Saturday, August 27, 2011

The California Charter School Jackpot or why everyone wants to open a "new" charter school

Allowable Expenses - Administration & Support (CA Dept of Education):

Allowable Expenses

Public Charter School Grant Program (PCSGP) Allowable Expenditures.

Purpose

This document provides clarification on the eligibility of specific expenditures for reimbursement under the Public Charter Schools Grant Program (PCSGP). The information provided here is not comprehensive, but does cover some of the more frequently occurring costs found in the grant program.

If you have questions about a specific item of cost that is not described here, please contact a member of PCSGP staff by phone at 916-322-6029, or by e-mail at CHARTERS@cde.ca.gov.

Federal Guidance

Federal guidance pertaining to allowable costs under the PCSGP may be found in the following documents:

Elementary and Secondary Education Act (ESEA) 5204(f)(3) (Outside Source)

U.S. Department of Education (ED) Charter Schools Program (CSP) Nonregulatory Guidance
(Outside Source – DOC; 184 KB; 22pp.)

Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions
(Outside Source)

OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments
(Outside Source)

OMB Circular A-122, Cost Principles for Non-Profit Organizations
(Outside Source)
ED Cash Management Policies for Grants and Cooperative Agreements
(CDE Website)

Factors Affecting Eligibility for Reimbursement

There are a number of factors that contribute towards the allowability of an expense. Developing an understanding of these principles will aid you in allocating expenses to the grant when the eligibility of an expense is not clear, or when an allocated expense is called into question and there is a need to obtain clarification. The factors are as follows:

Grant funds are intended to supplement, not supplant, state or local funds.

Supplanting is the use of PCSGP funds to pay for costs that would normally be paid using state or local funds. This primarily includes the operational costs of the school, such as rent and teacher salaries.

Federal nonregulatory guidance (D-3) indicates: “If the charter school can show that the state or local funds it has received are necessary to meet expenses other than the one at issue, then the charter school has met its burden of showing that the “other initial operational costs” cannot be met from state or local sources and, therefore, is allowable under the CSP grant.”

Costs incurred must correlate to a grant objective or a Work Plan objective.

The purpose of the PCSGP grant is to foster the development of high-quality charter schools in California. The Work Plan is the medium by which applicants propose activities with measurable outcomes that will enhance the quality of their school.

Other grant objectives include: informing the community about the school; and acquiring necessary equipment, educational materials, supplies, and curriculum.

Costs incurred must be one-time in nature and may not include ongoing operational costs.

When making the distinction between one-time and ongoing costs, it is helpful to ask the following questions:

Is the expense required to operate the school?

Will the school continue to incur the expense after the grant has ended?

Answering “yes” to either of the above questions most likely indicates that the expense is not one-time in nature, and is most likely not allowable.

Costs incurred must be obligated during the grant project period.

Generally speaking, costs must be incurred during the grant project period in order to be eligible for reimbursement. Therefore, costs related to developing the charter petition or for services rendered beyond the duration of the grant project period are not allowable.

Purchases or contracts for goods and services must follow pertinent procurement regulations.

Procurement regulations ensure the appropriate use of federal funds, prevent conflicts of interest, and promote open competition between vendors offering similar goods and services. Most, if not all, purchases under the grant must comply with appropriate procurement regulations. You may find additional information on procurement in Appendix C of the 2010—2015 PCSGP Request for Applications.

All purchases must be reasonable and necessary to the completion of the grant objectives or the initial operation of the school.

Goods and services purchased using grant funds should correlate to some need reflected in the approved charter petition or the approved Work Plan in the grant application. Expenses will be questioned if they appear to be unreasonable or unnecessary to the essential operation of the charter school or the completion of the grant objectives.

Selected Items of Cost

Accreditation Costs

Accreditation costs may include fees owed to an entity for the purpose of site visit or accreditation. Initial accreditation costs, incurred as a one-time expense during the school's first few years, are allowable. Ongoing costs associated with accreditation are not allowable.
Advertising Costs
1. Advertising costs include: print (newspapers, flyers, brochures, etc.), radio, internet, or television advertisements whose purpose is to recruit teachers or additional students to increase enrollment. Advertising costs are allowable.
2. Advertisements, on billboards or in other public venues, related to the recruitment of students or the hiring of teachers are allowable costs.
3. The installation of an advertising marquee at the school site is not an allowable cost.
Architect fees
1. Architect fees that are related to the inspection of a facility to meet occupancy requirements, and which are reasonable and necessary, are allowable.
2. Architect fees related to a site improvement are not allowable.
Authorizer Fees

Authorizer fees may include fees for services provided by the authorizer to the charter school. Authorizer fees are not allowable.
Back Office Services
1. Back office services may include back office support or administrative services provided by a third-party contractor, a parent Charter Management Organization (CMO), or the charter’s authorizer.
2. Back office services that are ongoing expenses are not allowable.
3. Back office services that pertain to initial implementation activities, such as setting up accounting systems or providing initial training for administrative staff at the school site, are allowable.
Bonus Pay

Bonus pay is incentive compensation for an employee for cost reduction, efficient performance, or as an award. Bonus pay is not allowable.
Conference Registration Fees

Conference registration fees are allowable, provided that the content or theme of the conference is related to operational elements or educational programs of the school.
Consulting Services
1. Consulting services are professional services provided by a third-party organization or contractor with specialized skills or expertise.
2. Consulting services that are not ongoing expenses, and that pertain to curriculum development, educational programs, special education, standardized testing, or other operational elements of the charter school are allowable.
3. Legal services that are not ongoing expenses, and that are necessary and usual in order to allow the school to begin operations are allowable.
4. Legal fees pertaining to lawsuits are not allowable.
Consumable Goods
1. Consumable goods include food, beverages, and other non-durable consumer goods.
2. Consumable goods are not allowable. There are exceptions for food services provided for students and travel expenses. Refer to Food Services and Travel Expenses for more information.
3. Food and beverages provided for staff meetings or student events are not allowable.
4. Gift cards, certificates, or anything that holds monetary value and may be used to purchase consumable goods are not allowable.
Data Systems

Data systems include the design, setup, and/or installation of computer software or hardware whose purpose is to track data pertaining to: student attendance and achievement, the school’s finances, or other educational and operational elements of the school. Data systems are allowable.
Educational Supplies and Curriculum Materials

Educational supplies and curriculum materials may include, but are not limited to: textbooks, workbooks, library books, pens, pencils, paper, markers; and supplies for specialized programs such as art, music and science: paint, paint brushes, colored pencils, drawing paper, instruments, music books, music stands, beakers, chemicals, goggles, etc. Educational supplies and curriculum materials are allowable.
External Reviewer Fees

External Reviewer fees to facilitate the third-party external review of the school site, as required under the PCSGP grant, are allowable.
Fingerprinting

Fingerprinting fees, and other costs associated with background checks for hiring new staff, are allowable.
Food Service
1. Food service may include contracted services with a third-party entity to provide meals for students of the charter school.
2. Food service is allowable under the following conditions:
  1. The expense cannot be reimbursed through other means, such as state, local, or federal funding sources (supplanting).
  2. The school does not charge students for school meals or the school provides school meals at a reduced-cost. The school must be operating on a break-even basis with regards to the service provided.
Fundraising

Fundraising may include grant writing, financial campaigns, endowment drives, solicitation of gifts and donations, and similar expenses incurred to raise capital or obtain contributions. Fundraising is not allowable.
Furniture
1. Furniture may include: student and staff desks and chairs, bookshelves, cabinets, tables, maps, whiteboards, etc.; appliances pertaining to a specific educational program such as laboratory workbenches; and playground equipment. Furniture is allowable.
2. Furniture does not include any assets that are permanent fixtures to the school site, whereby they cannot be removed and transported to another site. Permanent fixtures are considered site improvements, which are not allowable.
Graphic Design

Graphic design pertaining to the development of a school logo or mascot is allowable.
Indirect Costs

Indirect costs are agency-wide, general management costs, such as administrative activities necessary for the general operation of the agency. Indirect costs are not allowable.
Insurance and Indemnification
1. Insurance includes insurance which the charter school maintains in connection with the general conduct of its operations. This section does not apply to insurance which represents fringe benefits for employees; for more information on employee benefits, see Personnel Costs.
2. Insurance costs are only allowable during the planning phase, subject to the following conditions:
  1. Types and extent of coverage shall be in accordance with sound business practice and the rates and premiums shall be reasonable under the circumstances.
  2. Costs allowed for business interruption or other similar insurance shall be limited to exclude coverage of management fees.
  3. Provisions for a reserve under a self-insurance program are allowable to the extent that types of coverage, extent of coverage, rates, and premiums would have been allowed had insurance been purchased to cover the risks. However, provision for known or reasonable estimated self-insured liabilities, which do not become payable for more than one year after the provision is made, shall not exceed the present value of the liability.
  4. Costs of insurance or of any provisions for a reserve covering the risk of loss or damage to Federal property are allowable only to the extent that the organization is liable for such loss or damage.
  5. Costs of insurance on the lives of trustees, officers, or other employees holding positions of responsibility are allowable only to the extent that the insurance represents additional compensation to the employee; costs of such insurance when the organization is identified as the beneficiary is not allowable.
3. Indemnification includes securing the organization against liabilities to a third party and any other loss or damage, not compensated by insurance or otherwise. Indemnification is not allowable.
Leasing Costs of Supplies, Furniture, or Equipment

Leasing costs for supplies, furniture, or equipment are allowable. Consideration for leasing vs. purchasing should be included in the pre-bid/proposal process for the procurement of goods.
Membership Dues

Membership dues to professional organizations incurred during the Planning Phase for direct services related to planning and starting a charter school are allowable. Dues incurred on a periodic basis are not allowable.
Personnel Costs
1. Personnel costs include salaries, wages, benefits, payroll taxes and employer contributions, and other forms of compensation paid to employees of the charter school.
2. Personnel costs are allowable by a percentage equal to the ratio the staff member’s involvement in grant-related activities divided by the staff member’s overall time on payroll. The grantee must maintain accurate time-and-effort reports for all staff members whose salary costs are allocated to the grant. The CDE has provided a time-and-effort reporting template for this purpose.
  1. Any activities completed during the Planning Phase (before the school opens) are allowable, including time for sick, holiday, or vacation leave. You must still file a time-and-effort report.
  2. Allowable activities that may be attributed to the grant during the Implementation Phase include: curriculum development; data system setup or training; leadership training with an executive coach; overtime pay related to allowable activities; professional development, whether participating or facilitating; recruitment activities, including management of recruitment efforts; and teacher recruitment efforts. why everyone wants to open a "new charter school
  3. Non-allowable activities that may not be attributed to the grant (non-funded) during the Implementation Phase include: administrative duties; after-school programs; CELDT, STAR or CAHSEE training; classroom observation; financial management; hiring teachers or staff; intervention practices; maintenance of data systems; open houses; overtime pay not related to allowable activities; parent-teacher conferences; pupil discipline, instruction, or supervision; retention activities; school oversight; special education staffing; staff meetings or retreats; student counseling; and teacher evaluation or assessment.
Professional Development
1. Professional development includes: stipends for staff to participate in professional development, subscription fees, or registration fees for conferences pertaining to the educational program of the school. Professional development is allowable only if it is tied directly to a grant-related activity.
2. Travel costs incurred, directly related to professional development or conferences, including food and lodging expenses, are allowable. Please refer to Travel Expenses for more information.
3. Materials to host professional development, or fees paid to a back office provider, parent CMO, or an authorizer to conduct in-house professional development, are allowable.
4. Tuition for an employee to attend classes of a professional subject matter pertaining to the operation or educational program of the charter school is allowable.
5. Tuition for classes that are perceived to be recreational in nature, and have no apparent correlation to the operation or educational program of the charter school, is not allowable.
Rental, Lease, or Occupancy Costs
1. Rental, lease, or occupancy costs for the school facility, for a reasonable period of time in preparation of the school’s opening, are allowable.
2. Rental, lease, or occupancy costs incurred after the school opens are not allowable.
3. Conditional Use Permits and other fees required by a local governmental agency to use the facility are allowable, provided that the costs are incurred before the school opens.
4. Rental fees for portable classroom units to accommodate additional students while the school is in operation are not allowable.
5. Rental fees, for storage units to store supplies or equipment prior to obtaining adequate school facilities, are allowable.
School Uniforms
1. School uniforms, Physical Education uniforms, or costs incurred to embroider or apply other design elements to school uniforms are allowable under the following conditions:
  1. The expense cannot be reimbursed through other means, such as state, local, or federal funding sources (supplanting).
  2. The school does not charge students or parents for the cost of uniforms. The school must be operating on a break-even basis with regards to the goods provided.
Security or Alarm Systems
1. Security or alarm systems include the installation of security monitoring equipment to safeguard against the loss, theft, or damage of property obtained by the charter school.
2. Installation of security or alarm systems is allowable.
3. Monthly fees associated with the continued operation of a security or alarm system are not allowable.
Shipping, Installation Fees, and Taxes

Shipping, installation fees, and taxes for any allowable goods purchased using grant funds are allowable.
Site Improvements
1. Site improvements may include: any renovations made to the facility to meet the Americans with Disabilities Act or a specific building code; improvements made to meet the needs of a specific educational program, such as a chemistry lab; fencing installed on or around the school site perimeter; paint applied to the interior or exterior of the school facilities; carpeting installed in school facilities; and the installation of appliances, equipment, or furniture that are permanent fixtures to the school site, whereby the appliance, equipment, or furniture could not be removed and transported to another site. Site improvements are not allowable.
2. Architect fees for any site improvements are not allowable.
Special Education Costs

Special education costs, such as encroachment or Special Education Local Plan Area (SELPA) fees, are not allowable.
Substitute Teacher Compensation

Substitute teacher compensation is allowable provided that correlating teacher absences are due to professional development or engagement in other grant-related objectives.
Teacher Credentialing

Costs or fees incurred as a result of teacher credentialing are not allowable.
Technology
1. Technology costs include: hardware such as computers, printers, scanners, other peripheral devices, projectors, fax machines, laminators, other office equipment; software such as databases, word processors, accounting programs, and licensing keys; electronic curriculum such as e-books; setup, installation, or training fees for any hardware or software purchased; and contracted services to design and publish a website. Technology costs are allowable.
2. Services to maintain a website are not allowable.
Transportation Services
1. Transportation services for students, including bus services provided by a local education agency or a third party entity, are allowable.
2. Fees for public transportation passes provided to students are allowable; fees for public transportation passes provided to staff members are not allowable.
Travel expenses

Travel expenses may include: rental car fees, passenger airline tickets, train tickets, bus tickets, taxi fare, mileage reimbursements, meals and lodging. Travel expenses are allowable if they are tied directly to a grant-related activity.
Utilities

Utilities may include: water, gas, electricity, garbage, Heating, Ventilation, and Air Conditioning (HVAC), phone services for both the facility and employees of the school, and internet service.
One-time setup fees for utilities are allowable.
Periodic utility bills are not allowable.

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