Title 1 Basics – A State Perspective Bonnie P. Granger Young Law Group, PLLC 1
What Does State Law and Regulations Have To Do With Federal Programs? How are the state laws and regulations intermingled with the federal programs requirements? Allowable Cost/ Cost Principles Supplement-not supplant Procurement Issues 2
First 1 of 14 Federal Compliance Requirements • 1. Activities allowed and unallowed : Provides guidance on activities that can or cannot be funded under a specific program. - This compliance requirement is the reason that monitors and auditors always want to see a copy of the approved project application and amendments. If the expenditure is not allowed by the program application, it is not in compliance with this requirement. - Accounting codes used for function and object codes (as well as the narrative) are critical in determining whether an item was budgeted and approved in the project application. 3
First 2 of 14 Federal Compliance Requirements (Continued) • 2. Allowable costs/cost principles : describes the cost accounting requirements associated with federal awards . These include the following: • OMB Circular A- 21, “Cost Principles in Education Institutions,” • Circular A- 87, “Cost Principles for State, Local and Indian Tribal Governments” and others that do not apply to non-profit organizations and hospitals. Circular A- 87 has been incorporated in to the OMNI Circular that has just been released. 4
“Big Circle/Little Circle” Activities Allowed or Unallowed Applicable Cost/Cost Principles In order to meet the “activities allowed or unallowed” requirement, the expenditure must first meet the “applicable cost/cost principles” requirement. This means that no expenditure can be approved, 5 even if it is in the project application, if it is prohibited by Circulars A-21 or A-87.
Examples • Teacher appreciation gifts from Title 1 or Teacher Appreciation Banquets out of GEAR-Up. Even if it was approved in the project application – MS Constitution prohibits purchasing gifts for employees with public funds. • Under the Basic Guidelines in A-87, an expenditure must be authorized or not prohibited under State and local laws or regulations to be allowable under Federal Programs. 6
Examples: • Remember, years ago, teachers could not be reimbursed for tuition by a school district. • Initially, state law was changed so that they could be reimbursed with “No Child Left Behind” funding so that they could be reimbursed out of Title 2 under certain circumstances. 7
Examples: • Currently, Section 37-7-301 (mm) was further changed to state: To expend federal No Child Left Behind Act funds, or any other available funds that are expressly designated and authorized for that use, to pay training, educational expenses, salary incentives and salary supplements to employees of local school districts; except that incentives shall not be considered part of the local supplement as defined in Section 37-151-5(o), nor shall incentives be considered part of the local supplement paid to an individual teacher for the purposes of Section 37-19-7(1). Mississippi Adequate Education Program funds or any other state funds may not be used for salary incentives or salary supplements as provided in this paragraph (mm); • Therefore, State law is evolving to allow certain expenditures to comply with requirements of the federal government. 8
OMB Circular A-87 • Federal Requirements – Basic Major Principles (page 291 (Red Book), page 227 (Blue Book)): • 1. Be necessary and reasonable … • 2. Be allocable to Federal awards … • 3. Be authorized and not prohibited under State or local laws or regulations. 9
A-87 Federal Requirements – Basic Major Principles (Page 291 (Red Book), Page 227 (Blue Book)): • 4. Conform to any limitations or exclusions set forth in these principles, Federal laws, etc . • 5. Be consistent with policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the Governmental unit. (Leave policies, travel policies, etc., would be the same whether using local or federal dollars.) • 6. Be accorded consistent treatment as far as direct and indirect costs. • (You must follow your district salary scales for salaries paid out 10 of federal dollars.)
A- 87 Federal Requirements – Basic Major Principles (Page 291 (Red Book), Page 227 (Blue Book)) : • 7. With some exceptions, be determined in accordance with generally accepted accounting principles. (When is the cost expended?- Once item is received or service is performed.) • 8. Not be included as a cost or used to meet a cost sharing or matching requirement of any other Federal award in either or current or prior period. • 9. Be the net of all applicable credits. (Some of the electronic payment accounts payable systems may be a problem because of rebates going to federal programs.) • 10. Be adequately documented. 11
State Laws Affecting Federal Projects • §37-7-301, Miss. Code Ann. Board Powers and Duties specifies that the school board has the following duties: • (w) To employ all non-instructional and non-certificated employees and fix the duties and compensation of such personnel deemed necessary pursuant to the recommendation of the superintendent of schools; • How does this affect non-licensed employees who work for afterschool programs or summer programs? Does this have to be board approved? Yes, based on the statute above. • What if one hourly amount is approved in the federal project application and the board approves a lesser amount? Which 12 one is authorized? Only the board can set compensation!
§ 37-9-23. Form and execution of contracts with superintendents, principals, licensed employees, and others anticipating graduation from approved programs; conditional contracts • The superintendent shall enter into a contract with each assistant superintendent, principal, licensed employee and person anticipating graduation from an approved teacher education program or the issuance of a proper license before October 15 or February 15, as the case may be, who is elected and approved for employment by the school board. 13
Salary Supplements Paid to Employees • Do the above laws say that a Federal Program Director can add a supplement for extra duties for employees to a project application and require the district to pay that supplement to the employees? • Does the School Board have to approve supplements to be paid to each employee? • What if an additional supplement is written into a Title 1 Project? Does the employee get to claim the supplement also? • First, the Board would have to approve the additional compensation for the employee and second, it could be considered a donation by the Board if additional work is not 14 documented.
§37-7-301 - Miss. Code Ann. Board Powers and Duties specifies that the school board has the following duties: • (mm) To expend federal No Child Left Behind Act funds, or any other available funds that are expressly designated and authorized for that use, to pay training, educational expenses, salary incentives and salary supplements to employees of local school districts; except that incentives shall not be considered part of the local supplement as defined in Section 37-151-5(o), nor shall incentives be considered part of the local supplement paid to an individual teacher for the purposes of Section 37-19-7(1). Mississippi Adequate Education Program funds or any other state funds may not be used for salary incentives or salary supplements as provided in this paragraph (mm); 15
Other Constitutional Prohibitions – Retroactive Pay Can the school board approve an employee to perform additional duties such as an afterschool program and pay them for time they have already worked in that program? • Section 37-9-14 (z) Allows Superintendent to temporarily employ licensed and nonlicensed employees to fill vacancies which may occur from time to time without prior approval of the board of trustees, provided that the board of trustees is notified of such employment and the action is ratified by the board at the next regular meeting of the board. A school district may pay a licensed employee based on the same salary schedule as other contracted licensed employees in the district until school board action, at which time a licensed employee approved by the school board enters a contract. If the board, within thirty (30) days of the date of employment of such employee under this subsection, takes action to disapprove of the employment by the superintendent, then the employment shall be immediately terminated without further compensation, notice or other employment rights with the district. The terminated employee shall be paid such salary and fringe benefits that such employee would otherwise be entitled to from the date of employment to the date of termination for days actually worked. 16 • If not this circumstance, Miss. Constitution prohibits retroactive pay!
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