Once it has addressed the underlying issues with regional accounting, provided direction to regions about which expenditures it will consider administrative, and obtained accurate expenditure data, Education should review its administrative cost goal to ensure that this goal is reasonable given the requirements of the migrant program.
Fully implemented. To provide subgrantees with additional expenditure data guidance, Education: (1) clarified the method to account for MEP administrative expenditures through the 2013-14 redesign of the grant application, budget and expenditure forms; and (2) identified an administrative limit of 15 percent, as set forth by Education Code (EC) Section 63001 (which requires educational agencies to spend no less than 85 percent of funds received from specific categorical programs on direct services).
In addition, after reviewing two years of expenditure data, Education revised administrative cost goals for each subgrantee and provided guidance in the updated MEP Fiscal Handbook, which was re-posted in June 2015. The MEP Fiscal Handbook recognizes administrative expenditures that are unique to the MEP, such as the identification and recruitment of migrant families, the convening of parent advisory councils, and the coordination of health related services.
On October 5, 2016, the State Controller's Office (SCO) issued its audit report on Education's MEP oversight efforts. The SCO reported that Education restored its administrative oversight efforts and implemented several improvements including: (1) redesigning accounting forms; (2) building a competent program-oversight workforce; (3) organizing Webinar trainings; (4) updating policies and procedures; (5) revising the MEP FiscaI Handbook; (6) performing a comprehensive analysis and updated the contents of the annual funding application and quarterly expenditure reports; and (7) fostering a collaborative relationship with the subgrantees (see Attachment 7). Education continues to interact with subgrantees to improve oversight efforts.
In our assessment of Education's October 2015 response to this recommendation, we did not agree that Education had fully implemented this recommendation because the administrative cost goals it had developed for its migrant program regions were based on expenditure decisions the regions had made before Education had issued new guidance on administrative costs in its MEP Fiscal Handbook. Since that time, Education has continued to refine its administrative cost goals in light of expenditures the regions made since receiving the updated guidance. As it has revised administrative cost goals for each region, Education has attempted to account for unique features of the migrant education program and differences between regional structures (i.e, directly funded school districts versus regional offices that oversee the migrant education program multiple school districts).
In 2013-14, Education collected detailed administrative expenditure data to: (1) calculate the percentage of funds dedicated to administrative services; (2) analyze the major program-specific requirements for administration; (3) identify MEP unique administrative functions, which are documented in the MEPFH (MEP-unique administrative functions are specifically exempted from the calculation of the administrative formula to ensure that subgrantees do not reduce administrative expenditures in areas that are required for program implementation.) Education also utilized the expenditure data analysis to revise administrative cost goals. Education will continue to seek administrative cost goals of 15 percent for districts, but will consider slightly higher cost goals for county offices of education.
Education provided evidence that it has reviewed regional administrative costs as it states in its response. However, Education's migrant education program fiscal handbook, which contains guidance related to which expenditures Education considers administrative, was adopted in June 2015. Therefore, although Education claims to have used fiscal year 2013-14 expenditure data to revise its administrative cost goal, this expenditure data was not reflective how regions may account for their expenditures now that they have received additional guidance. Therefore, we assess this recommendation as partially implemented until Education has reviewed its administrative cost goals in light of a full fiscal year's worth of expenditure information under the new direction included in its handbook.
To address the underlying issues with regional accounting for expenditures, in addition to the new MEPFH, Education is developing administrative cost guidance to the regions. This guidance will consider factors such as: (1) 2013-14 fiscal year expenditure report data; (2) local educational agency indirect cost rates; (3) individual regional administrative constraints; and (4) guidance from the federal Office of Migrant Education (OME).
To ensure the majority of MEP funding is utilized for direct MEP services and activities, Education has established a "15 percent or below" administrative cost percentage as a reasonable goal. Administrative cost percentages can be calculated from the regional Summary Budget Worksheets by dividing the total administrative cost by the total budget amount. If a region is found to have incurred excessive administrative costs, Education requires the region to submit an "Action Plan to Reduce General Administrative Costs" delineating specific actions to reduce administrative costs down to 15 percent or less over the following two fiscal years.
Education conducted two WEBEX trainings on completing new budget forms, ME-1, on April 3, 2013, and on May 21, 2013. The ME-1 worksheet includes three coding cost columns (service, administrative, and total), and does not allow any administrative coded costs to be entered in the service column. The definitions of administrative costs are included in the revised MEPFH:
General Administrative Costs: Personnel that have job descriptions stating that all job functions are strictly administrative such as program directors, secretaries, and coordinators.
MEP- Unique Administrative Costs: Personnel involved in Identification and Recruitment activities, and support personnel with job descriptions stating that they provide direct services to parents; or are in health related activities such as health clerks, para-professionals, and migrant resource specialists.
Other: Personnel and activities where the administrative definition is unclear such as nurses, and teachers on special assignment, will be reviewed by Education on a case-by-case basis.
To ensure the majority of MEP funding is utilized for direct MEP services and activities, Education has established a 15 percent or below administrative cost percentage as a reasonable goal. Administrative cost percentages can be calculated from the regional Summary Budget Worksheets by dividing the total administrative cost by the total budget amount. If a region is found to have incurred excessive administrative costs, Education requires the region to submit an Action Plan to Reduce General Administrative Costs delineating specific actions to reduce administrative costs down to 15 percent or less over the following two fiscal years.
Education has provided training to the regional staff regarding the use of revised expenditure forms, but as it notes in its response to recommendation eight, it has not yet finalized its Migrant Program Fiscal Handbook. Until this guidance is finalized and Education has an opportunity to review expenditure data that incorporates that guidance, Education is early in its conclusion that a 15 percent administrative cost goal is reasonable.
Education will address this recommendation at the end of FY 2013-14 once the activities in status updates to recommendations 1, 3, 4 and 7 have been implemented and aligned as stated.
In order to determine if regions are meeting applicable federal and state criteria, Education created a new DSA and RA that includes specific guidance and direction. The revised applications require more specific details from regions on their proposed services as they relate to specific budget line items. Education is also revising the current expenditure report to align with the new budget template that is part of the RA which results in a more detailed review of expenditures necessary to fund the Migrant Education Program (MEP) regionally. The revised expenditure reports will also provide clearer expenditure breakdowns to more accurately determine specific administrative costs (e.g., administrative salaries, support staff, materials), direct services (e.g., instructional program, pre-school services) and state required activities (e.g. identification and recruitment).
In addition to the Federal Program Monitoring reviews, Education is developing a MEP expenditure review process in which regions will be selected on a rotating basis to ensure applicable federal and state criteria are being met. Education plans to review 25 percent of the regions each fiscal year using the revised expenditure reports. Education will then select a sample of expenditures reported by these regions and request the necessary documentation to substantiate the costs. As part of these reviews, Education will provide ongoing technical assistance in addition to other specific technical assistance meetings.
Agency responses received after June 2013 are posted verbatim.