Transferability and Title I Carryover
If a local educational agency (LEA) transfers funds from another federal education program into Title I Part A under the transferability provision in Section 6123 of Elementary and Secondary Education Act (ESEA), the transferred amount is added to the LEA’s Title I Part A allocation and the combined amount becomes the base for calculating the 15 percent carryover limitation.
Section 1127(a) of Title I of the ESEA limits the amount of Title I Part A funds an LEA may carry over from one fiscal year’s allocation to not more than 15 percent of the total Title I Part A funds allocated to the LEA for that fiscal year. The law allows a state educational agency (SEA) to grant an LEA a waiver of this carryover limit if: (1) the LEA’s request is reasonable and necessary, or (2) a supplemental Title I Part A appropriation becomes available. The SEA may grant such a waiver once in three years
If an LEA received a waiver in the last two years and did not receive supplemental allocation of Title I Part A American Recovery and Reinvestment Act (ARRA) funds, the LEA is subject to once in a three year restriction and is not allowed to carry over funds exceeding the 15 percent limit. The California Department of Education (CDE) will bill the LEA for the amount exceeding the 15 percent carryover limit.
Under Section 421(b) of the General Education Provisions Act, LEAs and the CDE must obligate funds during the 27 months extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second succeeding fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. However, Section 1127(a) of Title I of the ESEA limits the amount of Title I Part A funds an LEA may carry over from one fiscal year’s allocation to not more than 15 percent of the total Title I Part A funds allocated to the LEA for that fiscal year.
The following illustrates how the 27-month availability for Title I Part A funds and the carryover limitation would operate for an LEA that receives an allocation under the fiscal year (FY) 2011 appropriation.
Federal FY 2011 Appropriation
(Title I Part A Funds Allocated to the LEA from Funds Made Available on July 1, 2011 Total $1,500,000)
|Minimum amount LEA must obligate between July 1, 2010-September 30, 2011 to avoid excess carryover (85 percent of total appropriation)||
|Amount LEA may carryover and obligate during October 1, 2011-September 30, 2012 (carryover period provided under Section 421(b) of General Education Provisions Act)||
During the first 15 months that an LEA’s Title I Part A funds are available, the LEA must, by September 30, 2012, obligate at least $1,275,000 (85 percent of the total Title I Part A allocated to it). The LEA may carry over a maximum of $225,000 (15 percent) into the next fiscal year and must obligate those funds by September 30, 2012. Any funds that remain unobligated after that date revert to the U.S. Treasury.
Questions and Answers on Carryover
- Are obligations included in the expenditure amounts?
Legal obligations are commitments made by an LEA to purchase goods or services immediately or in a future period. Commitments are generally made in the form of a purchase order or a written contract. For purposes of accounting at year-end, obligations for future periods are not reflected in the current year’s books. Rather, the obligated goods or services are recognized in the following year’s books, when the goods or services are actually received. But for purposes of grant reporting, federal funding may be claimed under a current-year grant for certain qualifying legal obligations incurred by the end of the grant period, even though the goods or services will not be received until after the grant period ends. The question of whether or not an obligation is claimable for funding under a current-year grant is determined by the purpose of the obligation. The following illustration from the Education Department General Administrative Regulations Code of Federal Regulations (CFR), Title 34, Part 76.707, shows when various commitments are considered to be legal obligations.
If the obligation is for . . . The legal obligation is made . . .
Acquisition of real or personal property
On the date the LEA makes a binding written commitment to acquire the property
Personal services by an employee of the LEA
When the services are performed
Personal services by a contractor who is not an employee of the LEA
On the date the LEA makes a binding written commitment to obtain the services
Performance of work other than personal services On the date the LEA makes a binding written commitment to obtain the work services Public utility services
When the LEA receives the services
When the travel is taken or conference attended
Rental of real or personal property When the LEA uses the property
Based on the previous illustration, an example of a legal obligation that would not qualify for funding under a current-year grant ending June 30 is the cost of a conference to be held in July. Regardless of when a purchase order or contract is signed, that legal obligation occurs when the conference is attended, not before.
On what amount is the 15 percent limitation on carryover based?
The percentage limitation is applied to the amount allocated to the LEA for Title I Part A under Subpart 2 for the current year, plus any funds transferred into Title I Part A under the authority in Title VI Part A, Subpart 2 (see Q4). It does not include carryover funds from the preceding year, excess funds that the SEA reallocated to the LEA under Section 1126(c) of Title I, school improvement funds received under section 1003, or funds received under the State Academic Achievement Awards program.
- Does the percentage limitation on carryover funds apply to all LEAs?
No. The percentage limitation does not apply to an LEA that receives an allocation of less than $50,000 in Title I Part A Subpart 2 funds.
- What happens to excess funds carried over by an LEA?
If an LEA does not have a waiver of the carryover limitation, the excess funds become available to CDE to reallocate to other LEAs.
- How does an LEA handle Title I Part A funds that are carried over when allocating funds to school attendance areas?
Although an LEA may not use carryover funds to provide services in an ineligible Title I school, an LEA has considerable discretion in handling carryover funds. Some of these options include:
- Adding carryover funds to the LEA's current-year allocation and distributing them to participating areas and schools in accordance with allocation procedures that ensure equitable participation of private school children.
- Allocating to schools with the highest concentrations of poverty in the LEA, thus providing a higher per-pupil amount to those schools, ensuring equitable participation of private school children. Note: if an LEA adds carryover funds to a reservation to which equitable services apply (e.g., parental involvement), the LEA must also calculate and provide equitable services from the carryover funds.
- If an LEA is required in a given year to reserve a specific amount of funds for a particular purpose but does not spend all of those funds in that year, may the LEA carry over those unspent funds and spend them in accordance with the flexibility noted in Question 5?
No. If an LEA is required to spend a specific amount of its Title I Part A allocation in a given year for a particular purpose, the LEA must meet that obligation. If it does not do so in the year for which the funds were allocated, it must carry over the unspent funds and spend them for the specific purpose in the following year. For example, an LEA that has been identified for program improvement must reserve and use 10 percent of its Title I Part A allocation for professional development activities. The LEA does not have any flexibility to spend less. Thus, an LEA that has been identified for improvement in School Year (SY) 2009-10 must spend at least 10 percent of its SY 2009-10 allocation, which first became available on July 1, 2009, within 27 months. Any funds that the LEA reserved for professional development in SY 2009-10, but did not use that year, must be carried over into SY 2010-11 and used for professional development activities. These carryover funds may not be used for other Title I purposes. In addition to the 2009-10 funds carried over for professional development activities, the LEA, if it is still identified for program improvement in SY 2010-11, must also reserve 10 percent from its SY 2010-11 Title I Part A allocation for professional development activities.
- If an LEA reserves 20 percent of its Title I Part A allocation for supplemental educational services (SES) and choice-related transportation, but spends less than that amount, is the LEA required to carry over the unspent funds for SES and choice-related transportation costs in the following year?
It depends on several situations in which an LEA would need to carry over unspent Title I Part A funds in this context. For example, if an LEA has documented demand (e.g., parent applications) to absorb the full 20 percent on choice-related transportation and SES but, for whatever reason, spends less than 20 percent, an LEA would not meet requirements of the statute and be subject to enforcement sanctions unless it reopens enrollment for SES and/or public school choice. If reopening enrollment is impossible, the LEA must carry over to the following school year the unexpended balance of the set-aside and use that balance for choice-related transportation and SES in that year—in addition to spending an amount equal to 20 percent of that year’s Title I Part A allocation. An LEA may find itself in this position if there is a lower than expected enrollment rate among eligible students that applied for SES, or if the student attendance levels in SES tutoring sessions are lower than anticipated, but there is unmet demand for choice or SES among other eligible students.
Another scenario in which an LEA would need to carry over unspent funds for choice and SES is if the LEA initially prioritizes the students to whom it offers SES—e.g., its lowest-achieving, low-income students—and demand from those students does not absorb the full 20 percent. In this instance, the LEA would need to reopen enrollment to all eligible students or carry over to the following year the unexpended balance of the set-aside and use that balance for choice-related transportation and SES in that year—again, in addition to spending an amount equal to 20 percent of that year’s Title I Part A allocation too.
On the other hand, if an LEA offers the opportunity to transfer to other schools and to receive SES to all eligible students and demand for those services does not absorb an amount equal to 20 percent of the LEA’s allocation, the LEA may use those funds for other allowable activities during the year in which the reservation was made or carry over the unexpended balance and use those funds for any purposes for which carryover funds may be used (see Question 4). If these funds are carried over, the equitable participation requirements for private school children in Title I would apply.
- Are unspent funds from required reservations included in the carryover limitation?
Yes. The 15 percent carryover limitation applies to the LEA's entire Part A, Subpart 2 allocation and, therefore, includes any funds reserved but not spent. For example, if the combination of unused funds reserved for professional development and other unspent Part A funds exceeds 15 percent of an LEA's total Title I Part A allocation, the excess funds must be returned to the CDE for reallocation to other LEAs, unless the CDE grants the LEA a waiver. However, the LEA must still meet its obligations with respect to the statutory reservations from funds available for the subsequent school year.
- How does the carryover provision apply to equitable services to private school children?
In general, if an LEA provided equitable services for private school students in the first year, any carryover funds would be considered additional funds for the entire Title I program in the subsequent year and would be part of the LEA’s Title I resource base in the next year. Those funds would be used, along with any other carryover funds, for serving both public and private school students on an equitable basis. This situation might occur, for example, if private school students did not fully participate in the Federal program in the first year, even though an equitable program was planned and offered for those students.
However, there may be a circumstance in which equitable services were not provided. For example, there was a delay by an LEA in implementing an equitable program for private school children because of consultation and notification issues between private school officials and the LEA. As a result, the LEA could not spend all the funds it had available for providing equitable services to private school children and needed to carry over those funds and use them to provide services to private school children in the following year. These carryover funds would be in addition to funds that the LEA would otherwise be required to use to provide equitable services for private school students out of the LEA’s current-year allocation.
Under either situation, the LEA retains control of the Federal funds carried over into the following year. No funds are provided directly to private schools.