHER CAPITAL OUTLAY REQUEST FORM FOR MDE PRIOR APPROVAL FOR PURCHASES NOT ON THE LIST THAT EXCEED $5,000 MUST SUBMIT AN EQUIPMENT OR OTHER CAPITAL OUTLAY REQUEST FORM FOR MDE PRIOR APPROVAL IF SPENDING OVER $25,000 PER BUILDING, PER FISCAL YEAR, FOR ITEMS ON THE LIST FILLABLE FORM IS EMBEDDED IN THE MEMO 28

INDIRECT COSTS USE THE UNRESTRICTED RATE PUBLISHED BY MDE ANNUALLY PUBLIC SCHOOLS: IF APPROVED INDIRECT COST RATE EXCEEDS 15% LIMIT USE 15% MAX NONPUBLIC: 10% MAX MDE INDIRECT COST RATES CURRENT INFORMATION WWW.MICHIGAN.GOV/MDE OFFICES>STATE AID & SCHOOL FINANCE>PUBLICATIONS>INDIRECT COST RATE USDA MEMO SP 60-2016: INDIRECT COST GUIDANCE TREATED CONSISTENTLY ACROSS ALL OTHER PROGRAMS 29

LOCAL MEAL CHARGING POLICY USDA MEMO SP 46-2016 MEAL CHARGING WRITTEN POLICY REQUIRED BY JULY 1, 2017 CLEARLY COMMUNICATED IN WRITING INCLUDE BAD DEBT POLICY REQUIRES A COLLABORATIVE EFFORT BETWEEN ADMINISTRATION, BUSINESS OFFICE, AND FOOD SERVICE 30

BAD DEBT POLICY (UNCOLLECTABLE MEAL BALANCES) MDE ADMIN POLICY #6 BAD DEBT & FAQS SY 2016/2017 WRITTEN POLICY REQUIRED BY JULY 1, 2017 NEGATIVE STUDENT BALANCES MUST BE WRITTEN OFF THE POS SYSTEM AND MADE WHOLE IN THE FOOD SERVICE FUND BY JUNE 30TH DECEMBER 31 EVERY YEAR CAN BE TRACKED AND COLLECTED BY BUSINESS OFFICE AFTER JUNE 30TH DECEMBER 31 REQUIRES A COLLABORATIVE EFFORT BETWEEN ADMINISTRATION, BUSINESS OFFICE, AND FOOD SERVICE 31

ADA COMPLIANCE A WALK THROUGH THE MDE WEBSITE OFFICE OF FINANCIAL MANAGEMENT AUDITS (NAOMI CASHER) OFFICE OF PROFESSIONAL PREPARATION SERVICES MOECS (NAOMI CASHER) OFFICE OF STATE AID & SCHOOL FINANCE (CHRIS MAY) OFFICE OF FIELD SERVICES (MIKE RADKE) OFFICE OF SCHOOL SUPPORT SERVICES (LOUIS BURGESS)

THE END PRESENTED BY: GLORIA SUGGITT SINGLE AUDIT COORDINATOR OFFICE OF FINANCIAL MANAGEMENT NAOMI CASHER ASSISTANT DIRECTOR OFFICE OF FINANCIAL MANAGEMENT JOHN BROOKS AUDITOR OFFICE OF FINANCIAL MANAGEMENT CHRISTOPHER MAY FINANCIAL SPECIALIST OFFICE OF STATE AID & SCHOOL FINANCE MIKE RADKE DIRECTOR OFFICE OF FIELD SERVICES LOUIS BURGESS DIRECTOR OFFICE OF SCHOOL SUPPORT SERVICES DIANE GOLZYNSKI SUPERVISOR OFFICE OF SCHOOL SUPPORT SERVICES BECKY PENNINGTON SUPERVISOR OFFICE OF SCHOOL SUPPORT SERVICES