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Guidance: 2012-13 Title I Carryover and Waiver

Consolidated Application, Winter Release program guidance for the 2012-13 Title I Part A Carryover Calculation and Waiver Request.
Introduction

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.

Transferability and Title I Carryover

If a LEA transfers funds from another federal education program into Title I Part A under the transferability provision in Section 6123 of the 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. If an LEA received a waiver in the last two years and received the supplemental allocation of ARRA funds, the LEA may exceed the 15 percent limit.

The U.S. Department of Education granted CDE a waiver for the once in a three year restriction on granting carryover waiver to the LEA provided that the LEA needs an additional waiver due to the hardship caused by sequestration. This is a one- time waiver and applies only to fiscal year 2012–13 funds. This waiver is available to the LEAs that have already received a Title I, Part A carryover waiver in one of the previous two years but need a second waiver due to sequestration. CARS will inform the affected LEAs of the availability of this option provided the LEA needs an additional carryover waiver due to sequestration.  

Note: The waiver must be approved before the LEA can spend the carryover funds that are in excess of the 15 percent limit.

Federal FY 2012 Appropriation
(Title I Part A Funds Allocated to the LEA from Funds Made Available on July 1, 2012 Total $1,500,000)
Description Amount

Total allocation

$1,500,000
Minimum amount LEA must obligate between July 1, 2011-September 30, 2012 to avoid excess carryover (85 percent of total appropriation)
1,275,000
Amount LEA may carryover and obligate during October 1, 2012-September 30, 2013 (carryover period provided under Section 421(b) of General Education Provisions Act)
225,000

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.

During the first 15 months that an LEA’s Title I Part A funds are available, the LEA must, by September 30, 2013, 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, 2013. Any funds that remain unobligated after that date revert to the U.S. Treasury.

Questions and Answers on Carryover

Q. Does the percentage limitation on carryover funds apply to all LEAs?
A. 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. However, all LEAs must report the carryover amount in CARS.

Q. Are obligations included in the expenditure amounts?
A. 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 Code of Federal Regulations, Title 34 (34 CFR), 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

Travel, conferences

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.

Q. On what amount is the 15 percent limitation on carryover based?
A. 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 next question). 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.

Q. What happens to excess funds carried over by an LEA?
A. If an LEA does not have a waiver of the carryover limitation, the excess funds become available to CDE to reallocate to other LEAs.

Q. How does an LEA handle Title I Part A funds that are carried over when allocating funds to school attendance areas?
A. 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:

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.

Q. 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 the question above?
A. 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) 2010–11 must spend at least 10 percent of its SY 2010–11 allocation, which first became available on July 1, 2010, within 27 months. Any funds that the LEA reserved for professional development in SY 2010–11, but did not use that year, must be carried over into SY 2011–12 and used for professional development activities. These carryover funds may not be used for other Title I purposes. In addition to the 2010–11 funds carried over for professional development activities, the LEA, if it is still identified for program improvement in SY 2011–12, must also reserve 10 percent from its SY 2011–12 Title I Part A allocation for professional development activities.

Q. 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?
A. 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 a 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, there may be cases where an LEA offers both school choice and SES to all eligible students and meets the demands for those services without expending an amount equal to 20 percent of the LEA’s allocation. In those cases, the LEA may use those funds for other allowable Title I activities during the year in which the reservation was made or may 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.

Q. Are unspent funds from required reservations included in the carryover limitation?
A. 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.

Q. How does the carryover provision apply to equitable services to private school children?
A. 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.

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