To: Executive Directors, Child Care and Development Programs
2007-08 YEAR-END REPORTING REMINDERS
and
2008-09 CHILD CARE AND DEVELOPMENT CONTRACT CHANGES
The purpose of this letter is to remind contractors of the due dates and reporting requirements for the fiscal year ending June 30, 2008, and to inform contractors of changes to Child Care and Development contracts and reporting procedures beginning July 1, 2008. Please share this letter with your agency staff as the information will be useful in both closing Fiscal Year (FY) 2007-08 as well as preparing for FY 2008-09.
2007-08 Year-End Reporting
CONTRACTS or CONTRACT AMENDMENTS:
All original contracts and any contract amendment(s), with the exception of CalWORKs Stage 2 and Stage 3 amendments, for FY 2007-08 must be signed and returned to the Contracts Office by June 30, 2008 in order to be valid. Reimbursements cannot be made without a signed contract and/or amendment.
FINAL REPORTS:
All final reports for contracts ending June 30, 2008 must be received by the Child Development Fiscal Services (CDFS) unit by July 21, 2008. Postmarks do not qualify as receipt dates. A delinquent report results in withholding any remaining apportionment for that contract as well as withholding contract advances for all contracts your agency may have for the next fiscal year. Please note that CDFS cannot make any exceptions to this regulation.
SUPPORT CONTRACT REPORTS:
Support contracts such as Instructional Materials and Supplies, Repair and Renovation, or Local Planning Council contracts also require a final fiscal report (form CDFS 9529) by the July 21, 2008 deadline if the contract period ends June 30, 2008 (refer to the face sheet of your contract(s) for the contract end date). If the contract was for multiple years, please ensure that expenditures made in prior years are included on the Expenditures Incurred in Prior Years line of this report.
RESERVE ACCOUNT ACTIVITY REPORTS:
The Reserve Account Activity Report for FY 2007-08, which is due by July 21, 2008, will require additional back-up documentation in the form of a copy of a current bank statement or the contractor’s general ledger report page(s) that reflect the cash balances maintained in the Reserve Account. Failure to include this documentation will constitute a delinquent report. Please ensure that the beginning balance for FY 2007-08 reported on the Reserve Account Activity Report matches the prior year’s ending balance per the FY 2006-07 Reserve Account Status Report supplied by CDFS, and that expenditures from the Reserve Account match income reported on appropriate service contract reports. An incorrect or missing Reserve Account Activity Report will be considered delinquent and will result in withholding advance apportionments for the next fiscal year. CDFS analysts have mailed important notices regarding Reserve Account reporting and documentation required when submitting June reports; please refer to these or contact your fiscal analyst should you have any questions. Form CDFS 9530-A is available online at http://www.cde.ca.gov/fg/aa/cd/cdfsforms07.asp.
Alternative Payment (AP) and CalWORKs contractors please note that while the Reserve Account Activity Report form is available online it cannot be filed online but must be mailed and be received in CDFS by the July 21, 2008 deadline. If you have any questions, please contact your fiscal analyst.
REVISED REPORTS:
Final reports must be received by the deadline of July 21, 2008 to avoid being delinquent; however, revisions to final reports may be submitted later under limited circumstances. Please refer to the Child Development Attendance and Fiscal Reporting and Reimbursement Procedures handbook (referred to as the “Greenbook”) regarding the due dates for revised reports for various programs. The “Greenbook” is available online at the CDFS Website at http://www.cde.ca.gov/fg/aa/cd.
CalWORKs BILLINGS:
For all CalWORKs contracts, invoices based on June 2008 reports will be sent to agencies pre-audit in order to facilitate the disencumbrance of unearned CalWORKs contract funds prior to receipt of the audit. Agencies will be allowed to submit revised June reports until September 30, 2008, at which time invoices will be sent. A billing that becomes 90 days delinquent will result in a withholding of all future apportionments.
2008-09 Child Care and Development Contract Changes
CONTRACT FUNDS:
The May Revision of the 2008-09 Governor’s Budget maintained General Fund reductions introduced in the January Budget. Some programs that were reduced will not result in a reduction or will result in a smaller reduction to agency’s contracts due to unallocated funds in these programs. Both the Assembly and Senate have taken action to restore the reduction proposed in the Governor's Budget. If these proposals are sustained and reflected in the Budget Act, contracts will be amended to reflect the increased allotment(s).
The following contract types will be issued for 2008-09 with no General Fund reduction:
General Child Care (CCTR), Full Day Preschool (CFDP), Family Child Care Homes (CFCC), Migrant Child Care (CMIG), Migrant Specialized Services (CMSS), Migrant Alternative Payment (CMAP), Latchkey (CLTK), and Pre Kindergarten Literacy Support (CPKS).
The following contract types will be issued for 2008-09 with a General Fund reduction:
State Preschool (CPRE) These contracts were reduced by a factor of .83949 percent for a total reduction of approximately $3 million.
Pre K - Part Day (CPKP) These contracts were reduced by a factor of 3.09926 percent for a total reduction of approximately $1.1 million. CPKP funds still in process were also reduced by this factor.
Pre K - Full Day (CPKF) This contract type is created by combining part-day funds with full-day (wrap-around funds). The part-day portion was reduced by a factor of 3.09926 percent for a total reduction of approximately $170,000. The Part-day portion of CPKF funds still in process was also reduced by a factor of 3.09926 percent for a total reduction of approximately $25,000.
Resource and Referral (CRRP) The General Fund portion of these contracts was reduced by a factor of 6.4381 percent for a reduction of approximately $1.3 million. Since these contracts also contain federal funds, which were not reduced, the overall reduction to the total MRA is approximately 5.4326 percent, depending on the amount of federal funds in each contract.
Handicapped (CHAN) These contracts were reduced by a factor of 6.4597 percent for a reduction of approximately $130,000.
Local Planning Council (CLPC) The General Fund portion of these contracts was reduced by a factor of 48.0575 percent for a reduction of approximately $425,000. Since these contracts also contain federal funds, which were not reduced, the overall reduction to the total MRA is approximately 6.4138 percent.
Centralized Eligibility List (CCEL) The funding for these contracts has been redistributed to more closely reflect the increased workload for counties with larger numbers of children waiting. This redistribution was accomplished by reducing 2007/08 MRAs by 10% plus a reduction of $2,000 to the original based amount. The balance remaining in each contract was then augmented by a prorated amount based on those counties with average child counts above 1,000 during the four reporting quarters of 2007. If you have any question regarding your 2007/08 CCEL MRA, please contact Suzanne Kwong, Child Development Division, at 916-323-3034.
Alternative Payment (CAPP) The General Fund portion of these contracts was reduced by a factor of 14.531 percent for a reduction of approximately $16.2 million. Since these contracts also contain federal funds, which were not reduced, the overall reduction to the total MRA is 6.356 percent.
CalWORKs Stages 2 and 3 (C2AP, C3AP) The May Revision increased allocations to both Stage 2 and 3, however, the Temporary Assistance for Needy Families (TANF) Reserve Fund “set-aside” used by both Stage 1 (Department of Social Services) and Stage 2 has been eliminated. Stage 2 contract MRAs will be initiated based on agencies’ April 2008 Caseload and Fiscal Data, however, in order to create a “reserve” of $16 million so that there will be a resource immediately available to augment Stage 2 contracts as needed, initial contract MRAs will reflect a total of $500 million. Stage 3 contracts will be initiated utilizing all of the $432 million available.
FISCAL YEAR 2008-09 BUDGET ACT:
It is uncertain if the FY 2008-09 budget will be signed on time, if the final budget will require any changes in funding to Child Care and Development contracts, or if the California Department of Education (CDE) will be given authority to advance contract apportionments prior to a signed budget. However, contractors should sign and return their contracts to the Contracts Office promptly, as advances cannot be made without a signed contract. If contract advances cannot be issued until after the budget is signed, contractors who require a short-term loan for operating expenses may contact their CDFS fiscal analyst to request a letter be sent to their financial institution confirming that a contract with CDE has been signed.
REPORTING RESTRICTED AND UNRESTRICTED INCOME:
CDFS has revised the CDFS attendance and fiscal report forms for FY 2008-09 by the addition of a second page to the fiscal section of the reports. This additional page will be used by those agencies who utilize supplemental income to enhance their child care and development program. Agencies that do not utilize supplemental income will continue to report restricted and unrestricted income on the first page of the fiscal section of the report. A Management Bulletin will be issued to all agencies and will contain detailed information and a copy of a revised fiscal report. Please contact your CDFS fiscal analyst if you have any questions.
CHANGE IN REPORTING FOR FULL-DAY PRESCHOOL:
Assembly Bill (AB) 1080 extended the use of adjustment factors to full-day preschool (CFDP) programs. Management Bulletin 08-01 notified child development contractors about future changes in attendance and fiscal reporting for CFDP contracts. This change includes reporting via the CDFS 9500 Form instead of the CDFS 8501 Form. Part-day State Preschool (CPRE) and Pre-Kindergarten and Family Literacy part-day (CPKP) contracts will continue to report on the CDFS 8501 Form.
PROCESS TO APPLY FOR CONTINGENCY FUNDS:
Pursuant to Education Code section 8222.1, as amended by AB 1571, the CDE shall reallocate funds as necessary to reimburse alternative payment programs (APP) (excluding CalWORKs) for actual and allowable costs incurred for additional services. An APP may apply for reimbursement of up to three percent of their contract amount, or for a greater amount subject to the discretion of the department, based on availability of funds. Applications may be submitted as early as May 1, but no later than September 30, 2008. The CDE will approve or deny applications submitted pursuant to this section, but will not consider applications received after September 30 of the current calendar year for additional costs incurred during the 2007-08 fiscal year.
The CDE will distribute reimbursement funds for each approved application within 90 days of receipt of the application if it was filed between May 1 and July 20 inclusive of the current calendar year. Applications received after July 20 are not subject to the 90 day requirement for the distribution of funds. If requests for reimbursement pursuant to this section exceed available funds, CDE will assign priority for reimbursement according to the order in which it receives the applications. Funds received by an APP pursuant to this section that are not substantiated by the program’s annual audit must be returned to CDE.
COSTS DISALLOWED IN CHILD DEVELOPMENT AUDITS:
The following is provided as examples of costs disallowed in audits related to non-reimbursable costs claimed under CDE center based and APPs. When costs are disallowed, CDE will not reimburse those costs. Each example is followed by a bracketed citation to identify the applicable requirement in the contract Funding Terms and Conditions [FT&C].
- Payroll costs for salaries and benefits are disallowed when a contractor does not adequately support its claim for reimbursement, e.g., does not maintain time sheets that indicate the actual amount of time spent (performing direct cost activities) in each program per day for multi-funded employees. [FT&C, § VI.E]
- The following costs are disallowed, as they are specifically prohibited by the contract – this is only a partial list [FT&C, § V.H]:
- Bad debts, except parent fees if collection attempts are documented.
- Amusement and entertainment.
- Idle facilities for full-year programs, e.g., office or classroom used for storage.
- Fines and penalties.
- Bonuses not part of a collective bargaining agreement.
- Costs incurred outside the contract period, but not audit fees [FT&C, § V.H].
- Costs are disallowed if they are not reasonable and necessary to the performance of the contract [FT&C § V.A], for example:
- Granite counter tops in kitchen and bathrooms.
- Cellular telephones for employees’ spouses and children.
- High-end office furnishings.
- Depreciation is disallowed when claimed on (a) assets purchased with public funds, (b) donated assets, or (c) idle or excess facilities [FT&C, § III.A].
- When a contractor lacks prior written approval from the Child Development Division, costs are disallowed for:
- Renovation and repairs or subcontracts of $10,000 or more [FT&C, §§ III.F and IV.C].
- Equipment purchases in excess of $7,500 per item [FT&C, § III.C].
- Rent is disallowed [FT&C, § II.P]:
- On property owned by the contractor. An expense may be claimed only as depreciation or use allowance.
- On property owned by affiliates, officers or other key personnel of the contractor or their families, unless the contractor obtains (and claims no more than) a fair market rental estimate.
- In general, claims for reimbursement are disallowed if there is insufficient documentation to support the claim, e.g., no paid invoice or receipt to support an expense. The contractor has the burden of proof. [FT&C, § VI.E]
For additional information, contact CDE Audits & Investigations Division at 916-322-2288.
ANALYST CASELOAD ASSIGNMENTS:
Please be aware that some analyst caseload assignments have changed. Most agencies will continue to report to the same CDFS analyst. Please refer to http://www.cde.ca.gov/fg/aa/cd/ for your fiscal analyst.
WEB SITE LINK TO CDFS FORMS:
Contractors are requested to always use the most current CDFS report forms. Beginning July 1, 2008, please recycle any report forms that you may have made copies of, and use only the forms located at http://ww.cde.ca.gov/fg/aa/cd/.
If you have any questions about a specific contract or need clarification about any topic covered in this letter, please contact your assigned CDFS analyst.
Sincerely,
Original signed by Phyllis Savage
Phyllis A. Savage, Staff Services Manager III
Child Development and Nutrition Fiscal Services
Fiscal and Administrative Services Division
1430 N Street
Sacramento, CA 95814