A Microsoft Word version of this letter is available for download and PRINTING.

Important Information

October 6, 2009

TO THE ADMINISTRATOR ADDRESSED:

SUBJECT:      Monitoring of American Recovery and Reinvestment Act of 2009 (ARRA) Grant Requested Expenditure Reimbursements

In February of 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA; also known as the “stimulus bill”). This legislation provides for a high level of transparency, reporting, and accountability for recipients and subrecipients of ARRA funds. This letter is intended to provide all grantees receiving stimulus funding with a summary of the ways in which the Texas Education Agency’s (TEA) Division of Formula Funding, Reporting and Fiscal Accountability Unit will be monitoring ARRA grant expenditures. Please be prepared for staff to contact you regarding the monitoring activities described in this letter.

ARRA Grant Funds Made Available to Local Education Agencies (LEAs)
The following table outlines the ARRA grants under which Texas local education agencies (LEAs) could apply for stimulus funding.

Aspects of ARRA Grants to be Monitored
Grantees receiving stimulus funding can expect TEA’s Reporting and Fiscal Accountability Unit to monitor the following:

1. LEAs designated as high-risk grantees
2. Cash management practices
3. Timely expenditure of grant funds
4. Randomly selected grant expenditures

LEAs Designated As High-Risk Grantees
For LEAs that were previously identified as high-risk grantees and consequently given special conditions for the administration of their grants, those same special conditions apply to all ARRA grants. For more information, please contact Mary Gonzalez (512) 463-8525.

Cash Management Practices
LEA requests for expense reimbursements are processed through the automated Expenditure Reporting (ER) system, which monitors cash management. In ER, a threshold is established for each grant program. Thresholds will vary depending on the purpose of the grant program.  As long as a grantee’s expenditures remain below that threshold, payments are automatically approved. If a request for payment exceeds the threshold, the system forwards the request to TEA staff for review and approval. TEA staff gives individual consideration to each of these above-threshold requests.

In considering each request for above-threshold payment requests, TEA asks the grantee to submit documentation that lists cumulative expenditures by the corresponding class/object code. Above-threshold payments are made in ER only after TEA’s receipt and approval of the requested documentation. If TEA does not receive documentation supporting the above-threshold payment within three business days, ER purges the request for payment.

Special Note for ARRA IDEA, Part B
Grantees receiving ARRA IDEA, Part B funds should note that a 75% payment threshold has been established for this grant. Thresholds will also be established for regular IDEA, Part B funds in school year 2010–2011.  

Timely Expenditure of Grant Funds
A central principle of the ARRA legislation is that funds are to be spent quickly to save and create jobs. To this end, beginning this month (October 2009), TEA will monitor the rate of reimbursements to LEAs for all ARRA grants.  In order to ensure the accuracy of TEA’s reporting of ARRA fund expenditures, TEA encourages LEAs to submit frequent, complete requests for expenditure reimbursement. The U.S. Congress and the U.S. Department of Education (USDE) intend for the expenditure of ARRA funds to be timely, in order that the funds provide immediate stimulus to the economy; it is important that TEA and Texas LEAs publicly demonstrate that ARRA funds are being expended in accordance with that Congressional intent.

TEA will generate a monthly report of LEA expenditure reimbursements and post it on the Stimulus section of the TEA web site at http://www.tea.state.tx.us/arrastimulus/reimbursement/.  LEAs that have not drawn down funds for a particular grant or that exhibit a low rate of expenditure reimbursement (i.e., below 5% of a grant award per month) for ARRA grants will receive an e-mail notification with a link to the posted report. Because low rates of spending in the early months of an ARRA grant can be aligned with the planned use of funds, low spending does not indicate a compliance issue. Rather, the “low” designation is a reminder to administrators to submit expenditure reimbursements promptly and to carefully monitor the implementation of planned budgets.

Random Review of Grant Expenditures
To increase transparency and accountability in accordance with the guiding ARRA principles, TEA will choose some ARRA grantees at random for a closer review of expenditures for a specific grant award. Selected LEAs will be asked to submit supporting documentation for the requested expenditure reimbursements. The initial request will be for the general ledger and, if appropriate for the selected grant, the payroll ledger. After reviewing the ledgers, TEA may request additional documentation, such as, but not limited to, purchase requisitions, invoices, receipts, time and effort records, and travel vouchers. 

General ledgers must comply with Financial Accounting and Reporting (FAR), which establishes the requirements for proper budgeting, financial accounting, and reporting systems.  FAR is structured to comply with federal financial management standards which require that grant funds be accounted for according to a fund code structure. ESCs, charter schools and school districts are required to use a 15-digit fund code for their general ledger. The codes identify the source of funds and the use of funds. A general ledger with 15-digit fund codes documents the use of funds for allowable purposes and demonstrates compliance with FAR. (FAR can be accessed at http://www.tea.state.tx.us/index4.aspx?id=1222.)

No action is currently required from LEAs on the monitoring procedures outlined here; however, administrators are asked to watch for and be responsive to communications from the Division of Formula Funding, Reporting and Fiscal Accountability Unit.  Additionally, other TEA divisions are conducting ARRA-related monitoring activities, such as quarterly USDE reporting and onsite financial audits. Together, we can ensure that Texas schools make the most of this unique opportunity to jump-start school reform and improvement efforts while also saving and creating jobs and stimulating the economy.  Additional information regarding jobs created/retained can be accessed at http://ritter.tea.state.tx.us/taa/eduqualstan092509.html.

For more information, contact the Division of Formula Funding at (512) 463-8525.

Sincerely,

 

Nora Ibáñez Hancock, Ed.D.
Associate Commissioner
Office of Planning, Grants and Evaluation