Fiscal Grants Management �VASBO – Business Manager 101� �January 13, 2023������

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Agency of Education Regulatory Compliance Team��Bob Coathup, robert.coathup@vermont.gov �Abby Houle, abby.houle@vermont.gov �Cassandra Ryan, cassandra.ryan@vermont.gov

VT AOE Fiscal and Regulatory Compliance Team

• Technical Assistance on Fiscal Grants Management
• Federally required Policies and Procedures
• Expenditure Documentation
• Procurement
• Federal Documentation for Compensation of Personal Services (Time and Effort)
• Indirect Cost Rates Determination and Information
• Consolidated Funds Accounting (Schoolwide and Consolidated Admin.)
• Fiscal Monitoring
• Single Audit Review
• Subgranting information
• Prior Approvals: Equipment / Construction/
• Sole Source Letters for Federal Procurement
• State Bid Waivers
• Emergency School Construction Aid
• State Excess Spending Approvals / Construction
• Title 16 § 267 Joint Agreements

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Technical Assistance (TA)

• Regulatory Compliance Team (RC Team) sits in School Finance under the Chief Financial Officer - Bill Bates
• RC Team assists LEAs with questions on meeting Federal and State grant compliance specifically, the Federal Uniform Guidance (2 C.F.R. Part 200) and certain sections of Vermont Title 16
• Always best to reach out with questions as soon as possible and before the LEA incurs an expense.  
• There is no penalty for seeking technical assistance.

Laws, Regs, & Other Requirements Impacting Federal Grants

Policies and Procedures�(Federally Required)

• Policies
• Capitalization Policy
• Conflict of Interest Policy (Procurement)
• Travel Reimbursement Policy
• Procedures
• Allowability of Cost Procedure
• Management of Equipment Procedure
• Procurement Procedure
• Travel Reimbursement Procedure
• Time and Effort** if anything but traditional PAR/PC and for bonus/merit pay process
• The RC Team is always willing and able to review the policies and procedures for compliance
• VASBO provides sample templates of most of the required policies and procedures on its website.

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Expenditure Documentation

• All expenditures of Federal grant funds must include back-up documentation to meet the foundational requirements of
• Allowable
• Reasonable
• Necessary
• Allocable
• Consistent Treatment
• Each expenditure may require a variety of back-up documentation to meet this requirement.

�Compensation - Personal Services �“Time and Effort” �Documentation��

• Employees (not outside contractors) paid in part or in whole with federal funds must document their time.
• Any employee whose salary is used as a match for a federal program 
• Time and effort not on file may result in single audit and/or monitoring findings and / or disallowed costs
• Note: Act 173 State Census Block Funds

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Documentation Requirements�

Documentation must:

• be supported by a system of internal controls which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; 
• be incorporated into official records;  
• reasonably reflect total activity for which the employee is compensated, not exceeding 100% of compensated activities; 
• encompass both federally assisted and all other activities compensated by the district on an integrated basis; 
• comply with the established accounting policies and practices of the non-federal entity; and 
• support the distribution of the employee’s salary or wages among specific activities or cost objectives.

Understanding "Cost Objective"

• Cost objective – a statement that captures the work an employee is doing for the purposes of collecting cost data to determine "allowability" - this is not the same as a single funding stream.
• First step in determining the appropriate documentation requirements is to determine how many "cost objectives" an employee works on.
• If an employee works on one cost objective -  meeting documentation requirements will be relatively simple.
• If an employee works on more than one cost objective – meeting documentation requirements may be a bit more work but we have some thoughts for increased flexibility with minimal risk.

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Example 1

• An employee provides services to students on IEPs 100% of their time.  
• The employee is funded partially with Federal IDEA B and partially with state/local.  
• If the employee's work qualifies fully for both sets of funding and there is no additional need to further track costs – this employee's work would represent one (1) cost objective.

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Example 2

• An employee provides services to Pk-8 students on IEPs 100% of their time.  
• The employee is funded partially with Federal IDEA B and partially with IDEA B PreK.  
• Not all of the employee’s work qualifies for both fundings because the Prek funds can only be spent on time spent serving PreK students.
• This employee's work would represent two (2) cost objectives.

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Example 3

• An employee performs duties as part of a schoolwide plan at School X.
• The employee is paid 100% with Schoolwide dollars
• This employee has one cost objective

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Example 4

• An employee performs duties as part of a schoolwide plan at School X on MWF and School Y on Tuesdays and Thursdays.
• The employee is paid 100% with Schoolwide dollars
• This employee has one two cost objectives and must track the time spent at each of the schools.

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What About Ancillary Duties?�a.k.a., "Incidental"

• What about duties such as regular bus duty, recess duty, lunch duty, etc?  
• If you can answer "Yes" to the following two questions the duties do not constitute a separate cost objective and may be considered ancillary/incidental/de minimis (for these purposes these three words may be used interchangeably.)
• Are these duties required of all similar staff regardless of funding source?
• Is it reasonable that the total amount of time spent on these duties is expected to not exceed 10% of the employee's time?
• Note:  The AOE has confirmed that there is an IRS hardened definition of 5%, but we believe no more than 10% is reasonable and represents minimal risk.  Anything over 10% is not considered incidental.

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Best Practice/Increased Flexibility for Documentation for Employees with One (1) Cost Objective

• Periodic Certification for one employee
• Blanket Periodic Certification for multiple employees working solely on the same cost objective
• Both must be: 
• Completed/Signed after the fact
• Contain a certification statement
• Signed by either the employee(s) or supervisor with knowledge
• May be completed on an annual basis at the end of the year (increased flexibility) if the LEA determines it has adequate internal controls.

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Best Practice/Increased Flexibility for Documentation for Employee with Multiple Cost Objectives

• Personal Activity Report (PAR)
• Must record the actual work / not as budgeted
• Completed after the fact
• Signed by the employee
• May be completed on a weekly/by pay period/monthly or even on a quarterly basis (increased flexibility) 
• May be completed either using the amount of hours per day OR may use a percentage approach for employees with regular schedules (increased flexibility)
• Must have adequate internal controls
• Must reconcile by the end of the fiscal year.

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New Option Flexibility �Work Assignments / Job Descriptions / Timesheets/Student Info Systems

• Must include enough information to determine the number of cost objectives and be a regular enough schedule to reasonably assign percentages of splits for multiple cost objectives as applicable. 
• Must include a certification statement
• Must be signed by the employee or after the fact
• Must be accompanied by adequate internal controls

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New Option Flexibility�Attendance Sheets

• Used for employees working on an activity outside their normally contracted work assignment/duties.
• Must include enough info on the attendance sheet to connect to an allowable cost objective 
• Must be signed by employees on the day of attendance
• Previously this required a PC / Blanket PC which still works

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Substitutes

• Timesheets signed by the substitutes may be used in connection with the employee's time documentation
• Any other form of time documentation as appropriate

Adequate Internal Controls

• Examples of internal controls:
•  documented policy or procedures
• supervisor involvement and knowledge of changes in work that may require a change to cost objectives
• Written process for how changes will be identified and timely implemented
• Employee training on the proper use of the documentation tool(s) used by the LEAs
• Spot checking periodically
• Reconciliation procedures as applicable
• Annual or semiannual review of employees work duties to identify any changes and verify accuracy

Caution:  If an employee's work changes during the year and the work required a change to multiple cost objectives you may be unable to show the split.

Keep It Current

• Employee documentation requirements should be reviewed at least annually to be sure cost objectives and format (PAR/PC) are still relevant.
• New Federal funds will trigger the need for documentation for additional staff.

Procurement with Federal Funds and State Bid Law

• Must follow Federal Procurement for purchases of goods and/or services when paid in whole or in part with a Federal grant dollar
• Must use one of Five (5) Federal Procurement methods: Micro purchase, Small Purchase, Sealed Bids, Proposals, Non-Competitive (only applicable in certain instances)
• Must follow State Bid Law for certain purchases
• Must check www.sam.gov for suspension/debarment
• Must document all stages of procurement
• Recommend viewing full August 20, 2021 VT AOE Federal Procurement training video at: https://www.youtube.com/watch?v=7cj0fMb1Wts

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Consolidated Funds

• Consolidated funds support an activity without regard to which program contributed the specific funds used for a particular activity.
• Allow for flexibility on the program side
• Single Cost Objective for time and effort
• Must allow the contributing funds to lose their identity/restrictions
• Must provide detail to support grant funds were spent on allowable expenditures per SWP.
• Must be able to report back to the VT AOE under the contributing funding(s) i.e. Title I and Title IIA, Title IV, IDEA etc.
• Require business office to set up consolidated accounting records – detailed in the UCOA Handbook

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• Two Consolidated Funds to be familiar with:
• Schoolwide Program (SWP)
• SW1—no consolidation (Title I funds only)
• SW2—consolidation of Title I and at least one other federal fund
• SW3—consolidation of federal, state and local funds

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• Consolidated Administration (Con. Admin.)
• Must combine some funds from all grants benefitting from the administration services.
• Con Admin expenditures are included in the administration caps for each grant

Examples of Funds That Can Be �Consolidated in SWP�(not all inclusive)

• Title I
• Title IIA
• Title III (with conditions)
• Title IV Part A
• IDEA-B*
• The amount of funds that can be consolidated are the total IDEA-B allocation for the year divided by the number of children with disabilities in the SU/SD multiplied by the number of students with disabilities in the school
• 21^st Century, Title IV, Part B*
• State and Local Funds*

*Requires advance notice to the AOE

Application Budget

• GMS Application budgets for contributing funds must include the dollars under object codes:

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• SWP Object Code Placeholder: 990
• SWP Function Code Placeholder: 9990
• Con. Admin. Object Code Placeholder: 995
• Con. Admin. Function Code Placeholder: 9995
• Please note: The above codes are not part of the UCOA and are not used in your accounting system – they are placeholders in the GMS only.

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Accounting Structure for Consolidated Accounts: �(SWP and Con. Admin.)

• LEA must create a separate accounting record for each consolidated account to track associated expenditures and cost data.
• SWP (one for each participating school)
• Con. Admin
• Expenditures must be charged directly to “consolidated fund” accounting record.

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Reporting

Two options for calculating SWP for reimbursement: Must chose one method of reporting

• Sequential:
• Funds are paid from a single funding source until that source is exhausted, and then remaining payments are paid from the next funding source.
• If Local Funds are part of the School-Wide Consolidation (SW3), then Local and State funds would be used first until exhausted, next Title 1 would be drawn, and so forth.
• Prorated:
• Funds are drawn from each source at a rate proportional to the amounts consolidated across all funding sources.

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AOE 3.0 �Consolidated Funds Reporting

• On the AOE 3.0 for each contributing fund LEAs need to report using the object code placeholders for the amount of SWP expenditures associated with each funding source

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SWP Object Code Placeholder: 990

Con. Admin. Object Code Placeholder: 995

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Indirect Cost Rates

What is an Indirect Cost Rate?�(ICR)

• An indirect cost rate is a means of determining the percentage of allowable general management costs that benefit each federal program or activity.

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• Indirect costs are generally administrative costs such as the salaries and expenses for staff engaged in organization-wide (general) activities.

What is an Indirect Cost Rate?�(ICR) cont.

• Charging indirects does not increase your grant award
• Indirect dollars are dollars earned on dollars spent
• Once an indirect is earned – the funds lose federal identity. LEA has ability to be flexible with the earned ICR dollars.
• Cannot draw indirects in advance of supporting direct expenditures

USED/AOE Delegation Agreement

• AOE receives authority from USED to approve LEA rates through a delegation agreement.
• ICRs are approved on an annual basis and follow the LEA fiscal year of July 1 – June 30.
• The ICR is for use on Federal grants / not state grants.

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Two Types of Indirect Cost Rates

• Restricted Indirect Cost Rate: For use on Federal grants that contain a supplement not supplant requirement such as:
• Title I, Title IIA, Title IV, Perkins, 21^st Century
• Unrestricted Indirect Cost Rate: For use on Federal grants that do NOT include a supplement not supplant requirement such as:
• ESSER I, ESSER II, NSLP
• You may use the ICR you receive from VTAOE for Federal grants you receive from other state agencies or on Federal grants you receive directly from a Federal Awarding Agency.

Monitoring

• 2 CFR §200.332 Federal Uniform Grants Guidance requires the AOE to monitor all Federal funds the AOE subgrants to subrecipients.
• Vermont State Administrative Bulletin 5 requires all State Agencies/Departments monitor all State grant awards.
• Different AOE Teams conduct different monitoring's:
• Child Nutrition monitors CN funds
• Program Teams monitor individual programs
• Regulatory Compliance Team monitors all grant programs with a focus on fiscal and administrative functions.
• Emergency Federal Funds Monitoring – comprehensive to include program and fiscal.

Single Audit

• $750K or more in Federal Expenditures for a single Fiscal Year.

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• Due to VT AOE by March 31^st each year

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• Auditor must upload final audit to the Federal Audit Clearinghouse (FAC) 2 CFR 200.§512(b)

https://harvester.census.gov/facdissem/SearchA133.aspx

• Send single audit notification to the AOE at:

AOE.FinancialReports@vermont.gov

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Financial Statement audits should be emailed as PDFs to the above address.

Subgranting

• VT SUs may only subgrant funds passed through the VTAOE to its member districts. – Does not apply to SDs
• Grant is received at the SU level, but obligations are incurred at a district level – most commonly (but not exclusively) for salary and benefits
• Requires an official subgrant agreement document
• Subgrant agreement must include a scope of work and information per 2 CFR §200.332 + all assurances of original award
• Must be signed by the Superintendent and Principal
• If an SU subgrants grant funds to a member district, the SU must reimburse the district prior to claiming these expenses on an AOE 3.0.

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“Equipment” / Construction�Prior Approval

• Uniform Guidance requires LEAs receive “prior approval” from the VT AOE when using Federal grant funds to purchase “Equipment” or construction.
• AOE process for prior approval for both is administered through the GMS system
• Equipment is a single step process
• Construction is a two-step approval process
• Concept Approval
• Project Approval = Final prior approval

Must receive project approval BEFORE starting construction.

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Non-Competitive Federal Procurement�Request for Sole-Source Determination

• Full Federal Procurement: 2 CFR §200.318-327
• LEA may request a non-competitive / sole source determination from the AOE for purchases involving Federal funds
• Request is a Cognito Form: https://www.cognitoforms.com/VermontAgencyOfEducation/aoenoncompetitiveprocurementrequestwithfederalfunds

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Vermont Bid Law�Waiver Request

• Full Bid Law found at 16 V.S.A. §559
• If an LEA is unable to comply with the Vermont Bid law it may request a waiver from the Secretary of Education.
• Bid Waiver request is a Cognito Form: https://www.cognitoforms.com/VermontAgencyOfEducation/AOEBidWaiverRequestForm

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Emergency School Construction Aid�

1. Emergency construction aid is
1. reserved for projects that are both unanticipated and result in a safety concern for occupants.
2. limited to 30% of actual costs up to a maximum eligible project cost of $100,000. 
3. applied to eligible project costs after insurance claims and other sources of assistance.
4. paid on a first come / first serve based on the completion of a financial audit.
5. not for deferred maintenance.
2. It is not necessary for a School District to receive approval prior to starting construction. 
3. The bid law (Title 16, V.S.A. §559) does not apply to emergency situations.
4. If you have an emergency situation please reach out to the Regulatory Compliance Team for a copy of the most current application.

Uniform Grants Guidance

Available on the Electronic Code of Federal Regulations website:

• https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200

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• Also available for purchase through Brustein and Manasevit: 5^th Edition with purple cover is current

AOE COVID Guidance�

COVID Guidance on AOE website

https://education.vermont.gov/news/covid-19-guidance-vermont-schools/covid-19-federal-emergency-funds

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Questions?