Bruman Legislative Office: Rules and Regs

Showing posts with label Rules and Regs. Show all posts

Showing posts with label Rules and Regs. Show all posts

Wednesday, March 5, 2008

HHS Proposes Final Rule on TANF (2/8/2008)

On Tuesday, February 5th, the U.S. Department of Health and Human Services (HHS) posted a final rule regarding reauthorization of the Temporary Assistance for Needy Families (TANF) Program. This final rule implements changes to TANF required by the Deficit Reduction Act (DRA) of 2005 (Pub. L. 109–171). The DRA reauthorized the TANF program through fiscal year 2010 with a renewed focus on work, program integrity, and strengthening families through healthy marriage promotion and responsible fatherhood. This final rule becomes effective on October 1, 2008. You can view the Federal Register posting regarding the final rule at:
http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/08-455.pdf.

CMS Moratorium Political Strategies (2/8/2008)

The countdown to June 30th continues. That is the day when the moratorium on the rules issued by the Centers for Medicare and Medicaid Services (CMS) expires. Congress passed the moratorium last December as a part of the S. 2499 (now Public Law No: 110-173), the Medicare, Medicaid, and SCHIP Extension Act of 2007, and it prevents CMS from implementing regulations that would restrict payment under title XIX of the Social Security Act for rehabilitation services or school-based administration and school-based transportation. It reads:

SEC. 206. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS.
Notwithstanding any other provision of law, the Secretary of Health and Human Services shall not, prior to June 30, 2008, take any action (through promulgation of regulation, issuance of regulatory guidance, use of Federal payment audit procedures, or other administrative action, policy, or practice, including a Medical Assistance Manual transmittal or letter to State Medicaid directors) to impose any restrictions relating to coverage or payment under title XIX of the Social Security Act for rehabilitation services or school-based administration and school-based transportation if such restrictions are more restrictive in any aspect than those applied to such areas as of July 1, 2007.

Many in Washington are now racing against the clock. Led by a the American Association of School Administrators and the National Education Association, a broad coalition is working with members of Congress to draft legislation that will, at least, extend the moratorium until 2009 when the administration turns over and Michael O. Leavitt is no longer the Secretary of Health and Human Services. The coalition is working with the members of the House Committee on Energy and Commerce and the Senate Finance Committee, the committees with jurisdiction over the matter, to first draft legislation and then to find a bill sponsor and co-sponsors.

Yet, the problem is not with support for the action, but with finding sufficient budget offsets for the legislation. The Democratic leadership in the House is still operating under Pay Go rules, which require that any new funding must be offset either through program cuts or raising taxes. Whether such legislation would require an offset, and the cost of that offset, is now under discussion. Once that is resolved, any newly drafted CMS moratorium bill would not move on its own but be attached to another piece of legislation that will be signed by the President, although the question of who the President will be at that time is also part of the strategy debate. We are actively taking part in this process and will report on any progress as it occurs.

Resources:
Medicare, Medicaid, and SCHIP Extension Act of 2007, S.2499, http://thomas.loc.gov/cgi-bin/query/z?c110:S.2499:, (chose option 1).
Elicia J. Herz, CRS Report for Congress: Medicaid and Schools (Congressional Research Service, updated December 20, 2007), http://opencrs.com/document/RS22397/.
Author: DAD

NCLB: Monitoring the Regulatory Route (1/11/2008)

On Monday, President Bush was in Chicago urging Congress to revive the reauthorization of the No Child Left Behind Act (NCLB), but not to “weaken the accountability system” or else he will veto the bill. It was such non-negotiable encouragement for Congress that the speech elevated the discussion of an anticipated third course of action: effecting change through regulatory or administrative measures. Prior to the President’s speech in Chicago, U.S. Secretary of Education Margaret Spellings laid out the contingency plan if Congress fails to act in 2008. “We hope they will [reauthorize the law in 2008]. But if they don't, I'll take administrative steps at the Department, as I have in the last three years, to start to work on some of these matters.” She repeated this position at her Thursday Newsmaker Luncheon speech on the National Press Club. She stated that “Congress has had over a year to consider these reforms, but students and teachers need help now. So if Congress doesn't produce a strong bill quickly, I will move forward.”

The administrative steps Spellings referred to are not clear, but they likely begin with what the U.S. Department of Education (ED) has the authority to do. ED can certainly expedite the expansion of the growth model pilot program since that is already underway and ED could more aggressively monitor implementation, particularly around choice and supplemental educational services provisions, a priority for ED. The range of other administrative actions is limited, practically, by the limited scope of ED’s legal authority to makes changes to the law and by the near certain political resistance ED will encounter to any significant initiatives. Much remains unknown, and we will continue to monitor and analyze these matters as they develop.

Resources:
Maria Glod, “Congress is Urged to Enhance ‘No Child’ Law,” Washington Post, January 8, 2008, http://www.washingtonpost.com/wp-dyn/content/article/2008/01/07/AR2008010701823.html
“Press Gaggle by Tony Fratto and Secretary Margaret Spellings,” The White House, News & Policies, Office of the Press Secretary, January 7, 2008, http://www.whitehouse.gov/news/releases/2008/01/20080107.html.
“U.S. Secretary of Education Margaret Spellings Discusses No Child Left Behind, Priorities for 2008 During Remarks at National Press Club in Washington, DC,” United States Department of Education, http://www.ed.gov/print/news/pressreleases/2008/01/01102008.html.
Author: DAD

DOL Publishes Strategic Plan for 2007-2012 (1/4/2008)

The Department of Labor gave notice yesterday of the publication of the U.S. Department of Labor, Employment and Training Administration’s (USDOL/ETA) Five-Year Research, Demonstration, and Evaluation Strategic Plan for 2007–2012. The Strategic Plan is required under the Workforce Investment Act (WIA) of 1998, Section 171. The Strategic Plan identifies the potential demonstration and pilot, multi-service, multi-state, research and evaluation efforts that will most assist ETA in carrying out workforce development programs under WIA.
You can view the Federal Register notice (73 Fed. Reg. 501) at: http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/E7-25563.pdf.

Changes Proposed to the National Apprentice System (1/4/2008)

The U.S. Department of Labor recently issued a Notice of Proposed Rulemaking (NPRM) in the Federal Register (72 Fed. Reg. 71019) to update the regulations implementing the National Apprenticeship Act of 1937 (29 CFR Part 29). This is the first major overhaul of the regulations since they were promulgated. In the NPRM, the Employment and Training Administration (ETA) stated that the new proposed regulations would enable the National Apprenticeship System to:

Keep pace with changes in the economy and corresponding workforce challenges, continue apprenticeship’s vital role in developing a skilled, competitive workforce, and further promote registered apprenticeship as an important talent development strategy offered through the public workforce investment system.

The Apprentice System regulations set labor standards, policies and procedures for the registration, cancellation and deregistration of apprenticeship programs, and apprenticeship agreements. They also provide for the recognition of a State Apprenticeship Agency as an agency authorized to register local apprenticeship programs for Federal purposes, and for the revocation of such recognition.

The major proposed revisions are supposed to enhance flexibility in the requirements for provision of related technical instruction, permit competency-based progression through an apprenticeship program, establish requirements for education and training of apprenticeship instructors that align with developments in the workforce and education systems, and strengthen oversight of program performance. The proposed rule also updates 29 CFR Part 29 to incorporate gender neutral terms and technological advances in the delivery of related technical instruction.

ETA is inviting interested persons to submit comments on this proposed rule. To ensure consideration, comments must be in writing and must be received on or before February 11, 2008. See the full Federal Register notice for more information on how to submit comments at: http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-24178.pdf.
Author: CWP

Wednesday, December 12, 2007

Final Regulations on Direct Grant Programs

The Office of the Chief Financial Officer at the U.S. Department of Education (ED) posted final regulations regarding Direct Grant Programs today in the Federal Register. Through these regulations, ED’s prior regulations governing the determination and recovery of indirect costs by grantees are amended to address procedural aspects related to the establishment of temporary indirect cost rates.

The final regulations specify the temporary rate that will apply to grants generally and clarify how indirect costs are determined for a group of applicants that apply for a single training grant. These regulations are effective January 7, 2008.
According to ED, these final regulations impose no additional burdens on applicants for discretionary grants or recipients of those grants. The final regulations merely specify the rate at which grantees can recover indirect costs during a temporary period when the grantee does not have an indirect cost rate recognized by the Federal Government and establish procedural requirements regarding temporary indirect cost rates. While these final regulations prohibit a grantee from recovering indirect costs if the grantee has not submitted its indirect cost proposal within the 90 days after the date ED issues the Grant Award Notifications, the burden and timing of submitting an indirect cost rate proposal under the procedures in the Federal cost principles do not change at all.

You can view the Federal Register notice at http://www.ed.gov/legislation/FedRegister/finrule/2007-4/120707a.html.

President Issues Executive Order for Government Program Efficiency

On Tuesday, the President issued an Executive Order on “Improving Government Program Performance”. This Order sets forth a policy of spending “taxpayer dollars effectively, and more effectively each year. Agencies shall apply taxpayer resources efficiently in a manner that maximizes the effectiveness of Government programs in serving the American people.” The Order calls for the heads of the various executive agencies to approve clear annual and long-term goals defined by objectively measurable outcomes and specific plans for achieving the goals.

Plans should include assignments to specified agency personnel of the duties necessary to achieve the goals and the authority and resources necessary to fulfill such duties. The plans should also provide ways to measure progress toward achievement of the goals and efficiency in use of resources in making that progress. Finally, the plans should also include mechanisms for ensuring continuous accountability of the specified agency personnel to the head of the agency for both achieving the goal, as well as effectively using resources to do so. Agencies are also directed to keep their websites updated with information relating to program performance, as well as updates on implantation of the achievement goals.
Furthermore, the Order calls on heads of agencies to assist the Director of the Office of Managements in Budget (OMB) in making appropriations recommendations to Congress that are justified based on objective performance information and accurate estimates of the full costs of achieving the annual and long-term goals. The Director of OMB is instructed to keep the information relating to the various agencies’ efforts readily available to the public, through the internet or the Federal Register.
The Order directs heads of agencies to designate Performance Improvement Officers. These officers are employees of an agency who is a member of the Senior Executive Service or equivalent service. Their duties include:
• Supervising the performance management activities of the agency;
• Advising the head of the agency with respect to a program administered in whole or in part by the agency;
• Convening specified agency personnel or appropriate subgroups thereof regularly throughout each year to assess performance of each program administered in whole or in part by the agency;
• Assisting the head of the agency in the development and use within the agency of performance measures in personnel performance appraisals, and, as appropriate, other agency personnel and planning processes; and
• Reporting to the head of the agency on the implementation within the agency of the policy of effectively spending tax payer dollars.
Finally, the Order creates an Operation of Performance Improvement Council, under OMB. The council will consist of the OMB Deputy Director for Management (who shall serve as Chair), agency Performance Improvement Officers, and such other full-time or permanent part-time employees of an agency, as determined by the Chair with the concurrence of the head of the agency concerned. The Council’s objective is to effectively implement the policy set forth on the Order by:
• Developing and submitting recommendation to the OMB Director regarding performance management policies and requirements as well as criteria for evaluation of program performance;
• Facilitating the exchange among agencies of information on performance management, including strategic and annual planning and reporting, to accelerate improvements in program performance;
• Coordinating and monitoring a continuous review by heads of agencies of the performance and management of all Federal programs that assesses the clarity of purpose, quality of strategic and performance planning and goals, management excellence, and results achieved for each agency's programs, with the results of these assessments and the evidence on which they are based made available to the public on or through the internet;
• Developing an internet website that provides the public with information on how well each agency performs;
• Monitoring implementation by agencies and reporting to the OMB Director, together with any recommendations of the Council for more effective implementation of such policy;
• Promptly reviewing and providing advice, at the request of the head of an agency, on a proposed action by that agency to implement the policy; and
• Obtaining information and advice, as appropriate, in a manner that seeks individual advice and does not involve collective judgment or consensus advice or deliberation.

You can view the text of the Executive Order at: http://www.whitehouse.gov/news/releases/2007/11/20071113-9.html.
Author: SAS

Monday, November 5, 2007

Secretary of Education Amends ACG and SMART Grant Regulations

The Secretary of Education recently amended the regulations for the Academic Competitiveness Grant (ACG) and National Science and Mathematics Access to Retain Talent Grant (National SMART Grant) programs. The purpose of the amendments is to reduce administrative burden for program participants and to clarify program requirements. The new regulations are effective as of July 1, 2008. The amendments were announced on Monday in the Federal Register. 72 Fed. Reg. 61248 (Oct. 29, 2007).

There are a number of changes to the applicable higher education regulations, 34 CFR Part 691, as a result of the regulations, some very minor, while others more substantial. Among the changes are the following:
• Requiring an institution in which a student is currently enrolled to determine the student’s academic year progression based on the student’s attendance in all ACG and National SMART Grant eligible programs only at that institution.
• Adding a new provision to require that when determining the appropriate academic year for a transfer student, the institution to which the student transferred must count both (a) the number of credit or clock hours earned by the student at prior institutions that are accepted for the student, and (b) an estimated number of weeks of instructional time completed by the student.
• Adding a new provision requiring three alternative methods to determine the weeks of instructional time for a student’s academic year progression, and to provide that an institution choosing to use one of these alternative methods must do so for all students enrolled in the eligible program.
• Clarifying that when determining academic year progression for a student, an institution may not assign any weeks of instructional time to certain credit or clock hours accepted toward a student’s eligible program if those credit or clock hours were earned from Advanced Placement (AP) programs, International Baccalaureate (IB) programs, testing out, life experience, other similarly earned credits or credits earned while not enrolled as a regular student in an ACG or National SMART Grant eligible program, or coursework that is not at the postsecondary level, such as remedial coursework
• Clarifying that an institution must assign weeks of instructional time to determine National SMART Grant eligibility for periods in which a student was enrolled in an ACG-eligible program before declaring, or certifying his or her intent to declare, an eligible major.
• Clarifying that, for purposes of eligibility for ACG and National SMART Grants, an institution that assesses grade point average (GPA) on a numeric scale other than a 4.0 scale must ensure that its minimum GPA requirement meets the same numeric standard as a cumulative GPA of 3.0 or higher on a 4.0 scale.
• Clarifying that institutions are required to calculate a student’s GPA for determining second-year ACG eligibility as follows:
o For a student who transfers to an institution that accepts into the student’s ACG eligible program at least the credit or clock hours for one academic year, but for less than two academic years, the institution must calculate the student’s GPA using the grades from all coursework accepted into the student’s ACG eligible program.
o For a student who transfers to an institution that accepts less than the credit or clock hours for an academic year into the student’s ACG eligible program, the institution must calculate the student’s GPA by combining the grades from all coursework accepted into the student’s ACG eligible program with the grades for coursework earned at the current institution through the payment period in which the student completes the credit or clock hours for his or her first academic year.
• Adding a new provision to require that, for a transfer student who transfers from one institution to another institution at which the student is eligible for a National SMART Grant, the subsequent institution determines that student’s eligibility for the first payment period using one of two methods, depending on whether it incorporates the grades from the student’s previous coursework that it accepts on transfer into the student’s GPA at the subsequent institution.
• Extending eligibility for a first-academic-year ACG to any student who enrolls as a regular student in an ACG eligible program while in high school provided that the student is beyond the age of compulsory school attendance.
• Requiring an institution to document a student’s eligible major and progress in the eligible program and major by maintaining documentation, such as the following:
o Documentation of the declared major, including written declaration of intent to declare an eligible major provided by the student; and
o Written documentation showing that the student is progressing in coursework leading to a degree in the student’s intended or declared eligible major; and
o Written documentation that the student is enrolling in the courses necessary to complete a degree in the intended or declared eligible major.
• Providing a process for institutions of higher education to request additional majors to be added to the list of eligible majors for National SMART Grants.

The Federal Register notice stated that there were no significant differences between the Department of Education’s original Notice of Public Rulemaking and the final regulations resulting from public comment or legislative action.
You can view the Federal Register notice at http://www.ed.gov/legislation/FedRegister/finrule/2007-4/102907a.html.

Author: CWP

Monday, October 1, 2007

Taking CMS Issues to Congress

A consortium of opponents to the proposed rule changes related to Medicaid reimbursements for school-related administrative and transportation costs are taking the issue to members of Congress. The Center for Medicare & Medicaid Services (CMS) has attempted to pass this rule for almost 20 years, but has taken its efforts further this year by announcing a proposed rule in the Federal Register earlier this month. Meeting with no success in appealing to CMS and the current Administration, advocates for the program are taking their issues to Congress, hoping to spur legislation that will keep CMS from instituting and enforcing the proposed rule.

School districts all over the country receive federal reimbursement for an estimated $3.6 billion over five years in Medicaid services provided to children with disabilities. Schools rely on these reimbursements for a variety of purposes, such as outfitting buses with specialized equipment, transporting children to school for their medical appointments, identifying students who need screenings and evaluations, and connecting children and their families with other needed services in their community. CMS, which is under the jurisdiction of the Department of Health and Human Services, argues that it should not have to reimburse school-related costs. Advocates for the program have been successful in stopping CMS before it can move on this rule every year until now.

Some lawmakers have taken mild steps towards legislation that would prohibit CMS from going through with its proposed rule, but efforts have been ineffective so far. Presently, advocates are sending individual and dear colleague letters to members of Congress, asking for their support of any legislative efforts towards that end. The most likely vehicle for this legislation is currently the State Children’s Health Insurance Program (SCHIP), which is in conference at the time of this Update’s publication. The House version of the bill included a provision that would prevent CMS from moving forward on the rule, but it is not clear if that provision will make it into the conference report. Another likely vehicle would be an omnibus appropriations bill. The 60-day comment period on the proposed rule ends in November, leaving just over a month for advocates to lobby Congress for assistance in keeping the program running.

Author: SAS

EDGAR Changes to Recordkeeping and Reporting Requirements2

The Office of Management and Budget (OMB) is inviting comments on a submission for OMB review as required by the Paperwork Reduction Act of 1995. The OMB Control Number 1890–0004 collection currently includes three distinct information collection instruments: (1) the ED 524 Budget Form, (2) the ED 524B Grant Performance Report, and (3) the administrative requirements in the Education Department General Administrative Regulations (EDGAR). As part of the renewal of these instruments, the OMB is requesting that each of these instruments be approved under separate OMB control numbers. OMB is separating these instruments into three information collections to make it easier to make additional deletions, revisions or other needed changes to each instrument throughout the approval period and eliminate any potential confusion when changes are made to only one of the instruments.

Therefore, OMB is requesting a new OMB control number for the ED 524 Budget Form and a three-year approval for the collection. OMB is also requesting a new OMB control number for the EDGAR Recordkeeping and Reporting Requirements and a three-year approval for the collection. The ED 524 form and instructions are included in the U.S. Department of Education discretionary grant application packages and are needed in order for applicants to submit summary level budget data by budget category, as well as a detailed budget narrative, to request and justify their proposed grant budgets which are part of their grant applications. Note that the ED 524B, Grant Performance Report will retain the 1890–0004 number.

Parties interested in submitting comments must do so on or before October 19, 2007. Written comments should be addressed to:

Office of Information and Regulatory Affairs
Attention: Education Desk Officer
Office of Management and Budget
725 17th Street, NW.
Room 10222
Washington, DC 20503

Commenters are encouraged to submit responses electronically by e-mail to oira_submission@omb.eop.gov or via fax to (202) 395–6974. Commenters should include the following subject line in their response ‘‘Comment: OMB Control Number 1890–0004” and the collection name commented on (e.g. “EDGAR Recordkeeping and Reporting Requirements” or “ED 524 Budget Form”). Parties submitting comments electronically should not submit paper copies.

Author: CWP

CMS Posts Proposed Rule on Medicaid Reimbursements

The Center for Medicare & Medicaid Services (CMS) posted a proposed rule in today's Federal Register to eliminate reimbursement for certain school-related costs under Medicaid. CMS has attempted to institute this rule since 1988, but has never met with success, due to both public and Congressional rejection of the proposal. The proposed rule would establish a Secretarial finding that school-based administrative activities are not necessary for the proper and efficient administration of the State plan. Moreover, this proposed rule would establish a finding that transportation from to and from school for school-age children is neither necessary for the proper and efficient administration of the State plan, nor within the scope of the optional medical transportation benefit. Based on these findings, the proposed rule would specify that federal financial participation under the Medicaid program will not be available for school-based administrative and certain transportation costs unless conducted by employees of the State or local Medicaid agency. CMS has opened up for public comments on the proposed rule. Comments on the proposed rule must be received no later than 5:00 p.m. on November 6, 2007.

Because of the agency's long history of opposition to this program, it is unlikely that comments in opposition will have any serious impact on the decision to eliminate the program. Therefore, the best hope is for Congressional intervention. Sen. Edward Kennedy (D-MA), chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee attempted to add a provision to the Senate's bill expanding the State Children's Health insurance Program (SCHIP) that would have placed a one year restriction on regulatory efforts to eliminate the program, allowing Congress enough time to work on a more permanent solution. The provision did not make it into the bill, but there is still a possibility that the conference report for the SCHIP expansion may contain such language. Otherwise, there are other vehicles, such as appropriations bills, that can carry the provision. However, this relies heavily on Congress's ability to move quickly on the issue, and that is not likely to occur.

To view the Federal Register listing, go to:
http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/07-4356.pdf.

Author: SAS

CMS Proposed Rule on Reimbursements

For a number of years, the Center for Medicare and Medicaid Services (CMS) has been responsible for federal reimbursements for IDEA related school-based administrative outreach and transportation costs. The administration has worked towards ending this practice for the last few years. Every year, CMS discusses proposing new regulations that would prohibit payments for education-related costs, but public support for the program has stalled the effort each year. This year, however, CMS is taking a more proactive approach, having submitted a proposed rule (CMS-2287-P) to the Office of Management and Budget (OMB) for review, taking a big first step towards eventual acceptance.

The Medicaid Administrative Claiming (MAC) program provides partial reimbursement to schools for health related services provided by professionals during the school day to children with disabilities. The program, developed by a state’s Medicaid agency, must be approved by CMS. Schools rely on these reimbursements for a variety of purposes such as outfitting buses with specialized equipment, transporting children to school for their medical appointments, identifying students who need screenings and evaluations, and connecting children and their families with other needed services in their community.

Despite the fact that CMS is run by the Department of Health and Human Services (HHS), MAC has provided funds for education-related expenses. The Office of the Inspector General of HHS included elimination of the program in its Redbook, which is a roadmap for their actions in the year ahead. For the last few months, CMS has stated that it will issue regulatory changes that would eliminate reimbursement to schools for the costs of administrative activities and for transportation of students under the MAC program. CMS argues that this is necessary because of fraud and abuse in the program. The education community, which stands to lose an estimated one billion dollars annually in reimbursements, argues that CMS is disregarding recently implemented changes that address these concerns.

OMB has 90 days to review the proposed rule before ruling on its validity. CMS submitted the proposal on August 13th, leaving many concerned parties in a worried state of limbo until the end of the year. Advocates for the program, such as the National School Boards Association, have already voiced their concerns to CMS, the White House, and Congress. Senator Edward Kennedy (D-MA) already attempted to pass an amendment to the State Children’s health insurance program authorization that would prohibit any such rule for one year while Congress works on a way to rectify the situation, but the effort stalled on the Senate floor. Unless Sen. Kennedy can convince conferees on the SCHIP bill to insert the language, school districts may face a problem when OMB issues its decision on the proposed rule.

Author: DAD, SAS

Monday, August 27, 2007

Late Liquidation Policy

The U.S. Department of Education (ED) issued an updated policy memorandum entitled: Extension of Liquidation Periods and Related Accounting Adjustments for Grantees in Department of Education State-Administered Programs. The memo lays out a new late liquidation policy that will begin on October 1, 2007.

The current policy will remain in effect until September 30, 2007. It allows grantees in state administered programs to make late liquidation requests in two phases. Phase I requests cover liquidations up to one year after the end of the “Tydings period,” which is the 27-month period for obligating state administered program funds (or 9 months after the end of the normal liquidation period) if the requests meet certain criteria outlined in the memorandum. Phase I requests are approved by ED’s program offices and in theory are fairly routine, but in practice, they are sometimes denied. Phase II requests cover liquidations more than one year after the end of the Tydings period and must be approved by the Office of the Chief Financial Officer. Approval of Phase II requests is extremely rare.
The new policy, beginning on October 1, extends Phase I requests and eliminates Phase II requests. Now grantees may request to liquidate funds up to 18 months after the end of the Tydings period (or 15 months after the end of the normal liquidation period). In general, ED will not grant extensions beyond then “except under extraordinary circumstances or in cases involving lengthy construction contracts.”
This official policy change does not come as a major surprise and better reflects ED’s actual practice. ED has been cracking down on late liquidation requests, toughening the standards for Phase I requests and all but refusing to grant Phase II requests. As a practical matter, this policy change may have an important impact on state administered programs. ED is under tremendous pressure (both internal and external) to minimize “lapsed funds” (program funds that remain unspent and revert to ED and ultimately the U.S. Department of Treasury). ED views lapsed funds as a significant risk factor that may indicate systemic problems that prevent grantees and subgrantees from efficient operation of their programs. Late liquidation requests have been a way to avoid lapsing funds. With ED’s stricter policy in place, it is more important than ever to ensure funds are obligated and spent timely.
Lapsed funds have also been a powerful political tool. Several years ago, when states complained about the level of funding for No Child Left Behind programs, ED and Congressional officials pointed to the high level of lapsed funds as proof that states did not need more funding. With NCLB reauthorization looming, funding debates may heat up again, and if so, lapsed funds could become an issue.
There are numerous tools state and local educational agencies can use to ensure they obligate and spend federal funds in a timely manner. Please do not hesitate to contact us if you would like additional information.
Authors: DAD, SLK

Changes to EDFacts

The U.S. Department of Education (ED) published a notice in the Federal Register on Thursday, August 9 regarding proposed changes to the information collected through EDFacts. EDFacts is ED’s centralized data collection system (formerly known as EDEN) designed to reduce reporting burdens, improve data reliability, and increase the usefulness of the data collected by allowing ED to better evaluate the results of the programs it administers.

ED proposes to change the data it will collect in 2007-08, 2008-09 and 2009-10. ED eliminates some categories that were collected in 2006-07, adds new categories and changes the definitions of others. The proposed revisions are available at: http://edicsweb.ed.gov/browse/downldatt.cfm?pkg_serial_num=3334 in attachments B (listing all of the data ED intends to collect) and C (explaining the differences from prior years).
This notice is noteworthy because it is one of the first tests of ED’s new regulatory authority to sanction states that do not submit data in the format (and timeframe) ED requires. Once ED’s proposed changes are approved, states that fail to submit the required information through EDFacts are subject to penalties, including the withholding of funds. While ED pledges to take a practical approach to data collection, it stated that “there will be no ‘free pass’ given to the states on any obtainable education data required to manage federal programs and meet the goals of the No Child Left Behind Act.”
Data continues to be one of ED’s key priorities. As noted by ED, “the Secretary has determined that complete, accurate, and reliable data are essential for effective decision-making and for implementing the requirements of the Nation’s education laws.” Not only is ED committed to collecting information about federal programs, it is also committed to using such information to evaluate program performance. ED plans to use the information collected through EDFacts to make program management decisions. In the future, ED may share the information it collects with members of Congress and other stakeholders.
Author: SLK

Monday, July 23, 2007

ED Expands Growth Model Program

On Tuesday, July 3, the U.S. Department of Education (ED) expanded the growth model pilot to include Alaska and Arizona, which are immediately approved to use a growth model for the 2006-2007 school year. The pilot program now includes eight fully approved states and one conditionally approved state. According to a department spokeswoman, no additional states will be considered for the program.

The states and their approval dates include:
1. North Carolina (May 2006)
2. Tennessee (May 2006)
3. Delaware (November 2006)
4. Arkansas (November 2006)
5. Florida (June 2007)
6. Iowa (May 2007)
7. Ohio (Conditional, May 2007)
8. Alaska (July 2007)
9. Arizona (July 2007)

All applicant states had to meet the bright-line principles required to participate in the growth model program. Those principles require that the applicants, at least:
• Ensure that all students are proficient by 2014 and set annual state goals to ensure that the achievement gap is closing for all groups of students;
• Set expectations for annual achievement based upon meeting grade-level proficiency and not upon student background or school characteristics;
• Hold schools accountable for student achievement in reading/language arts and mathematics;
• Ensure that all students in tested grades are included in the assessment and accountability system, hold schools and districts accountable for the performance of each student subgroup, and include all schools and districts;
• Include assessments, in each of grades 3 through 8 and high school, in both reading/language arts and mathematics that have been operational for more than one year and have received approval through the NCLB standards and assessment review process for the 2005-06 school year. The assessment system must also produce comparable results from grade to grade and year to year;
• Track student progress as part of the state data system; and
• Include student participation rates and student achievement as separate academic indicators in the state accountability system.

Resources:
Alyson Klein, “U.S. OKs Pilot ‘Growth Models’ for Last 2 States,” Education Week, July 3, 2007.
“Secretary Spellings Approves Additional Growth Model Pilots for 2006-2007 School Year,” Press Release, U.S. Department of Education, July 3, 2007.
Author: DAD

Audit Report Questioning Fiscal Flexibility in Schoolwide Programs

On June 20, 2007, the U.S. Department of Education’s Office of Inspector General (OIG) released a blockbuster audit report questioning long-standing guidance on the way states and school districts should document financial information in schoolwide programs. The audit is available on the U.S. Department of Education’s (ED) website at: http://www.ed.gov/about/offices/list/oig/auditreports/a05g0031.pdf

OIG audited a school district to determine if the district complied with financial accountability requirements under the No Child Left Behind Act (NCLB) programs. The objective of the audit was to determine if costs were allowable under the program, necessary, reasonable, allocable and spent in accordance with approved budgets. During the audit, OIG concluded the district did not provide appropriate time and effort records showing how much time employees spent on various cost objectives. Some of these employees worked on schoolwide activities in schoolwide programs.
The State (which is ultimately responsible for audit resolution in state-administered programs) objected, noting that funds lose their character as state or federal funds in schoolwide programs. Therefore, it would not make sense to require schoolwide employees to maintain documentation of their time and effort. The state pointed to ED’s Non-Regulatory Guidance on Designing Schoolwide Programs (March 2006), which states:
Schoolwide program schools use Title I funds to meet the needs of all students in the school, as determined through a comprehensive needs assessment. Individual students are not identified as eligible to participate. No distinctions are made between staff paid with Title I funds and staff who are not.
The State argued that if there is no distinction between staff supported with federal funds and staff that are not, it does not make sense to require employees to keep documentation of which programs they work on.
OIG rejected this argument, noting the schoolwide schools did not actually consolidate their funding in their accounting systems. The OIG states that “funds were accounted for in the same way whether or not the individual was employed by a schoolwide or non-schoolwide school.” Without evidence that the school district used an accounting method to consolidate schoolwide program funds at its schoolwide schools, OIG found no basis to distinguish between schoolwide and non-schoolwide costs.
OIG questioned $210,000, but estimated the total amount of unsupported costs might be as high as $2,360,000. OIG recommended that ED’s Office of Elementary and Secondary Education determine the full amount of unsupported costs and require the State to repay that amount.
This audit report highlights longstanding confusion over the extent of fiscal flexibility available in a schoolwide school. Although ED has encouraged schoolwide schools to “consolidate” their funding (and, in fact, NCLB requires states to lift all barriers to the consolidation of schoolwide funds and to encourage school districts to consolidate schoolwide funding), it has never provided clearly written guidance on what consolidation means. In May 2006, ED released Non-Regulatory Guidance on Title I Fiscal Issues attempting to clarify the consolidation requirement by introducing the notion of a “single account.” The guidance provides:
A school operating a schoolwide program that consolidates in a single account and uses, in a schoolwide program, funds from other Federal education programs administered by the Secretary (except Reading First) is not required to maintain separate fiscal accounting records, by program, that identify the specific activities supported by those program funds. The school must, however, maintain records that demonstrate that the schoolwide program, considered as a whole, addresses the intent and purposes of each of the Federal education programs whose funds were consolidated to support it.
From the start, however, this guidance raised more questions than it answered because it never explained what a “single account” is, or what steps a school must take in order to consolidate funds into a single account.
ED has been particularly inconsistent in how it treats time distribution in schoolwide programs. In guidance issued under the Improving America’s Schools Act of 1994, the predecessor to NCLB, ED stated that employees working exclusively on schoolwide activities do not need to maintain any time and effort records. This guidance was written by ED’s Office of Elementary and Secondary and Education. Yet, ED’s Office of the Chief Financial Officer (OCFO) later advised that a schoolwide program represents a single cost objective; accordingly, semi-annual certifications must be kept. The OCFO’s position was also reflected in the OMB Circular A-133 Compliance Supplement. This conflict was supposed to be clarified by ED’s May 2006 fiscal guidance, in which ED stated that schoolwide schools consolidating their funds into a single account are not required to maintain any time and effort records, while schools not consolidating their funds into a single account must follow the rules of time distribution set out in OMB Circular A-87. Without an explanation of what a “single account” is, it is difficult to understand the practical implications of this guidance. Further, it remains unclear whether a schoolwide program constitutes a “single cost objective” if a school does not consolidate its funds into a single account.
This audit finding may finally force a confrontation over what it means to consolidate funds in a schoolwide program and what practical implications that has for financial operations. Although the finding only specifically addresses time and effort certification, this issue impacts the documentation of any costs associated with a schoolwide program, as well as other financial management issues such as procurement, inventory management, cash management and record keeping. Ultimately, it is up to ED’s Office of Elementary and Secondary Education to determine whether to sustain the audit findings.
This audit also underscores ED’s overall focus on fiscal issues. It is our understanding that OIG is performing a number of financial accountability audits around the country.
Our firm has contacted the OIG and OCFO to get clarification on the policy interpretations underlying this audit report. We plan to address the issue of consolidated funding in a schoolwide program in great detail at trainings this fall, including AEFFA in October and our Forum in November. We will keep you posted on any additional information we receive from ED on this very important issue.
Author: SLK

More Focus on Internal Controls in OMB Circular A-133 Revision

The Office of Management and Budget (OMB) published a revision to OMB Circular A–133 “Audits of States, Local Governments, and Non-Profit Organizations” in Tuesday’s (6/26/07)Federal Register. The revision updates terminology and definitions related to internal controls and simplifies reporting requirements to the Federal Audit Clearinghouse (FAC).

The revisions to the internal control terminology align OMB Circular A-133 standards with changes in the Statement on Auditing Standards issued by the American Institute of Certified Public Accountants (AICPA) and the Government Accountability Office’s revisions to Government Auditing Standards. Rather than requiring auditors to identify reportable conditions over internal controls, the revised OMB Circular A-133 will require auditors to classify findings as a “control deficiency,” “significant deficiency” or “material weakness.” The definition of each of these categories is available at: http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-12320.pdf. In addition, OMB announced the release of AICPA Auditing Interpretation No. 1 of Statement on Accounting Standard No. 112, entitled “Communicating Deficiencies in Internal Control Over Compliances in an Office of Management and Budget Circular A-133 Audit.” The Interpretation is available at: www.aicpa.org.
Starting on January 1, 2007, the auditee is no longer required to submit multiple copies of the reporting package to the FAC. Instead, only one copy is necessary, except for Part III, item 8, which states that all required agencies receive a copy of the package.
As a practical matter, these revisions may lead to an increase in the number of internal control findings reported in single audits. They may also change how auditors determine which programs to audit and how to determine an auditee’s overall risk-level. This could have a significant impact on recipients of federal education grants. As we have previously reported, the U.S. Department of Education (ED) has become increasingly concerned about managing risk levels in state and local education agencies. It has developed a scorecard to assess risk levels across the country and has begun to visit states to discuss risk mitigation strategies. Ultimately, ED plans to use its assessments to determine who to monitor when, and how closely to scrutinize state and local practices. Although we do not know precisely what criteria ED uses as part of its risk determination, ED officials have stated they review single audit findings – especially findings related to internal controls.
These revisions apply to audits of fiscal years ending on or after December 15, 2006. OMB invites interested parties to submit comments by August 27, 2007. Instructions for submitting comments are available at: http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/E7-12320.pdf.
Author: TRW, SLK

Wednesday, June 13, 2007

Two FERPA Amendments Proposed

Two bills were recently introduced in the U.S. House of Representatives to amend the Family Educational Rights and Privacy Act (FERPA) of 1974. With some exceptions, FERPA prohibits educational agencies or institutions that receive federal funds from having a policy or practice of releasing the education records of a student without the written consent of the student or parents. FERPA also requires that educational agencies and institutions that receive federal funds provide parents with access to the educational records of their children.

H.R. 128, the David Shick Honesty in Campus Justice Act, would amend FERPA in order to improve the access of victims of crimes to information concerning the outcome of disciplinary proceedings by institutions of higher education. The proposed change would make access to this information for victims of crimes mandatory. Presently, it is at the discretion of institutions of higher education whether to disclose the outcome of disciplinary proceedings to victims, but not required.
H.R. 2220, the Mental Health Security for America's Families in Education Act of 2007, would amend FERPA in order to allow educational institutions to disclose certain information to parents of students who may pose a significant risk to their own safety or well-being, or to the safety or well-being of others. The bill contemplates allowing parents access to their children’s mental health records in these types of cases.
Source: Jody Feder, The Family Educational Rights and Privacy Act (CRS Report for Congress: May 15, 2007).
Author: CWP

Friday, May 25, 2007

New Rulemaking on Direct Grants

On Thursday, the U.S. Department of Education (ED) released a notice of proposed rulemaking (NPRM) regarding the determination and recovery of indirect costs in direct grant programs. The proposed regulations would amend sections 75.560 (dealing with temporary indirect cost rates), 75.562 (dealing with indirect costs in training grants) and 75.564 (dealing with group awards under training grants) of the Education Department General Administration Regulations (EDGAR).

Temporary indirect cost rates: Under current regulations, grantees must have negotiated indirect cost plans in place in order to charge indirect costs to federal grants. ED has the authority to approve a temporary rate for grantees who do not have existing indirect cost plans in place; however, as a practical matter this is rare. The proposed regulations would make it easier to obtain a temporary rate.
Under the proposed rule, grantees must submit indirect cost plans to their cognizant agencies (the agency responsible for approving indirect cost plans) within ninety days after receiving a direct grant from ED. During that time, ED can authorize the grantee to charge a temporary rate of 10% of the direct salaries and wages included in the grantee’s approved budget. If the grantee submits a plan to its cognizant agency within the first ninety days of the grant award, then it may continue to use the temporary rate until the plan is approved. If the grantee does not submit a plan to its cognizant agency by the ninetieth day, the temporary rate expires and the grantee must discontinue charging indirect costs to the grant.
Once a final rate is approved, the grantee must make adjustments to ensure its total recovery does not exceed the approved rate.
Training grants: Part 75 of EDGAR provides special rules for indirect costs in educational training grants. Training grants generally support instructional activities such as summer institutes, training programs for selected participants, or the introduction of new or expanded courses, as opposed to activities simply related to the development or dissemination of educational materials. Grantees under training grants may recover their actual indirect costs (as determined under a negotiated indirect cost plan); however, the recovery of non-governmental grantees is capped at eight percent.
Indirect cost plans generally determine the ratio of a pool of indirect costs (numerator) to a base of direct costs (denominator). The base consists of “modified total direct costs.” Current regulations define modified total direct costs as all total direct costs minus stipends, tuition and related fees, and capital expenditures of $5,000 or more. The proposed regulations would remove the reference to “capital expenditures of $5,000 or more” and replace it with “equipment.” They would also clarify that any amount of a sub-award exceeding $25,000 must be excluded from the base as well.
The NPRM addresses two somewhat controversial issues. Regarding equipment, ED’s Office of the Chief Financial Officer (OCFO) has been somewhat inconsistent in how it treats items purchased with federal funds. EDGAR defines equipment as all tangible personal property with a useful life of more than one year and an acquisition cost of $5,000 or more unless the state sets a lower threshold. EDGAR then requires grantees and subgrantees to track equipment as part of an inventory management system. Notwithstanding EDGAR’s clear definition of equipment, OCFO monitors have cited state and local education agencies for failing to track items below the $5,000 threshold – items that legally constitute supplies and do not need to be tracked. At the same time, the preamble to the proposed indirect cost regulations make clear the OCFO will follow the EDGAR definition for purposes of indirect costs. Thus, the OCFO seems to apply different criteria for “equipment” in different contexts.
Regarding sub-awards of more than $25,000, OMB Circular A-87 requires state and local education agencies to exclude “major” contracts from their indirect cost calculations. Neither A-87 nor EDGAR currently defines what constitutes a “major” contract; however, OMB Circulars A-21 and A-122 do set the threshold at $25,000. In order to be consistent, federal agencies have generally agreed that a major contract is a contract exceeding $25,000. The proposed regulations would finally clarify this rule in the context of direct training grants. It is important to note, however, that ED applies the same limitations in state-administered programs as well.
Group Grants: The proposed regulations would clarify that when a training grant is provided to a group of eligible recipients, the grant funds allocated between group members do not constitute sub-awards for purposes of calculating and applying indirect cost rates.
Interested parties can comment through June 25, 2007.
Author: SLK

Monday, May 21, 2007

ED Proposes New Migrant Education Program Regulations

The U.S. Department of Education (ED) recently published its proposed amendments to the Migrant Education Program (MEP) regulations in the Federal Register. The proposed changes were motivated, in large part, by the results of OIG audits and investigations of several states’ MEP programs over the past year that found significant errors in state counts of children eligible for the program. Because MEP allocations are based on state counts of eligible children relative to other states, ensuring accurate and consistent determinations of student eligibility under the program across the states is very important to ED.

The proposed regulations aim to improve accurate and consistent state counts in several ways. First, the proposed regulations clarify and expand upon the definitions governing who is a “migratory child.” For example, the proposal includes changing the definitions for “agricultural work” and “fishing work” to clarify that they do not include activities that may be related to agriculture or fishing but are not inherently agricultural or fishing work. To highlight this distinction, ED provides an example explaining why factory work processing wheat into flour would not qualify as “agricultural work.” Several similar definition clarifications are made in an attempt to better detail MEP eligibility requirements.

Second, the regulations establish a mechanism to adjust the base amounts of the MEP basic state formula grant allocations for FY 2006 and subsequent years. In addition to adjusting the base amounts for state formula grant allocations, the proposed regulations establish requirements for SEAs to develop and implement rigorous quality control procedures in order to improve the accuracy of MEP eligibility determinations and state counts of eligible migratory children. This includes a new requirement for SEAs of annual re-interviewing for improved quality control. Under the proposed regulations, states generally will be required to use a face-to-face approach to conduct these annual interviews.

Comments on the proposed regulations must be received by June 18, 2007. The proposed regulations can be found on ED’s website at http://www.ed.gov/legislation/FedRegister/proprule/2007-2/050407a.html.

Author: JSM

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