Leigh Manasevit, Esq. Brustein & Manasevit, PLLC Fall Forum 2015 1.

Understanding the Fundamentals: Obligations, Carryover, FIFO

Leigh Manasevit, [email protected]

Brustein & Manasevit, PLLCFall Forum 2015

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mailto:[email protected]

“Notwithstanding any other provision of law…any funds…to carry out any programs to which this title is applicable…which are not obligated and expended…prior to the beginning of the fiscal year succeeding the fiscal year for the which such funds were appropriated shall remain available in obligation and expenditure…during such succeeding fiscal year.”

Section 412 (b) General Educations Provisions Act (GEPA)

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Carryover

Funds in most State-Administered Programs are available for 27 months◦ Example:

Funds first available July 1, 2015First 15 months available to September 30, 2016Tydings Amendment allows obligation for another 12 months

That is Until September 30, 2017

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Carryover

From July 1, 2016 until September 30, 2016 it is possible to have 3 FYs of funds available

Must have a system to identify which funds are expended

◦ 14-15 Funds July 1, 2014 to September 30, 2016◦ 15-16 Funds July 1, 2015 to September 30, 2017◦ 16-17 Funds July 1, 2016 to September 30, 2018


Carryover – Note

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Carryover OverlapJuly 1, 2014 July 1, 2015 July 1, 2016 September 30, 2016

Until Sept 30, 2015

14-15 Funds

15-16 Funds

16-17 Funds


Title I, Part A Rule –◦ Limits carryover to 15%◦ Can be waived by State

Once per 3 years◦ ED can and has waived this limitation

Perkins LEA/Postsecondary ◦ No carryover


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Carryover – Special Program Rules Sometimes Apply

Carryover funds must be obligated in accordance with new law, regulations, application◦34 CFR 76.710

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Carryover

Funds must be obligated within the time periods described

Obligation Disclosure Decision of the Secretary, Appeal of

California-May 6, 1986


Linkage


Linkage

Obligation – EDGAR 34 CFR 76.707

Property: Binding written commitment

Employee: When services performed

Contractor: Binding written commitment

Obligations must be liquidated within 90 days of the end of period of availability

14-15 Funds – obligation no later than September 30, 2016

Liquidation by December 30, 2016 (may be extended – ED has specific rules on extensions)


Linkage

18 months after end of obligation period – program office

After 18 months – only in extraordinary circumstances (or construction contracts) June 5, 2007 Policy Memorandum

August 16, 2011 Memorandum Can be granted only by CFO


Liquidation / Extension

Grantee has burden◦ Allowable cost◦ Obligation was timely

Generally will not approve if moves:◦ Funds between programs◦ From state/local to federal

Will consider if◦ Obligation charged/federal but paid state/local

Consistent with underlying accounting system High risk? Audits current? Attestation required

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Liquidation/Extension

When an obligation is paid = Liquidation Liquidation involves the use of actual funds These funds must be identified to the year

they were available


Linkage

Example:◦ A contract is signed on August 15, 2014◦ Invoice submitted October 15, 2014◦ Funds available to liquidate

12-13 carryover 13-14 1st year ending September 30, 2014 14-15 1st year beginning


Linkage

Utilize oldest funds first (FIFO) Why – they are going to expire How to utilize –

◦ Accounting entry – assign ◦ Cost to 12-13 funds by a clear accounting entry

indicating payment from 12-13 funds◦ Must be consistently used part of accounting system


Linkage

LEA has paid the contract with newest funds (14-15)

Realizes there is an unpaid balance of 12-13 funds

Deobligate 14-15 funds – increasing balance of 14-15 funds

Obligate (by accounting entry) 12-13 funds


Linkage Roll

The legally relevant question is when the obligation arose, not in what account such obligation was originally recorded.

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Timeliness

Was the obligation incurred during the period of availability of the grant?

Was the obligation for an allowable expense?

Does the State/LEA have an established accounting policy covering linkage?


Linkage - Checklist

Setasides

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Where LEA must spend a set amount◦ Example 10% PD for LEA in improvement:

And the full amount not spent The balance carried over Remains in setaside

Plus new 10% allocation


Setasides

Exception: Some setasides specify an amount – but say unless a lesser amount is needed

Example: 5% for all teachers HQT


Setasides

Special rules for spending less than the specified amount

Example: 20% for Choice/SES


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Setasides

Equitable Services◦ If equitable services not provided – carry over as

setaside ◦ If provided – reverts to general Title I available

funds (subject to equitable services)


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Setasides

Where LEA must spend a set amount:◦ The full amount not expended in year one◦ There is a new law in year 2◦ Must the balance be made up?


Setasides

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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.


Leigh Manasevit, Esq. Brustein & Manasevit, PLLC Fall Forum 2015 1.

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