Fiscal Monitoring Guidelines


>> Good morning, everyone. [Inaudible] Cindy Bernstein. Welcome to the Listen and Learn for Fiscal Monitoring Guidance. A couple of housekeeping things -- I just typed into the chat box to please remember to mute your lines by pressing star six. If we hear talking as we go through the webinar, we'll probably stop and ask folks to remember to mute their lines. I also put a few instructions on looking up at the top of your screen, there's a dark grey bar. On the very left it says Adobe, then it says meeting, and then there's a speaker icon. Please click on that speaker icon so that's it's white, not green. When it is white, then you won't get any -- and we won't get any feedback through your computer speakers, if you're listening through the phone. If you are listening through your computer, make sure that stays green, that you may be able to hear. So today we have Tyler Backus, he's the management analyst for Special Services, he's our fiscal monitoring person. And Heather Neal was to be with us today. She is out sick today, so it's all Tyler. Be kind. Ken Gretton is also here, and Denise Howard, Adobe Room extraordinaire is here to help us out. So we'll turn it on over to Tyler.

>> Hi everyone. So, we're going to talk today about fiscal monitoring guidance here in Maine. And then I'll probably interject stuff directly to -- for the IDA Grant, since Heather is out, because that's the piece that I know so well, and she might have been able to interject some more general things that I'm not going to be able to, so. And so keep in mind that Heather developed most of these slides, so I'm trying to think about what she would have said as we go through them. Next slide. So, when we look at the federal rules, we're generally, with fiscal monitoring, within the Department of Education, we're looking at EDGAR and we're looking at the OMC Circular A-133, which talks about the fiscal rules for schools. Not going to read the [inaudible], you guys can read them. But generally, it's just talking about the fact that as the grantee, the state, we have the fiscal responsibility to monitor all subgrantees. So the responsibility lies on us to do that. And in general, these are kind of the -- these are the rules and regulations for which we have to follow when we do the monitoring. EDGAR, which is dealing with the education, the different OMB circulars. That's going to be mostly A-87 and then A-133. Some different agencies may have a separate OMB that they have to follow, as well, but generally those two. And then any state laws, or policies and procedures, for which the state has created, and a lot of those are based off of the federal rules anyways. So what is EDGAR? Plainly, it's the Education Department General Administration Regulations. It talks about how we monitor the fiscal piece of the money that we get from the federal government. It talks about how you purchase items, whether it be supplies or equipment, or how you are supposed to do contracts. It talks about the inventory management, and then of course it talks about the financial management. It also, within that, it talks about how the different grants are awarded to the states, and then to the subgrantees. So onto the next one. So the OMB, which is plainly the Office of Management and Budget, this talks about -- where I generally go towards this, this is talking about what you can actually spend money on. What's a direct cost, what's an indirect cost, what's allowable, and what's not allowable. So generally, when we're looking at the OMB, that's where we're -- what we're looking for. There is a lot more to them, but that's the general sense of why we're looking at them. Our state regulations, rules and policies. Of course you'll be looking at any statutes that have gone through the legislature, whether they're proposed by DOE, whether they're proposed by a legislature or proposed by, you know, a governor, these are the statues that make up the Maine law. And then of course you have the program-specific rules, you know, so of course for special education we're talking about MUSER. And then the Fiscal Review and Compliance Team, so for the special education, that's me. There's some pieces for which Jan -- for which I go to Jan for guidance on how we want to administer certain pieces, what we want to review any given year. That's something that Jan and I would decide. And then of course the Maine DOE Supporting Documentation Guidance. This is brand new, it's still partially in development. We've stuck one piece out there -- it's on -- it's actually on Heather's web site, so that audit page was in Maine DOE, and you can read all about how we're doing fiscal reviews, what the requirements are, and a lot of it is we're looking at the federal regulation, we're looking at state regulation, and we're doing a little bit of interpretation of those rules to give you guidance. So, the cross-cutting monitoring requirements. So a big piece of this is looking at your accounting records and seeing what you bought, making sure it was bought within the proper timeframe, making sure it's allowable, and you know, making sure it fits the program. Some of the things that are coming up are you know, like we've seen things that are allowable in general, but they may not be within the IEP, so we also need to keep those pieces in mind, as well. And a big thing over the past, the last cycle and this cycle, is we're looking at internal controls, and until we feel as though we've gotten a handle on internal controls, we're going to continue looking at them as a major item. This is your policy and procedures that are required by federal regulations, that school districts need to have on hand. What we're finding is that a lot of schools are following a procedure, it's just not written down. They're following a policy, it's just not written down. We want to see these things written down so that when there's a handoff from one person to the next, especially at director levels or within the business department, that things are being done consistently, and within the regulation. And another big piece for this year is the equipment. So any -- the state dropped the equipment level from 5,000 to 500 that needs to be tracked. This also, included in that is highly walkable. And generally when I say highly -- when I think, how I describe is highly walkable is, if you can stick it in a backpack and walk out of the building, and nobody would ever have seen it leave, that's highly walkable. There does have to be some value to that, of course, though. I mean -- but, you know, we're generally thinking, within special ed, we're thinking iPads, iPods, these devices that are used to help special ed kids out, but they can easily walk off, but they don't meet that $500 threshold. So again, I talked about fiscal accountability already. Time and effort is also coming up as a big thing within some districts. Semi-annual certifications and a monthly personal activity report, depending on how, on what that individual is doing. The guidance is within the compliance manual that is on the audit webpage. And so you can see -- within that, we describe what's needed on the time and effort reporting, and when they need to be done. One of the biggest things that I'm finding is everything is right on the form, but then it's signed before the end of the period. We've okayed the fact that if you're singing on the last day of the period, that's okay, or after the period has ended. But if you sign it in the middle of the period, then that's not an acceptable time and effort reporting.

>> We'll have a question. All of us have our internal procedures reviewed by our district auditors. What do you look for that they would not expect us to have in place, by written procedure?

>> So big things that I'm not seeing is the grant management pieces. So this is talking about doing applications -- having something that says you have a procedure for when your application is done, this is a federal grant -- when you're -- something that talks about when you're filing invoices, when are you doing your year-end report? So making sure that those -- a procedure that talks about having those pieces done on time.

>> Tyler?

>> Yes?

>> This is Kathy Warren. I'm helping a former superintendent of mine comply with some policies that he needed to get as a result of his local entitlement audit this last year. And so I've been looking into this specifically, and it's a bunch of Ds. D-policies, for everybody who's out there wondering what they need to be. And I've actually gone around and looked at a bunch of different school districts to see who's got some written that we can maybe work from, so that we can create a package of them in the...

>> Yeah.

>> ...handbook -- in the committee, and maybe we can all share them, so that we only have to do it once. So the point of that was that the cross-cutting federal program sub-recipient monitoring instrument, which I think is one of the things you guys use in the audit, actually, it lists the different policies and describes them actually really well, that we're all going to have to come up with, so that's a really good resource for knowing exactly what these policies need to be written about.

>> Okay, yep. And we do have -- I'm just waiting on an okay from some of these districts. I have a few different districts' procedure manuals. I'm just waiting on an okay to be able to share them, and then I can give them over to Heather, and you know, and then when that group is looking at it. We have some that, you know, just need a little bit of tweaking, and then we have some that are actually, are okay to account for some of these procedures that are needed.

>> Are they policies, though? Because what I'm understanding is that, you know, some of these are policies that the school boards are going to have to adopt, not just internal procedure.

>> We don't have much for policies, but we do have some of the procedure side of it.

>> Okay. so I've mostly been looking at the policy side of it. And ultimately -- I mean, a lot of the procedures then are attached to the policies as an R attachment. But yeah, but they definitely are Ds. And a lot of us don't have very many D policies. So it's a brave new world.

>> A few questions came through. Sandy Warden says D or B policies?

>> D as in dog.

>> D, okay. And Shelia says, could you repeat the cross-cutting?

>> Is it -- do you guys -- because I only have a couple pages of it, for where the deficiencies are for this particular district. So, the title at the top of the page says Maine Department of Education, and then it says Cross-Cutting Federal Programs Sub-Recipient Monitoring Instrument. And I have pages two and three of a seven-page document, and it lists -- this section is from the internal controls review portion of the audit. So...-

>> Right, and so there's the general Department of Education Cross-Cutting Monitoring Tool, which is what I used last year. And I'm not sure if Heather has posted that on her webpage or not. Although it is under my -- it's still under my page, if you go to the Maine DOE and then the special ed, and then there's a monitoring section, and I can't remember the exact title to that page. And then there's fiscal accountability within that. And I do have that cross-cutting as one of the pages, and you can kind of go through and see each of the items for which we looked at last year. And then I do have -- this year I added excess costs and maintenance of effort, which we'll talk about later, onto this year's what we're looking at.

>> And the policy part of this isn't just -- it's all federal grants , right? It's not just local entitlement.

>> Right. If anything, these are federal rules though.

>> Okay.

>> So they're for all federal grants.

>> Okay, we have another -- Will says, "All of us have our internal procedures reviewed by our district auditors--" Oh, I'm sorry, we already did that one.

>> Yeah.

>> Let me go down a little bit. For such routine issues, it seems like reinventing the wheel makes no sense. Getting model -- getting model policies and procedures would save a large amount of time.

>> Yep.

>> And then JA says, "Tyler, can you clarify if there are required policies that must be passed by a school board?"

>> Yeah, and those are all in the cross-cutting fiscal monitoring from last year that's on my page. There's a whole list of eight or 10 of them, and there are two on that page that don't apply. One is dealing with the cash management, because we no longer do cash management, and then one of them is dealing with the interest. And because we no longer -- because the districts no longer hold cash on hand, they'll no longer have interest from the federal grants.

>> So Tyler, on your -- somebody posted the link to your page, and on your page, it's listed as the monitoring matrix...

>> Okay.

>> ...people are trying to trace it.

>> Okay.

>> And can I -- I'm sorry, can I throw in one more thing? So Maine ASBO is -- has put together a committee to work on a handbook for federal grant monitoring. And what I'm trying to do with the stuff that I'm uncovering, in helping the superintendent, is the policy part of it, so that I can contribute that to the committee, so that we can all have access to it and only do it once. So that committee's just starting up now, but a template should be coming out of that so that we all don't have to do this independently.

>> Right. And I think that -- you know, that was the intent, was so that business managers from many different districts are getting together and writing template policies that can be brought back to all the districts, and then they can take that model policy and make it work for their own specific districts.

>> Could you please identify the lady who's speaking? This is Denise Powers. Who's speaking on the phone?

>> This is me, it's Kathy Warren. I'll put it in the comment thing.

>> Well I guess we can move on [inaudible]. So, what does monitoring look like? So basically we're going to look at your application performance report. There's going to eventually be a self-assessment. For the fiscal side it hasn't been developed yet, and then there'll be a desk review of we'll ask for certain items, which will include a detailed run of what your district has spent in a particular time period, and so we'll look at that, and we'll pick some items out to be reviewed on site. We'll also, for districts that do have policies and procedures already written, we'll ask those to be part of the desk review. And, you know, and then there'll be some other items that are easily sent in that'll be part of that. We'll go out to the site. We'll look for backup documentation for the selected transaction. You know, we'll talk with the business managers, the business staff, and if the -- for me, I'll talk with the special ed directors if there's some specific issues where I, you know, where I need to talk to them as well. And then we'll -- oh, and of course we'll also look at -- Heather, as part of her piece, she looks at the audit that was done for your school district. And sometimes this includes the federal programs, if they are of a certain threshold, and then those pieces come to us, to come up with a corrective action plan. And then we'll also develop a corrective action plan based on our desk review and site visit.

>> Question from Karen. So my corrective action plan requires all of this to be done by February of 2014. Will all these models be done for us to use by then, or will there be an extension?

>> Yeah, I think for the most part, we're going to work with the districts. We understand that they aren't developed yet, and so I guess the answer is, if they aren't done yet, then we're, you know, we'll work with the districts. And then we're also going to do a risk assessment piece, and again this is still being developed, looking at some different fiscal pieces, maybe some programmatic pieces. But again, it hasn't been developed yet. We're still talking about it. And then of course, a big part of our job is technical assistance. When you guys have questions from the field, we're here to answer those questions. You know, we may not always be able to answer them right when you call, so, you know, I try to tend to ask a lot of questions about your question, so then I can either, you know, go talk with Heather, go talk with Joanne, go talk with Jan, maybe talk with regional support so that we're not -- so that we're giving you the correct answer. And then we're also using, starting this year, using the GEM system that you guys have used for reimbursement to help with the monitoring process, so that when invoices are coming in, sometimes you guys are getting requests for documentation on those invoices.

>> I will just read what Kathy wrote. She said, "Kathy Warren, from MSAD Eight in [inaudible] from R23 is chairing the NEASBO committee to create a handbook to complement Heather's fiscal guidance document. The committee will be working directly with the DOE audit. If anyone prints out the matrix and looks at these required policies, and you know your district already has a D-policy in place, please let me know.

>> Okay. So yeah, so let Kathy know if you have something already that meets of these -- or that you think meets one of these requirements. You know, a hand it -- you know, hand it off to her, you know, if you can, and you know, hopefully this will fulfill, take the process along quicker. So the next slide is maintenance of effort. So this is basically the amount the district is spending for any given year for the education--for the special education for a child with disabilities.

>> Bless you.

>> This is established year to year. Basically, we are going to look at the last year that you met maintenance of effort and ensure that this year your -- this year's funding matches that year's funding. That can be done four different -- well as it stands now, we can look at it two ways; we can look at your state and local total spending, or state and local per capita spending. And there are certain ways for which an LEA can reduce the level it spends. And most of the special ed directors understand those and if they don't, you know, they are part of the application and they are part of the year- end report, and those exceptions are all things that are approved by Jan. She works with the special ed directors to ensure their -- that those exceptions actually meet the requirement. Next slide. So the implications of if you don't -- if you fail to meet maintenance of effort. So there are the audit requirements. Basically if you fail to meet maintenance of effort, you pay back the amount for which you missed maintenance of effort. This could be larger than -- if it becomes larger than your allocation, you still have to pay back that portion. There are huge implications for not maintaining effort.

>> [Multiple speakers].

>> One of the--this is Jan. One of the things that I see in the applications, if you look in the [inaudible] application, you will find four reasons for which effort can be reduced. For example, if there is a decrease in the number of students, or if there is an exceptionally high crowd of students who graduate or move away, and there are a couple others that are there in the application. What I find is that too often districts are just writing, "We are decreasing the number of students," and so I question, I ask more information, and I find out that there were two fewer students with disabilities than there were last year. Well, we all know that the impact of two students; one of whom might be a tenth grader, one of whom might be a second grader is nothing because you haven't been able to reduce a teacher, you haven't been able to eliminate therapy during the--those kinds of things, so you have got to pay close attention to the reasons by which budgets are reduced. There -- and take a look at those four reasons that are on the website that are allowable. Unfortunately, under maintenance of effort, you can't just reduce your budget to be more fiscally prudent, and I think it is a ridiculous concept, but if you find a cheaper way to do things, it is not one of the allowable reasons, which you believe. So if you have questions about maintenance of effort, talk to us. But, it is something that you have got to be very paying close attention to because we have to begin enforcing it in the next year and we will talk a little bit more about that. You haven't done excess cost yet have you?

>> No.

>> After excess cost, we will talk about the next steps on that.

>> So the next one of course is excess cost, and this deals directly with ensuring that you are spending the same amount for the education of a child with disabilities, as you are for a child without disabilities. Quite simply, the easiest way for you to ensure that this is happening is to look at your -- within your warrant that your voters passed, is to look at your regular education --your regular instruction budget, versus your special education budget. If your special ed population makes up 15% of your population, which is the state average, then your special ed budget should at least be 15% of what your regular education budget is. That is a pretty down and dirty, simple way of looking at it. The calculation is much harder than that, but that is a very general easy way of looking at it. And if you want, I mean -- so the regulation is 300.202 within the IDEA. And keep in mind that you have to meet it separately for elementary and secondary. And so when you look at your budgets you should look at elementary separate from secondary and make sure that both of those -- the meeting that requirement in both places. And one thing that we are finding this year, and so I want to point it out, is when you code expenditures and they are for special education, code them to special education, because we are finding a lot of districts aren't coding expenditures and where this is coming up a lot is tuition. When you are paying tuition from your district to another district and it is for a child with special education needs, you need to code that special education portion that is paying for ed tax or paying helping to pay for a special education teacher, those need to be coded that part of the tuition needs to be coded special education. If it is coded regular education, we have to count it as regular education.

>> This one?

>> I have got one more slide on.

>> Okay.

>> So the implications of not meeting excess cost, you pay back. If you don't meet it, the implication is that we may have to make you pay back your entire allocation from the previous year.

>> So this is Jan again, so I have to put on my hard hat, I guess, to have this conversation. We are preparing a notice that will go out in the "Commissioner's Update" in the next week or so, whereby, school districts will be notified that going forward, beginning in the next school year, if districts do not make excess cost, or fail to make maintenance of effort, there will be either a failure to receive funds, or pay back of funds. This is very, very serious. We have several school districts; some in -- who are supposed to get large, hundreds of thousands of dollars of local entitlement awards, that are endanger of not getting that award had we decided to enforce this this year. And it should have been enforced. It has been in place for a lot of years, but we felt that we couldn't do that because there had never been a formal notification to the field and so there will be that notification in the next few weeks. So as you prepare you budget, please be very, very careful because if you are a $500,000 receiver, and you are not meeting your excess cost requirements, those funds will not be awarded to that district in the coming year. So talk to us if you have questions, because we are wanting to help, but we are also recognizing our responsibility to enforce the federal rules.

>> Jan said, "Will we know if we were one of those districts?"

>> Yes you will. We will be making personal contact with the districts that have excess cost requirements.

>> That concludes the PowerPoint presentation. So, I guess if there is any other questions.

>> Just to let everybody know, you can download a copy of this PowerPoint directly to your computer by going into the file's cuepod [phonetic] above the chat box, highlight the physical monitoring guidance document and download it right to your computer if you would like to.

>> Yes, it is recorded.

>> Can you repeat that information about the tuition cost again?

>> So when you're paying tuition, when your district pays tuition to another district, what I have seen, it is not every district, but what I have seen is, district are paying all of their tuition as regular -- they are coding it all as regular education tuition, even though they may be paying for special ed services with that tuition. And so what we are trying to put out is the fact that when you code it that way, we have to count it as regular education tuition. And if you are, and what we want you to do and what you need to be doing is, when you are paying for special education services that the other district is providing, those need to be coded as special education.

[ Inaudible Conversations ]

>> We had many conversations with Tyler about how to correctly calculate our excess cost to our very...

[ Inaudible Conversations ]

>> Oh, very small district. We would have to be in big trouble without that amount of our calculation. How can we ensure that everybody is able to look at their numbers, the most accurate way so everything is included? An M-E-A-F-B-O help, a workshop perhaps.

>> Well, and so, I have been talking with Joanne and we are trying to find easier ways to calculate this. So, hopefully we will have something more concrete in the next--within a short time of being able to help you calculate this easier. But, that is part of the reason why, a little earlier, I said look at your special education budget compared to your regular education budget, which, when the state looks at -- on the state website, on Joanne's page, she lists the different articles within your warrant and if you go by how the state does it--warrant. Article One is for regular instruction and Article Two is for special education instruction. And so, that Article Two should at least be the same percentage, when compared to Article One, as your special education population is compared to your total population. That is a pretty easy way of looking at it. Because everything else, all the other expenditures that we are taking is just a percentage of all those, so it should work out pretty well when you look at -- when you compare those two articles, that if you are meeting it there, you should at least be very close.

>> Sandy says, "Did we get a comment on model policies?"

>> Main ASBO has a subgroup that is going to be working on these and then, so that we can get them all out in the field.

>> Okay, then Shelia asked, "Would that include the entire tuition?"

[ Inaudible Conversations ]

>> Can you clarify that question?

>> Hi. Am I un-muted?

>> Yes.

>> Okay when you were talking about paying tuition to another district for a special ed student, would their whole tuition go as -- be coded as special ed, or a portion of it, depending on how much services they got?

>> It would depend on how much services they are getting. So, for that portion that is being, I mean because there is a portion that is being paid for their regular instruction.

>> Right.

>> And of course some of the money that you pay the other district is going for their administrative cost, and so we are trying to account for that, as well. But, those costs that are directly for special education need to be coded as special education. And however you work that out, with the other district is up to you, but be sure that those costs are being coded as special education.

>> Okay so it just would be a percentage of the tuition.

>> Yes.

>> Okay thank you.

>> So, we look for an itemized bill from the receiving district?

>> Yes, and I don't know how every district does it, and it could be different from district to district. And I know some districts work it out ahead of time, what services will be provided and how much those will cost. So, I don't know that there is a completely simple across the board answer.

>> If folks want to just speak, un-mute themselves and speak into phone to ask their questions you can do that, as well.

>> Adam says, "If the only reason the student is attending the other district is to receive special ed services, can the entire tuition amount be charged to special ed, or must it still be broken into regular ed, admin cost, etcetera."

>> I know, but I was, because I have a regular ed responsibility to that student.

>> Tyler Backus: I mean.

>> Were they talking -- Adam, can you un-mute your phone?

>> Hello?

>> Adam, you send a student to another district for what? Can you give me an example, so would it be like a day treatment program or something like that?

>> Well, I am shooting in the dark a little bit, because I do not have my special ed director with me, but I am just trying to think of a scenario, where the student requires services, so they go elsewhere. They receive services while they are there, that are not per se special ed, we are paying a full tuition. I just don't know if we still need to try to break things out, or if it can just simply be expended and charged to special ed.

>> If it is not a special education service that they are receiving by going to that district, then no, you couldn't charge it to special ed. And when you do the calculation, I am looking at Tyler here, it is not kid by kid by kid, if I am understanding correctly. It is, you have x number of kids and the cost of educating regular education students is $9,000 for example, then you have to show that you spend the $9,000 on whatever your special education population is, before you spend the extra that you may be required to educate that student with disability. So going back to the student that you are talking about who is going out of district, you still have that basic responsibility to be spending in your total whatever it costs to educate all kids in your district, but then you can count the amount that you are spending over and above due to the fact to him needing special education services. Is that pretty muddy?

>> Can I ask a -- I have a question, but it is not related to the tuition part of that, that it just made me think of. So, Adam, did you get your question answered?

>> Yeah, I think so.

>> Okay so we -- this is Kathy. So I would say that our special education costs for our students is not the -- our special education warrant article divided by the number of our spec ed kids, I would say it is regular ed portion for each of them, plus our special education budget. We don't have special education classrooms. Our kids spend very little time segregated, and certainly not all of them. So I don't think that warrant article idea is going to work.

>> But you have other -- regardless of what their placement is, you have special education costs. I bet if you don't have a lot of special ed classrooms, I bet you have a lot of paraprofessionals, you certainly have some teachers that are providing consult out to those classrooms, you have probably have a lot of therapies that are going on. Probably -- do you have a special education director?

>> Yes.

>> So the placement doesn't matter so much if all those other costs go to support whatever your model is of serving the kids.

>> I totally understand what I am establishing as far as -- well I guess I don't. But it's -- yeah, well -- we will have to see how it works another year. I just know we had to do a lot of machinations this year to try to pull that apart and there were a lot of things, whether it was, you know, special ed students are receiving a portion of the extracurricular and co-curricular budgets which is another warrant article entirely. You know, so there were things that we looked at when we were trying to get the excess cost correct this year, that were outside of those articles. I am just afraid it is going to create, I think it is a guideline, but I don't think it is going to be the whole picture.

>> Yes.

>> No, and that's -- I would. What we are seeing, when I looked at the [inaudible], that the financial information [inaudible] the districts that are not meeting the excess cost requirements, some of them have upwards of 20% that are special ed population, but when I look at their direct special ed expenditures, it only makes up 8-10% of them, as compared to their regular education budget.

>> Yeah, I would be one of those people.

>> Okay.

>> I mean we are spending $250,000 out of a total operating budget of $3.5 million, you know, $800,000 of that is debt service, so if you just go to operating, I will have to look at -- I need to look at what my actual special ed article is, because I haven't done actually done that, but -- yeah, anyway. I know you guys are trying really hard to make sure everybody is reflected accurately, so I don't want to dwell.

>> Comparing Article One to Article Two will not break out the expenditures by K-8 and 9-12. We are way over in K-8, but very tight in 9-12. Would we be in jeopardy of losing funding if only one area is low, but the entire district figures are okay.

>> You would, because the feds have been very clear that this calculation must be done in the elementary and 9-12 separately, and if you don't meet in either one of those, then you are in jeopardy.

>> Any other questions?

>> I think we are all done with this [inaudible]. Thank you for coming and listening.

>> [Inaudible].

>> Thank you.

>> Thank you.

>> Thanks.

>> Have a good weekend.