1. Difficult Issues of Cost Allocation Leigh Manasevit Brustein & Manasevit, PLLC lmanasevit@bruman.com Spring Forum 2011 Notes and comments added by participant Excerpt from Advanced Allowable Costs Issues

2. Support of Salaries and Wages • Payroll must be documented in accordance with SEA/LEA’s generally accepted accounting practice • Charges must be approved by a “responsible official” of the SEA/LEA

3. Time DistributionOMB Circular A-87 • If federal funds are used for salaries “time and effort records” must be kept • Must demonstrate that employees paid with federal funds actually worked on the specific federal program • Applies to all employees who are paid with federal funds

4. General Requirement • Type of documentation depends on how many “cost objectives” the employee worked on • These cost objectives must be connected to the employee’s salary source • What is a cost objective? • A specific grant award, or other category of costs, that requires the grantee to track specific cost information • What is not a cost objective? • Source of funding

5. Who must participate? • Any employee working on a federal program • Not contractors • All employees paid with federal funds • Some employees paid with non-federal funds • Matching

6. Cost Objective • Single cost objectives: • Consolidated administration • Schoolwide programs

7. Cost Objective (cont.) • Multiple cost objectives: • More than one Federal award • A Federal award and a non-Federal award; • A Federal award with specific earmarking (set-asides) or matching requirements; • An indirect cost activity and a direct cost activity; • Two or more indirect activities which are allocated using different allocation bases; or • An unallowable activity and a direct or indirect cost activity.

8. Single Cost Objective • If an employee works on a single cost objective: • Semi-Annual Certification • Signed by employee or supervisor every six months • Example: “I hereby certify that for the period January 1, 2010 through June 30, 2010 one-hundred percent (100%) of my time and effort was spent on Title III Administration.”

9. Single Cost Objective (cont.)Flexibility • Payroll certification in lieu of semi-annual certification • Single cost objective • Supervisor cannot assign multiple functions • Employee coded to dedicated function not benefiting multiple functions • Blanket certification

10. Multiple Cost Objectives • If an employee works on multiple cost objectives: • Personnel Activity Report (PAR) or equivalent documentation • Signed by employee • Example: “I hereby certify that for the period January 1, 2011 through January 31, 2011 50% of my time and effort was spent on Title I School Improvement and 50% on Consolidated Administration.”

11. Multiple Cost Objectives (cont.) • PAR must be: • After the fact • Account for total activity • Signed by employee • Prepared at least monthly and coincide with one or more pay periods

12. Multiple Cost Objectives (cont.) • Time increments reported on PARs should be sufficient to recognize: • Number of different activities performed • The dynamics of these responsibilities

13. Multiple Cost Objective (cont.)Flexibility • Equivalent Documentation • DRAFT(Prior to clarification) Guidance from ED (may not be accepted by auditors) • Instructional staff may use lesson plans to confirm that their written schedules were followed, in lieu of PARS, if: • After-the-fact notes are made on those plans to indicate the completion of each scheduled activity • The lesson plans account for the total time the employee is compensated • The lesson plans are prepared at least monthly and coincide with one or more pay periods • The completed lesson plans are signed by the employee

14. Flexibility • Substitute systems • Must be approved by state (if ED has approved state procedures) • Clarification allows teacher’s schedule • Can include: • Random moment sampling • Case counts • Other quantifiable measures of employee effort

15. Substitute System –NEW ED Guidance (not included in Manasevit presentation) • LEA certifies employee eligibility and that the documentation system has sufficient controls • Established work schedule indicates specific activities/cost objectives for each segment and documents total hours • Semiannual certification – signed by employee and supervisory official having first hand knowledge of the work • Any schedule deviations require special handling, guidelines, including PAR when applicable

16. Salaries • Activities allowable under more than one program • Can be funded in part by both • Can be funded 100% under either • Coach provides professional development services • Eligible under Title I or Title II • The cost objective is professional development

17. Consolidated Administration • Combine administration for all NCLB programs • NOT non-administrative activities • Single Cost Objective • Semi-annual certification • SEA: majority of operating funds from non-federal sources • LEA: approval of SEA

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