Consolidation of Administrative Funds, Part III

This is the third part of a web page that provides guidance for local educational agencies (LEAs) about consolidating administrative funds for eligible federal grant programs 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.

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.

TEA Approval to Consolidate Administrative Funds 

Your LEA must request approval from TEA to consolidate administrative funds each school year. You do this either by indicating the specific NCLB programs that you will consolidate on Schedule BS6001 of your NCLB Consolidated Federal Grant Application, or by indicating that you will consolidate administrative funds on the appropriate schedule of other NCLB grant applications.

As part of the application, your LEA will have to complete a form that indicates the amount of administrative funds you plan to consolidate from each funding source, as well as the percentage of each funding source allotment that you plan to consolidate. Your LEA should already have all of the information needed to populate the form if you created a table like the one shown in the example on Part II of this web page. You must keep and maintain this form, as well as any other tables you create, so that they may be provided to your independent auditor or to TEA monitors if your LEA is selected for a review.

The Consolidation of NCLB Administrative Funds for 2015–2016 form is available online. Please note that your LEA must ensure that this form is updated as necessary throughout the school year. For example, if your allocation of funds for a specific eligible program increases because of carryover funds, or if you need to increase your administrative costs (staying within any statutory or regulatory maximum percentage), your form should reflect the change.

During the grant negotiation process for NCLB grants, some LEAs may be required to submit the completed form to TEA. Please note that TEA negotiators will review the form to ensure that the amounts of consolidated administrative funds are within the maximum percentage, as applicable, but cannot ensure that consolidated amounts for programs without a maximum percentage are reasonable and necessary. That determination can only be made by your LEA’s independent auditor or by a TEA monitor.

Once TEA approves your grant application and issues your Notice of Grant Award (NOGA), you can assume that your request to consolidate administrative funds is also approved. TEA will not issue a separate approval. If your request is approved, the approval is valid only for the school year for which your application is submitted and approved.

An LEA that does not consolidate administrative funds in one school year may request approval to do so in subsequent years.

If your LEA has already submitted its applications for NCLB grants and received its NOGAs, you can submit amendments to indicate to TEA that your LEA would like to consolidate administrative funds. You must submit the Consolidation of NCLB Administrative Funds form, and are responsible for all necessary planning, budgeting, and documentation. 

Accounting Requirements

If your LEA consolidates administrative funds in an administrative cost pool, you must use that pool to pay for administrative costs for all programs that contribute to the pool. You may not use program (nonadministrative) funds to pay for any administrative costs for the contributing programs.

LEAs that consolidate administrative funds in an administrative cost pool are not required to keep separate records, by individual program, to account for costs relating to the administration of the programs included in the consolidation. However, for auditing and monitoring purposes, LEAs that consolidate their administrative funds in an administrative cost pool must maintain documentation that shows:

  • The amount of administrative funds from each program for each grant year that the LEA consolidated for administrative activities.
  • That the amount consolidated from each program does not exceed any statutory or regulatory cap on administrative funds.
  • That funds were obligated within the period of availability.
  • The activities for which the funds were used were allowable under any of the consolidated programs or under Title IX, Part B, Sec. 9201(b) of ESEA.

Your LEA can fulfill the first two requirements listed above if you maintain a table like the one in the previous example as well as your Consolidation of NCLB Administrative Funds form.

To fulfill the third and fourth requirements, your LEA must comply with basic accounting requirements for availability of funds and allowability of costs. Please refer to the program guidelines for each of the consolidated programs for more information.

Indirect Costs

Consolidating administrative funds does not change how LEAs submit reimbursement requests to TEA for indirect costs.

General Accounting Guidelines

State accounting guidelines in Texas require LEAs to use the current account code structure defined in Module 1 of TEA’s Financial Accountability System Resource Guide (FASRG). The account code structure defined in the FASRG also provides TEA monitors, auditors, and investigators, as well as independent auditors, with the documentation necessary for them to carry out their functions. LEAs are also required to use the account code structure and identify expenditures by certain categories so that they can submit financial data to the Public Education Information Management System (PEIMS).

To allow LEAs to take advantage of the accounting flexibility offered by consolidating administrative funds, but still comply with state accounting guidelines, TEA has developed the accounting procedures described on Parts IV and V of this web page. Following the procedures is not required, but TEA encourages LEA business managers to try the procedures, particularly if accounting issues are preventing their LEAs from consolidating their administrative funds. Using the accounting procedures has the following advantages:

  • Business managers are not required to keep two different general ledgers to account for consolidated administrative expenditures and other expenditures.
  • All administrative expenditures from the administrative cost pool are documented in the general ledger, so LEAs do not need to maintain “off the books” accounting records.
  • Existing accounting software does not have to be modified. LEAs can choose to make software changes to automate the recommended proportionality calculations, but this enhancement is not required.
  • No extra steps need to be taken by the LEA to calculate carryover amounts of unspent consolidated administrative funds at the end of the grant period. Please note that any unspent administrative funds that are carried over to the next grant period become program (nonadministrative) funds.

Allocating Expenditures

LEAs that consolidate their administrative funds have considerable discretion in how they allocate administrative expenditures to the individual programs that are consolidated. TEA recommends, but does not require, that LEAs allocate expenditures in proportion to the amount each program contributes to the administrative cost pool. For example, if Title I, Part A contributes 60 percent of the total administrative cost pool, then the LEA allocates 60 percent of each administrative expenditure to Title I, Part A.

As soon as your LEA has determined the specific NCLB programs that you will consolidate, and the amount from each program that you will place in the administrative cost pool, you should also create a proportionality table. A proportionality table documents how you will allocate actual expenditures to the appropriate funding source by showing the calculation of the proportion each funding source contributed to the total administrative cost pool. The following is an example of a proportionality table:

Marshalsea ISD
Proportionality Table
Consolidation of Administrative Funds
2015–2016 School Year
  NCLB Funding Source Amount Contributed
to Pool
 Proportion
Calculation
 Percentage
of Total
A Title I, Part A—
Improving Basic Programs
$270,000A ÷ E64.13%
 BTitle I, Part C—
Migrant Education
$125,000B ÷ E29.69%
 CTitle II, Part A—
Teaching Effectiveness
$16,000C ÷ E3.80%
 DTitle III, Part A—
LEP
$10,000D ÷ E2.38%
 ETotal$421,000 100%

 

This district will allocate 64.13 percent of each administrative expenditure to Title I, Part A, 29.69 percent of each administrative expenditure to Title I, Part C, 3.80 percent of each administrative expenditure to Title II, Part A, and 2.38 percent of each administrative expenditure to Title III, Part A.

Fund Code 282

The basis for the accounting procedures is fund code 282. This fund code was initially approved solely to identify expenditures from a Title I, Part A schoolwide program pool of funds. However, beginning with the 2015–2016 school year, LEAs are also allowed to use fund code 282 to identify expenditures from an administrative cost pool.

The code makes it possible for anyone who reviews an LEA’s general ledger, including auditors and monitors, to see immediately which expenditures are for consolidated administration and which are not.

This code is currently defined in the FASRG as a state-designated fund code, but TEA expects to change the definition at the earliest opportunity to indicate that the code may only be used at the local level to and must only be used to identify expenditures from a Title I, Part A schoolwide program pool of funds or expenditures from an administrative cost pool. Your LEA should distinguish between the two types of expenditures by using program intent code (PIC) 30 for all schoolwide program expenditures, and using the appropriate PIC and a unique local option code for expenditures from an administrative cost pool. TEA recommends that you use “CA” as the unique local option code.

Please note that LEAs must not use fund code 282 to report data in PEIMS.

For more information about the account code structure defined in the FASRG, please contact financialaccountability@tea.texas.gov. For more information about PEIMS reporting, please contact peimscustomersupport@tea.texas.gov.

Accounting for An Actual Expenditure

The accounting procedures on Parts IV and V of this web page describe how your LEA may account for an actual expenditure from an administrative cost pool. The procedures are based upon the proportionality methodology and use the figures in the example proportionality table above. Each step is based upon a $1,000 expenditure.

Your LEA can develop and use another methodology but you must be able to show auditors and monitors documentation that explains the rationale for using the methodology and verifies that you used the methodology consistently.

Please go to the fourth part of this web page for step-by-step guidance about how to allocate expenditures from an administrative cost pool.

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.