Consolidation of Administrative Funds, Part I

Local educational agencies (LEAs) are allowed to consolidate federal grant funds from several federal grant programs in order to pay for the costs associated with the administration of those programs. The only federal grant programs eligible for this consolidation are those awarded under the No Child Left Behind Act of 2001 (NCLB). The authorizing statute is the Elementary and Secondary Education Act of 1965 (ESEA), Title IX, Part B, Sec. 9201 and Sec. 9203.

This web page, which is divided into five parts, provides details about how LEAs can take advantage of the flexibility offered by consolidating their administrative funds and administering their NCLB programs as a whole. Providing this guidance is part of TEA’s federal flexibility initiative. The purpose of the initiative is to provide increased flexibility to subrecipients of federal education grants.

The consolidation of administrative funds has some similarities to consolidating funds in a Title I, Part A schoolwide program. LEAs can take advantage of the flexibility offered by both programs at the same time. More information about Title I, Part A schoolwide programs is available online.

Please note that all of the examples on this page are provided by TEA for informational purposes only. You should not interpret the items or amounts as anything other than sample data.

LEAs must receive approval from TEA to consolidate their administrative funds each school year. The annual approval process is described in the third part of this web page.

Flexibility Offered by Consolidating Administrative Funds

Consolidating administrative funds provides flexibility to LEAs by allowing them to charge administrative costs to an administrative cost pool instead of assigning specific costs to specific programs. As long as the cost is an allowable administrative activity under any one of the programs that have been consolidated, it may be charged to the administrative cost pool.

Allowable administrative costs, which may include both direct and indirect administrative costs, include the following:

  • Salaries and wages of staff involved in the administration of any of the consolidated programs (such as federal program coordinators and federal program directors).
  • Planning for the use of federal program funds (such as costs associated with federal program budget meetings).
  • Monitoring and evaluation of federal program activities (such as salaries and wages of federal program monitors and internal program auditors, and costs associated with reviewing program goals, objectives, and performance).
  • Indirect costs, calculated by using the LEA’s indirect cost rate, related to processing federal program funds (such as costs associated with accounting, human resources, and information technology).

Costs that are not administrative and are therefore not allowable include, in general, salaries and wages of staff that are not involved in the administration of any of the consolidated programs (such as teachers, substitute teachers, and paraprofessionals).

Advantages to Consolidating Administrative Funds

The administrative cost pool can also be used for purposes other than administering the programs that contributed to the pool, such as

  • Coordination of programs whose funds are consolidated with other federal and non-federal programs.
  • Establishment and operation of peer-review mechanisms under ESEA.
  • Dissemination of information regarding model programs and practices for NCLB programs.
  • Technical assistance under programs whose funds may be consolidated.
  • District-level activities designed to carry out Title IX of ESEA.
  • Training personnel engaged in audit and other monitoring activities.
  • Implementation of the Cooperative Audit Resolution and Oversight Initiative (CAROI) of the US Department of Education.

In addition, the administrative cost pool may be treated as one cost objective. This means that for employees who work exclusively on administrative activities for the programs that contribute to the administrative cost pool, LEAs are not required to maintain personnel activity reports. A semi-annual certification will be sufficient. If all of the programs that contribute to the administrative cost pool are covered by the state’s Ed Flex administrative waiver, then a semi-annual certification is not required.

Please note, however, that clarification of time and effort documentation requirements in the new Education Department General Administrative Regulations (EDGAR) is still pending. TEA recommends that LEAs maintain semi-annual certifications, or their equivalents, for employees that work on a single cost objective, and identify the administrative cost pool as the single cost objective.

Eligible Programs

The NCLB programs listed in the table below may be included in the consolidation of administrative funds. The table also shows the maximum percentage of each LEA’s total allotment that may be used for administrative costs. For those programs without a maximum percentage, LEAs can use a percentage that is reasonable and necessary for the proper and efficient administration of the program.

Eligible NCLB Programs
NCLB ProgramsMaximum Percentage
Title I, 1003(a)—Priority and Focus SchoolsReasonable and necessary
Title I, 1003(g)—School Improvement Grants (Texas Title I Priority Schools)5%
Title I, Part A—Improving Basic ProgramsReasonable and necessary
Title I, Part C—Migrant EducationReasonable and necessary
Title I, Part D—Neglected and Delinquent ChildrenReasonable and necessary
Title II, Part A—Teacher EffectivenessReasonable and necessary
Title II, Part D—Enhancing Education through Technology3%
(no allocations; for REAP
purposes only)
Title III, Part A—Limited English Proficient2%
Title III, Part A—ImmigrantReasonable and necessary
Title IV, Part A, Subpart 1—Safe and Drug-Free Schools and Communities2%
(no allocations; for REAP
purposes only)
Title IV, Part B—21st Century Community Learning Centers5%
Title V, Part A—Innovative ProgramsReasonable and necessary
(no allocations; for REAP
purposes only)
Title VI, Part B—Rural and Low-Income School ProgramVariable (see program guidelines)

 

Please note that if your LEA transfers Title VI, Part B funds to another fund under the Rural Education Achievement Program (REAP) option, any applicable maximum percentage remains in place. For example, if your LEA transfers Title VI funds to Title III, Part A—LEP, the 2 percent maximum percentage for Title III, Part A—LEP applies to the combined Title VI and Title III, Part A—LEP funds.

State and local administrative funds may not be consolidated with federal administrative funds. However, if LEAs use state and local funds only for activities authorized under section Title IX, Part B, Sec. 9201(b) of ESEA, they may combine state and local funds with federal consolidated administrative funds. Do not consolidate any state special allotments in an administrative cost pool. Special allotments include special education state funds, the bilingual education allotment, the career and technology education allotment, and the state compensatory education allotment. If you have questions about state funds, please contact the TEA division of Financial Compliance at schoolaudits@tea.texas.gov.

An administrative cost pool that includes state and local administrative funds is still considered one cost objective.

Documentation Requirements

TEA is required to uphold its administrative responsibilities by ensuring that federal grant subrecipients comply with applicable statutes and regulations, including the rules that apply to consolidation of administrative funds. If your LEA is selected for a review of its administration of federal grant awards, your LEA must provide TEA monitors with adequate documentation to demonstrate that it complies with all applicable requirements. This web page includes, whenever possible, guidance about the documentation that is required, Please note, however, that the guidance is not intended to limit the documentation maintained by your LEA. As a best practice, your LEA should maintain all documentation that it believes is necessary to demonstrate compliance with applicable rules.

Your LEA must also maintain the required documentation for its own independent auditor.

Please go to the second part of this web page for information about budgeting and specific documentation required for consolidating administrative funds.

Contact Information

For more information about the consolidation of administrative funds, please contact the TEA Help Desk and enter “consolidation of administrative funds” in the subject field.

For more information about the federal flexibility initiative, please contact Terry Reyes in the Office for Grants and Federal Fiscal Compliance at terry.reyes@tea.texas.gov.