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CSPP Fiscal Training Webinar Transcript Day Three


Corey Khan: Okay, good morning, everyone. Welcome to day three of our California State Preschool Program fiscal training. Hopefully the last two sessions have been worth your time. Again, this is our first time doing a webinar of this size. So, bear with us as we learn how to facilitate this.

So, I wanted to go over just our agenda today, we have a packed agenda, I will say. So, what we're going to do, again, we're not going to hold questions for like a Q&A session this time, but we are going to hopefully be able to get through each presentation faster than what we have allotted; and then we'll take questions, however much time is left within the time that we allotted for this presentation, each presentation. That's when we'll take live questions. We don't want to go too far over because we know that as we saw on the first day, we sort of had a ripple effect, and we got out too late. So, today is expected to go until 1:00 p.m. So, this one is one hour longer mostly because the content, the presentations are a lot, a little bit longer than they have been. So, what we're going to start so like we did. So, last couple of days, we sort of set the groundwork for like, why you report certain things, what are some of your requirements on like the program side on how you enroll a child eligibility and your family files and things like that. Day one, two, we sort of went over a high-level overview of the reporting requirements, where those requirements come from, and then the contract and payment process just generically. So today, we're sort of bringing all the that together, we're first going to start with Enrollment, Attendance and Fiscal Reporting requirements. So, that sort of goes back to the laws and regs that we spoke to on day one, but this presentation is going to have more like tangible examples. They are examples so they're just mock, like mock forms that we're using and things like that, just to provide an example for to show how a child gets reported on our report forms. And then we go into the fiscal side of how to report as well. And then, so that is expected to go until 10:30 a.m. So, if we get done early with that presentation, we'll do a live Q&A. And then, till 10:30 a.m., hopefully, or 10:25 a.m., just to give all of you a short break, then we'll go into the calculation worksheet. So, once you've submitted your report, usually that means our office, you know, generates a calculation worksheet and earnings worksheet. So, we'll go over that and how you earn your contract. That presentation is expected to go from 10:30 a.m. to noon. And then we have one other audit presentation and that unlike day two where the you know, school districts and county office of EDs and community college districts, they were let go early. This audit presentation really applies to all contractors. So of course, if you have to drop off, you drop off, but if you're able to stay this does apply to everyone. So, that is expected to go to one and so then that's how we'll end today. So, I don't want to take up too much time. Again, we have the Q&A function. If those that do put a question in the chat, make sure you do a you know, your– your question is fully written out because sometimes we don't see it on the slide that we're actually on. So, if you have– if you can identify exactly what you're asking that will be ever so helpful for us. So, Q&A in the– in the Q&A function box. We have everyone here, policy program, again, responding to the questions ourselves, my staff, responding to questions, and then live Q&A at the end of each session if we have time. So, I'm going to turn it over. I'm going to stop talking. I'm going to turn it over to our first presentation of the day, which is presented by Assadya Ross and Ellyssa Rodriguez. So, I'm going to turn it over to Assadya.

Assadya Ross: Thank you, Corey. Good morning, everyone. As Corey mentioned, my name is Assadya Ross. I am a fiscal analyst in the Early Education and Nutrition Fiscal Services office, also known as EENFS. I, along with my colleague, Ellyssa Rodriguez, will be presenting this section on Enrollment, Attendance and Fiscal Reporting requirements.

So, let's jump into what topics we're going to be discussing during this portion of the presentation. We'll be discussing enrollment and attendance source documents. So, the various forms of documents at your agency that help collect the data reported for enrollment and attendance. We will examine a couple of examples of enrollment and attendance source documentation and then based on that documentation, show how that information is transferred to the enrollment and attendance portion of the Enrollment, Attendance and Fiscal report. Then, Ellyssa will take over and share the same information, but on the fiscal side. So, we'll be looking at documents that support your revenue and expense reporting, and how that information should be transferred to the fiscal portion of the report.

During my portion of the presentation, we will be going over the following: enrollment and attendance, so we'll be clarifying what a day of enrollment is versus a day of attendance, as well as clarifying what a day of operation is. We'll walk through the source documents that feed into the Enrollment, Attendance and Fiscal report and then we'll go over some important reporting reminders to ensure successful accurate reports. While enrollment and attendance are currently not a basis of reimbursement in this fiscal year, it is important that this data continue to be reported correctly. Not only does Title 5 report– require that this data continue to be reported, but this information can also be used for analysis and legislative decisions. In addition, enrollment reporting still plays a role in reserve account calculations for those that have reserve accounts and accurately reporting enrollment data will help you determine if you are serving enough children with exceptional needs to meet the set aside requirement.

So, on this first slide we have a flow chart of enrollment and attendance reporting and source documentation. Various documents are used to determine the days of enrollment and days of attendance. This flow chart illustrates how source documents feed into the EENFS reports submitted via CPARIS. Source documentation includes the family file. Within this we are concerned with the Notice of Action which is going to determine the certified time-based category that a child is enrolled under. Next, we have the sign in and sign out sheet. This is going to determine the days of attendance that is reported for each child. Next, we have the best interest day tracking log also referred to as a BID tracking log. This tracking log is going to verify that our child doesn't exceed the total best interest days that are allotted per fiscal year, as well as ensure that these best interest days are tracked accurately. Next, we have the CD9400. This is what we call the bridging document between all of the source documents referenced previously. So, the Notice of Action, the sign in and sign out sheets, and the best interest day tracking log and the CD9400 document bridges that information and allows it to be reported on the EENFS Enrollment, Attendance and Fiscal report form in CPARIS. For example, if a child is marked absent on the sign in and sign out sheet, the absence should also be reflected on the CD9400. The time-based categories children are reported as are based on the Notice of Action. This will transfer over to the CD9400 and allow those children to be reported accurately in each category on the Enrollment, Attendance and Fiscal report. The EENFS Enrollment, Attendance and Fiscal report is the basis of reimbursement for your contract, so it is extremely important that all source documents justify and support the data that is being reported.

So, now we're going to go into terminology. We've already covered this, but we're going to go over it again as we're in this section and show you how this information is reported on the report form as well. So, a “Day of Operation” is going to be a day that the contractor is open to provide services for at least one enrolled certified child. Minimum Days of Operation, also referred to as the MDO, are going to be the number of days that the contractor is required to serve certified children. This becomes a term of your contract. This MDO is going to be based on the program calendar that was submitted either with your Continued Funding Application if you're a contractor that is continuing service from one near to the next, or if you are a contractor that was newly awarded funding then this will be the calendar that was submitted in your Request for Application package. Staff training days do not count as a day of operation. If you are a contractor with multiple sites, then service at any one site is going to be reported as a day of operation. If there are any changes to your Minimum Days of Operation, you are required to request a calendar change by contacting your PQI regional consultant. These requests must be submitted by June 30 of the fiscal year in which the change is occurring.

Now, we're going to look at an example of a program calendar, as I mentioned this is what determines the Minimum Days of Operation that are a term of your contract. On the left side of the screen is the program calendar summary. This is going to be the cover sheet of the program calendar. This sheet reflects contractor information as well as the days of operation in each quarter and what is cut off on the bottom is the summary of the total of all the days for the fiscal year. So, the total MDO for the contract term and then on the right side, you have an example of a program calendar for the month of September. Throughout this presentation we are going to be looking at reporting data for the month of September. So, that is why this example is included and we'll see that based on this program calendar there are 20 days of operation for the month of September which will service as we continue throughout this presentation, and we'll reference back to this later. As a reminder, if you have any calendar changes these must be submitted no later than June 30 of the fiscal year in which the change is taking place.

Next, we're going to talk about “Days of Enrollment.” Days of enrollment are the total of every child’s enrollment for the days that the contractor is open to provide services. This means that you are going to be adding up all the days of enrollment for all the children in the program. Enrollment is going to depend on eligibility. The days and hours of care are going to be reflected on the Notice of Action.

So, here we have an example of a Notice of Action. Some important information that we're going to look at on this particular document is the services approved to begin date for this child, which was July 3, 2023, in the upper left-hand corner. In area number four, this is going to show the approved child care services for the child, so it'll show the name of the child or children receiving services, the program that they're enrolled in, which will be CSPP and then the certified days and hours of care are going to be listed. In this example, the contractor wrote the times that the child is certified to attend the program. So, for example, on Monday, 8 a.m. to 4:30 p.m., however, contractors are not required to write the actual hour certified, but at minimum do have to indicate how many hours they are certified for. Using the Monday example, the contractor could have written 8.5 hours rather than 8 a.m. till 4:30 p.m.

Now, we're going to look at how days of enrollment are reported. The total number of days of enrollment for every certified child during the reporting period is what should be entered on the enrollment and attendance portion of the Enrollment, Attendance and Fiscal report form. You are going to record the days and enrollment for certified children under the appropriate categories. Children should only be reported under one category. There is a separate section on the report form for reporting children in classrooms that are receiving mental health consultative services, and this adjustment factor is built into the categories in that section. All children in the classroom receiving mental health consultative services should only be reported under the adjustment factors that indicate this. If the child’s days of enrollment are reported under the mental health consultative services categories, then they must not be reported under the non-mental health consultative services categories. You want to ensure that you reconcile the days of enrollment as well as the adjustment factors that are being claimed with the Notice of Action and family file to ensure that these children are reported in the right categories. In addition, you want to reconcile the days of enrollment with the program calendar to ensure that the days of enrollment do not exceed the days of operation for that period.

Now, we're going to look at how to determine enrollment time-base. In order to determine whether a child is reported as full-time or part-time, contractors should use the child’s certified schedule based on a full week of services to determine whether the child is deemed as part-time or full-time enrollment. Currently, less than 30 hours per week each day will be reported as part-time. If it is 30 hours or more in the week then each day will be reported as full-time. In addition, the enrollment time-base that is determined should be used to report the child's enrollment for every day that the contractor is open to provide services. We'll see an example of this carried out through the examples in the rest of this presentation. Due to legislative changes, on or before March 1, 2024, the number of hours associated with full and part-time services will change to 25 hours. So, at that point less than 25 hours per week will be reported as part-time and 25 hours or more per week will be reported as full-time. More information will go out when this change is ready to be implemented.

So, on this slide you'll see a couple of snips from some Notices of Actions throughout the rest of the enrollment and attendance portion of this presentation. We're going to use the certified services shown on this slide to complete a section of tab one, the enrollment portion of the Enrollment, Attendance and Fiscal report forms. On this document, you'll see that there are three children referenced at the top. You have Teddy Bear, who is certified to receive care 8 a.m. to 4:30 p.m., Monday through Thursday, and 8 to 11:30 a.m. on Friday. Teddy Bear has a total of 37.5 hours of care for the entire week. So, Teddy bear will be reported as full-time every day that the program is open. Next, we have Skye Cloud. Skye Cloud is approved to receive services 8:30 through 5: 30, Monday through Friday. This is a total of 45 hours for the week. So, Skye Cloud is also going to be reported as full-time for every day that the center is open and to provide services. Next, we have Rayne Falls. Rayne Falls is certified to receive care only Monday through Thursday, 7:30 to 5:00 o’clock p.m. and is not certified to receive any care on Friday. Although Rayne Falls will not attend the program on Fridays, Rayne Falls will still be reported as full-time based on their 38 hours per week every day so Monday through Friday and we'll see examples of that coming up in my presentation.

Now we're going to quickly look at “Days of Attendance.” Days of attendance are the total number of days that certified children are present in the program for any part of the day for which they are enrolled, or they have an excused absence. Days of attendance are always going to be equal to or less than days of enrollment. Daily sign in and sign out sheets are used as a primary source document for reporting and reimbursement purposes. According to Title 5, Section 17818 actual hours are required to be used when a child is signed in and out. Full signatures are also required to be used when signing a child in and out. On days that a child is absent, an authorized adult is required to sign the sign in and sign out sheet and include a reason for that absence in order for it to be considered an excused absence. The CD9400 must reconcile to the sign in and sign out sheets, and the EENFS report, the enrollment and attendance sections.

Now we will take a look at excused absences. As a reminder, excused absences are included as a day of attendance. Excused absences include illness, quarantine, illness or quarantine of the parent, family emergency, or to spend time with a parent or other relative as required by a court of law, or that is clearly in the best interest of the child according to Education Code Section 8205. Days of best interest are going to be limited to 10 per child per fiscal year, according to Title 5, Section 17819. The Best Interest Day policy should be clearly stated in the contractor Parent Handbook. The 11th day and thereafter must be counted as an unexcused absence. There's an exception for children who are recipients of protected services, or at risk for abuse or neglect in which case best interest days are not limited to 10 days. Best interest days may not be used as an excused absence if the child no longer attends the program, but the termination date on the Notice of Action has not passed. For example, if a child stops attending the program in mid-May and there is no contact until early June when the parent reaches out to say that they're withdrawing their child and their child is not coming back. The contractor cannot go back and claim the days from the time that the child stopped attending in mid-May and apply best interest days to those days where the child's absences were unexcused. Excused absent policy and family emergency policies must be clearly outlined in your Parent Handbook.

Now we're going to take a look at a couple of examples of sign in and sign out sheets which will later be used to complete the portion of the Enrollment, and Attendance Fiscal report. So, on this first sign in sheet we have Teddy Bear for the month of September 2023. When looking at the sign in and sign out sheet, you want to verify that full signatures are being used, which they are. You also want to verify that actual times are being used, so you'll see that the child is being reported as signed in at 8:05 or 7:59 and 8:01, which is completely accurate, and this is what we should see on the sign in and sign out sheet. You want to use the actual times. Also, on this example you'll see that on Tuesday, September 5 a best interest day is used. If the parent or teacher had not signed and indicated a reason for the absence on September 5 then it could be considered an unexcused absence. Since the required components of a signature and a reason are included, teacher Emily signed with her full signature and indicated that a best interest day are being used. Then the use of the best interest day should also be tracked in the best interest day tracking log to ensure that it actually qualifies as a best interest day, meaning that Teddy Bear has not already exhausted their 10 best interest days. Teacher Emily verified this. If Teddy Bear had already utilized their 10 best interest days, then this usage of a best interest day would be denied and could not be counted as a day of best interest and would instead be considered an unexcused absence. However, Teddy Bear did not exceed their 10 best interest days, so this best interest day utilized on September 5 is okay to be used. Next, you'll see that on the lower portion of the screen on Friday, September 29 there is an excused absence because Teddy Bear was out sick. You'll see that the teacher signed, indicating that they accepted a call from the parent stating that Teddy Bear was out sick and indicated the reason for the absence. If the parent didn't call or follow the procedures of the agency to report an absence and teacher Emily hadn't signed that it would remain an unexcused absence until it was cleared by either the teacher or the parent. As a reminder, when you are reporting our– when you're reporting the enrollment for each child, hours are going to be based on the certified weekly hours and not the actual hours of attendance.

So, on this screen is an example of the best interest day tracking log. This is included to show that Teddy Bear had not exceeded their 10 best interest days. We saw on the previous slide that on September 5, a best interest day was used for Teddy Bear which is also notated on this best interest day tracking log on the line for September 5. You will see that prior to this best interest day being used, Teddy Bear had only utilized 4 days which makes this an acceptable use of a best interest day. You want to verify that best interest days from the sign in and sign out sheet are reconciled on the best interest day tracking log, and you'll also want to verify that the child doesn't exceed their allotted 10 best interest days. The best interest day tracking log does not have to look like this. This is just an example, but it is a requirement that best interest days are tracked for all children in the program to ensure that they don't go over their yearly allotment.

Next, we'll look at an example of a sign in and sign out sheet for Skye Cloud. Skye Cloud is certified to attend the program Monday through Friday from 8:30 to 5:30 every day, I believe. So, you'll see on this sign in and sign out sheet that actual times are being used and full signatures are being used. You'll see that on Friday 9/1/2023, a best interest day was used by Skye Cloud. This was notated by teacher Emily along with the signature. Similarly, to Teddy Bear, teacher Emily checked to ensure that Skye Cloud had not exceeded their 10 best interest days prior to putting this down as an acceptable reason. There were no other absences for Skye in the month of September and we verify that the parent signed with a full signature and actual times when signing Skye in and out for the remainder of the month.

Next, we have an example of a sign in and sign out sheet for Rayne Falls. If you remember, Rayne Falls was only certified to attend the program Monday through Thursday, with no services being provided on Friday. You'll see on this sign in and sign out sheet that every Friday is indicated as a day of no service. That is the N/S in parentheses by every Friday and it's also grayed out because we don't want the parent or teacher to sign in this day because this is not a day that the child is actually at the program. So, with that being grayed out, the teacher has already notated these days to help reconcile the attendance documents. If these days were left blank, this could cause a parent to sign on the wrong date when the child was actually not in attendance which could cause confusion when reconciling the documents. In addition, on this sign in and sign out sheet on Wednesday, September 6 it is blank. There are no times indicated and there are no signatures or reason for why the child might have been absent. So, this is going to be an unexcused absence which will be tracked on our enrollment and attendance document. We'll see how this is tracked on the next slide on the CD9400 when we get there. You'll also see that later in the month on Tuesday, 9/26 and Wednesday, 9/27, Rayne Falls was sick. Teacher Emily notated this with the reason of sick as well as a full signature, so these days will be considered excused absences.

So, here we have an example of the CD9400. Similarly to the best interest day tracking log that I showed earlier, this is just an example. Your CD9400 doesn't have to look like this. However, it should contain a key notating any symbols or abbreviations that are being used on the CD9400 so that when, if we ever come out for a review at your agency, we can pull this document, review this document and be able to read it accurately. So, on the CD9400 we're going to use this to reconcile the days of attendance and the absences from the sign in and sign out sheets to the CD9400 for each tab. In turn, this will help us turn around and report the total days of enrollment and days of attendance on the Enrollment, Attendance and Fiscal report form in CPARIS. On the September 9400 you'll see the first line of Teddy Bear under the 3 year old full-time category. On this line we want to ensure that that best interest day on the first Tuesday of the month is indicated, which it is by that “B” in that first Tuesday column. Teddy Bear was present in the program every other day except for the very last day of the month in which Teddy Bear was sick and teacher Emily signed to notate that. You'll see on the CD9400 the last Friday of the month on Teddy Bear’s line there is a “EA” indicated which shows that this is an excused absence, so that sick day is recorded properly. For Teddy Bear, you'll see 20 days of enrollment as we recall for the month of September the program was operating 20 days, so this is correct. And because Teddy Bear didn't have any unexcused absences, the only days that Teddy Bear was not in the program were a best interest day and an excused absence. Then we will also have 20 days of attendance because that will include all of the days that Teddy Bear was present in the program as well as any excused absences. The next line we're going to have Skye Cloud. So, Skye Cloud was present for every day in the program, except for that very first day in which a best interest day is used, and you'll see that a “B” is indicated in the first Friday of the month for Skye Cloud. Skye Cloud was present or had an excused absence for every day of the month of September, so we'll see 20 days of enrollment and 20 days of attendance in the last two columns for Skye Cloud. Lastly, we have Rayne Falls. Remember that Rayne was our most unusual reporting case, in which services were only received Monday through Thursday, and no services were received on Friday. Those Fridays were grayed out on the attendance sheet similarly to that on the CD9400, each Friday is notated with the “NS” which means no services per certified hours. In addition, we know that Rayne Falls had an unexcused absence at that beginning of the month on a Wednesday. So, you'll see the first Wednesday for Rayne Falls reflects an “A” which is an unexcused absence as per the key on this CD9400. We also saw that Rayne Falls had an excused absences towards the latter part of the month and these are notated on the last Tuesday and Wednesday of the month with the “EA” indicating that these are excused absences. Based on this information, Rayne Falls had one day in which they were not present in the program and did not have an excused absence. So, we have 20 days of enrollment reported for Rayne Falls, and 19 days of attendance due to that unexcused absence. This brings us to 60 total days of enrollment, and 59 days of attendance for these 3 children for the month of September which we will see reflected on an upcoming slide on an enrollment and attendance portion of the report. When reconciling your CD9400, you want to verify that an absence is really excused as defined in your Parent Handbook and if not considered an excused absence, then it is coded correctly as unexcused.

So, here is an example of the enrollment and attendance portion of the Enrollment, Attendance and Fiscal report. This is going to be the first tab of the Enrollment, Attendance and Fiscal report. Enrollment and attendance are reported by service county. This contractor is only providing services in one county of Orange, so that is the only county that you'll see reflected on the screen. If you're a contractor that serves in multiple counties, then you will see multiple counties listed and you will select the one that you're entering the data for in order to put the enrollment and attendance information for that specific county. You'll see at the top of this form that this contractor has indicated that they are not serving children receiving mental health consultative services in this fiscal year. So, there are no enrollment and attendance boxes included under those specific sections. If you are a contractor who is providing services to certified children receiving mental health consultative services then you would click “Yes” and these same enrollment categories that you see reflected under days of enrollment for certified children would be reflected under certified children receiving MHCS and you would only report enrollment and attendance for the children in that specific section and not in the section below days of enrollment for certified children. Reconciling the days of enrollment and attendance from the CD9400, we saw that there were 60 days of enrollment for 3 year olds full-time based on the information that we reviewed. So, you'll see that 60 is entered in the current period. You'll want to verify that children are reported in the correct categories. All of these children were 3 year olds, so they are reported in the 3 year old full time category because they are receiving services for 30 hours a week or more. You want to reconcile this with your Notice of Action as well as any documentation in the family file. If you are serving– if you are not serving non-certified children, meaning children not receiving subsidized care through CDE or who have extended hours of care through Head Start and are enrolled in the same classroom at the same time as certified children then the radio button, indicating no non-certified children were not served will be selected and there will not be an area to include enrollment data for non-certified children. If non-certified children are being served in the same classroom at the same time as certified children, it will be reflected as we see it on the following slide.

As a reminder, this is the area of the report where non-certified children should be reported if services are provided in the same classroom at the same time as certified children. You'll see that “Yes” was selected for this contractor which allowed these enrollment categories to appear. This contractor is serving non-certified children and so they have that indicated on the non-certified three year old full-time line. For instances where a contractor with a CSPP contract commingles with non-certified children, the contractor will submit the appropriate Enrollment, Attendance and Fiscal report and complete the non-certified enrollment section. It is important to note that CDE CSPP contracts provide funding for only certified children. So, if a program includes non-certified children served in the same classroom at the same time, the CDE will prorate the total program cost to determine the appropriate amount to be allocated to the state subsidized portion. You will see the effect this has on reimbursement when we review the earnings calculation worksheet in a later presentation.

So, here are a few ways to ensure accurate enrollment and attendance reporting. You'll want to implement procedures to ensure report accuracy. A desk procedure will serve as a procedure manual. This will specify who is responsible for what task, how often the task is to be completed and any deadlines. For example, the teacher might be responsible for reviewing the sign in and sign out sheets on a daily basis, catching any days of attendance where a signature or time may be missed or that a parent is signing with full signatures or that an absence is not accounted for. The program director may be responsible for ensuring that all of the source documentation reconciles and acts as another pair of eyes to catch any discrepancies. This information is what would be reflected on your desk procedure and is helpful in ensuring accurate reporting. Desk procedures are also helpful when an employee is out and can assist management with monitoring tasks or modifying procedures as necessary. When staff members that complete certain tasks are out of the office or may leave the employment of the agency report, datelines can be missed, or data can be misreported. This can impact apportionment payments and impact cash flow. So, if procedures exist, it can help an unfamiliar person with completing and certifying the necessary reports. It's also helpful to have a reconciling procedure. This is going to be a process that is implemented by your agency to reconcile source documents such as the sign in and sign out sheets, best interest day tracking log, CD9400 and the Enrollment, Attendance and Fiscal report. How often you choose to reconcile your documents are up to each agency, however, it is highly encouraged that these types of checks are run often to avoid reporting discrepancies. Contractors on clear status are required to report quarterly so at minimum the reconciling procedure should be done quarterly to complete and certify the Enrollment, Attendance and Fiscal report. However, it is recommended that it is done more often to avoid any reporting discrepancies or cases of unexcused absences. If there is a day that a parent has not signed and you wait for months on end to catch it then it may be harder to verify who actually picked up the child that day, or if a time is missing, what time that child was picked up. However, if you reconcile on a daily basis your sign in and sign out sheet then you can catch any signatures that may be missed, or any times that may be missed and communicate that with a parent on the next day. Contractors on provision or conditional status are required to report monthly. So, at minimum the reconciling procedure should be done on a monthly basis to ensure that the data being reported is correct. However, as previously mentioned, doing these checks more often are recommended and can be beneficial to remembering to correct discrepancies in a timely manner. Now, I will turn it over to my colleague, Ellyssa Rodriguez, to discuss fiscal source documentation.

Ellyssa Rodriguez: Thank you, Assadya. Good afternoon, everybody. My name is Ellyssa Rodriguez, and I will be discussing the fiscal portion of the source documentation presentation. We will be discussing record keeping and requirements, cost allocation plans, what they are, and when you should have one, fiscal reporting, specifically looking at the fiscal section of the Enrollment, Attendance and Fiscal report, the requirement for an equipment inventory, and finally, some fiscal reporting reminders and a discussion of best practices.

On the screen is a diagram showing the various fiscal information sources feeding into the report. You can see the various sources feeding into the general ledger which then feeds into the report form. You will want to think about the flow of the process at your agency to ensure what you are reporting is accurate. There should be checks and balances prior to the information being entered in the general ledger. You want to verify that what is being reported is truly a reimbursable expense. An example of how that process might work would be the fiscal director having a procedure in place to review the general ledger periodically to verify that items are being categorized correctly. For fiscal staff, remember that anything recorded in the general ledger should reconcile to its source. If you have a cost allocation plan that will also impact how your expenses are being reported. As Assadya mentioned, the Enrollment, Attendance and Fiscal report is the basis of reimbursement for your contract. It is extremely important to ensure that all source documents can justify contract reimbursement.

There are record keeping requirements from both Education Code and Title 5 that pertain to you as a contractor as seen on the screen. Contractors have the burden of proof for supporting their claims for reimbursement. The expenses you claim should be accurate. We should clearly be able to tie what you are reporting to your records whether that be from your general ledger, from a profit and loss statement, or from your accounting software. Think about your process and how best to tailor it to fit the needs of your agency as well as the requirements from the state and keep in mind this is the sort of thing we will be looking for when we visit your agency for a fiscal review. The length of time you keep your records is governed by Education Code 33421 which states claims for reimbursement shall not be paid unless there are documents to support the claims. The contractor has the burden of supporting claims for reimbursement. All original records shall be retained by each contractor at least five years, or where an audit has been requested by a state agency until the date the audit is resolved, whichever is longer.

Now we will discuss a cost allocation plan. A cost allocation plan identifies the appropriate amount of expenses to be ascribed to a program, if you are operating multiple programs. Your cost allocation plan may be for direct costs only, indirect costs, or for both. Some examples would be a program director's salary which might be allocated between program and non-program duties or rent that is calculated using square footage. You can find more information on the cost allocation plan and requirements in the CDE Audit Guide. You can also contact your CPA for additional guidance.

Now, when should we cost allocate? Depending on the structure of your program, you may or may not be able to cost allocate. There must be an allocation plan to accurately report your appropriate cost for each program. In the example of a co-located program, some of the facility and staffing costs are shared such as electricity, rent or salaries and a cost allocation plan is required so that the related costs for each program are accurately reported. Remember that if you are claiming indirect expenses, you must have a cost allocation plan and use that to report your expenses.

Shown on the screen is the Enrollment, Attendance and Fiscal report that Assadya showed you earlier. We are now looking at the revenue section of the report. As a reminder, you will be entering information into the current period column or the middle column. The other sections are auto populated for you. Please note some current period sections may be grayed out. Shown on the screen is where you would report your restricted income, including child nutrition income, family fees, and if you have placed your apportionment payments in an interest-bearing account interest from those payments, unrestricted income, including fees for non-certified children and Head Start funding. The example on the screen shows that this contractor has reported $7,500 in restricted income from the ARPA stipend indicated above by the red arrow. We can also see this information as carried over to the cumulative fiscal year column.

Shown on the screen is the reimbursable expense page of the Enrollment, Fiscal and Attendance report. This portion of the page is where you will report your program expenses. Reimbursable expenses I've highlighted here categories 1000 through 5000. As a brief overview, you will see that these categories include certified salaries, classified salaries, employee benefits, books and supplies and services and other operating expenses. Another very important item to note is the line item for start-up expenses. If you were approved for start-up this line is where you will report those expenses. You should not be reporting start-up expenses in any of the categories above and on this line as it would cause you to overreport these expenses since they would be reported twice. Approved start-up expenses should only be reported here on the start-up expenses line. The reason that the start-up expenses do not need to be broken down is because these expenses have already been itemized on the line item start-up request that was submitted and reviewed. Next is the indirect cost line. This is where you will report your indirect costs. Keep in mind that indirect costs are included in your reported administrative costs, in– not in addition to. You will see the approved indirect cost rate percentage as a separate field on this page which will be auto populated for you. This is where you will enter your approved indirect cost percentage. Private agencies have a maximum indirect cost rate of 10 percent. If you are an LEA, you may have negotiated indirect cost rate. The maximum indirect cost rate for an agency with a negotiated rate is the lesser of the negotiated rate or 10 percent. This line is where you would report your administrative costs. These administrative costs are not in addition to the expenses indicated above. The administrative costs should already be reported in each category. This line simply asks you to separately identify the administrative costs that are reported above.

Now we will discuss equipment inventory. Equipment inventory must include all items purchased in whole or in part with state funds. What this means that everything that is considered to be not expendable. We do not expect you to inventory your pens or your pencils. However, if an item is reusable, think a bookcase, a table, a chair, a desktop, a computer, a laptop, an iPad, or items that last some time and are physical assets it is considered to be equipment and if purchased with state funds, even in part, it must be included in your inventory. There is not a dollar amount or a threshold minimum that determines what equipment should be included in the inventory. If the item can be classified as equipment and is purchased in whole or in part with state funds, then it should be included within the inventory.

Seen on the screen here is an inventory guide. The EENFS, in consultation with the Audits and Investigations unit, has developed the following chart showing examples of what is and what is not considered inventory. Please note that this is not an all-inclusive list, and the chart is only meant to be a guide. If you do have any questions about the items not addressed within this chart, please reach out to your PQI consultant.

Shown on the screen here we can see the equipment inventory form. As Assadya mentioned earlier in regards to the source documentation for enrollment and attendance like the best interest day tracking log or the CD9400, you can create your own equipment inventory form. However, it must include all of the fields that you can see here. Including contractor legal name, item description, serial, or identification number, original cost, acquisition date, location of the item, its use and the item's current condition. You'll also notice a field to the right titled disposal. This column would be utilized when the equipment is either donated to another CDE funded service provider, transferred to the Department of General Services also known as DGS, or sold with the proceeds deposited into the Child Development Fund as restricted income which would be reported on your Enrollment, Attendance and Fiscal report. If you are interested in utilizing the property transfer option for any of your equipment, please contact your EED program consultant for further guidance. Lastly, you will see the certification section which requires a signature and a date. Please also note that a physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.

Now let's discuss how to ensure accurate fiscal reporting. Maintaining thorough records, this is a key component of successfully running your program. Again, the burden of proof supporting your claims rests with you. Having policies and procedures in place to ensure your records are accurate will greatly benefit you as a contractor and will allow you to abide by the various regulations and requirements. Desk procedures, desk procedures can be incredibly helpful. As Assadya had mentioned to you, desk procedures can assist management with monitoring procedures to ensure staff are following the proper guidelines when preparing the reports. Reconciliation, Assadya spoke to you about reconciliation for your enrollment and attendance documents. Equally important is to have processes in place to reconcile your fiscal documentation. I mentioned earlier the example of the fiscal director, periodically reviewing the general ledger to ensure items are being categorized correctly. Spot check your accounts payable records to verify the proper back up documentation is present. If you are a larger agency, think about deciding how to pull the sample of records you will be reviewing. How often you reconcile is up to you but give some thought as to what works best for your agency, and also for the continued accuracy of what you were reporting to CDE. Lastly, cost allocation. The cost allocation methodology should be revisited to ensure it is still accurate. If you base part of your methodology on enrollment of certified children at your program that should be monitored as the enrollment changes. That wraps up the presentation on Enrollment, Attendance and Fiscal Reporting Requirements. Are there any questions?

Corey Khan: Okay, I'm going to call on. I don't know, Cate or Cory to jump on. We have another Cory not to say that I'm talking in the third person, sorry, to come on to facilitate our Q&A session. So, we have about 25minutes so if one of you two could come on that'd be great.

Crystal Devlin: Corey, really quickly, I’m sorry I to interrupt, but in the Q&A if you're submitting a follow up question, it'd be really helpful for you to refer to what was already answered for you, right? So, you answer– you ask a question, we answer it and then you're coming back with clarifying questions. We're having to go into the answered questions and find your original question and the response to that. So, it's really helpful if you could be more clear in the Q&A when you repost a question. Thank you.

Corey Khan: Cory, I think I heard you jumping on, but before I turn it over to you, I did respond to like I want to say five questions in the chat about how to report or record the days of attendance when the child isn't certified to be there all five days. So, if you remember in Assadya’s example, Rayne Falls I think is only certified to be in the program I want to say it was Monday through Thursday, let's say, so they weren't scheduled on Friday, but there is a FAQ and I'll put the link in the chat on how to report someone who might not be enrolled all five days. So, you essentially would be reporting the child all five days on the days of attend– sorry days of enrollment line and then the days of attendance on that nonscheduled day you can report that day– that non-scheduled day as a day of attendance. So, it looks like they're there, but if we were to go out, or you know, look at your document, you should have just like what Assadya went through in her presentation, whether it be on like the 9400, mostly on the 9400, you would record like a NS or create some sort of code that shows that it was a nonscheduled day on that day, but you can count it as a day of attendance. So, I did want to bring that up and then I'm going to put the link in the chat to that question and answer, we have a FAQ on it. So, I'll put it in the chat right now. So, Cory, I'm going to turn it over to you to facilitate, sorry.

Cory Kennedy: No worries, thank you. Hi, so my name is Cory Kennedy and I'm the manager over the Early Education Payment Systems office. So, we can go ahead and start answering your questions. I see someone has raised her hand. Janette Buchner, you can go ahead and ask your question. Hello, are you there? Okay, so we'll move on to Rasheedah.

Rasheedah Shakoor: Can you hear me?

Cory Kennedy: Yes.

Rasheedah Shakoor: Okay, hi, my name's Rasheedah Shakoor and I was just wondering do you all have any like best practices as it relates to the cost allocation plan or the certified children because I just want to make sure that when we're doing the financials that we're making the most sense. We've been doing it the same way. We've been in business for a long time, but we have new leadership, and we want to look at the best ways of doing it, like, I'm thinking, while I'm listening to the presentations which thank you very much for them. Like the commingled class, should there be separate classes? Because you say it– if you have a commingled class, do people have classes that only have their certified in one class and the non-certified in another, or as I'm setting up my accounting, should I have my funds separated where, you know, I just have a specific fund that only uses the CDE dollar so that when it comes time for reporting and doing audits, that that's the only fund that has to be reported. I'm just wondering if there is a– if you all have any of that, one, or if there's a way that we all who are all on the line listening, could share some of those best practices.

Corey Khan: I'm going to jump in, Rasheedah. So good question, I will say when it comes to like best practices of cost allocation plans, we, so our unit we're not auditors. So, we always defer to like your CPA to create a cost allocation plan, but part of your question actually is, I think it's further than a cost allocation plan. It's really about like best practices for setting up your program and things like that. So honestly, I would suggest for you to maybe contact– I don't know whether you contact your PQI consultant first, but I, and Crystal jump into if this isn't the right thing to say, but I honestly think that it would be beneficial for you to contact or get a meeting with both your fiscal analysts and consultants because the consultant can help with like, you know, should you comingle or I don't know those things, but we can also help with, okay, if this is your plan how should you then report and track? So that's why I'm suggesting to probably get a meeting with the both of them at once.

Rasheedah Shakoor: Perfect, thank you.

Corey Khan: Yeah.

Cory Kennedy: Okay, thank you. And moving on, we are going to Denise Gonsalves.

Denise Gonsalves: Hi, yes, I had some questions. Some of them were answered in the chat, but my biggest question and take away from yesterday that's creating some anxiety over here at our center is the ERTC funds that we did not– we were trying to save those funds for after hold harmless but we learned yesterday in the presentation that we have to report those for last fiscal year. That's when they came in and we did not use those. So, we are highly concerned it’s going to affect our MRA. Is that correct?

Cate Washington: Hi, Denise. Sorry, it took me a second to find my unmute button. So, what I would recommend that you do is you would need to work with your CPA on this. I'm not sure if you are a private agency, or if you're an LEA, but if you are a private agency, you would want to work with your CPA because the employer retention tax credits should be reported and should be recognized when the revenue is recognized. So, it sounds like you might need to potentially revise how that was reported last year through your audit, but that would be something that your CPA could give you further guidance on and if they have questions they would reach out to Audits and Investigations.

Denise Gonsalves: Yeah, we definitely are working on our audit from last year right now and so we have pulled in our CPA and he is included in the audit. What I'm more concerned about is that we were not reporting it in our fiscal and attendance reporting because we weren't using it.

Cate Washington: Right, and that will impact your reimbursement because it is considered restricted income. And so our calculation and that's why it's so important to and just kind of as a general note for everyone, it's really important to make sure that you're reporting correctly throughout the year because as you're reporting, we're adjusting your reimbursement based on the data that you're reporting to us. So, if you're reporting restricted income and the associated expenses, we're accounting for that in your earnings. And so, what we're trying to do is we're trying to make sure we're advancing sufficient funding to support your program, but we're trying to also avoid a billing at the end of the year and so reporting that restricted income and the expenses would help avoid that at the end of the year.

Denise Gonsalves: Yeah, I think we were under the impression that we would report it when we expended it. So, I think that’s where it got confusing for us so we were kind of trying to save it for after hold harmless but it should like we should have been spending it last year.

Cate Washington: Yeah, it’s when the revenue was recognized.

Denise Gonsalves: Yeah, so does that mean we do a journal entry with our accountant or do we have to go back and revise all of our reports?

Cate Washington: You wouldn't revise all of your reports, so that would be corrected with your audit. So, your CPA when they're completing your audit, they're going to be submitting that to Audits and Investigations. And once that is approved by Audits and Investigations, they'll send what they call the AUD over to your fiscal analyst and your fiscal analyst will then run the calculation for the final earnings for that year and at that point is when a billing, a payment or no action would be taken depending on the outcome of that calculation.

Denise Gonsalves: Okay, was there any kind of notice or a bulletin that went out that maybe we missed about the ERTC?

Cate Washington: Corey, do you remember if there was a listserv that went out? I want to say there might have been. I know where we address that in the end of the year letter, I believe as well.

Denise Gonsalves: Okay, yeah. We– I went thoroughly through the end of the year letter, and I did not see that. So yeah, okay. Alright, so it sounds like maybe I missed a bulletin. Thank you.

Cate Washington: You're welcome.

Cory Kennedy: Thank you. Now we're going to call on Michelle Armstrong.

Michelle Armstrong: Hello, I just have a quick question. I'm a little confused. I asked a couple of questions in the chat also. If I am using the form CD9400, I don't really know what to put in the amount received. I didn't– we haven't been using this. I had said I use my own tracking form, but what is supposed to go in those other columns as if I was keeping just regular track of their attendance?

Cate Washington: Hi, Michelle, could you possibly, I apologize, could you possibly repeat the question about the 9400? You said you wanted to know what should go in which columns on there?

Michelle Armstrong: Yeah, like there's the daily fee column, there's the amount received columns, receipt number and date. What are those columns for?

Cate Washington: Crystal, I don't know if you're able to take this question since that's not our form or someone else from EED.

Crystal Devlin: Yeah, I'm not sure. Let me go in and take a look at the form real quick and see if I can find the answer for you. You said the 9400, correct?

Michelle Armstrong: Yeah.

Crystal Devlin: Okay, let me take a look. I'll see what I can find.

Cate Washington: Thank you, Crystal.

Assadya Ross: Just to hop in. Those are old fields on there. So, those were used in reference to family fees that were received. So, you don't have to track your family fees on that version of the CD9400. So, nothing would need to be included if you are tracking those somewhere else separately.

Michelle Armstrong: That's helpful and we don't have family fees. Anyway, we have– we have sometimes not right now, sometimes, a full pay family that does not income qualify, but I didn't know if that was something that would be on here if that was the case.

Cory Kennedy: We'll wait for Crystal to get back on that, so we'll move on to Kristen Burkett.

Kristin Burkett: Can you hear me? Are you able to hear me?

Cory Kennedy: Yes, we can.

Kristin Burkett: Okay, sorry. So, I know we have to do an inventory list every two years, but it says it has to be reconciled with the property records. What are those referring to?

Crystal Devlin: Oh, real quick on the inventory records. So, you should be maintaining inventory records always, right? You have to reconcile them every– at minimum of every two years and your property records are, you know, you're tagging your equipment and your inventory or your equipment with like an identification number or serial number and then you're including that on your inventory records and on your inventory records you're also including the location of the item and those types of things. So, you're going to go through and check all your inventory. Find where those tags are, you know, verify that you know they match, that they're still in the same location, they have not been disposed of, or if they have been disposed of, that that's been, you know, included on your inventory record. So on and so forth.

Kristen Burkett: Yeah, so you just mean that every two years we need to go through our list to make sure we still have this item, it hasn't been sold that the serial numbers match. Is that what you're talking about?

Crystal Devlin: Correct and you should, you know honestly, you should be updating those inventory records anytime something is disposed of, sold, it's no longer, you know, usable, and you have to dispose of it. So on and so forth, that should happen at the time that it occurs.

Kristen Burkett: Okay so it’s kind of like a live list? Like when we–

Crystal Devlin: Correct.

Kristin Burkett: When we purchase something add it, when we take it away, add it, but we just need to reconcile it to make sure everything matches?

Crystal Devlin: Correct.

Kristin Burkett: Okay, thank you.

Crystal Devlin: You're welcome.

Cory Kennedy: Okay, and we'll move on to Maggie Flores. Hi Maggie, are you there?

Maggie Flores: Oh, yes, I'm sorry. I had already started talking. Sorry, I thought I was already unmuted. My question is in regards to the program calendar and base of operation. We are– we have one contract and we have multiple sites. Can we– if we have– if we close the site and leave other sites open, will that count as a day of service or a day of operation?

Corey Khan: Yes.

Maggie Flores: Yes? So, we have four sites. So, let's say we close two sites and leave two sites open. Will that count as a day of operation?

Corey Khan: Yes, so a day of operation is any– it's counted as long as you have at least one site open. I've seen this also throughout the chat, and I think I've responded to a bunch where, like, let's say, you close for a partial day. That's still a day of operation if you did operate part of the day.

Maggie Flores: Okay, so that was my next question. We have– we serve a.m. and p.m. session. So, let's say we, we close all sites in the morning, but we open afternoon. That would count as the day of operation, right?

Corey Khan: Yes.

Maggie Flores: Okay, very good. Thank you.

Corey Khan: Crystal, did you want to jump in?

Crystal Devlin: Yeah, and I wanted to just caution on this that if you're closing classrooms that are, you know, they're supposed to be open. You need to get approval from your consultant on that. So, in order to claim days of attendance so it's either an emergency closure or it's something that you know, it may have been included in your original request for application or something, but you can't just close classrooms without, you know, talking to your consultant if they're supposed to be open without talking to your consultant for and working through that to make sure that it's okay.

Maggie Flores: Okay, so we can use them for like in service days then?

Crystal Devlin: You can do that, but you still have to follow the requirements in the Management Bulletin, I believe it's 19-05. I can double check on that for the optional staff training days and you would send that information to your consultant to be approved for that.

Maggie Flores: Okay, thank you.

Crystal Devlin: Yeah, you’re welcome.

Cory Kennedy: Now we're going to call on aalvarez.

aalvarez23: Hi, thank you. So, my question has to do with attendance. We are CSPP part-time year-round and that means that we are here through the summer. Some of our families that are enrolling for the two-year contract sometimes decided to take part or the full summer off and so I know that we're not supposed to disenroll, and we are aware that they are wanting to take the summer off. So, would we count those as excused absences, unexcused absences, or disenroll them and have them re-certify when they come back?

Corey Khan: Crystal, I think that might be a question for you because it's recertification.

Crystal Devlin: Yeah, yeah, I was answering another question. I'm sorry. Can you repeat that question? I got part of it, but not all of it.

aalvarez23: Sure, we are CSPP part-time/full-year or year-round. So, we are open during the summer. We know that some of our families prefer not to bring the children in the summer and they do let us know ahead of time because the rest of the children may be off. So, when the children are not attending, and this is on a two-year contract. So, they want to be able to leave and come back sometime early in the summer, but nonetheless begone for a few weeks, for you know, so do we count those– that time not attending as unexcused absences, excused absences or do we disenroll and have them recertify when they come back in the fall?

Crystal Devlin: So, couple of things here. You could use– the family could use their 10 best interest days during that time. The remainder of those days would be considered unexcused absences. The family their certification during that 24-month eligibility period, you cannot disenroll that family unless they request to be disenrolled. So, you're going to have to work with them, either on those best interest days or they would fall into the, could fall into the abandonment of care requirements if they're not in contact with you for 30 days, or just straight unexcused absences if it's less than those 30 days. Does that answer–

aalvarez23: Okay, yeah, follow up question, please. So, does that mean that as long as they email me– and the first couple of weeks and tell me, okay, we are still coming back on this date because they are letting us know ahead of time that they're going to be gone for a certain amount of time. So, and in the previous webinar a couple of days ago I think it was said that as long as we were told ahead of time, is that abandonment of care because they are letting us know? So again, if I receive a communication via email or whatever, and letting them– letting me know, reaffirming that they are coming back. So would that–

Crystal Devlin: So those would be considered unexcused absences if the family has used all of their best interest days. And then if they're staying in touch with you, that's fine, they're not going to hit that 30 day with no communication and where you would disenroll them for abandonment of care. So, it sounds like they are in touch with you, but even so unless they're saying that they're sick, their child is sick, any of those excused absences categories, or the best interest days or family emergency, it would be considered unexcused absence.

aalvarez23: Okay, thank you.

Crystal Devlin: You’re welcome. If you need further clarification or technical assistance on that, reach out to your consultant.

Cory Kennedy: We're going to take one more question before a short break in between the next presentation. So, I'm going to move on to Angelica Felix. Angelica, are you there? Okay.

Corey Khan: Cory, can I just answer one more thing?

Cory Kennedy: Yes.

Corey Khan: I've seen a couple of things in the chat about the CD9400 being outdated. So, it is. I think someone also mentioned the revision date says 2001. That's probably correct. I don't know if it's a EED form, so, I see Crystal on. I'm not going to speak to whether they would revise that, but what I would say is, I've never seen anyone use that form, just because it's like a PDF so I will say that most programs that I've gone out to has their own version of it. So, that means that you can include the three-year-old adjustment factor category line or exceptional needs. Or, you know, whatever has changed. You have, or most programs have their own version of the CD9400. So that one that's on the webpage is more of like a template I'd say, at this point, but I don't know, Crystal, if you guys have any plans on revising that or anything, but essentially, it's just your bridging document between the sign in and out, all your NOAs, Notice of Actions and then have– but you know, it's the summary document before it gets onto our report form and most agencies have their own version.

Crystal Devlin: Yeah, thank you Corey. And yeah, I just wanted– did want to circle back to the 9400. Looking at what is on the website is definitely outdated and I recall this conversation coming up with some of our PQI office regional consultants just recently and it was something that we were going to bring back to our all staff meeting to discuss. So, just making sure that you're tracking the attendances, and that you know, the absences, excused and unexcused, best interest days, and that type of thing is sufficient. And we will get information out to the field if we determine that the 9400 is going to be revised, so on and so forth. And I see Cynthia just said, where do we send CD9400 form to? That's something you maintain on site. The tracking of your attendance. You maintain that on site for contract monitoring reviews or if we request a copy of it outside of the monitoring review process. So, you don't need to send it to anybody. It’s for your records and for your reviewers to review.

Corey Khan: Okay, thanks, Crystal. So, we're going to take just a few minutes break. Our next presentation is scheduled at 10:30 and that is to go over the calculation worksheet. So, we're– come back at 10:30 and we will begin that presentation.

Okay, welcome back. Sorry it was so short, but we're going to get started. So, this is going into now that you've reported, you know, your enrollment attendance and fiscal data. How does that turn into earning your contract? So, I'm going to turn it over to Jake, Jacob Lee. It does say that it's presented by Joey, co-presented by Joey Boyd. He is actually unavailable today, so I think we're going to have someone else step in but Jake, take it away.

Jacob Lee: Hi, everyone. So, as Corey said, I'm Jacob Lee and I'm going to be presenting with Yashima Daniels today and we're going to be talking about understanding the calculation worksheet and reimbursement. So, let's get right into that.

So, the topics we're going to be discussing are understanding the limits of reimbursement, hold harmless, understanding the calculation worksheet, apportionment determination. We'll talk a little bit about the reserve account then intra-agency transfers, whether that's CCTR to CSPP or vice versa and then voluntary and temporary transfers otherwise known as VTTs. Then we'll talk about contract monitoring and then get into some questions at the end. So, first thing is going to be understanding the limits of reimbursement. Next slide

Alright, so according to Title 5, the contractors will be reimbursed for actual costs that are reasonable and necessary to the performance of the contract as defined in Section 17700 of the chapter. Per Section 17812 of the California Code of Regulations, the determination of reimbursement, that's contract reimbursement is limited to the least of the following, that's going to be the maximum reimbursement amount otherwise known as the MRA and that's going be stated in the preschool contract. And then the net reimbursable program cost or the product of the adjusted child days of enrollment (cdes) for certified children, times the contract rate per cde, times the actual percentage of attendance plus 5 percent, but in no case to exceed 100 percent of enrollment and that third one there is just the service earnings.

So, starting in fiscal year 2020-21, we've been in a hold harmless year and what that means is that determination of contract reimbursement has been limited to the lesser of the following and that's going to be 100 percent of the contract MRA or net reimbursable program costs, whichever is less. So, in a hold harmless year we don't factor in service earnings.

So, here we'll look at some examples of the limits of reimbursement under hold harmless. In example one, it shows an MRA of $250,000, net reimbursable expenses of $150,000 and then service earnings of $200,000 because net reimbursable costs are the lesser of the two, it is going to be– reimbursement is going to be a $150,000 for this example. In example two, it shows an MRA of $250,000 with net reimbursable costs at $300,000, and service earnings at $300,000 as well. For this example, they would be reimbursed at the MRA since that is the lesser of the two and that's going to be at $250,000 for this example. Finally, in the third example here we see an MRA of
$250,000, net reimbursable costs of $180,000 and then service earnings of a $100,000. So, they're going to be reimbursed at the net reimbursable cost for this example and that's going to be $180,000. I do want to note that if this were a non-hold harmless year, that in this example three here, they would be– the agency would be reimbursed at the third one, which would be service earnings and that would be at $100,000, but since we are in a hold harmless year, we are only looking at the MRA or net, or a net reimbursable cost. So, in this case it would be $180,000.

Alright! Now we'll move on to understanding the calculation worksheet.

So, let's talk about the contract earnings calculation process a little bit as contractors certify Enrollment, Attendance and Fiscal reports in CPARIS, they become viewable to your fiscal analyst, who will then review that report for completion and accuracy. Provided there are no issues with the report, the analyst will approve it which will generate the contract earnings calculation on the agency's end and that's going to be based on the report data. As the graphic on the slide suggests, this is a continuous process. Each time your agency certifies a new report, it must be reviewed and approved by your analyst and a new earnings calculation will become viewable based on the newest certified report data. If your agency revises a report, a revised earnings calculation will be generated from that report. At this time, as with certified reports, only the most recent version will be viewable in the system. So, for example, if your agency revised a previously certified September report and then your fiscal analyst approves that report, a new earnings calculation was generated and then the previous September earnings calculation would be no longer viewable.

So, how contract apportionments and reimbursement are determined. Projections throughout the year help predict potential earning levels through the end of the fiscal year. Projections are based on the reported data by your agency multiplied by the projection factor. The projection helps estimate contract earnings so that we can advance contract payment and provide a cash flow for your agency prior to services actually being provided. The potential projected contract earnings combined with the apportionment schedule in the EENFS Fiscal Handbook produce a flow of funds throughout the year that corresponds to the amount a contract is expected to earn.

So, in the next few slides here we'll go through each section of the calculation. You'll learn as I go through this next section of our presentation that contract earnings calculations are a combination of contract terms, data from the Enrollment, Attendance and Fiscal reports and system calculations. At the top of the contract earnings calculation screen, the contractor’s name and the contractor’s number will be present. Directly below the agency and contract information, the fiscal analyst’s name, date, and time the calculation was approved by the analyst will appear. Next, the report month, the name of the authorized representative who certified the report as well as the date it was certified. The apportionment month this calculation will impact and the amendment and revision number the earnings calculation is based upon. In this example, the report month is December, the apportionment month this calculation will impact is March and contract terms are based on the amendment 01. We'll see how all this impacts the calculation in the next section.

So, this is going to be the contract terms section of the calculation. At the top of the screen, the top of the screen the maximum reimbursable amount (MRA) is displayed and that's going to be at $250,000 for this example. We know from the previous slide that this is the 01 amendment and then next we'll see the apportionments that were paid to date for this contract. For this one, it's that $0 then you see the minimum days of operation or MDO. This is also a term of the contract and it's going to be 246 for this example. The contract also has an approved start-up amount of $30,000. We see that on the next line there. Then the voluntary and temporary transfer, or CSPP/CCTR transfer exception is going to be listed here. For this example, there was no transfer so it's going to be $0 and then the– finally we see, we'll see the calculation for the contractor’s exceptional needs and severely disabled set aside. On this line you'll see the calculation is taking the total MRA of $250,000 and adding in the VTT exception, which is going to be 0 in this case and then multiplying that by 2.4. That gives this contractor a total exceptional needs and severely disabled set-aside of $30,000. We will discuss this and the credit in more depth later in my slides.

Alright, so the calculations from reported data and then the projection factor. Until the processing of the June year end reports, all apportionments are determined by applying the projection factor to the contractor’s actual data. The total days of operation per the service calendar divided by the actual days of operation per the reports are going to equal the projection factor. So, in this example on the screen, you would do the MDO of 246 divided by the actual reported days of 122 to get the projection factor of 2.0164 and we're going to use that throughout the rest of the examples here.

Now let's talk about the certified enrollment percentage. Remember, in the reports submitted to CDE, days of enrollment are reported in specific categories which are then multiplied against adjustment factors to arrive at adjusted days of enrollment. In this section of the earnings calculation, CPARIS will display the total certified adjusted days of enrollment. This number will be the total from all categories and all service counties. In this example, the total certified adjusted days of enrollment is 10,000.4500. The next line is going to be the total certified adjusted severely disabled/exceptional needs days of enrollment that comes from enrollment reported in the severely disabled and exceptional needs categories on your report forms. In this example, the total certified adjusted days of enrollment reported in the severely disabled and exceptional needs reporting categories are 500.8500. You should note that the 500.8500 is not in addition to the total certified adjusted days of enrollment of 10,000.4500. It's already included in that number. Next, we'll see the total non-certified adjusted days of enrollment. In this example, they reported 1,395. Now we put all that together to determine the percentage of certified enrollment. The system does this by dividing the total certified adjusted days of enrollment by the total adjusted days of enrollment, both certified and non-certified. For the example we're using, the total certified and non-certified enrollment is 11,395.45 so the 10,000.45 divided by 11,395.45 will give us a percent certified days of enrollment of 87.7583 percent and that's going to be that bottom line there.

Alright, so now although contract reimbursement is based on the lesser of the contract MRA or net reimbursable costs, the flex factor will still be displayed on the earnings calculation. Title 5 mentions that in a non-hold harmless year the third limit of reimbursement is typically determined by multiplying the adjusted child days of enrollment for certified children by the contract rate by the actual percentage of attendance plus 5 percent, but in no case to exceed 100 percent of enrollment. The addition of the 5 percent as reference in Title 5 is referred to as the 5 percent flex factor and is applied to as an allowance which is added to the actual percentage of attendance. For this example, the total attendance percentage based on reported data is 94 percent. That 94 percent is determined by taking the total days of attendance across all counties from the report and dividing that by the total percent– by the total certified days of enrollment. The total attendance percentage with flex factor line is going to be the 94 percent plus the– plus the flex factor of 5 percent to give a total of 99 percent. Next slide.

Alright, so for reporting revenue, Title 5 Section 17821 requires contractors to report all services, revenues, and expenditures for both subsidized and nonsubsidized children. If nonsubsidized and subsidized children are receiving commingled preschool services as defined in section 17700 of this chapter. There are multiple types of revenues and reporting sections. Restricted income will affect the earnings calculation, but supplemental and unrestricted revenues will not.

Restricted income, it may only be extended for specific limited purposes. This includes nutrition program revenues, family fees for certified children, ARPA funding, interest in transfers from a child development reserve. Restricted income is deducted from total expenses when determining your apportionments.

Alright, so family fees and interest. Family fees for non-certified children must always be collected, but do not affect the earnings calculation. Certified families may also be required to pay a portion of the cost of care depending on income. The contractor shall provide written information to parents in advance of collecting family fees about the policies regarding family fee assessment, collection, and the consequences for delinquent payment of the fees. And then for interest, contract payments are in advance of state funds therefore any interest earned on those funds is property of the state and must be repaid. Advanced contract payments are not required to be in an interest-bearing account.

So, the family fees and interest and how they affect your fiscal year contract earnings. So, fees received from subsidized parents are to be expended and earned by the contractor before contract funds shall be claimed for reimbursement. Projected family fees and interest will be subtracted from the projected contract earnings amount. Certified family fees and interest will be combined on the calculation sheet. They will also be projected through the end of the year using the projection factor. After family fees and interests are subtracted, your projected reimbursement will be the lesser of their projected contract earnings amount or the MRA.

Alright, so let's look at how the restricted income calculation looks on the calculation worksheet. So, the total expenses of $130,000 was reported on the submitted fiscal and attendance report by the agency. The contractor also reported $3,000 in family fees collected and $4,500 in interest earned on apportionment payments. This gave them a total of $7,500 in restricted income. You'll see that there on the second line. Then there was no transfer from the preschool reserve to CSPP contract indicated and then as we can see on the last line here, we are subtracting the restricted income from total expenses to arrive at net expenses. So, that's going to be $122,500 for this example.

Alright, so service level exemptions, start-up, and staff training expenses. Service level exemptions increases service earnings and reimbursable expenses by the amount of service level exemptions reported. There are two types of these service level exemptions. Going to be start-up and staff training expenses. For start-up, start-up costs are expenses an agency incurs in the process of opening a new or additional facility before the full enrollment of children. Start-up is a contract term and must be pre-approved. Report start-up costs on the start-up line located on the fiscal page of the attendance and fiscal report. Staff training on the other hand is not a contract term. Staff training expenses do not require prior approval. Report staff training expenses in categories 1000 through 5000 and identify the amount of staff training reported in these categories on the total staff training expense line located on the fiscal page of the attendance and fiscal report. Contractors should be verifying that reported start-up and staff training expenses are included in the earnings calculation.

Let's see how these service level exemptions affect cost earnings and service earnings. Remember that costs and service earnings are two of the three limits of reimbursement. First, you'll see start-up that was reported, and in this example, start-up is going to be $12,000. Next, we see the staff training expenses that is reported in this example. It's going to be $3,000 because throughout the year we are projecting earnings and service level exemptions are a one-time expense. We subtract the service level exemptions from the projection calculation, but then add it back into both fiscal year, net reimbursable expenses, and projecting service earnings. This will be reflected in both the projected fiscal year net reimbursable expenses as seen on this on the screen and also the projected service earnings adjusted for attendance line the projected fiscal year net adjusted reimbursable expenses. For this example, is going to be $197,304. You can go ahead, Jenny.

Now we'll talk about how the net reimbursable expenses projections are calculated. So, net reimbursable program expenses represent the expenses related for certified children by prorating the total reported costs based on the percentage of certified enrollment in the program. Total expenses are adjusted for restricted income and any service level exemptions. Then, net reimbursable expenses is calculated by multiplying the adjusted expenses by the percentage of the certified children in your program. Net reimbursable expenses are projected through the end of the year.

Alright, so let's look at the expenses projection calculation now. So, as mentioned in or as stated in a previous slide. The first line shown above is going to be the total expenses reported or reported from the report and it's going to be $130,000 in this example. Restricted income will also pull from your report. It's going to be $7,500 for this example. There was no transfer calculated to the reserve. It's going to be 0 there. Then you'll see the restricted income amount deducted from your total expenses and then the difference is going to be stated on the fourth line down. That's going to be your net expenses of $122,500. You'll then see the administrative costs that have been reported by the agency. It's going to be $5,000 for this example. Then, immediately following that, you'll see the maximum administrative cost that can be reimbursed, which is going to be 15 percent of net expenses or in this case it's going to be $18,375. Anything reported in excess of that $18,375 will be listed on the next line. There was nothing reported over that so it's going to be at $0. As mentioned before, if you have any service level exemptions such as start-up or staff training expenses, you will see those figures on the next lines. For start-up, $12,000 was reported. Then staff training expenses was $3,000. The sum of these two expenses is subtracted from the net expenses and then reflected on the net adjusted expenses line at $107,500. This only occurs because the service level exemptions are not projected. They will be added in the next couple of steps again. The second to last line takes the percent of certified days of enrollment and then multiplies it by your net adjusted expenses to get you $90,411. Finally, you arrive at your projected net adjusted reimbursable expenses by multiplying that $90,411 by the projection factor of 2.0164. You add your service level exemptions back in and subtract any transfers from the reserve and that gives you a total of $197,304.

Alright, and now we'll talk a little bit about service earnings projections. Just to reiterate, while in hold harmless, service earnings projections are going to be shown on the calculation, but do not get factored into anything. The adjusted certified days of enrollment will be multiplied by the service county rate, which will total the actual service earnings. Title 5 Section 17812 the determination of reimbursable amount says that the product of the adjusted child days of enrollment for certified children, times the contract rate per child day of enrollment, times the actual percentage of attendance plus 5 percent but in no case to exceed 100 percent of enrollment. And again, that's going to be the service earnings. So, the actual service earnings are projected through the end of the year, taking into account the 5 percent attendance flex factor.

A little bit about the exceptional needs and severely disabled set aside. So, this says that at least 5 percent of the CSPP contracting agency’s funded enrollment must be reserved for children with exceptional needs and the contracting agency must serve those children. Agencies will be fully funded for the set aside percentage of enrollment, inclusive of the exceptional needs adjustment factor, to ensure funding is available to enroll children with exceptional needs in the set aside at any point during the fiscal year.

We'll look at the service earnings projection calculation now. So, at the top, you'll see the total certified adjusted days of enrollment from what the agency reported. That's going to be 1,683.648 which includes the exceptional needs and severely disabled enrollment of 158.4 which is listed on that next line there. Next, you'll see the non-certified days of enrollment that the agency reported. It's going to be 380. Then you'll see the service county rate for this county. It's going to be $55.27. Then actual county service earnings is calculated by taking the certified cdes from the top line and multiplying that by the service county rate which gives you $93,055. You'll see the actual county exceptional needs and severely disabled service earnings which is calculated by taking the exceptional needs and severely disabled adjusted days of enrollment, which we did earlier and multiplying it by the service county rate which gives you $8,755. And that figure is also going to be factored into the actual county service earnings line above that $93,055 figure. Next, you'll see the projected fiscal year service earnings. This takes the actual county’s– the actual county’s service earnings from above then multiplies it by the projection factor. For this example, we get $187,636 and that is what we are projecting this contract’s service earnings to be for the fiscal year. Finally, we get to the projected county exceptional needs severely disabled service earnings. This is calculated by taking $8,755 from above and multiplying it by the projection factor. This gives us $17,654 and it is also included in the line above with the $187,636.

Alright, and then now we'll look at the exceptional needs and severely disabled calculation here, the earnings calculation. So, the exceptional needs and severely disabled service level exemption credit is calculated by taking the set aside amount in the contract, which we went over during the contract terms and subtracting $17,654. So, it would be the $30,000 that we went over in the contract terms minus the $17,654 to get a credit of $12,346.

Alright, so now we'll look at the last section of the calculation sheet which is going to determine the apportionment. So, the lesser of cost is– sorry, so the MRA is going to be stated here at the top and that's going to be $250,000. Next, you'll see the projected fiscal year net adjusted reimbursable expenses with the exceptional needs and severely disabled service level exemption credit added and that's going to be $209,650. Then, you'll see the total attendance percentage that came from the reports. It's going to be 96 percent for this agency. And then right immediately following that, you'll see the line the total attendance percentage with the flex factor included, so that 96 percent plus the 5 percent flex factor will take them up to the 100 percent. It cannot exceed 100 percent so it's just going to be listed at 100 percent there. And then we get to the total projected fiscal year service earnings. This is going to be the sum of projected fiscal year service earnings across all service counties and that's going to be $187,636. Then, we get to the total projected fiscal year service earnings adjusted for attendance with the exceptional needs and severely disabled service level exemption credit added and that's going to be $199,982. Then we get to the projected fiscal year contract earnings line and that's going to be the projected fiscal year net adjusted reimbursable expenses with the exceptional needs and severely disabled credit added and that's going to be at $209,650 again. Next, you'll see any interest earned, or family fees reported on it and there’s going to be $0 for this example. There was none reported. Then you see the projected fiscal year interest and family fees. Since they reported 0 on the earnings, it's going to be projecting 0 as well. Then you'll get to the projected fiscal year adjusted contract earnings line. That's going to be the projected fiscal year contract earnings minus the projected fiscal year interest earned and then any family fees and that's going to remain at $209,650 since there was no interest reported or family fees reported. Then we'll see the projected fiscal year reimbursement. This is going to be the lesser of the MRA or the projected fiscal year adjusted contract earnings which is that 209,650 above and that's going to be lesser than the MRA so that's what's going to be listed there. Then we'll see the projected percentage of contract earnings. That's going to be the projected fiscal year adjusted contract earnings of $209,650 divided by the MRA of $250,000. and that's going to give you a percentage of 83.86%. Next, you'll see the apportionments that were paid to date for the agency. This agency had received a $125,625 and then immediately following that, you'll see the apportionment schedule cumulative percent of which this calculation is being based off of and that's going to be 75 percent. And then, lastly, we'll see the calculation– the calculated apportionment for this contract earning summary and that's going to be the projected fiscal year reimbursement, times the apportionment percentage of 75 percent minus any of the apportionments that were paid to date and that's going to give us a calculated apportionment of $31,613. Please note that the service earnings calculations are going to be shown here but are not currently being factored into the calculation because of hold harmless. If and when this goes away, you will want to make sure that your costs, service earnings and MRA are aligning pretty closely. I'll now be passing it over to Yashima to go over the rest of the presentation.

Yashima Daniels: Thank you, Jake. As Jake mentioned, my name is Yashima Daniels. I'm a manager in EENFS. I will be filling in for Joey Boyd today. Now that we've covered how the calculation sheet is broken down. We'll now move into apportionment, determination, year-end differences, the reserve account and then, finally, the transfer of funds process.

Okay, so here you can see the apportionment schedule. This is the same apportionment schedule that is included in the EENFS Fiscal Handbook that Jennifer had discussed during yesterday's presentation. To quickly recap, the apportionment schedule displayed breaks down the maximum percentage of your MRA that your agency can earn each month. CDE apportions 25 percent as soon as your CSPP contract is fully executed, and we have assigned state budget. This payment is to fund the program through September. All subsequent payments are based on reported data and will vary between 8.3 percent and 8.4 percent per advancement month of the maximum reimbursable amount if you are fully earning your contract. The same rule applies for contractors that may have started providing services at a later date. In the example Jake used to illustrate the calculation sheet, we use the December report which calculates the apportionments for March. As we can see on the screen, when we look at the apportionment schedule for March it's equal to 75 percent of the cumulative total that EENFS would advance if fully earning the contract. On the next slide, we are going to see how this applies to the apportionment calculation formula.

So here we have an example of how CDE is determining the payment of the calculation worksheet that Jake covered earlier. The payment was $31,613. We calculated this amount by taking the contract earnings, which you can find on the calculation sheet in the summary section, multiplied by the maximum cumulative percent from the apportionment schedule we were just viewing on the previous slide and then subtract any apportionment that the CDE has already issued, which can also be found in the summary section of the calculation worksheet. So, in our example here, the contract earnings were $209,650. We then multiply that by 75 percent which is the percentage for March to pay through March. Then we subtract payments that have already been issued which is $125,625, which gives us the calculated payment for March of $31,613. This methodology can be used at your own agency if you are doing internal projections and wanting to calculate or project what your payments would look like in any given month.

Your contract is not a grant. A child care and development contractor and the CDE have a legally binding agreement in which the programmatic and fiscal requirements are met by the contractor and the CDE agrees to reimburse the contractor for those services according to defined limits. Contractors cannot be paid more than the contract maximum reimbursable amount, which is your MRA.

Okay, so the calculation sheet that Jake covered earlier is what your agency can expect throughout the year when we are projecting earnings. The June calculation sheet will look a little different because at this point, we are not– we are no longer projecting your earnings when we are at the year-end. So, a couple of additional differences in the June report are, one, you will see the operational MRA which is determined by how many days your agency operates compared to your program calendar after applying the MDO flex factor, which I will get into detail in the next couple of slides. You will also see on a June calculation sheet, transfers to the reserve account if applicable, which we’ll also get into later in this presentation, and then, lastly, there may be a recommended billing amount reflected if the CDE has overpaid the contract throughout the fiscal year.

Let’s start with one of the June year-end report differences, which is the MDO flex factor. So, the MDO flex– oh, my gosh, sorry, flex factor. There is a 2 percent flex factor for days of operation. If the contractor fails to operate at least 98 percent of the minimum days of operation required in its contract, ceases operation or the contract is terminated prior to the end of the contract period, the maximum reimbursable amount shall be reduced in proportion to the percentage of the contract minimum days of operation that the contractor was not in operation. So, what that means. Looking at our second example here, is that if the days of operation fall under 98 percent, the contract MRA will be reduced accordingly. So, if your percentage is 98 percent of the MDO, it will calculate as 100 percent, as the 2 percent flex factor will be added to that 98 percent. If you are operating 97 percent of the MDO, it will calculate at 97 percent as the flex factor is not applied if under 98 percent. Therefore, if there are changes that need to be made to your MDO, it is very important that you submit the request to revise your program calendar to your Early Education consultant prior to June 30 of that fiscal year. Next slide, please. Thank you.

Okay, so now we're going to get into some examples of how this can impact your earnings. So, the first example is a contractor reporting that has met their MDO requirements. We can see the agency reported 246 days of operation, actual days of operation, which is 100 percent of their MDO requirements. Because of this, this agency's MRA and total adjusted MRA is unaffected and both remain at $250,000 because its agency's contract earnings were also $250,000. It did not affect their reimbursement.

Here is an example of a June report where the contractor only operated 241 days of operation when their MDO was 246 days because the updated calendar was never submitted. This caused the percent of MDO operated to get below the 98 percent threshold. So, notice how the operational MRA decreased from $250,000 to $244,919, which is under the total adjusted MRA is where we can see that amount. The fiscal penalty for operating less than the MDO is a decrease to the operational MRA, serving a difference of 2 percent or more of the MDO decreases the MRA that you can receive. With being unable to earn the entire MRA now, this directly affects one of the limits of reimbursement. Now the most that this contractor can earn is the operational MRA, which is the $244,919. If their contract earnings were $250,000, same as the example in the previous slide. This agency would have lost $5,081 in reimbursement, simply because they did not submit their revised calendar to their EED consultant.

Now let's transition into the reserve account.

Okay, so let's start by discussing some reserve account requirements.

Education Code Section 8336(a) states that all child development contractors are encouraged to develop and maintain a reserve within the child development fund, derived from earned but unexpended funds. Child development contractors may retain all earned funds. For purposes of this section, earned funds are those for which the required number of eligible service units have been provided. A couple of important notes regarding the reserve account. A reserve account or state funds that the contractor holds in reserve as deferred revenue until they are either properly spent or returned to the CDE, which I will later give some scenarios on this. Reserve funds are earned, but unspent funds which are available for use in those years when contract reimbursement is not sufficient to cover a program's reimbursable expenditures, with the only exception being that the funds cannot be used within the same year they were obtained. For example, if you earned reserve funds in fiscal year 2022-23, those funds would not be able to be utilized until fiscal year 2023-24, or any subsequent years. So, for example, if you had reserve funds you could use these funds to update classroom furnishings, to purchase play centers, teaching materials, anything that is reimbursable, that is a reimbursable expense under the contract. These reserve funds can be used for unexpected expenses in a fiscal year or could be used to upgrade the program.

So, now let's talk about establishing a reserve account. To establish a reserve account, the contractor must submit a Statement of Intent to Establish a Reserve Account in CPARIS, which we can see here on the screen. This form or letter of intent, statement of intent, must be submitted on or before July 20 along with the June report that is due on that same date. If your agency currently does not have a reserve account and is interested in setting up one in fiscal year 2023-24, your fiscal analyst will need to receive this letter, again, along with your June report prior to that July 20 deadline.

Okay, so we've covered how to set up a reserve account so now let's move on to how to maintain the reserve. This slide represents requirements for maintaining the reserve account which includes reserve funds must be kept in an interest bearing account. For LEAs, reserve account funds must be held in Child Development Fund 12. Reserve account does not need to be in a separate bank account from the Child Development Fund. However, if your agency is going to use the Child Development Fund to hold reserve funds, you will need to ensure that you are only reporting the interest associated with the reserve funds, which I will elaborate later in the presentation. Also, the Reserve Account Activity Report, which can be found in CPARIS, and a copy of the general ledger must be submitted with the June report. Since your contract earnings are tied to the reserve, your fiscal analyst won't be able to process your year-end Enrollment, Attendance and Fiscal report without the required reserve reports. Because of this, if agencies fail to submit an acceptable Reserve Account Activity Report and general ledger by July 20, the entire June report would be considered delinquent, and we could potentially start withholding subsequent payment. CSPP contractors can retain a reserve fund balance equal to 15 percent of the sum of MRA’s of all CSPP contracts contributing to the reserve account.

So, a common question our office receives once the June calculations are available in CPARIS is how do funds transfer into the reserve account? So, a transfer to the reserve will be indicated when reimbursable service earnings exceed reimbursable costs based on June year-end report. The amount a contract may reserve is its reimbursable earnings minus reimbursable costs, within the contract MRA, then capped at the reserve account maximum limit. So, here we have an example. For this contractor, the reimbursable service earnings are $500,000. The reimbursable costs are $475,000, and they have an MRA of $500,000. The amount that they are able, or the amount able to be transferred to the reserve would be $25,000 and that is the difference between the reimbursable service earnings of $500,000 and the reimbursable cost of $475,000, not to exceed the contract MRA. Please note that if this agency did not have a reserve account that they would be reimbursed for only the $475,000 which is the lesser of the reimbursable costs and the MRA, but because they do have a reserve account, the total earnings equate to $500,000, which is the total MRA and they can transfer that $25,000 into the reserve account to be used in future fiscal years when needed so this is why it's encouraged for agencies to establish a reserve account.

Okay, so let's get into transfers into the reserve. The top portion of this slide is a snip, a part of the calculation sheet that you will find in CPARIS. On the bottom of the slide, we have a copy of a reserve status report. Using our example from the previous slide, the agency had $500,000 in service earnings through providing services to children, but the reimbursable expenses were $475,000. We can see the $475,000 which has the box around it there at the top on the calculation report. Below on the reserve account status report, we see the amount to be transferred to the reserve account of $24,955. Now, before I mentioned that to calculate the reserve amount, we could take the service earnings of $500,000 and subtract the reimbursable expenses at $475,000, which should be $25,000 to be transferred into the reserve. However, if you remember on the previous slide, the reserve account is capped within the contract MRA and then capped again at the reserve account maximum, which is 15 percent of the MRA. So, if you take note at the right-hand corner of the reserve account status report, you will see that the reserve has a maximum cap of $75,000 because there was a previous balance of $50,000 which we can see in section one as the beginning balance as well as $5 in interest. In section two, that $24,995 is calculated to be transferred to the reserve which is going to take this agency to its maximum reserve cap. If your agency were to have low expenses every year compared to service earnings, there could be a transfer to the reserve, and it also could lead to hitting your maximum cap. In other words, your agency, once your agency reaches the cap, those earned funds are lost. Meaning they cannot be transferred into the reserve account. A couple of other points on this example because the reserve is at its maximum cap, the interest earned next year could trigger an interest billing for the interest earned in subsequent fiscal years if those reserve funds are not utilized. Also, a common question we receive is, will we be getting a separate check for the amount being transferred to the reserve in this example the $24,955? The amount to be transferred to the reserve will come with the apportionment payment. Take notice on the– on the slide towards the middle of the calculation report. So, the $24,995 to be transferred to the reserve will be included in the payment of the $499,995.

Okay, so another common question our office receives is when can an agency utilize these reserve funds? A transfer from the reserve might be necessary when reimbursable costs exceed the MRA on the June year-end reports. Also, when transferring funds from your reserve account to a preschool contract, your agency must report the transfer on the fiscal pages of the reports in CPARIS, which I'll show examples of in the next upcoming slide. If you remember, in the earlier slides I talked about utilizing reserves for planned expenses. For this example, let's say the agency wants to use $25,000 to pay for a new outdoor play structure. So here we can see in this example that the reimbursable costs are $475,000. However, the MRA is only $450,000. So, in this example, this agency would need to transfer $25,000 from the reserve account to their CSPP contract to cover those excess expenses.

Okay, just a reminder that reserve account funds can only be used for reimbursable program expenses for eligible children that exceed contract reimbursement such as the previous example I gave with purchasing an outdoor play structure. In addition, CSPP. reserve funds can only be transferred to CSPP contracts that are tied to the reserve account. Reserve account funds cannot be used in the same fiscal year in which they are earned. As mentioned earlier, if your agency were to earn reserve funds in fiscal year 2022-23, those funds can only– can start being utilized in fiscal year 2023-24 and in any subsequent fiscal year.

Now we will be discussing how to report when transferring reserve funds to a preschool contract. We will use the same example from the previous slide with the agency having $475,000 in reimbursable cost, but only being reimbursed based off of the MRA of $450,000. In this example, the agency had $25,000 in excess expenses that they are getting reimbursed for based off their MRA because the agency's reimbursement won't cover the excess, a transfer from the reserve account would be necessary to cover the cost. It's important to note that agencies must report the transfer as revenue on your June year-end reports in the revenue section. The amount reported on your Enrollment, Fiscal and Attendance report must match the amount reported on the reserve account activity report, again which is due with your June report. In this example, the agency is using $25,000 from the reserve account to cover the excess expenses which we can see reported on the line transfer from preschool reserve account there on the screen and $25,000 reflected in the current period.

Okay, so here's an example of how it should be reported on the reserve account activity report. We are going to use the same example of the agency we used with transferring into the reserve. So, the beginning balance which should equal the same as your ending balance from the prior fiscal year, CPARIS actually will automatically import this information based on the prior year's final reports. If there are any discrepancies with the beginning balances, your fiscal analyst will contact your agency to correct. In this example, the beginning balance is $50,000. In the next part of this report, you should be reporting the interest since these funds must be kept in an interest-bearing account. For this example, the interest earned was $5. The next section is where you may report any transfers out of your reserve account. Please ensure that you place the contract number in which you would like for the funds to go to as well as the amount that corresponds with what you place on your fiscal report. In this example, the agency is transferring $25,000 from the reserve to their CSPP contract and in this example it's CSPP2999. If you have a reserve account open, but it has a 0 balance, you are still required to submit this report at the end of the fiscal year, but you do not have to submit a general ledger with it. So, just some take ways here, report the interest on the preschool reserve account activity report, and then be sure that you are sending in a general ledger as that becomes the supporting documentation for the transfer.

Okay, so a transfer from reserve on the year-end worksheet. So, the top portion of the slide is a snip of part of the calculation sheet similar to what we saw in the previous example. And on the bottom of the slide, again, we have a copy of the reserve status report. On the top of the slide, we see the $25,000 transfer amount shown on the calculation sheet and also see this amount on the reserve account status report which you can see kind of highlighted with the black box at the bottom of the slide. This $25,000 is getting subtracted from the total reimbursable expenses to bring the net expenses in line with the MRA of $450,000. On the bottom of the slide, the reserve status report also shows any transfers going out of your reserve account. As you can see, this report ties back to the previous slide, showing the transfer from your reserve account to your CSPP contract in the amount of $25,000.

Some final thoughts on the reserve. As previously mentioned, your reserve account activity report is due along with your June report on July 20 and must be accompanied by the general ledger. Your fiscal analyst cannot process your June report without these documents and will reach out to your agency if revisions are needed. Some important notes on the general ledger that you will be submitting directly to your fiscal analyst is one, the ledger must show interest earned being deposited into the reserve account. The ending balance reported on the reserve account activity report must be supported by the general ledger and if reserve accounts have a zero balance, a general ledger does not need to be submitted but again, the reserve account activity report does. If you have any questions regarding the reserve account, please do not hesitate to reach out to your assigned fiscal analyst.

So, this leads us to the transfers portion of this presentation, specifically intra-agency transfers which are sometimes referred to as CSPP to CCTR transfers and then voluntary temporary transfer of funds which we refer to as VTT.

So, we will start with the intra-agency transfers. Education Code Section 8216(a) and Welfare Institutions Code Section 10300.5 allows the California Department of Education and the Department of Social Services to arrange intra-agency adjustments between CSPP and CCTR contracts for the same agency and funding allocation, in an effort to promote the full utilization of childcare and development funds. This transfer is only available to non-Local Educational Agencies who hold both a CSPP and a CCTR contract. Funds can be transferred from an under-earning contract to an over-earning contract.

Contractors can request a CSPP/CCTR transfer during two periods of the fiscal year. The first is January 1 through 15, 2024, and the second is April 1 through 15, 2024. The changes to the MRA as a result of this transfer are only for the fiscal year in which is requested, so for this fiscal year it would be only for fiscal year 2023-24. In order to request a transfer, contractors must complete and submit the CSPP Transfer Request Form, which is in CPARIS to submit the request to your CDE analyst. And then you will also need to submit a transfer request for the corresponding CCTR contract which you will submit to your CDSS fiscal analyst. Request to transfer a significant portion of the contract MRA may require a Program Narrative Change Form submitted to the Early Education Division.

That leads us to the second type of transfer known as the Voluntary and Temporary Transfer of Funds, again, the VTT.

California Ed Code Section 8256 allows for a voluntary and temporary transfer of funds between over-earning contractors and under-earning contractors with similar contract types. So, what that means is an LEA CSPP transferring to another LEA CSPP or a non-LEA CSPP transferring to another non-LEA CSPP. Contractors must self-identify as an under or over-earner and submit a transfer request to their counties LPC Coordinator. When you are submitting a request to your LPC Coordinator, please also include your fiscal analyst on the transfer request. Analyst– once we receive the request, we'll evaluate the request to determine if the amount of the transfer corresponds with the contract’s earning projections. For example, if your agency is requesting a $50,000 transfer in funding and your agency's projections don't warrant a transfer, we will reach out to ask for additional justification on the transfer request which could include submitting internal projections and or an updated attendance– Enrollment, Attendance and Fiscal report. The decision to approve or deny a VTT request will be made exclusively by CDE.

Okay, so let's talk about some VTT requirements. Participating contractors must be in good standing which means full compliance with funding terms or contract terms and conditions and fiscal reporting requirements. Per Education Code 8275.5, status does not necessarily prohibit an agency, an agency's eligibility to request a transfer. For those requesting additional funding, you must be able to show that you can use the funds immediately or already be over-earning your contract MRA, meaning you have reimbursable costs in excess of the MRA. The funding from transfers is not intended for renovations or repairs or purposeful over enrollment. VTTs cannot be transferred into the reserve account.

Okay, so we are now going to close out this presentation with some best practices regarding monitoring your contract throughout the fiscal year to better earn your contract.

So, some best practices regarding contract monitoring. First, it is important to track. Agencies should be tracking their MDO. Looking at their program calendar to verify it for accuracy. Also, you know ensure that the CD9400 with the attendance information is reconciling with what is being reported on the Enrollment, Attendance and Fiscal report. Also, agencies should be tracking their, you know, service earnings and net reimbursable costs, even though we are in a hold harmless year and reimbursement is the lesser of the MRA and net reimbursable cost. Aligning your costs with your service earnings is still really important, as we know, hold harmless is not going to continue forever. Next, we have react. So, agencies should be reacting to the calculation sheets that are viewable in CPARIS. This could mean making adjustments to better align your cost and service earnings throughout the fiscal year. This could also be contacting your fiscal analyst if you need technical assistance in understanding the calculation. Reacting to the eBlasts, the list servs that go out as well as Management Bulletins. These contain important information that can have an impact on potential earnings for an agency. If you are not receiving email notifications, you can sign up on our website. Reacting to withhold notices is also important. These serve as notices to agencies that we are withholding payments because of a specific issue. It's important that issues are– that the issues causing withholding a payment is resolved quickly. Also, reacting to contract amendments that require action by the agency. For contracts that require signatures, CDE will continue to issue payments based on the current term until the amendment is signed and returned to our Contract Office which will then fully execute that amendment. Next, we have act, oops. Yeah, act, so ensure that you are taking action, when an MDO change, or address change occurs. I went over earlier how not submitting a change for the MDO can negatively impact your contract’s earnings. Also, when reviewing and tracking earnings, if your agency knows it will earn or over-earn or under-earn the contract, we have transfer requests such as the VTT as well as inter-agency transfers twice a year that could assist– receiving temporary funds to cover those over-earnings, or to give up funds to help another agency cover their over-earnings. Last, we have contact. Please contact your fiscal analyst with any questions regarding your Enrollment, Attendance and Fiscal reports, calculation reports or reserve questions. For any program changes or questions, you will want to reach out to your EED consultant. Our Contract Office will be able to assist with any missing contracts and for private agencies any questions relating to audit requirements, please contact our Audits and Investigation unit.

I will now hand it over to Lucy who will take live questions. Thank you.

Lucy Mosqueda: Thank you, Yashima. Good afternoon, everyone. My name is Lucy Mosqueda and I'm a manager in the Early Education Nutrition Fiscal Services unit. As Yashima stated, we're going to be taking some live questions. I know there's a few open questions still in the Q&A, but as you'll see, our team has been very responsive so we don't have that many open questions. So, so far, I only see one hand up and that is Denise. So, I'm going to unmute you and I think you also have to unmute yourself. So, go ahead.

Denise Gonsalves: Thank you. I have a few questions.The first one is related to the section covered about the MDO and the two percent flex factor and how it affects your MRA. So, I just want to make sure I'm understanding this correctly. So, for our CSPP contract, we're approved for 243 days of operation. So, if we close an extra 3 days that were not considered emergency closures, that’s still– that would bring us to 240, but that would still be not 2 percent of 243 because 2 percent of 243 is 4.86 days. So, if we close those extra 3 days and they were not approved as emergency closures that would not affect our MRA.

Lucy Mosqueda: Correct, if it's– I haven't done the calculation myself, but if it's– if you're– if you stay within the 90 percent threshold, then it shouldn't affect your MRA. That being said, you would probably still want to check in with your program consultant about possibly needing to make some kind of calendar change.

Denise Gonsalves: Yeah, so we would submit a calendar change with the program explanation of why we had to close those days. I just want to make sure I'm understanding the two percent flex factor.

Lucy Mosqueda: Crystal, did you want to jump in?

Crystal Devlin: I just want to add on that that as we presented day before yesterday, that prior written approval is required to change your calendar. So, if you're going to be– regardless of the flex factor, you need to submit that program narrative change and revise program calendar for a change to your minimum days of operation in any case.

Denise Gonsalves: Okay, so, but there is the two percent flex factor if it– we have to close and we can't get preapproval, we just had to close.

Crystal Devlin: Correct.

Denise Gonsalves: Okay and then I had two other questions. One of them was about the reserve account. The reserve account, I'm just wondering how that works with our hold harmless because we wouldn't really get reimbursed more than we earned unless it was the projections were incorrect. Is that, am I understanding that correctly?

Lucy Mosqueda: Well, so for hold harmless what that means is that service earnings are taken out of like the limits of reimbursement. So, when we're calculating reimbursement, it's based off of the lesser of the net costs and the MRA, but that being said, we are still having contractors report enrollment and we are still calculating service earnings. It's just not factored into the reimbursement calculation.

Denise Gonsalves: Okay, but we could, like this fiscal year we could have been overpaid just because we were reimbursed in advance and that would be a year where we could do a reserve account.

Lucy Mosqueda: Well, the reserve account, that transfer to the reserve account, are you saying the transfer of funds into the reserve account or using your reserve account?

Denise Gonsalves: Transferring the funds.

Lucy Mosqueda: Transfer the funds into the reserve account. So, that gets calculated when service earnings exceed the net reimbursable costs so that can still, that can still happen in hold harmless, it’s just less likely because enrollment is down.

Denise Gonsalves: Okay, and then the other piece. I just want to understand the reporting of other funds on our fiscal report, fiscal and attendance reports. So, our organization, I run the Early Education Department, but we are a nonprofit that has a bunch of other programs and we do apply for grants for funding that gives resources to our parents, but it's not normally stuff CSPP would pay for such as food bags. We give weekly food bags to all of our participants and that's not something that CSPP would normally pay for. So, we use those other grant funds for that. So, in that case, do we still report those as other income on our attendance and fiscal reports if it's funding we got to pay for something CSPP would normally pay for?

Lucy Mosqueda: I believe so, but I'm actually going to call on someone else on my team, possibly Cate or Corey if that would be reported as unrestricted income.

Corey Khan: Sorry, I've been feverishly trying to respond to questions in the chat. So, can you repeat?

Denise Gonsalves: Sure, so our organization, we do have the childcare center. We do have CSPP and CCTR contracts, but we also apply for grants because we're a nonprofit that provides other services. We apply for grants that help the participants in– that are CSPP. For example, we give weekly food bags. We– so we apply for grants for that and that's some of the money, like–

Corey Khan: Right, you're going above and beyond some of the normal–

Denise Gonsalves: Yeah, do we still report those in our attendance and fiscal? So, like for some of the ERTC funds, we're going to use those to buy gift cards. So, we still report that money in the fiscal and attendance report even though it's not things that CSPP would normally pay for?

Corey Khan: Yeah, I would say, those sorts of things seem to be enhancement fund like, that's what you're using it for, so there is like a supplemental section of our report. Supplemental– it looks just like the normal fiscal page, but really the supplemental page is for like supplemental expenses and revenue that you go above and beyond the normal program expenses.

Denise Gonsalves: Okay, so that supplemental section is where we would report this–the expenses related to stuff that CSPP would normally–

Corey Khan: Yeah, right.

Denise Gonsalves: Okay, alright, thank you.

Lucy Mosqueda: Okay, we are going– I'm going to unmute aalvarez23.

aalvarez23: Hi, thank you.

Lucy Mosqueda: Sure.

aalvarez23: My question has to do with the– what is the MDO calendar minimum required for I– the similar question was answered a couple of days ago for a part-time CSPP full-year, meaning year-round. The answer that was given before was, I think, 180 days. Our calendar is 242 days as a full-year, so is there a minimum? So, if I wanted to do a change of calendar to add a few professional development days, is there a minimum required calendar for my type of program?

Lucy Mosqueda: Crystal, can I ask you to weigh in on this question, please.

Crystal Devlin: Sorry, I was answering another question. Could you please– I'm trying to stay on top of these in the Q&A as well, so if you could please repeat your question?

aalvarez23: Yes, we are a CSPP part-time/full-year, meaning year-round program. Our current MDOs are 242 and I wanted to know if I wanted to make a change of calendar to add professional development days, what is the minimum required calendar for our type of program?

Crystal Devlin: Oh, so you're approved for the 242 days. Typically, a full-year program is 246, but you've already been approved. Clearly, for 242 MDOs, you can still request the two additional staff training days to be closed and that's set forth in Management Bulletin 19-05, I believe. I'll double check that and post the link in the chat. So, what you need to do is go ahead and submit a program narrative change and a revised program calendar for the two days that you will be closed for those professional development days. On that program narrative change, include the type of training that your or PD that your staff are going to participate in. Submit both of those to your assigned Program Quality Implementation office consultant and they will process the approval for that. And so, it's going to look like you're closed on those two days, and not, you know, claiming attendance, which is the case. However, the internal documentation that your consultant processes that then goes over to your fiscal analyst will make sure that your analyst is aware that those are PD days and that you're still to be reimbursed for those days.

aalvarez23: Thank you, I have a follow up question, please. So, I just wanted to make sure that I understand. Are the MDOs adjusted on a yearly basis? And so when we do calendar changes, we're talking about the current fiscal year. Is that correct?

Crystal Devlin: Me?

Lucy Mosqueda: Sorry, could you– Sorry, go ahead.

Crystal Devlin: Yeah, I was just going to say, I don't know if you're still there. I think you cut out on part of your question.

aalvarez23: Oh, I'm here. Yes, so my follow up question has to do with– I want to make sure that I understand the MDOs. Are the MDOs approved calendar days based on the yearly fiscal year and they readjust or reset on a yearly basis with a new contract? Is that correct?

Crystal Devlin: Yeah, so what happens is part of your Continued Funding Application that you submit to us every year. You include your proposed calendar for the following fiscal year. So, for instance, we have the CFA for this year due December 6, and you're going to include your calendar in there and that will have if the MDO is the same as what you're already approved for. That's just going to move forward. If you are proposing a change to your MDO. So, say your– right now your approved MDO is 242 days, and you decide you're going to do 246 days next year, or lesser days. Your calendar that you submit with the CFA will show that and then that will go to your consultant for review and approval. Then it will get moved forward and you'll get your contract with your approved minimum days of operation. Anytime during the year, during the fiscal year after you've submitted that Continued Funding Application and that MDO has been approved, if there's going to be a change which we see frequently for like our LEAs because they have a proposed calendar at the time our CFA is due for CSPP. Then, you submit that program narrative change and revise calendar, so we make sure we have the accurate information on file for you. Does that help?

aalvarez23: Yes, it does. However, when I'm– then the following year, when we do submit my proposal for the following year and if it's asking me whether there are calendar changes, is that referring to the adjusted changes that I submitted for a calendar change? Or is it referring to my original contract proposed calendar?

Crystal Devlin: No, so it's whatever was last year, right? So say, this year you have 242 days for fiscal year 2023-24, so that's what we have on file for you in CDMIS. Okay, so that's somewhere where you can check this right, go into CDMIS and look at what your MDO is. If it's going to be different than that for next fiscal year, then you're going to include that in your Continued Funding Application, you'll include the change.

aalvarez23: Okay, so are calendar changes in the middle of the fiscal reflected also in the CDMIS?

Crystal Devlin: Certainly should be and if you look in there and you see that they're not accurate, please email both your assigned PQI office consultant and the CDMIS team and I can put the email for the CDMIS team in the chat.

aalvarez23: Great, thank you so much.

Crystal Devlin: You're welcome.

Lucy Mosqueda: Before I call on the next person, I want to flag a question in the chat. I’m hoping you can take Crystal because I think it was covered in one of your presentations, but it says to piggyback on the question just addressed live, what are the minimum days of– number of days needed to serve in CSPP part-year and CSPP full-year?

Crystal Devlin: Okay, so our part-day/part-year CSPPs are required to operate a minimum of 175 to 180 days unless approved to– for a lesser number of days and for full-day/full-year, it's a minimum of 246 days unless otherwise approved. That's what's in regulation.

Lucy Mosqueda: Alright, thank you. Okay, I am now going to call on Isabella Gutierrez. I've unmuted you so you should unmute yourself as well.

Isabella Gutierrez: Hi, thank you for opening up for my question. In addition to sending that– the change in narrative, is there a place that we need to report when we have a closure for professional development in order to get a reimbursement? Do we need to report it in some way or form?

Crystal Devlin: No, that's just it. It comes up as a, like a day of non-operation, as if you're not operating. So, your fiscal reports would not show it as a day of operation. However, your fiscal analyst and the fiscal team are made aware that those are PD days, and you should be reimbursed for those days as if you were operating.

Isabella Gutierrez: Alright, thank you.

Cate Washington: I just want to hop on to clarify that if you do have those staff training days that you should be reporting the expenses for those days that your agency is closed in the report. There's a line on the report for staff training costs and you should be reporting the expenses associated with those two days on that line as well as above in the expenses section.

Isabella Gutierrez: And just to clarify or to make sure these expenses are– will be like for salaries and things like that, but not food, right?

Crystal Devlin: Correct. So generally, food costs are not reimbursable unless they're part of like, for staff development and staff training. Unless they're part of like a conference and that that cost is included in the conference fee, or you're traveling out of the local area more than 50 miles and then you would claim per diem, and I know that our audits team is going to clarify more on the cost for meals in their presentation later today.

Lucy Mosqueda: Okay, so I think we are going to pause there on questions. We'll continue to monitor the Q&A and answer the questions there. I think we can actually have some time for a two-minute break and resume right at 12 because we're going to have the– our final presentation, which is an audit presentation starting at 12. So, for now, we're going to take a quick two-minute break, thank you.

Sharon Highsmith: Hello, everyone. Corey is it okay to start?

Corey Khan: Yeah, I think so. Sorry, I have gardeners outside my window so it's very, very loud, but yes, you could start.

Sharon Highsmith: Okay, this part of the presentation we’ll be going over the State and Federal Requirements. My name is Sharon Highsmith. I am the manager over the State Preschool Program, and we will be going over the regulation as it applies from an audit perspective and so next.

We will be reviewing first of all, the program compliance hierarchy, where we'll identify the laws that govern the program’s operations. Cost allowability, which identifies reimbursable and non-reimbursable costs. Time and effort which is related to personnel expenses. Subcontracting requirements, equipment purchases, and inventory items, and finally, types of electronic documentation. Next.

Before I get started, I would like to emphasize that the content of this presentation is intended to provide a general overview and for information purposes only. Any decisions or actions taken as a result of this presentation should be made in consultation with your CDE analysts who can provide you tailored guidance. Next. Okay. Oh, there we are.

These are the main criteria for the State Preschool Program under state regulations. We have Education Code, Title 5, and Contracts Terms and Conditions. I want to highlight Title 5, Chapter 18.5, which came into effect July 1, 2022, and it is specifically for the preschool program. Prior to the child development programs were under Title 5, Chapter 19 and 19.5. However, since the transfer of the Child Care Development Program to the Department of Social Services, these regulations were separated. We also have Title 45 and Uniform Guidance Part 200. Some of you might be wondering why we are looking at federal requirements for the State Preschool Program and we will get into that slide shortly. Next.

Listed here are additional guidance which is, which also provides examples and more contacts that might be easier to read through than the regulations. Please note that the regulations and guidance are also listed in the Contract Terms and Conditions. Next.

Our first topic will be cost allowability, which consists of reimbursable and non-reimbursable costs under the program. Next

Cost allowability, Title 5, Section 17804 is the basis for determining all costs. It specifically states costs have to be reasonable and necessary for the performance of the contract and reasonable and necessary shall be determined in conjunction with Title 2, Code of Federal Regulation, Part 200. The state regulation tells us that we have to follow federal requirements when we're looking at cost. This is why you will see us referring to federal regulations along with state requirements for the preschool program. Next.

Uniform Guidance Subpart E Cost Principle states all costs must be reasonable, necessary, and allocable. Reasonable– and I'm sorry we'll start with necessary. Necessary is any ordinary expense for the operation, something that you will typically see. Reasonable would be the cost. Is it reasonable to a prudent person under similar circumstances? Allocable, is the cost specifically for the program, and if so, how much is used in the program? It must conform to limitations or exclusion under the program, be consistent with your agency's policies and procedures, receive consistent treatment, are the same types of costs treated as direct or indirect cost and it must be in accordance with generally accepted accounting principles. And no cost sharing or matching, so costs are not shared between other programs. And most importantly, the costs must be adequately documented. One of the most common reasons for costs being disallowed is not being adequately documented. Next.

These are specific reimbursable costs identified in the state regulation. Administrative costs are those costs related to general administration of the programs, such as accounting personnel, administrator salaries. These costs cannot exceed 15 percent of the net reimbursable costs and it includes indirect costs. Indirect costs are those costs that benefit more than one program and can't be easily assigned, such as utility costs and it can't exceed 10 percent of the total direct cost. If you're claiming indirect cost, it should be based on an approved cost allocation plan, and it must be on file. For LEAs, if you have a negotiated indirect cost rate of 8 percent then you are required to use the lesser amount. Next.

Key points regarding indirect cost is that it applies to line items 1000 to 5000, which are certificated salaries, classified salaries, employee benefits, books and supplies, and other operating expenses. For indirect cost rate, the allocation method must quantify the benefit among similar programs, then distribute the cost accordingly. Please keep in mind that non-reimbursable costs cannot be included in the indirect cost rate. And now we will go into non reimbursable costs, next.

State Regulation, Title 5, Section 17806, identifies approximately 20 non-reimbursable costs. From an audit standpoint, we will review the general ledger for these specific types of cost. I'll go through a few of these cost examples. For one, idle facilities. If an old building or portable are not being used for the program that any costs associated with that is non-reimbursable. Cost incurred after a contract is terminated. If a contract is terminated, you cannot continue payment to the vendor on a month-to-month basis. Any costs incurred after a contract is expired is considered non-reimbursable or vice versa. Paying for expenses before the contract is signed, any costs associated with fundraising, such as raffles, barbecues, those are also non-reimbursable costs. Next.

Consumer interest is a non-reimbursable cost. Personal loans, credit cards however, there is an exception that where it can be allowable is when interest on borrowed funds, when apportionment is withheld is allowable, but that is with a prior CDE approval or interest on part of a lease purchase agreement so that's kind of very rare, but it can happen. Public relations, promotional items in memorabilia are non-reimbursable costs and organization costs such as incorporation fees and consultant fees are also non-reimbursable. Next.

Bonuses, examples are Christmas bonuses. Year-end bonuses are also non-reimbursable. Unless a bonus is part of a collecting bargaining agreement, and we typically see these at the year-end or during the holiday season so just keep that in mind. Compensation for board of directors, no compensation for their service as a member, however, they can be reimbursed for travel or per diem when conducting business. Next.

When charging expenditures, so costs must be incurred during the contract period. That's very important. Contractor shall not use current year contract funds to pay for prior or future obligations. The only exception is for the cost of an annual independent audit. The cost of an audit can be incurred in the current audit period or when the audit is completed. Next.

Now let's look at federal requirements. The federal regulations identify 56 types of cost and some of these costs overlap with the state regulations. However, it is, however, it explains in further detail the cost. Some of the costs are allowable, allowable with special conditions, allowable with prior approval, or unallowable. So, in this example, alcohol, it is not allowable in both state and federal regulations. Another example is entertainment. Field trips and holiday parties are typically not allowable unless there is a clear programmatic purpose or authorized by CDE. Okay, the common question we get is lunch. Lunch is expensed during professional development training. If the training is local or on site, then the cost of lunch is not reimbursable. However, if the lunch is included as part of the training and included in the registration fee then it is allowable. If employees are working evenings or weekends, then we would refer to the agency's internal policy on how they address those costs and determine if it is reasonable. Typically, in those circumstances we consider state per diem rates as a reasonable and allowable cost. If you are unsure of a cost, please refer to the Code of Federal Regulations, 200.7.5 for meals, and then just generally, Code of Federal Regulations, 200. It identifies a lot of costs so if you're unsure about a cost, please refer to that. Next.

Okay, this is also time and effort. This is also known as personal expenses or payroll expenses. We always get a lot of questions on this topic as well. Next.

And so, when it comes to time and effort, we rely heavily on federal regulations when reviewing payroll. 2 CFR 200, the law requires that you must maintain documentation showing their time is allocable to the program and documentation must be based on actual work. We often have employees who are working on multiple funding sources. For example, if an employee is working on the preschool and a general child care development program, please check with the employee regularly to see if they are charging their time based on the actual time they spend in each program. Next.

So, this is the, this is very important. This is a requirement and when we are auditing, we use, we will review your documentation against these requirements. Okay, time and effort must be supported by a system of internal controls, which means not only you understand the requirement, but you are training your employees on the requirement and have protocols in place to ensure compliance and have written procedures, reviews, and supervisory approval. It must be incorporated into your official records, be reflected in the accounting records, safe payroll register, general ledger, and be available upon request. Must reasonably reflect the total activity for the employee. We need to see all of the hours in which the employee is being compensated. If an employee works 10 hours a day, we need to see all 10 hours documented. This is when you really need to be looking at a monthly time and effort reporting. How is the employee supporting each program? It must encompass all activities. If an employee works part-time as a teacher and part-time as a cook, we need to see all the duties they perform. It must also comply with established accounting policies and support the distribution among specific activities. Next.

So, I went over the requirements. This is on how you document salaries and wages. CSAM provides examples on how to meet time and effort requirements. It gives you examples of timecards, personal activity reports and worksheets on how employees can keep track of what programs they are working on. A timecard that shows that clock in and clock out does not qualify as support. We need to see what you worked on and what duties you performed for the program. How did your work benefit the program? Next.

Budget estimates typically do– actually budget estimates do not– does not reflect the actual time an employee has worked on the program. For example, at the beginning of the year you prepare your annual budget and if you can estimate that you know 75 percent of your expenditures are for the preschool program and 25 for the CCTR. However, you cannot distribute personnel expenses based on those estimates. Personnel expenses must be based on actual time worked. When we are conducting an audit, we will be asking for supporting documentation and how an employee’s time was allocated to the program. So, CSAM also, you know, provides additional guidance and I will get to that next.

Actually, I apologize, its subcontracting is next. This section we will be dealing with subcontracts. Next

Listed here are the types of subcontractors that are included from– they're excluded from bidding and approval requirements. Employment contracts, for example, an executive director typically has a separate employment contract and does not, is not subject to bidding approval. Lease, facility lease, payment for family child care homes, subcontracts with public agencies, medical or dental service agreements and janitorial or groundskeeping agreements. Next.

Subcontractors, greater subcontracts– greater than 500,000 require 3 bids. It must be comparable, so you must be comparing like items awarded to the lowest bidder. No subcontract splitting. It is important that you can't split a contract to circumvent the bidding requirement. For example, if you are doing renovations, you can't separate labor costs from materials cost. Next.

Subcontracts greater than 10,000 require prior approval. Please make sure you're not paying the subcontractor prior to CDE approving the contract. We typically see this at year-end. Trying to pay for subcontracts before you receive approval, or even prior to any work being done. So please keep that in mind to get CDE approval on those. Next

All subcontracts are required to have the following language and must have a date, amount, service, and responsibility. It must have independence of the subcontractor. So, this has to do with conflict of interest and related party transactions. You should reference the California Corporation Code as well for that. We want to ensure that the transactions are fair and reasonable and done at an arm's length so that's why that provision is in there. For example, if a board member has a construction company and you want to hire them to build a shed or put up a fence, you can select them as long as you follow the public– California Public Contract Codes and California Corporation Codes. The board member would have to refrain from voting on this issue. Any modifications are done in writing. Next.

If the subcontract includes purchase of equipment, then the state retains title of that equipment or supplies. Subcontractors agree to indemnify and hold harmless to the state, and it has to include a nondiscrimination clause. Next.

Okay, audit requirements for subcontractors. If your school subcontracts for the operation of the preschool program, then the subcontract company is subject to CDE audit guidelines, and they are required to also submit an annual independent audit. Thus, the contractor is responsible for submitting the subcontractor's audit along with their annual audit. So please keep that in mind. Next.

Okay, equipment purchases. This will be a review of the information that was discussed in prior presentations. Next.

Okay, equipment greater than $5,000 requires 3 bids and again, it must be comparable and awarded to the lowest bidder and no splitting. For example, you cannot split office equipment into smaller purchases to avoid the bidding requirement. Next.

Any per unit equipment greater than $5,000 requires CDE approval. Also, keep in mind that if you are purchasing several similar items, or as part of a one purchase contract then the sum of all items greater than $10,000 requires CDE approval. Subdividing equipment purchases into separate items to avoid the pre-approval requirement is prohibited and once you have equipment, then you definitely have to do inventory. So next.

The purpose of doing inventory is to safeguard against loss, damage, and theft and to maintain equipment in good condition. For inventory, detailed property record must be maintained, and which includes description, serial number, or identification, the source of funding so which would meaning which program paid for the equipment, the acquisition date, the cost, the location and disposition date, or sale price.

It is– CSAM recommends yearly inventory of your equipment. Next.

Here are some questions you can ask to determine if an item is an equipment that should be inventory, or if it is a supply. Does the item lose its original shape and appearance when used? Is it easily broken, damaged, or lost in normal use? Is it more feasible to replace it with an entirely new unit than to repair it? Next.

Is it included in another unit rather than being an independent unit? Is the cost of tagging and inventorying a substantial percentage of the item’s price? If that's the case, it might be considered a supply. Is the cost of the item below the LEA’s capitalization threshold? If it is not necessarily might not be a supply, it could still be an equipment. So, keep that in mind, but these questions might help you identify which items need to be inventory. Next.

CSAM recommends to inventory anything over $500. However, you can inventory items less than that amount. For example, on tablets, iPads, since they can easily be stolen. It is a good idea to include them in your inventory. Next.

Okay, we'll be going over electronic documentation. Next.

Contractors may maintain electronic records. Management Bulletin 16-02 provides information on how to maintain, convert, store, and destroy records. CFR, I mean, sorry, CCR 22620 provides standards for trustworthy electronic documents and record preservation. Please keep in mind that you are required to retain records for 5 years. Next.

LEAs, they also may keep electronic records. No original record basic for any audit shall be destroyed before the second July 1 following the audit completion. However, keep in mind that our Contract Terms and Conditions requires to maintain records for 5 years. Next.

Digital signatures and digital forms are also okay. They have the same effect as written handwritten signatures. Digital forms allow families to apply for services faster so it might be a good idea to have some digital forms and I'm sure most of the contractors do. Next.

Digital signatures must be unique, capable of verification, under the sole control of the user, and invalid if it's changed so keep that in mind as well. Next.

Key takeaways, our preschools are subject to both state and federal regulations. Preschools must follow the most stringent requirements. For example, LEAs have to follow the lesser of the indirect cost rate, which is– or 10 percent and equipment greater than $500 should be inventoried. And most importantly, everything should be documented, documented. That's pretty much it for our presentation. The next few slides have to do with resources where you can refer to the regulations, which is the California Education Code, Title 5 regulations and Uniform Guidance and if you guys have any questions, I can take any questions.

Corey Khan: Sharon, it looks like we have one hand raised. So, I'm going to– I'm going to allow that person to speak and hopefully, it's an audit question for you, but I don't know so–

Sharon Highsmith: No problem.

Corey Khan: Leticia, I'm going to unmute you. You'll have to unmute yourself but go ahead.

Leticia Juarez: Good morning. Can you hear me?

Sharon Highsmith: Yes, I can hear you.

Leticia Juarez: Yes, I just have a question. It's actually about the family data file. How long do we keep those records? I know that this is five years, but the family data files.

Crystal Devlin: Yeah, highly yes. Yes, you need to maintain the documentation for five years.

Leticia Juarez: The– also the same amount of time?

Crystal Devlin: Yes, pretty much all of your state preschool program related files and documents should be retained for a minimum of five years. And I also want to note on that family data file, it would be five years from the date that the family is no longer receiving services.

Leticia Juarez: Yes, okay, okay, thank you.

Crystal Devlin: You're welcome.

Corey Khan: Okay, looks like we don't have any more hands up. Let’s see, I can take some from the chat. I know that there were a few about, let's see, time accounting whether that's required even for state funded CSPP. There were questions on that.

Sharon Highsmith: Yes, time recording is required for state funded CSPP.

Corey Khan: Let’s see, I don’t know if you want to go over, because there was still more questions about the allowability of providing lunch for professional development so can you just repeat what you had said?

Sharon Highsmith: Oh, sure. For professional development, so if you have training that is on site or local then that lunch expense is not reimbursable, but if you have training that's part of you– the registration fee then that's already included. Your lunch is already included in that registration fee so that like a conference so that that is definitely allowable, but if you have like, if employees are working weekends or overtime, we would refer to your– the agency's internal policy and see how they address those costs, and if so, we would just use the federal guidelines to determine if that cost is reasonable and necessary. Like– so that's how we would look at those types of costs. And again, when we look at reasonable and necessary, we would just refer to the state reg–, you know, state regulations, the per diem rates for the state so you know, breakfast, I believe it's like $7 and lunch is $12 and dinners like $23, but if we're looking at those costs and we look in the source documents and we're seeing, like, you know, $50 or $75 for lunch and then we look at the receipts and if it's like alcohol on there then definitely that is not allowable. So, at the end, we're always looking for the reasonableness of those costs. Does that answer your question?

Corey Khan: Think so. I see two other people who raised their hands. I'm going to call on them. So, Ken I have allowed, I've given you permission to unmute yourself.

Ken Herron: Okay, thank you. You can hear me now?

Corey Khan: Yes.

Ken Herron: Okay, great. So, I just wanted to go back to the cost allocation. I hope you don't mind me going back to that. So, you know, a lot of us have expanded into CCTR from CSPP because, you know, we're forced to. So, we have to deal with this cost allocation plan. So, I'm trying to understand something regarding the indirect cost and the 10 percent max and all that. So, let's say, you have a center, and you have, you know, it's half CCTR and half CSPP and you have a site supervisor, and you have a cook. And okay, so let’s say that site’s supervisor is paid, you know, 70,000 or 60,000, or what, let's say 60,000. Shouldn't 30,000 be allocated to the CCTR and 30,000 to the CSPP and which would be 50 percent versus like a 10 percent limitation, right?

Sharon Highsmith: Like generally that would be, that'd be correct, but you would have to work with your CPA and or your accountants to see how you kind of determine that like if you base it on enrollment or you're basing it on, you know, square footage, but that does sound right, but you would have to have kind of like an approved and justified cost allocation plan.

Ken Herron: So then, so then those salaries would not be an indirect cost. They would be the– you would put them in the 1,000 category.

Sharon Highsmith: Yes.

Ken Herron: Excuse me?

Sharon Highsmith: You can, yes, you can.

Kern Herron: Because otherwise if you have this indirect cost limitation of 10 percent, you know, our program, it’s not– not everybody has 10 percent of their program is CCTR and 90 percent is CSPP. It could be like what I just said it could be half and half or 80, 20 or– so it has to be reasonable on my end too, to be able to allocate those things because otherwise you would have one contract where your way over spending, and the other one where your way under spending because of some kind of limitation within your paperwork here. So, so again, I just want to get back to the salaries of a janitor would be– you would put it under the classified, you know, those line items. You'd figure that out, and that's where you'd put it. So, when it gets down to the indirect cost line, what would go there? Would it be like the rent?

Sharon Highsmith: Yes, rent utility costs like, you know, you can even be like small office supplies that are shared between both programs.

Kern Herron: But on the supplies, same thing, wouldn't you? If you did that, wouldn't you want to put it on the line, the 4,000 line put the supplies that are CSPP and then the CCTR report we would do the same thing, you know, split–

Sharon Highsmith: If you can, yeah.

Ken Herron: Because otherwise, again, this limitation, this 10 percent is a very small– it would really be to me, makes sense like the rent and the utilities, things you really cannot identify, you know, and then you have your cost allocation plan, and you have like you said, you have to have your CPA approve it, it needs to be reasonable, you know, based on, you know, some kind of explanation of how you divvy it up? So, all that, that makes sense to me.

Sharon Highsmith: Okay, so well, if you can allocate it directly then allocate it directly, but if those costs that you can't allocate directly then use the indirect cost rate.

Ken Herron: Okay, and but again, I just want to make sure you split up the costs and then you literally put those costs on the lines where they should go. You don't just put all of them in because you would, your 10 percent is going to say nope, you can't do that because it's– you're over 10 percent or whatever. Okay, I want to just thank you guys for this. This has been one of the best trainings that I've ever been on and I, you guys are very smart. You're very professional. You guys have answered all these questions over and over and over again in the chat. You've been very kind and very, you know, because some of them are repeat questions and different things. And so, thank you, for you know, how you've handled this webinar.

Sharon Highsmith: Yeah. Thanks goes to Corey.

Corey Khan: Oh, no, everyone on this webinar. It's been a joint effort, as you guys have probably seen across the CDE so thank you, Ken and to that end, we've answered almost 350 questions today so that's actually pretty remarkable. I think so. I will move on. We have one other hand raised. So, Dominique? I have– wait, where'd you go? Okay, oh no, you keep moving around. I think you just unraised your hand. Okay, I see you again. Go ahead, Dominique.

Dominique Herron: Alright, can you hear me?

Corey Khan: Yes.

Dominique Herron: I had a question regarding the retaining of records. Regarding the DRDP, the portfolios, the completed conference, the rating records, and all of that. Do we also have to retain those for five years?

Crystal Devlin: Not really sure about that. Really, what we're looking for retention of records is related to anything that might, you know, tie back to, you know, reimbursements or funding, or that type of thing. So, like family data files, right? We're looking at, you know, making sure that these were actually reimbursable because the family was certified correctly as eligible, and or having that need for services and I know a lot of folks pass those DRDPs on to the kindergarten or the TK, the parents might take the portfolio, so I think with the DRDP you're safe, but if there's anything that you feel is like relevant to put into the family data file then I would maintain it there.

Dominique Herron: Thank you, I appreciate it.

Crystal Devlin: You're welcome.

Corey Khan: Okay, I see no more hands raised. Anyone have any questions? No? Okay, well, I know we are– we said we are going to one, but I do know that we're in the lunch hour, so I do want to be mindful of that for all of you to go run off and get some lunch hopefully before your next meeting. So, I want to thank you all for participating in our first ever webinar of this sort, like I said of this magnitude. This has been three days of intense, I think, information. So, it's been really engaging, I think, even between us and you know, across our department, even with the participants, you guys have been great with answering all or actually asking questions, so thank you guys for being, you know, for participating, active participants. So anyways, if– I think we've said this before in most of our different presentations, but I think, you know, if you all– any of you have any questions, if it's fiscally related, you have your fiscal analyst, and they also have– we have a management team that can help answer any of those questions as well. Anything related to you know, program or policy could be directed to your PQI consultant and then if it's an audit question, you may have to go to one of us, but we'll try to get you the answer for audits, but I do see that Sharon is displaying her contact information here too as well so that might be a handy email or contact to save. So again, thank you, guys. I'm going to end it here and hope you all have a good day and learned a ton.

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Questions:   Jenny Tran | jtran@cde.ca.gov | 916-322-8326
Last Reviewed: Thursday, February 22, 2024
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