Avoiding Financial Pitfalls of Managing Perkins Funds

Steve Equall, Nebraska

What Federal rules apply to Perkins funding?

Perkins Act EDGAR (Education Dept. General Administrative

Regulations) OMB Circulars (Office of Mgmt. & Budget)

Circular A-87 Cost Principles – State & Local Circular A-21 Cost Principles – Educ.

Institutions Circular A-133 Single Audit Requirements

What are the basic cost criteria?

Allocable to the purposes of the act Necessary and reasonable Not for general purposes

What types of costs can generally be considered eligible?

Administrative Costs (5%) Personnel Services (time records) Operating Expense (watch supplanting) Stipends Consultants Instructional materials (watch supplanting) Travel Instructional equipment

What types of costs are not eligible?

1. Student expenses or direct assistance to students

2. Entertainment3. Awards and memorabilia4. Individual memberships5. Memberships with orgs.

that lobby6. College tuition, fees,

books7. Fines & penalties8. Insurance/self-insurance

9. Expenses that supplant

10. Audits except single audit

11. Contributions & donations

12. Contingencies

13. Facilities and furniture

14. General advertising

15. Alcohol

16. Fund raising

17. General administration

Is there an exception to the rule on direct assistance to students?

YES! Legislative history indicates that the intent is there for this flexibility, however certain restrictions apply.

What are the requirements for uses of funds at the local level?

Strengthen academic, voc. & tech. skills of students

Provide students with strong experience and understand all aspects of the industry

Develop & expand use of technology

Professional development

Evaluate programs

Initiate, improve, expand & modernize quality programs

Be of sufficient size, scope and quality

Link secondary & postsecondary programs

Are local recipients required to budget and expend funds in all 8 categories?

No. The 8 categories are elements required in

programs eligible for funding If deficiencies exists, Perkins funds can address

those deficiencies If all 8 are already met, funding can be used in

the permissive areas

What are the permissive uses of funds at local level?

1. Involve parents, business and labor in planning & operation

2. Career guidance & academic counseling

3. Work-related experiences4. Programs for special pops5. Education & business

partnerships6. Voc. Student organizations7. Mentoring & support

services

8. Upgrading equipment

9. Teacher prep programs

10. Improving, developing new vocational ed. courses

11. Family & consumer science

12. Adult vocational programs

13. Job placement programs

14. Non-traditional training & empl.

15. Support other voc. programs

What are the required uses of funds at the state level? (10%) Assess programs Develop, improve, expand use of technology Professional development Support programs that improve academic & technical

skills of students Non-traditional training Partnerships Service individuals in state institutions Programs for special populations

May not be used for administrative costs

What are the permissive uses of funds at the state level?

1. Technical assistance to LEAs2. Improve career guidance & counseling3. Establish agreements between sec./postsecondary4. Support cooperative education5. Support vocational student organizations6. Support charter schools7. Support programs that include all aspects of industry8. Support family & consumer science9. Support business & industry partnerships10. Develop new vocational education courses11. Programs for adults and dropouts12. Job placement services

When can funds be obligated?

EDGAR says that a subgrantee of the state may not obligate funds until the later of: The date the state may obligate funds

or The date that the subgrantee submits

its application to the state in substantially approvable form

When are funds considered obligated?

Type of Cost

Equip &supplies……..

Work of employees…..

Contracted services…..

Utilities……………….

Rental…………………

Travel…………………

Obligation occurs:

Date of purchase order

When work is done

Date agreement signed

When used

When used

When travel is taken

How long are Federal funds available for obligation?

Perkins funds are available to states for 27 months (July 1, 2002 thru Sept. 30, 2004)

Section 417 of General Ed. Provisions Act (GEPA) called Tydings Amend. provides carryover period

Subgrants to LEAs are for one fiscal year

What are the Maintenance of Effort Requirements for a State?

State must maintain effort either per student or in aggregate

Separate maintenance of effort for state administrative costs

Year-to-year state costs must be equal or greater than year before

There are exceptions

May Federal funds be used to support a program that was supported last year with non-federal funds?

NO. This would be supplanting – Exception

Must be evaluated case-by-case If it would be impossible to continue the

activity without the federal funds, then it may not be supplanting

Can Perkins funds be co-mingled with other funds to offer voc. programs?

Funds may not be co-mingled so that they lose their identity. Expenditures must be traceable to the source of funding. However, programs can be co-funded to maximize the available funds.

Can funds be used to provide vocational opportunities to 6th graders?

No. Section 315 prohibits the use of funds below the 7th grade level.

What are the rules on Perkins equipment usage and disposition?

May not be used to compete unfairly with business

When no longer needed for original purpose or other federal programs:

Current fair market value of $5,000 or less- keep, dispose of with no strings attached

Current fair market value of more than $5,000- keep equipment or sell and pay awarding party its share of sale price or fair market value

If a State fails to meet State adjusted levels of performance for 2 or more years – can Secretary withhold funds?

If so, can another entity administer the funds?

Sec. 123 allows both to happen but only after all other options including technical assistance from OVAE and failure to implement plans have been exhausted

Are vocational technical ed. students enrolled in programs receiving no Perkins funds subject to accountability requirements?

Yes. As I read Sec. 113, all students who participate in state-approved programs are subject to accountability requirements – including special pops

What areas will auditors be looking at? In general – 3 main areas:

Financial statements & expenditure records

Internal controls Compliance with laws and regulations

What will auditors be looking for at the state level?

1. Expenditures are documented and allowable

2. Recipients are eligible and formula is correct

3. Monitoring requirements are met and documented

4. Compliance issues: Program offerings Student participation Assessment

5. Funds supplement and not supplant

6. Time records

7. Maintenance of Effort

8. Minimal time between drawdown and disbursement

What will auditors be looking for at the local level?

1. Expenditures are documented and allowable

2. Compliance issues: Program offerings Student participation Assessment

3. Funds supplement and not supplant

4. Time records5. Minimal time between

drawdown & expenditure

6. Procurement methods provide free & open competition and prevent conflict of interest

7. Equipment –locatable and inventoried

8. Obligations incurred in time frame

9. Expenditures are budgeted

Where can I find federal rules? Catalog of Fed. Domestic Assistance (CFDA)

www.gsa.gov/fdac Code of Fed. Regulations (CFR)

www.access.gpo.gov/nara/cfr/index.html Ed. Dept. General Administrative Regs. (EDGAR)

www.ed.gov/funding.html Federal Legislation http://thomas.loc.gov Federal Register

www.access.gpo.gov/su_doc/aces/aces140.html OMB Circulars http://www.whitehouse.gov/omb/circulars US Department of Education www.ed.gov/

Your Turn

Questions?