M I C H A E L B R U S T E I N , E S Q . W W W . B R U M A N . C O M

M B R U S T E I N @ B R U M A N . C O M

Ohio Department of Education Perkins CTE Workshop

January 21, 2014 1

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

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Perkins CTE Funding to Ohio

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

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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?

Pass Through 85%

State Administration

5%

State Leadership

10%

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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

- 34 CFR 76.708

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May unobligated funds be carried over?

NO! Section 133(b) of Perkins

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What are the allowable uses of Perkins funds?

1. Perkins Act 2. EDGAR Basic Roadmap 3. OMB Omni Circular

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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 113 5. Local Improvement Plans – Section 123

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Section 135

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

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EDGAR

Part 76 – State Administrative Rules Part 80 – General Administrative Rules

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EDGAR Part 80

1. Standards for Financial Management* 2. Payments* 3. Allowable Costs* 4. Period of Availability of Funds* 5. Program Income* 6. Non Federal Audit*

* Omni Circular Changes

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EDGAR Part 80 (cont.)

7. Changes* 8. Equipment* 9. Supplies* 10. Procurement* 11. Monitoring* 12. Retention of Records

*Omni Circular Changes

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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

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2) Is the item necessary?

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3) Is the cost reasonable? 16

4) Is the cost allocable to Perkins?

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5) Is the cost adequately documented?

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OMB Revised Administrative, Cost, Audit Rules Governing All Federal

Grants

The Super Circular – “Omni Circular”

The One-Stop Shop for Federal

Assistance

Key Dates:

Feb 1, 2013 NPRM Dec 19, 2013 Final Dec 26, 2013 Federal Register April 2014 New OMB Compliance

Supplement June 26, 2014 ED Draft EDGAR

Changes Dec 26, 2014 Final EDGAR

Published

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Date of Applicability of Revised Rules

OMB stated on 12/20/13 All Drawdowns, after December 26, 2014

? ? ?

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What is covered?

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)

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Who is covered?

All “nonfederal entities” expending federal awards

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Reasons for the Change?

1. Simplicity 2. Consistency 3. Obama Executive Order on Regulatory

Review Increase Efficiency Strengthen Oversight

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Who crafted the changes?

“COFAR” Council on Financial Assistance

Reform, and Key Stakeholders www.cfo.gov/cofar

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Inconsistency Between Program Statute and Circular

If federal program statute or regulation differs from Omni Circular, then statute / regulation governs.

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Most Significant Change

Shift from focus on Compliance to focus on PERFORMANCE!!!

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Performance

Auditors (A-133 + Federal OIG) and Monitors (Federal and State Pass Through) must look more to “outcomes” than to “process”

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Flexibility

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

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Flexibility

Example of new flexibility = Time and Effort certifications

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The Current Law:

Employee effort is one cost objective Semi Annual Certification

Employee effort is two or more cost objectives PAR

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Personnel Activity Report

1. After the fact 2. At least monthly 3. 100% of effort 4. Certified by employee

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New Law: (200.430)

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

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200.430

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

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200.430

New requirements are less prescriptive

Grantees encouraged to adopt “substitute systems”

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200.430

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

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200.430

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

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What about employees assigned to “administrative” functions?

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

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New Emphasis on Risk (200.205)

ED and “Pass-Through” must have in place a framework for evaluating risks before applicant receives funding

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Risk Factors:

1. Financial Stability 2. Quality of Management System 3. History of Performance 4. Audit Reports 5. Applicant’s Ability to Effectively

Implement Program

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ED or “Pass Through” May Impose Additional Conditions

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

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Monitoring by “Pass Through” (200.328)

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”

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Accountability 200.415

Major emphasis on “strengthening accountability” by improving policies that protect against waste, fraud and abuse (200.415)

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Accountability

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.”

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Conflict of Interest (200.112)

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

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Mandatory Disclosures (200.113)

Non federal entity must disclose in writing in timely manner to federal agency or pass-through all violations of federal criminal law involving fraud, bribery or gratuity violations potentially affecting federal award

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Significant Changes to Core Financial Management Standards (200.302)

Written Procedures on Cash Management

Written Procedures on Allowability of Costs

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Cash Management (200.305)

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

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Cash Management

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

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Program Income (200.307)

“Deduction” method, rather than “addition” method, shall be used if ED does not specify otherwise in GAN

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Meals / Conferences / Travel (200.432) (Family Friendly Policies)

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 200.474) 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

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200.474

Travel costs may be charged on actual, per diem, or mileage basis

Travel charges must be consistent with entity’s written travel reimbursement policies

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200.474 - Travel

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

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200.474 - Travel

Travel costs must be reasonable and consistent with written travel policy / or follow GSA 48 CFR 31.205-46(a)

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Computing Devices (200.20)

Machines used to acquire, store, analyze, process, and publish data electronically

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Supplies (200.314)

Now includes “computing devices” Residual inventory of unused supplies

exceeding $5,000 in total aggregate value – must compensate federal government

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Changes to Equipment Rules (200.313)

Subgrantee cannot “encumber” the property without approval of pass-through

Shared use if such use will not “interfere” 1st preference – projects supported by federal

awarding agency 2nd preference – project funded by other federal

agencies 3rd preference – use for non federally funded

programs

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User Fees

“User fees” on equipment “should be considered if appropriate”

But “user fees” should not be less than private companies charge for equivalent services

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Trade-In on Equipment

When grantee acquiring replacement equipment, the equipment to be replaced may be used as a “trade-in” without recourse to federal agency

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Disposition of Equipment

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

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Internal Controls on Equipment, Supplies, Computing Devices (200.302(b)(4))

Regardless of cost, grantee must maintain effective control and “safeguard all assets and assure that they are used solely for authorized purposes.”

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Micro-Purchases 200.320 62

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

Insurance Coverage (200.310)

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

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Audit Resolution (200.501)

Federal Compliance requirements do not pass through to contractors

Auditee is responsible for ensuring compliance for procurement transactions

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2014 OIG Audit Work Plan 65

Oversight of OVAE and selected states compliance with Perkins

200.503

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

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Audit Follow-Up 200.511

Auditees must prepare a summary schedule of prior audit findings and a corrective action plan for current year audit findings

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Federal Agency Audit Responsibility (200.513)

The federal awarding agency must use cooperative audit resolution to improve federal program outcomes

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Audit Findings (200.516)

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

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Major Program Determination

See chart in 200.518 70

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Implementation Issues

Supplanting 72

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

Non-Supplant Tests 73

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

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

eliminated

Programs of Study 75

How many programs of study?

Questions? 76

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.

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