May 13, 2010
TO THE ADMINISTRATOR ADDRESSED:
SUBJECT: Fiscal-Related Changes for Formula-Funded Grants
The purpose of this letter is to inform local educational agencies (LEAs) and education service centers (ESCs) about significant changes to requirements for expenditure reporting and receipt of goods and services for formula grants funded by the Texas Education Agency (TEA). Please share this information with federal program directors and with the business office.
Expenditure Reporting Requirement for Grants with 27-Month Period of Availability
On April 5, 2010, TEA posted revised guidance on the TEA Correspondence page (http://ritter.tea.state.tx.us/taa/formfund040510.html) regarding the period of obligation for eligible 2009-2010 federal education formula grants. As explained in TEA’s revised guidance, the grant period for eligible federal formula grants has been extended by three months in order to give LEAs a full 27 months to obligate and expend those funds. As a result of that three-month extension of the grant period, TEA has also implemented changes to expenditure reporting requirements.
Because funds are now available for an three additional months, and because of TEA’s requirements for reporting 2009-2010 final expenditures to the U.S. Department of Education (USDE), recipients of formula grants with a 27-month period of availability now have only one opportunity to submit an expenditure report—i.e., the final expenditure report. No revised final expenditure report will be accepted for these grants under any circumstances after the specified date. The decision is final, and there will be no opportunity for appeal.
This is a significant change from prior practice. Please ensure that the business office is fully aware of this major change in policy for submitting final expenditure reports.
The deadline for submitting a final expenditure report for 2009-2010 formula grants with a 27-month period of obligation is November 1, 2010. Grantees will not be able to access the ER system after that date. This requirement applies to the following grants:
- Title I, Part A—Improving Basic Programs Operated by Local Educational Agencies
- Title I—School Improvement Program (SIP)
- Title I, Part C—Education of Migratory Children
- Title I, Part D—Prevention and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At-Risk, Subpart 1—State Agency Programs
- Title I, Part D—Prevention and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At-Risk, Subpart 2—Local Agency Programs
- Title II, Part A—Teacher and Principal Training and Recruiting Fund
- Title II, Part D—Enhancing Education Through Technology
- Title III—Language Instruction for Limited English Proficient (LEP) and Immigrant Students
- Title IV, Part A—Safe and Drug-Free Schools and Communities
- Title VI, Part B—Subpart 2—Rural and Low-Income School Program
- Individuals with Disabilities Education Act (IDEA), Part B—Grants to States
- IDEA, Part B—Deaf
- IDEA, Part B—Preschool Grants
- IDEA, Part B—Preschool Grants, Deaf
Please note that that this revised reporting requirement does not apply to any discretionary programs (state or federal) or to any state-funded formula-funded programs. The following list provides examples of grants to which the 27-month period of obligation and revised expenditure reporting requirement does not apply:
- State funded grants
- Carl D. Perkins Title I, Part C
- IDEA, Part B—Discretionary
- IDEA, Part C
- IDEA, Part D
Revisions to Expenditure Reporting Dates for Other Formula-Funded Grants, Effective for 2010-2011 School Year
Alternate expenditure reporting requirements apply to formula-funded grants to which the 27-month period of obligation does not apply. Currently, TEA allows recipients of those formula-funded grants to submit final expenditure reports 45 days after the ending date of the grant and to submit revised final expenditure reports 75 days after the ending date of the grant. Those expenditure reporting requirements are being revised in order to align expenditure reporting processes across formula and discretionary grant programs and to assist in the timely award of reallocation funding.
Effective for the 2010-2011 school year, for all formula-funded grants not covered under the 27-month period of obligation, all final expenditure reports for formula-funded grants will be due 30 days after the ending date of the grant. The revised final expenditure report will be due 60 days after the ending date of the grant. Grantees will not be able to file a revised final expenditure report after that date. There will be no opportunity for appeal.
Rescission of 30-Day Period for Liquidation of Obligations for Formula-Funded Grants
Currently, TEA guidelines for formula-funded grants allow LEAs to obligate funds for goods and services between the beginning and ending dates of a grant and to receive the goods and services within 30 days after the ending date of the grant. Effective for the 2010-2011 school year, all goods and services purchased with formula grant funds must be received in time to substantially benefit the project during the current grant period. LEAs may no longer obligate funds for goods and services during a grant period if the goods and services will be delivered after the ending date of the grant. Equipment purchased with grant funds must be received, installed, and put into service before the ending date of the grant period.
The impetus for this change is OMB Circular A-87 (federal cost principles), which requires federal grant expenditures to “be necessary and reasonable for proper and efficient performance and administration of Federal Awards.” Recent audits of Texas LEAs, including one by the USDE Office of the Inspector General, have found that goods and services delivered after the grant period did not significantly benefit the project within the beginning and ending dates of the grant and thus were not necessary and reasonable expenditures.
TEA encourages your LEA to ensure that purchases made with grant funds are put into use as early as possible during the grant period so that beneficiaries of those goods and services receive the full benefits. Your LEA may not expend funds for goods or services that will not be utilized between the beginning and ending dates of the grant. Funds that are not expended within the grant period will be allocated during the subsequent grant year in accordance with the requirements of the authorizing legislation.
Expenditure Reporting by Class/Object Code in ER
Effective for the 2010-2011 school year, all expenditures for formula-funded grants must be reported in the expenditure reporting (ER) system by class-object code. The ER system will interface with eGrants to ensure that your current approved budget is displayed. TEA is implementing this process to demonstrate compliance with federal monitoring expectations and auditing standards. The change is intended to mitigate the need for LEAs that are not identified as high-risk by TEA to submit supporting expenditure documentation for reimbursement requests that exceed grant threshold requirements. High-risk grantees are still required to submit the requested documentation to TEA.
If you have any questions about these changes to business practices, please e-mail the Division of Formula Funding at FormulaFunds@tea.state.tx.us.
Sincerely,
Yolanda Cantu
Senior Director, Division of Formula Funding
cc:
Rita Chase
Ramon Medina
Cory Green
Kathy Clayton
Vangie Stice-Israel
Gene Lenz
Ann Smisko
Anita Givens
John Lopez
Nora Hancock
Earin Martin
Adam Jones
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