Maine Department of Education - Administrative Letter 6: Fiscal Compliance: Reminder of General Education Federal Regulations that Apply to Funding under the No Child Left Behind Act (NCLB)

ADMINISTRATIVE LETTER: 6
POLICY CODE: DI/KLL

TO: Superintendents of Schools

FROM: Susan Gendron, Commissioner

DATE: September 18, 2006

RE: Fiscal Compliance: Reminder of General Education Federal Regulations that Apply to Funding under the No Child Left Behind Act (NCLB)

I am writing to remind you of the long-standing requirements for federal fiscal management systems as outlined in the Education Department General Administrative Regulations (EDGAR). The following information will have an impact on the approval of SAU (NCLB) applications, disbursements of funds, and NCLB monitoring reviews.

The use of contracted services is an area of concern for the United States Department of Education. It has advised auditors and state officials to carefully examine for compliance in this area. Most of you are familiar with the program requirements of the NCLB programs, or contact Department staff for assistance whenever necessary. Some of you are less familiar with the requirements for fiscal compliance in the use of federal funds.

The use of contracts by SAUs to provide services with federal funding, especially with No Child Left Behind (NCLB) funding, makes it important for you to review the federal regulations on financial administration, and on procurement and subawards.

EDGAR Section 80.20 details the basic requirements for financial management systems.

Section 80.36 details the threshold procurement requirements. This section requires that SAUs ensure that their basic procurement systems meet the threshold requirement outlined in EDGAR. Section 80.36(i) specifies the required contract provisions for subgrants.

The cited sections are located at http://www.ed.gov/policy/fund/reg/edgarReg/edlite-part80c.html.

For the 2006-2007 school year, the Maine Department of Education NCLB program staff will telephone the SAU’s contact person for a given NCLB Title under which funds are proposed to be used for contracted services, in order to obtain any additional information that may be needed to ensure compliance with the federal regulations prior to approval of the NCLB application for that Title and any amendments to that application that are made for those contracts that were unanticipated or not yet completed at the time the application was submitted/approved. Also, follow-up may be requested as part of the NCLB Performance Report review. Plans to build this process into the 2007-2008 NCLB Application and Performance Report are underway.

As we begin to implement this process, the questions about specific contracts that staff will be asking are:

Is the contract currently in place?
If yes, why was the vendor selected?
How were references and multiple quotes obtained?
Is there a contract signed by both the vendor and the SAU on file? If not, why not?
Are deliverables specified and does the contract include reporting requirements to the contract administrator on the work being performed and the completion of the deliverables?

Further, as the NCLB Team conducts on-site visits, they will be reviewing the following, which are also required by the general education regulations (EDGAR):

The SAU ‘s written code of standards of conduct governing the performance of those involved in the award/administration of contracts, including standards regarding conflict of interest;
The SAU’s procurement procedures to avoid duplication of services and other measures to ensure cost-effectiveness;
The SAU’s system for the maintenance of procurement records; and
The SAU’s process for dispute resolution for contracting.

Finally, please verify that the correct object codes for projects are used. For details on what object codes should be used for contracts, please contact your business manager or refer to: http://www.maine.gov/education/data/handbook/reports/objectcodes.pdf.

The Department will provide additional guidance in this area throughout the year.

Thank you for your prompt attention to this request. If you have questions or comments, please contact the NCLB Clearinghouse at 624-6705.