Maximize Fiscal Flexibility:

Consolidated Administration, Transferability, Waivers, and

Schoolwide Programs

Leigh M. Manasevit, Esq.lmanasevit@bruman.com Brustein & Manasevit, PLLC

Spring 2012 Forum

Remembrance of Things Past . . .• March 3, 2011 letter from Secretary Duncan to Governors

• “The New Normal”

• Focus on the effective, efficient and responsible use of federal funds

• Reminder of flexibilities around since 1994!

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CONSOLIDATED ADMINISTRATION UNDER NCLB

For those wearing multiple hats3

Consolidated Administration

• Combine administration for all NCLB programs

• NOT non-administrative activities • Single Cost Objective• If you work 100% on NCLB consolidated

administration, then do semi-annual certification

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Prerequisites

• LEAs =• Need approval of the

SEA• SEA must set % cap for

administration, OR use “necessary and reasonable amount”

• SEAs = • Need to demonstrate

that majority of operating expenses come from non-federal sources

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TRANSFERABILITY

In the unlikely event you have more federal resources than you really need

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Transferability- LEAs not ID SI• May transfer up to 50% of funds under:• Title II, Part A (Teacher Training)• Title II, Part D (Enhancing Education through Technology• Title IV (Safe and Drug Free)• Title V (Innovative Programs)• ED Tech State Grants

• Transfer to Title I, Part A or any of the above programs

• Increases the base on which calculating set asides7

Transferability – LEAs ID for SI

• Transfer up to 30%

• May only use for school improvement activities (Section 1003 or 1116)

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Transferability – How to use it• Notify SEA

• Modify local plans (submit to SEA within 30 days)

• Consult with private school officials

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WAIVERS

Possible relief in absence of ESEA reauthorization

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USDE Invitation to Submit Waivers – ARRA Funds

• In 2009 after ARRA• Relief from set-asides

expanding w/ ARRA $• Relief from carry over

limitations• Relief from 14-day

notice• Allow SES in year 1• Allowing ID

LEAs/schools to be SES providers

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Problem with Waivers?

Lack of Transparency!!

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Waiver Resources• Statute – NCLB Section 9401

• Guidance – • Title I, Part A – July 2009

• Maintenance of Effort – See program statutes

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NCLB -What may be waived?

The Secretary may grant a waiver of any ESEA statutory or regulatory provision EXCEPT:

Allocation or distribution of funds to SEAs, LEAs or other recipients of ESEA $ComparabilitySupplement not supplantEquitable services to private school studentsParent involvementCivil rights

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What can be waived? (cont.)

Secretary may waive any provision, EXCEPT:

Charter school requirements (Title V)Prohibitions regarding state aid (Section 9522); using funds for religious purposes (Section 9505)Selection of eligible school attendance areas under 1113, unless % low income students is less than 10% below the lowest eligible school

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What must be included in waiver request?1. Identify federal program affected;2. Identify particular statutory or regulatory provision;3. Describe how waiver will increase quality of instruction and

improve academic achievement;4. Identify the specific measurable educational goals for each

school year and method used to measure;5. How waiver will assist in meeting those goals;6. How schools will continue to provide assistance to targeted

populations; and7. Evidence that notice & comment rules are met

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Notice & Comment rules• For SEA request:• Notice and reasonable opportunity to comment for all LEAs• Submit any LEA comments to USDE• Notice to public in customary manner

• For LEA request:• Notice to public in customary manner• Submit to SEA for comment• Submit SEA comments to USDE

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ED Announcementon Waivers

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“ESEA Flexibility” September 23, 2011

• 10 provisions subject to waiver1. 2013-2014 timeline –

develop new ambitious AMO’s2. School improvement consequences: LEA not

required to take currently required improvement actions in Title I Schools

3. LEA improvement identification: not required to identify for improvement LEA that fails 2 consecutive years

4. Rural LEAs• Small Rural School Achievement or Rural and

Low Income program• Flexibility regardless of AYP status 19

Waivers5. Schoolwide

Operate as schoolwide regardless of 40% poverty threshold if• SEA identified as a priority or focus school with

interventions consistent with turnaround principles

6. School Improvement• 1003a funds to serve any priority or focus school

if SEA determines school in need of support7. Reward Schools

• Rewards to any reward school if the SEA determines appropriate 20

Waivers8. HQT improvement plans

LEA that does not meet HQT no longer must develop an improvement plan Flexibility in use of Title I and II funds

LEA-SEA develop “more meaningful” evaluation and support systems which eventually will satisfy the HQT requirement

SEA still must ensure poor and minority children not taught at higher rates by inexperienced, unqualified or out-of-field teachers 21

Waivers

9. Transferability Up to 100%, same programs

10. SIG 1003g awards for any priority school

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Waivers

Optional #11◦21st Century Community Learning Centers

support expanded learning time during school day

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CONSOLIDATING FUNDS IN SCHOOLWIDE PROGRAMS

Balancing Flexibility with Responsible Planning

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Schoolwide: Legal Resources• Statute: Section 1114

• Regulations: 34 CFR 200.25-200.29

• Federal Register Notice, July 2, 2004 www.ed.gov/legislation/FedRegister/other/2004-3/070204a.html

• Non-Regulatory Guidance:Designing Schoolwide Programs Guidance: March 2006www.ed.gov/policy/elsec/guid/ designingswpguid.doc

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• Non-Regulatory Guidance:“Title I Fiscal Issues” February 2008

(replacing May 2006)www.ed.gov/programs/titleiparta/ fiscalguid.doc • Consolidating funds in schoolwide programs,

MOE, SNS, Comparability, Grantbacks, Carryover

Schoolwide Programs: Basic Requirements• Consolidate federal, state, and local funds to upgrade the

entire educational program.

• Ensure all children meet standards, particularly those most at risk.

• Requirement:• 40% poverty• Schoolwide plan

What federal programs can be consolidated?

Federal Register, July 2, 2004

All formula (non-competitive) ◦ Except Reading First

Consolidate, but with caveats -◦ Includes IDEA - up to cap (but not exempt from programmatic

requirements)◦ Migrant; Indian Ed restrictions on consultation

• All discretionary (competitive)• Still must comply with application• Need not account separately for specific expenditures

• ED only (no School Lunch, Head Start)

Recordkeeping in SWP School operating SWP that

consolidates is not required to maintain separate fiscal accounting records, by Federal program, that ID the specific activities supported by each program’s funds.

Guidance: Three scenarios# 1: Consolidate federal, state, and local# 2: Consolidate only federal# 3: Do not consolidate Title I with other federal, state, and local (nothing consolidated)

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What does it mean to consolidate funds?• Title I Fiscal Issues Guidance E-2 and E-3• Treat funds like a “single pool of funds”• Lose individual program identity• School has one flexible pool of funds• “Use to support any activity of the schoolwide

program without regard to which program contributed the specific funds used for a particular activity”

What does it mean to consolidate funds? (cont.)LEA does not literally need to combine funds in a

single account or pool with its own accounting code

“Pool” is used “conceptually”◦ See Title I Fiscal Issues Guidance p. 51, footnote 2

IMPORTANT: Identify in SWP PLAN: “consolidated” programs and the amounts consolidated from each!

What about state limitations on consolidation?• NCLB Section 1111(c)(9) and (10):

• Each State plan shall contain assurances that - Each SEA must “encourage schools to consolidate funds from Federal, State, and local sources in their schoolwide programs”, and . . .

“Each State plan shall contain assurances that – the SEA will modify or eliminate State fiscal and accounting

barriers so that schools can easily consolidate funds from other Federal, State, and local sources for schoolwide programs”

Scenario #1: Consolidating Federal, State, and Local Funds

What if the LEA consolidates federal, state, and local?? Title I Fiscal Issues Guidance Question

E-8

“When Title I, Part A funds are consolidated with State and local funds . . . they lose their identity.”

No distinction between federal and non-federal.

For Formula Grants

Meet “Intents and Purposes” A school that consolidates federal

funds with state and local is not required to meet most of the statutory and regulatory requirements of the specific federal programs applicable at the school level. ◦Not required to ID particular children

or provide supplemental services.

Must meet “intents and purposes” of program.

Examples of meeting Intents and Purposes

• See Federal Register Notice – July 2, 2004

For Discretionary / Competitive Grants

• Must still carry out all activities described in application.

• But do not need to account separately for specific expenditures of the discretionary grant funds.

Scenario #2: Consolidating Only

Federal Funds

Can the LEA consolidate only federal in a SWP?• Yes. Title I Fiscal Issues Guidance E-4• Single Federal consolidated pool• “From an accounting perspective, the funds from

the contributing Federal programs lose their individual identity when they become part of a consolidated schoolwide pool and would be accounted for as part of that pool rather than by the individual programs that contribute to the consolidated schoolwide pool.”

On what activities can consolidated Federal funds be used?

1. Activities to address the “educational needs” of the school: • Identified by needs assessment• Articulated in SW Plan• Meet “intents and purposes” of federal programs• Title I Fiscal Issues Guidance E-5, etc.

What is “educational need”?• Not addressed in guidance

• B&M best guess:• Instruction – yes• Instructional support – probably yes• Administration – possibly yes• Operational – no

On what activities can consolidated Federal funds be used?

2. OMB Circular A-87 applieso “Cost Principles for State, Local and Tribal

Governments”o Applies to all federal funds – not education specifico General: “necessary and reasonable”o Specific: Allowability of salaries/wages (time and

effort records), equipment, alcohol

Scenario #3:What if there is NO

consolidation at all?

Only Title I supports the plan. How must Title I $ be used?

If Title I is not consolidated with other federal, state, and local, then how must the LEA use Title I funds?

Title I Fiscal Issues Guidance E-71.On the “educational needs” of school◦ Identified in needs assessment◦Articulated in SW Plan

2.OMB Circular A-87 applies

If Title I not consolidated (cont.)

• All kids may participate

• Need not be supplemental

• ** “Must account for and track the Title I funds separately, identifying the activities the Part A funds support”

Under #3, what about other federal programs?

• Not addressed in Title I guidance• B&M: Must meet all requirements of those other federal programs

Supplement not Supplant in Schoolwide Programs

Supplement not Supplant

• Section 1114(a)(2)(B): Title I must supplement the amount of funds that would, in the absence of Title I, be made available from non-federal sources.• Title I Fiscal Issues Guidance E-18

• The actual service need not be supplemental

SNS: • Guidance: School must receive all the state and local

funds it would otherwise need to operate in the absence of Federal funds

• Includes routine operating expenses such as building maintenance and repairs, landscaping and custodial services

Can Title I $ be used for basic operational expenses?• Title I Fiscal Issues Guidance E-8• If only federal combined –• No, must be for educational needs

• If federal and non-federal combined –• Impossible to determine which is federal• Be sure sufficient state and local funds allocated to

school to meet basic operational needs

Schoolwide Planning Requirements

1) Comprehensive Needs Assessment2) Plan3) Annual evaluation

Components of the SW Plan 1) Identify reform strategies, aligned with the needs assessment, that are

research-based and provide opportunities for all children to meet the State’s proficient or advanced levels of academic achievement;

2) Provide instruction by highly qualified teachers;

3) Offer high-quality, ongoing professional development;

4) Create strategies to attract highly qualified teachers;

5) Create strategies to increase parental involvement;

5) Develop plans to assist preschool students through the transition from early childhood programs to local elementary school programs;

6) Identify measures to include teachers in decisions regarding the use of academic assessments;

7) Conduct activities to ensure that students who experience difficulty attaining proficiency receive effective, timely, additional assistance; and

8) Coordinate and integrate Federal, State and local services and programs. Identify what funding sources are being consolidated

Components of the SW Components of the SW Plan (cont.)Plan (cont.)

The Mechanics of Consolidation

How to Report Expenditures? “Use any reasonable basis”

Proportional basis• Example: If 25% of combined funds are from Title I, then report

25% of expenditures as Title I expenditures

Proportional Basis (or “any other reasonable method”)• Use for identifying:• Carryover• Amount of unused non-federal funding• MOE• Comparability• Reporting expenditures back to State or USDE• State Per Pupil Expenditure (SPPE)• Title I, Part A ARRA Reporting

Carryover• Rule:

• Section 1127: Not more than 15% of the LEA’s Title I, Part A allocation will remain available for obligation in the second year

• SEA may waive once every 3 years

Carryover in a SWP• Title I Fiscal Issues Guidance E-22• How to calculate 15% limitation?• Based on 15% of LEA’s Part A allocation

• How to calculate amount left over at school level?• Look at $ left over in school pot – if Title I contributed 10%, then

10% of remaining funds are Title I, Part A

ESEA Maintenance of Effort• RULE:

• Section 9521: LEA may receive ESEA funds only if the combined fiscal effort per student or the aggregate expenditures across LEA from non-federal funds from preceding FY was not less than 90% of the second preceding FY

Maintenance Of Effort in SWP• Title I Fiscal Issues Guidance E-20• Must exclude federal funds• Identify proportion of federal contribution, and allocate

expenditures to federal in same proportion• EX: If federal programs contributed 25%, then 25% of

expenditures attributed to federal and excluded

Comparability• RULE:

• Section 1120A: LEA may receive Title I funds only if nonfederal funds are used to provide services in Title I schools that are at least comparable to services in non-Title I schools

• Often measured by student/instructional staff ratios or salary ratios

Comparability in SWP• Title I Fiscal Issues Guidance E-19 (refers to B-6)• Must exclude federally-paid instructional staff• Identify proportion of federal contribution -- assume same

percentage of instructional staff in school was paid with federal funds and exclude from comparability determination

Time and Effort Documentation in Schoolwide Programs

Time and Effort Rules

•Depends on the extent of consolidation of federal, state, and local funding.

•Key Concept: Schoolwide Plan is a single cost objective.• per Sandy Brown at NASTID, Jan. 2011

Schoolwide Time RecordsIf LEA/school consolidates . . . .

Then must keep . . .

All federal, state, and local funds No time and effort records

Federal only (“Consolidated federal pot”)

Semi-annual – if works ONLY on SWP Plan (single cost objective)Monthly PAR – if works on SWP Plan and other programs not in Plan (multiple cost objectives)

Nothing (only Title I funds SWP) Semi-annual – if works ONLY on SWP Plan (single cost objective)Monthly PAR – if works on SWP Plan and other programs not in Plan (multiple cost objectives)

SAFE: Under Full Consolidation

IF:• Works 100% on SWP Plan• Paid 100% from consolidated pool that includes all federal,

state, and local programs

THEN:• No records are required. No distinction between federal and

nonfederal.

SAFE: Under Federal Consolidation

IF:• Works 100% on SWP Plan• Paid 100% from consolidated federal pool

THEN:• Do semi-annual certifications• “I spent 100% of my time on SWP”

SAFE: Under No Consolidation

IF: Works 100% on SWP Plan Paid 100% from Title I, Part A (no consolidation)

THEN: Do semi-annual certifications “I spent 100% of my time on SWP”

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A verbal “OK” from USDE: IF: Works 100% on SWP Plan Paid 50% from Title I Part A and 50% from non-federal

money (no consolidation)

THEN: Keep semi-annual certification – “I spent 100% of my time

on SWP Plan”◦ (per S. Brown – working on 1 cost objective - could have

been funded 100% from Title I Part A, if had enough resources)

SAFE:IF:• Works 50% on SWP Plan and 50% on Reading First (not included

in Plan)• Paid 50% from Title I, Part A and 50% from Reading First

THEN:• Keep monthly PARs• “I spent 50% of my time on the SWP Plan and 50% on Reading

First”

Questions?

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This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this presentation with any attorney at Brustein & Manasevit, PLLC 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. 76