To address problems with its methodology for calculating administrative costs, Education should review the regions' current use of accounting codes to identify the areas in which regions differ in accounting for similar migrant program costs.
In 2013-14, Education revised its expenditure reporting forms to align with the revised budget forms and to standardize the use of accounting codes. The revised expenditure report form utilizes object classification codes instead of function codes. The revised MEPFH includes a section on object classification codes. This section of the MEPFH states that California Education Code, Section 41010, requires local educational agencies to follow the definitions, instructions, and procedures in the California School Accounting Manual (CSAM). Operating agencies and districts are mandated to follow CSAM guidelines for conformity with generally accepted accounting principles (GAAP), which are essential for consistency and comparability in financial reporting. The CSAM is to be used for classifying, developing, and recording all MEP revenues and expenditures.
Since our final audit report, Education has changed how it calculates administrative costs. Education's new method, which identifies administrative and services costs through the annual application for migrant program funding, addresses the concerns we had about Education's former practice of retroactively calculating administrative costs based on the accounting codes that its migrant program regions used. Because regions sometimes differed in their use of accounting codes, Education's previous methodology had classified some service costs as administrative and vice versa. Under its new methodology, Education reviews how regions are accounting for service and administrative costs as part of its approval of each region's application for funding. This provides clarity about what expenditures will be considered administrative and, provided that Education is uniform in its review of all regional applications, should ensure that it calculates service and administrative costs more accurately across regions.
As reported in Education's response update to CSA Recommendation No. 1, to facilitate consistency and more guidance to regions, the revised MEPFH will include: 1) an updated list of accounting codes; (2) criteria for allowable program costs; and (3) general guidelines pertaining to supplement-not-supplant, meetings and trainings, travel, conferences, food, field trips, and other areas. The revised MEPFH also addresses capital outlay and property, including criteria for capital purchases such as vehicles and other equipment. Education plans to complete the final MEPFH by December 2014.
Education is in the final stages of revising the MEPFH. To facilitate consistency and more guidance to regions, the revised MEPFH includes an updated list of accounting codes and criteria for allowable program costs and general guidelines pertaining to supplement-not-supplant, meetings and trainings, travel, conferences, food, field trips, and other areas. The revised MEPFH also addresses capital outlay and property, including criteria for capital purchases such as vehicles and other equipment.
Education established a Migrant Education Office (MEO) "fiscal team" of individuals to provide feedback and expertise throughout the process of revising the Migrant Education Fiscal Handbook (see status update to Recommendation No. 1). The fiscal team is working to ensure accounting code consistency and the incorporation of new allocation codes; guidance will be provided to regions as explained in status updates to Recommendations No. 3 and 4.
The U.S. Department of Education revised the budget portions of the DSA and RA for 2013-14 to clarify the types of expenditures as they relate directly to programs. In addition, as described in the response to recommendation number four, Education is also making other reporting revisions to allow a more effective selection of expenditures for review.
Agency responses received after June 2013 are posted verbatim.