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Federal Fiscal Update:How ESEA Reauthorization will impact LEAs( and how it wont)Kristen Tosh Cowan, Esq.Brustein & Manasevitwww.bruman.com

WASBO ConferenceMay 5, 2011

ESEA Reauthorization- Timing 2009 and 2010 2011 2012 2013Brustein & Manasevit2

ESEA ReauthorizationFunding Trends

More consolidation

More competitionBrustein & Manasevit3

ESEA ReauthorizationStandards and Assessments

Common Core debateRequire or incentivize

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4ESEA ReauthorizationAccountability

Growth Model

Subgroup accountability

No 100% proficiencyBrustein & Manasevit5

ESEA ReauthorizationAccountability

School improvement more nuancedObama & Sen Dems 4 SIG models for lowest %Republicans More local flexibilityTarget interventions to struggling subgroupChoice/ SES 1 option of many

New Rewards Program

Brustein & Manasevit6ESESA ReauthorizationTeacher Preparation and Evaluation

Preparation:Focus on teaching collegesPerformance exam for classroomAlternate certification

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ESESA ReauthorizationTeacher Preparation and Evaluation

Evaluation:Multiple factors, including student assessment dataPerformance/ merit payBrustein & Manasevit8ESEA ReauthorizationFiscal Requirements

ComparabilityEnd option to exclude salary differential to reflect seniority, as well as use of FTEsMove to measuring non-federal expenditures/ studentSupplement not SupplantMaintenance of EffortBrustein & Manasevit9What wont be changing in reauthorization . . . .Federal scrutiny, monitoring and audits!10Brustein & Manasevit

Time and Effort Documentation for Employees Paid with Federal Funds** #1 greatest area of audit exposureWhy should you care?Easy finding for auditors

Unclear, contradictory guidance

Expensive!!Brustein & ManasevitGive OIG audit amounts:2006 Columbus 2.3 Million2008 Detroit - $49 million2010 Philadelphia - $123 million12Essential Legal ResourcesOMB Circulars A-87: Cost Principles for State and Local Governments

HHS Implementation Guide for A-87: ASMB C-10 (1997)http://rates.psc.gov/fms/dca/asmb%20c-10.pdf

Brustein & ManasevitResources, cont.Cost Allocation Guide for State and Local Governments (or Green Book) (Sept 2009)http://www.ed.gov/about/offices/list/ocfo/fipao/guideigcwebsite.pdf

Montana Compactwww.bruman.com

Program-specific guidance

USDE officials

Brustein & ManasevitMary Gougisha comments at AEFFA14OMB Circular A-87:Compensation for Personnel Services: If federal funds used for salaries, then time distribution records are required.

Must demonstrate= If employee paid with federal funds, then employee worked on that specific federal program/ cost objective.

Brustein & ManasevitRecent Presentation: What your describing assumes that if Im paid from Perkins Admin, then Im working on Perkins Admin. Yes.15TerminologyTime and attendance recordsPayroll recordsWorked 8:00-4:00

Time and effort recordsTime distribution recordsWorked 50% on Title I administration and 50% on nonfederal

Brustein & ManasevitPhiladelphia: Assumed that the attendance system satisfied requirements, at least for 100% employees. No.16What is a Cost Objective?A-87 Definition: A function, organizational subdivision, contract, grant or other cost activity for which cost data are needed and for which costs are incurred.

Brustein & ManasevitExamples . . . .A Minimum Set-Aside or Maximum Cap:Title I- LEA Parent Involvement minimum (at least 1%);Title III Cap on administration (no more than 2%)

Program servicesTitle I program services

Brustein & ManasevitWho must participate?Any employee working on a federal programNot contractors

All employees paid with federal funds

Some employees paid with non-federal fundsMatching

Brustein & ManasevitIf employee works 100% on single cost objectiveSemi-Annual CertificationSigned every six months by supervisor or employee

This is to certify that Kristen Cowan has worked 100% of her time for the period January 1, 2010, through June 30, 2010, on Perkins Administration.Signature of employee:Date:

Brustein & ManasevitBlanket Semi-Annual CertificationSingle cost objective (semi-annual cert)Multiple employeesSigned by supervisor with first-hand knowledge (principal)

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If employee works on multiple cost objectivesPersonnel Activity Reports (PAR)Signed every month by employeeUNLESS, using substitute system (then 2 or 3 times per year)

For the month of September 2009, I spent my time 50% on Title I Program Services and 50% on non-federal programs.Signature of Employee:Date:Brustein & ManasevitTELL COLORADO STORY: Read from report.Colorado: To be cautious, all federally-paid employees executed monthly records. Even 100% employees.

Auditors: Reviewed monthly timesheets for 8 sampled employees (out of 363 total employees paid from federal funds)

Filled out carefully, percentages of time were added, employees signed and dated.Auditors: Interviewed those 8 employees. Read from report: Although CDEs timesheets designed to allow for daily recording of actual time and effort, employees reported their time based on predtermined allocation percentages. After comparing with . . .

Based on interviews w/ 8 employees, we concluded that the timesheets reflected the normal payroll reporting practices used throughout CDE.. Therefore, systemic issue. . .

COST: $23.9 million22PARs must:After-the-fact recordTotal activity for which employee compensatedAt least monthly Signed and dated by employee

Brustein & Manasevit23Keeping the right records is not enough!Need reconciliation between: programs that funded salaries, and programs on which employees actually worked1) At beginning of year, use budget estimates for salary allocationsInitially, use budget estimates or other distribution percentages determined before the services are performed But these do not qualify as PARs!

May be used for interim accounting purposes

Brustein & Manasevit2) Compare budget estimates to actual data and make adjustmentsQuarterly comparisons of actual costs to budgeted distributions

If difference between actual cost and budgeted cost is 10% or greater, then make adjustment quarterly

If difference is