NARRATOR
The Center for IDEA Fiscal Reporting, TA On Demand.
ALLISON DAVEY
Welcome everyone and thank you for joining us for this two-part webinar series: An Introduction to IDEA Part C Fiscal Requirements. I’d like to welcome and introduce our presenters, Beth Cole and Vera Stroup-Rentier. Beth and Vera are Part C Technical Assistance Liaisons with the Center for IDEA Fiscal Reporting, and we are very thankful to both of them for sharing their expertise with us for this webinar series. So with that, welcome Beth and Vera. I think I will turn it over to you now.
VERA STROUP-RENTIER
Hello, everyone. I’m going to add my good afternoon, and good morning to some of you, to start our webinar today. As Allison said, I am Vera Stroup-Rentier, and I think many of you on the call are probably somewhat familiar with what CIFR does in their role as the national TA center. And when I say CIFR, that’s the Center for IDEA Fiscal Reporting. But in case you’re not familiar, we help states improve the quality of their data reporting and analysis and use of the Part C and Part B fiscal data. Specific on the Part C side, we support the work of indirect cost allocation plan information, maintenance of effort, and use of funds. And as we look at our agenda today, that includes Beth providing an overview of the Part C fiscal regulations. I’m going to provide some information about key internal controls. We’re going to review some resources and then move into our state discussion as Allison just mentioned. And now, I’m going to turn it over to Beth to provide the fiscal regulations overview that I just mentioned.
BETH COLE
Well, welcome everyone from me. And now, I get to share with you the fun of fiscal regulations. Next slide. So given that Part C uses federal funds, it should be of no surprise that there are lots of regulations that apply. They’re from different levels so have slightly different focuses. Regulations that apply to any federal grant are found in the Uniform Guidance, also called the Uniform Grant Guidance, or the OMB for the Office of Management and Budget Uniform Grant Guidance, or the OMB UGG, because why not? We love our acronyms. So the section of the Uniform Guidance that applies to our grants is section E, that’s called cost principles. This includes guidance on how to determine if a cost is reasonable, allowable, and allocable. So when you think of whether or not a cost is reasonable, the definition is would any reasonable person pay that amount for that item or that service?
An example is very few reasonable people would expect to pay $50,000 for a toilet. Just an example. For allowable, it’s whether or not the expense is an allowable grant activity or item. So when you think of the Part C funds, they are designed to support families in activities and items that families who have typically developing children wouldn’t normally access. So if a child in Part C, if the family is asking for help with childcare, that would not be an allowable expense because most families of typically developing two- or three-year-olds or one-year-olds have their children in childcare, and they have to pay themselves for that childcare so that childcare would not be an allowable activity. But many activities that are identified are allowable when you’re thinking of what you can use the Part C funds for.
And then allocable, what does that mean? It means that the activity or the cost can be charged to an identified line item in your Part C budget. So, if you can say, yes, this cost was for the data system, or for public awareness, or for Part C salaries, those are all allocable costs, and they can be charged to the federal funds. Some other things that you find in the Uniform Guidance are guidance around whether or not the Part C funds can be used to cover food for meetings or participant support costs, which might mean helping an interagency coordinating council or ICC member attend a conference. Those are all costs that are allowable within certain parameters, and the parameters you can find in the uniform guidance.
So the next level down is EDGAR, and one of my coworkers, when she first started in the administrative side of the education field, she was hearing people talk about EDGAR this and EDGAR that until she finally said, “Who is this EDGAR guy?” Well, EDGAR is one of those entities that you should be very familiar with and should be your best friend. That’s the Education Department General Administrative Regulations. And this provides guidance for funds that the education, the federal education department, provides to states and territories.
And so, it’s the next level down. It’s specific to education grants, and so, it has a little bit more language that’s specific to education. And even though it mirrors most of the guidance and the Uniform Guidance, it sometimes has a little bit more detail that could be very useful. The parts in EDGAR that are most appropriate are 75, which covers general guidance, 76 is the one, it’s for state administered programs, and that’s the one you’re going to go to the most. And that the section that includes things like how to determine if you need prior approval for any kind of an activity, any kind of a cost. And then, those of you who do monitoring or auditing really need to pay attention to section 81, because this is enforcement, and that includes audits so guidance around audits and then also the recovery of funds. So if during a monitoring, you determine that local agency has a finding and needs to pay money back, this is the section, section 81, that will give you guidance on how to get those funds back.
Then tied to the education, the EDGAR regulations, the Department of Education also puts out additional guidance, and this can be found in memos, it can be found in FAQ documents, and sometimes, it can be found in letters that the Department of Education has issued to states when there have been findings or questions. And all of that provides really good information for you to look at and tie back to the information that’s in EDGAR and the Uniform Guidance.
The federal information that is most closely aligned with the Part C program, though, is the IDEA Part C regulations, and that’s the 34 CFR, Part 303. Fiscal people really need to pay attention to 303.500 and all of the elements in the 500 range because that covers the use of funds. However, Part C coordinators need to be aware that fiscal is mentioned throughout the IDEA Part C regulations, so it’s not specifically tied to that 500 section. You can find fiscal information or guidance in other parts, but the majority is in that section.
So that takes care of the federal side of things. But the Part C program is a state program, so, of course, you have to follow state rules and regulations. And something to really be aware of is sometimes the state rules and regulations around fiscal might be more stringent than the federal guidance. And if that’s the case, you have to follow the state guidance. Always, you have to follow whichever guidance is more stringent, but, oftentimes, it’s the state that’s a little bit more restrictive than the federal.
And then, the lead agency is typically a department of the state. And as one of the state departments, it’ll have its own policies and procedures that you’re going to have to be aware of and follow. And all of the state guidance and the federal guidance, there’s a great deal of overlap in what they say, but it’s important for you to know the different levels, the different information, both at the state level and the federal level, because Part C coordinators, you need to be able to provide guidance and training materials for your local programs, so they really understand what they need to do for tracking the funds, for using the funds so that they truly are following the guidance required of a federal Part C grant.
One of the big fiscal requirements is called the single line of responsibility, and that’s a lead agency responsibility. And essentially, it means the buck stops here. The lead agency has to know what’s happening with the federal funds so that when they’re asked by the Office of Special Education Programs, OSEP, what’s happening with their federal funds, they can actually say, “This is what happened to the funds, and this is what activities they were used for.” The state lead agency is responsible for providing general administration and supervision of programs, agencies, and providers. And that just means, again, that they have to know if they give money to a local agency what’s happening to those federal funds. And they have to do what the next bullet is: monitor to make sure that the funds were truly used for Part C activities. And then they have to provide enforcement if they determine that maybe the funds weren’t used for the Part C activities.
And then, they also have to identify and provide oversight of all of the available resources for early intervention services. And this is an activity that is oftentimes supported by the Interagency Coordinating Council members to identify what grants are out there. Are we accessing Medicaid? Are we accessing all of the other available funding sources? And so making sure that the lead agency really knows what sources are paying for the Part C program. And then assignment of financial responsibility and that’s just making sure that if Medicaid is supposed to pay for a service, Medicaid pays for that service and making sure that that happens.
The next fiscal requirement is about methods. And when the feds use the term methods, it’s important that you understand that they’re talking about how the Part C funds are being obligated, and so they can be obligated by state law or regulation. And you see that sometimes if state law says that X amount of Part C funds are required to go to the state school for deaf and blind, that would be an example of a state law or regulation. There’s also interagency and intra-agency agreements between different agency officials, and you see this between the lead agency and the department that houses Medicaid to make sure that Medicaid will cover Part C activities, and, more importantly, provide reporting back to the Part C program so that they will know how many kids received Part C services paid for by Medicaid and whether or not the child actually is active in Medicaid. That’s an example of an interagency or intra-agency agreement.
Sometimes, states have agreements with their university to provide professional development, so those are some examples. Most states use contracts to contract with their local agencies or independent providers to provide direct services and service coordination. Things to keep in mind when you’re thinking about a contract is making sure that you have language in there that requires them to follow the Part C rules and regulations and, most importantly, that requires them to report back to you about the kids they’re seeing, how they’re being funded, and what services they’re getting to make sure that you are getting the data you need to move forward. Another written method that has been available since 2021 is state lead agencies are now able to subcontract with local agencies. But in terms of the subgranting, we’re going to leave that conversation for another day. If you have questions about subgranting, you can always ask your CIFR state lead about that.
The last fiscal requirement I’m going to talk about is fiscal control and fund accounting procedures. And this is primarily for fiscal people at the lead agency and within the Part C program because this is also called internal controls, and it’s something that OSEP is looking very closely at these days. And so, this is the policies and the procedures that you have in place to make sure that the Part C funds are being used according to the system of payments, that they’re being used as the payer of last resort, and that they are being used for allowable and allocable Part C services. And so you can say, again, we are, the buck stops here. This is where the funds went and what they were used to pay for. And now, I’m going to turn it over to Vera to talk more about internal controls.
VERA STROUP-RENTIER
Thank you very much, Beth. I’m going to start talking about internal controls by talking about cost-cutting fiscal requirement. And when we talk about cost-cutting fiscal requirement, it is really the responsibility of the entire lead agency to ensure these requirements are being met. That not only includes the Part C program but auditing, contracts. And as you know, depending on your state, this can include a lot of people or just a handful of people, really depends on your state. Before 2014, all the guidance regarding fiscal requirements states received at the federal level came in the form of OMB circulars. Now, some of you fiscal folks who have done this work for a while may remember those OMB circulars.
For example, one circular might address prior authorization for equipment or purchases over $5,000. But now, those Uniform Guidance cost principles are consolidated into one source, and the Uniform Grant Guidance and EDGAR, which Beth talked about earlier, have a great deal of overlap. So, when you are considering the fiscal requirements, it’s really helpful to check both of those references as one may have a more detailed description or information about a given topic than another. And these resources provide information for receiving and using federal awards, which will help you reduce administrative burden and improve outcomes.
Now, we’re going to talk about some key internal controls requirements in the OMB Uniform Guidance. As I talked about earlier, each member of the lead agency Part C team has a role in these key requirements that we’re talking about here. And as we go through each of these requirements, be thinking about your role as it relates to how this is happening in your system. The first key internal control requirement in the OMB Uniform Guidance is risk assessment. Now, risk assessment only applies if your lead agency is doing subgrants. The risk assessment is not required if you contract for EI services and supports.
And then, when we look at that key internal control requirement of financial management, states must expend and account for the federal awards in accordance with your state law, Beth already talked about that, and those procedures in your state for expending and accounting for state’s own fund. In addition, this fiscal management must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. To be able to trace funds to a level of expenditures adequate to establish that funds have been used according to federal statutes, regulations, and the terms of conditions of the federal award.
Now, I’m going to repeat that again, because I have it bolded. So really, when you’re thinking about this financial management, you need to be able to trace funds to a level of expenditures adequate to establish that such funds have been used according to federal statutes, regulations, and terms and conditions of that federal award. Now that would include things like records that identify the source and the application of funds for those federally funded activities.
Lastly on this slide, when we talk about internal controls, internal controls provides that reasonable assurance that the non-federal entity, for example, your state lead agency, is managing the federal award and compliance with the federal statutes, regulations, and terms of that federal award. Now, Beth talked about that earlier, too. These internal controls must be in compliance with the guidance and the document entitled Standards for Internal Control in a Federal Government, which is issued by the Comptroller General of the United States. Now, if you want an easier way to say and think about this resource that’s commonly referred to as the Greenbook, and we do have a link to that in the resources that we’re going to share in just a minute or two.
We’re going to talk about a few more key internal control requirements. And it’s important to remember, if you already haven’t guessed this by now, the OMB Uniform Guidance is written for a very broad audience, and it’s broad because we don’t reflect guidelines for Part C of IDEA, Part B of IDEA, but it also is what someone at the National Resource Conservation Service, which is part of the Department of Agriculture, would also use. And also, as many of you know, it’s all written in legalese, so I’m going to try to break down these internal control requirements in plain language. Bear with me, though: sometimes, it’s not that easy. As Beth stated earlier, as a state lead agency, your fiscal responsibilities include the monitoring of each program, function, or activity for the Part C federal IDEA funds being used in your state. Now, that term in the second requirement, pass-through entity, is the term that the federal government uses to describe the entity receiving the money from the federal government. When we’re referring to Part C of IDEA, the pass-through entity is your state’s lead agency.
The last internal control requirement we are going to cover today are the audit requirements. These are the single or program-specific audits required for non-federal entities. Again, in our case, the state lead agency receiving more than $750,000 in federal funds during the federal fiscal year. Now, probably some of you know that there’s a proposal right now; there’s a number of proposals that are in place to change some Uniform Grant Guidance, and one of the proposals that they have outlined is that this $750,000 limit will change to $1,000,000. We won’t know for certain when this proposed change will go in effect if it’s implemented, but it’ll likely be sometime in the summer of 2024. Beth and I shared quite a bit of information with you today during this presentation, so I’m going to take a minute to share some resources with you to help you better understand our topic.
As you can see by each of these resources, we have the link to the resource. When you have the…You might already have the PowerPoint, but as we share the PowerPoint, you’ll be able to access all these resources on this slide. And first, we have the Uniform Grant Guidance that we talked about. Then, we have those general administration regulations in EDGAR. Then, of course, we have Part C of IDEA, and that’s Part 303 where you’ll find your fiscal requirements.
And then lastly, we have GAO’s Greenbook, which I referred to earlier in the presentation. But the important thing here is all of that information is also reiterated and consolidated into one place in a quick reference guide. You can see that on the fourth link up there, on the use of IDEA funds, so that’s the quick reference guide on the use of IDEA Part C funds. If something you’ve heard today doesn’t make sense, you look at that reference guide and you have more questions, if you want to talk more about it, please reach out to your CIFR TA liaison.
NARRATOR
Thank you for watching this CIFR TA On Demand video. If you have any questions about the content of the video, please contact us at [email protected].
TEXT ON SCREEN
This video was developed under grant #H373F200001 from the U.S. Department of Education. It is not intended to be a replacement for the IDEA statute, regulations, and other guidance issued by OSEP and the U.S. Department of Education. The IDEA and the regulations are found at: https://sites.ed.gov/idea. The video does not necessarily represent the policy of the U.S. Department of Education, and you should not assume endorsement by the Federal Government.
