Dear California State Preschool Program Executive Directors and Program Directors:
FISCAL YEAR (FY) 2021–22 JUNE YEAR–END REPORTING REMINDERS
The purpose of this letter is to compile reporting information provided throughout FY 2021–22 and provide contractors the due dates and reporting requirements for purposes of completing June year-end and audit reports for the fiscal year ending June 30, 2022. Please share this letter with your agency staff. A subsequent letter will be issued in the coming weeks to inform contractors of any changes to California State Preschool Program (CSPP) contracts and reporting procedures for FY 2022–23.
The Early Education and Nutrition Fiscal Services (EENFS) webpage contains valuable resources for contractors, including the Enrollment, Attendance, and Fiscal Reporting, and Reimbursement Procedures for Early Education Contractors, also known as the EENFS Fiscal Handbook. Supplemental fiscal guidance, such as contract-related updates, rate reform resources, the Child Development Provider Accounting Reporting Information System (CPARIS) User Manual, CPARIS, and Frequently Asked Questions, and links to view past webinars, can also be found on the EENFS webpage.
CSPP contractors will continue to be informed of added content to this webpage by notification through the Early Education Division (EED) Email Distribution List Subscription. The subscription page for the EED email distribution list can be found at https://www.cde.ca.gov/sp/cd/ci/progspeclist.asp. The EENFS webpage can be found at https://www.cde.ca.gov/fg/aa/cd/. Additionally, Management Bulletins (MBs) distributed by the EED throughout FY 2021–22 can be found at https://www.cde.ca.gov/sp/cd/ci/allmbs.asp. The MBs also contain fiscal directives, when applicable.
Contracts and Contract Amendments
All original contracts and any remaining contract amendments requiring signature for FY 2021–22 must be signed and returned to the Contracts Office as soon as possible. The California Department of Education (CDE) cannot make payments based on amended terms until amendments requiring signature have been signed and returned.
As a reminder, due to the Allocation Letter amendment process implemented in FY 2021–22, not all amendments require a signature. While Allocation Letter amendments will look similar to a contract amendment, they will not require a signature from the contractor. Contractors unsure whether an amendment requires a signature should contact the Contracts Office at CHILDDEVELOPMENTCONTRACTS@cde.ca.gov.
FY 2021–22 June Year-End Reports Reporting Deadline
FY 2021–22 June year-end Enrollment, Attendance, and Fiscal Reports are due by July 20, 2022. All reports must be submitted online through CPARIS. Acceptable reports not certified by July 20, 2022 will be considered delinquent. A delinquent report results in withholding any remaining apportionments due for FY 2021–22. Additionally, apportionments for FY 2022–23, beyond the initial payment, will be withheld until the contractor has complied with this contract requirement.
CPARIS can be found on CDE’s website at https://cparis.cde.ca.gov/cparis/. The CPARIS User Manual, which provides CSPP contractors with instructions on how to navigate the web-based application, can be found at https://www.cde.ca.gov/fg/aa/cd/documents/cparisusermanual22.docx
FY 2021–22 ENROLLMENT, ATTENDANCE, AND FISCAL REPORTING
Coronavirus (COVID-19) Related Closures, Reporting, and Reimbursement
Assembly Bill (AB) 131, Section 263, specifies that for FY 2021–22, CSPP contractors are to be reimbursed the lesser of 100 percent of the contract Maximum Reimbursable Amount (MRA) or net reimbursable program costs, without regard to enrollment or attendance, when they meet the policy directives set forth in MB 21-11: Reopening, Reimbursement, Distance Learning Plans, and Distance Learning Requirements for California State Preschool Program Contractors.
In order to be reimbursed as provided in AB 131, all CSPP contractors must be:
- Open to provide in-person early education services for enrolled families in accordance with the contracting agency’s FY 2021–22 approved program calendar, and remain open and offer services through the FY 2021–22 program year;or
- Not provide in-person services by the start date of the contracting agency’s FY 2021–22 approved program calendar, due to local or state public health order or guidance that prevents the program from reopening;or
- Open for in-person services in accordance with the contracting agency’s FY 2021–22 approved program calendar, with any future days of closure being due to a local or state public health order or guidance
CSPP contractors, whether providing in-person or distance learning services, are required to report the days of enrollment for all children receiving services in the program. CSPP contractors will only report the days of attendance for children who receive in-person services and will not report days of attendance for any children participating in distance learning activities. Excused absences will only be reported as a day of attendance for children who were expected to physically attend the program on any given day, but the child did not attend.If a contractor’s days of closure are not attributable to closure by a local or state public health order or guidance or an approved non-COVID-19 emergency closure, the contractor’s MRA will be pro-rated by the days of operation that the contractor was not open to provide in-services. Contractors must submit a revised FY 2021–22 program calendar and a program narrative change to their assigned EED Program Quality Implementation (PQI) Regional Consultant to ensure that the correct minimum days of operation (MDO) are reflected in their contract. The revised calendar will be used by EENFS to determine the pro-rated FY 2021–22 MRA.
For additional details, please refer to MB 21-11, which can be found at https://www.cde.ca.gov/sp/cd/ci/mb2111.asp.
Reporting Non-COVID-19 Emergency Closures
Contractors that closed due to an emergency not related to the COVID-19 pandemic, including but not limited to fires, earthquakes, floods, or other circumstances beyond their control, must submit a non-COVID-19 Emergency Closure Request, in accordance with MB 21-10: Non-COVID-19 Emergency Closure Requests for Fiscal Year 2021–22. MB 21-10 can be accessed at https://www.cde.ca.gov/sp/cd/ci/mb2110.asp.
Contractors with an approved non-COVID-19 Emergency Closure Request will receive an approval letter from their EED Consultant. Contractors’ reimbursement will not be automatically credited for the days lost due to emergency closure. Rather, contractors must report the credits as stated in the approval letter as part of their days of operation on the FY 2021–22 June year-end Enrollment, Attendance, and Fiscal Report. The approval letter must be retained by the contractor and becomes the documentation to support the lost days reported as a day of operation.
Enrollment and Attendance Reporting Changes due to Changes to CSPP Reimbursement Rate
Pursuant to Education Code (EC) Section 8242(c), beginning January 1, 2022, CSPP contractors will be reimbursed at the greater of the following:
(1) The 75th percentile of the 2018 Regional Market Rate (RMR) survey; or
(2) The contract per-child reimbursement amount as of December 31, 2021.
Contractors whose rate increased as a result of this change, received a contract amendment to incorporate the new rate into their contract(s). Contract rates continued to be a term of the CSPP contract; however, contractors may have multiple contract rates if they operate in multiple service counties.
Reporting Enrollment and Attendance as of January 1, 2022
Effective January 1, 2022, reimbursement is based on the county in which preschool services are provided. As such, CPARIS was updated in February 2022 and CSPP contractors are now required to submit enrollment and attendance data by service county. The service counties displayed in CPARIS are based on the approved counties as reflected in the Child Development Management Information System (CDMIS). Any issues with the displayed service counties should be reported immediately to the CPARIS Support email at CPARISSupport@cde.ca.gov.
The CPARIS User Manual was updated to include instructions specific to CSPP service county reporting. Contractors are also reminded to review the Rate Reform Resources webpage, which provides guidance to CSPP contractors on the first stage of rate reform implemented on January 1, 2022. Guidance on this page includes a link to MB 22-01, the CSPP Contract Rates by Service County, Frequently Asked Questions, and the webinar presented by the EENFS on February 24, 2022 in which updates to the Enrollment, Attendance, and Fiscal Reports in CPARIS were reviewed. The Rate Reform Resources webpage can be accessed at https://www.cde.ca.gov/fg/aa/cd/ratereformresources.asp.
Reporting Days of Operation as of January 1, 2022
Days of operation must continue to be reported at the contract level, inclusive of all service counties. As a result, the Days of Operation line has been removed from the Enrollment & Attendance section to the Fiscal section of the Enrollment, Attendance, and Fiscal Report.
Reporting Waived Family Fees
AB 131 waived family fees for all families enrolled in CSPP from July 1, 2021 through June 30, 2022. The EED released MB 21-12: Guidance on Family Fees for FY 2021–22, notifying contractors that all family fees were waived for all families in FY 2021–22. Although family fees are being waived for FY 2021–22, contractors are still required to calculate and assess the appropriate family fee.
The Enrollment, Attendance, and Fiscal Report in CPARIS allows contractors to report the amount of family fees waived. All contractors are required to report the total amount of family fees that were assessed, but waived, in accordance with the directive in MB 21-12. Contractors will report the amount of family fees waived on the line Waived Family Fees for Certified Children. The cumulative amount reported in this field should represent the total amount of fees that would have been collected from families in FY 2021–22 if family fees had not been waived.
For additional details, please refer to MB 21-12, which can be found here: https://www.cde.ca.gov/sp/cd/ci/mb2112.asp.
Reporting Revenue and Expenses Reminders
Contractors are reminded that reporting revenue is dependent on the source of the income and how it is expended. Revenue should only be reported when its corresponding expenses are also reported. Restricted revenue reported in the Enrollment, Attendance, and Fiscal Report is income provided for a specific, limited purpose and that can only be expended for certified children. Generally, any funds received by a contractor that are allocable to the preschool program, but must be used for a specific purpose or which the contractor does not have to return, such as a funds received through the Paycheck Protection Program, should be reported as restricted revenue and the associated expense must also be reported.
Contractors must follow Generally Accepted Accounting Principles (GAAP) for accrual accounting. Contractors shall follow the accounting procedures specified in the most recent edition of the California School Accounting Manual (CSAM). The CSAM specifies that under an accrual basis of accounting, revenues are recorded when earned and expenditures are recorded when a liability is incurred, regardless of when the receipt or payment of cash takes place.
When determining whether an expense may be charged to the contract, contractors should GAAP. This includes situations where a contractor prepays for supplies or equipment in one contract year and does not receive those supplies or equipment until the following contract year. Per Title 5 California Code of Regulations, Sections 18037 and 18063, with the exception of audit costs, expenses considered incurred in a future year per GAAP are not reimbursable under the current year contract.
For additional details, please refer to the CSAM, which can be found here: https://www.cde.ca.gov/fg/ac/sa/.
Reporting Start-up Allowance
Contractors with a FY 2021–22 CSPP contract containing approved start-up associated with expansion funding must report any expenses associated with the start-up allowance on the Start-up Expenses line in CPARIS. Start-up expenses should be reported only on the Start-up Expenses line, and not included in the expenses reported in categories 1000-6500.
Allowable start-up expenses are negotiated and approved by the CDE specific to each contract. Expenses reported on the start-up line must only include what was requested by the contractor and approved by the CDE.
Reporting Quality Rating and Improvement System (QRIS)
The QRIS is a local level block grant with a focus on improving program quality. It was created to meet the needs of early learners and ensure access to high quality programs for California’s children. The primary purpose of this funding includes training, professional development days, stipends, and bonuses. Contractors are reminded that income and expenses associated with the use of these funds must be reported on the Enrollment, Attendance, and Fiscal Report. In most cases, these grant funds should be reported as supplemental revenue and expenses.
Reporting California Prekindergarten & Family Literacy Support (CPKS) Contracts
The CPKS contract is a support contract that also requires that a June year-end fiscal report be submitted by the July 20, 2022 deadline. CSPP contractors who hold a CPKS contract must report their June year-end fiscal report in CPARIS, even if the contractor fully expended and reported the full contract amount prior to the end of the year.
June year-end reports must be certified by the deadline of July 20, 2022 to avoid becoming delinquent. However, revisions to year-end reports may be submitted later under the limited circumstances outlined below.
Non-LEA contractors may submit revised year-end reports until August 22, 2022. Contractors will receive a preliminary contract closure calculation from EENFS based on the June year-end report, or a revised June year-end report, that is received by the August 22 deadline. Revised reports will not be accepted after this date; contract closure and year-end reimbursement calculations will be based on the contractor’s audit.
LEA contractors may submit revised June year-end reports according to the deadlines below. Contract closure and year-end reimbursement calculations for an LEA are based on the June year-end report, so it is vital that information is complete and accurate. LEAs should submit a revised report, if necessary, to EENFS as soon as possible, but “Contractors have sixty (60) days from the due date for submission of the audit to submit a revised report” to your EENFS Fiscal Analyst (FY 2021–22 Funding Terms & Conditions (FT&Cs)).
- A County Superintendent of Schools/School District audit is due on December 15 (EC Section 41020). The revised report deadline for FY 2021–22 is February 13, 2023.
- A Community College audit is due on December 31 (FT&Cs), so the revised report deadline for FY 2021–22 is March 1, 2023.
PRESCHOOL RESERVE ACCOUNTS
Reserve Account Changes in FY 2021–22
Due to the transition of General Childcare and Development Program (CCTR), Migrant Childcare and Development Program (CMIG), and Severely Disabled Program (CHAN) contracts from the CDE to the California Department of Social Services (CDSS), effective July 1, 2021, Center-Based Reserve Accounts were split into two Reserve Accounts: one for CSPP (referred to as the Preschool Reserve) and one reserve for CCTR, CMIG, and CHAN contract types (referred to as the Center-Based Reserve). Contractors who had a Reserve Account established prior to FY 2021–22, received an email from their EENFS Fiscal Analyst in January 2022 notifying them of their beginning balance for the FY 2021–22 Preschool Reserve.
Contractors should contact their assigned EENFS Fiscal Analyst for questions regarding the beginning balance. For information regarding the methodology used to determine the reserve balances for each reserve type, please refer to the Center-Based Reserve Account Changes Letter at https://www.cde.ca.gov/fg/aa/cd/cbreservechanges2122.asp.
Effective July 1, 2022, EC Section 8336 has also been amended to remove the requirement that 10 percent of the reservable amount must be utilized on professional development for the CSPP. Therefore, CSPP contractors may now utilize their total Preschool Reserve Account balance for all allowable CSPP expenses.
Reserve Account Reporting
If a CSPP contractor has a Reserve Account, a Preschool Reserve Account Activity Report is required, regardless of whether the Reserve Account has a balance. A copy of the contractor’s general ledger report page(s) that reflects the cash balances maintained in the Reserve Account must be submitted via email to the assigned EENFS Fiscal Analyst by July 20, 2022.
Preschool Reserve Account Activity Reports must comply with the following to be deemed acceptable:
- The beginning balance reported on the FY 2021–22 Preschool Reserve Account Activity Report must be correct.
- For contractors whose center-based Reserve Account had multiple contracts (CCTR, CMIG, and/or a CHAN) tied to the account prior to July 1, 2021, the beginning balance reported on the Preschool Reserve Account must match the beginning balance provided by the Fiscal Analyst via email in January 2022.
- For CSPP contractors that did not hold a CCTR, CMIG, or CHAN contract prior to July 1, 2021, the beginning balance reported on the FY 2021–22 Preschool Reserve Account Activity Report must match the ending balance of the most recent FY 2020–21 EENFS 9530 Reserve Account Status Report provided by EENFS.
- The Preschool Reserve Account amounts must be kept in an interest-bearing account within the contractor’s early education fund. Preschool Reserve Account Activity Reports submitted to EENFS that indicate a balance with no interest reported will be deemed as unacceptable.
- Requested transfers from Preschool Reserve Accounts must match what is reported in the Transfer from Reserve line in the Revenue section of the June year-end Enrollment, Attendance, and Fiscal Report. Contractors who utilize Reserve Account funds for expenses incurred in FY 2021–22 must report the transfer from the reserve on the Preschool Reserve Account Activity Report as well as on the Enrollment, Attendance, and Fiscal Report. These amounts must be the same.
- The general ledger must be submitted by email to the assigned EENFS Fiscal Analyst.
Establishing a Preschool Reserve Account
Contractors who do not currently have a Preschool Reserve Account and wish to open one can do so in CPARIS. The request to open a Reserve Account can be found in the Reporting tab of CPARIS. Requests to open a Preschool Reserve Account must be received by July 20, 2022 to be established as of FY 2021–22. Requests received after that date will not be processed. Requests to establish a Preschool Reserve Account do not need to be made annually; contractors that established a Preschool Reserve Account in prior years do not need to establish a reserve account again in FY 2021–22.
For further information, please refer to the Preschool Reserve Account instructions posted on the EENFS webpage.
Closing a Preschool Reserve Account
Contractors who wish to close a Preschool Reserve Account may do so by completing the Request to Close Reserve Account in CPARIS. If a Preschool Reserve Account is closed, any balance currently held in the Preschool Reserve Account, as well as any interest accrued by the funds, must be returned to CDE. Requests to close a Reserve Account should be submitted on the same date the contractor’s June year-end Enrollment, Attendance, and Fiscal Reports are submitted, which are due July 20, 2022.
AUDITS AND INVESTIGATIONS DIVISION: AUDITED ATTENDANCE AND FISCAL REPORTS REMINDERS AND CHANGES
Please share the following information with your fiscal staff and independent auditor, e.g., Certified Public Accountant (CPA), who performs your annual audit that you submit to the CDE.
FY 2021–22 AUD Forms
CDE’s Audits and Investigations Division (A&I)’s resource page, which includes audit guidelines and Audited Attendance and Fiscal Reports (AUD forms) and Instructions for FY 2021–22, can be found at https://cde.ca.gov/fg/au/pm/.
FY 2021–22 Electronic Submission Instructions
FY 2021–22 audit reports may be electronically submitted to CDE using the following information:
Project Code: AUDIT22
Audit reports that need to be submitted to the CDSS may be emailed to AuditsOffice@dss.ca.gov.
The following audit requirements of the CDE Audit Guide, referenced by section number, are important to discuss with your CPA. The CDE Audit Guide can be found at http://www.cde.ca.gov/fg/au/pm/documents/auditguide2015.pdf.
- Ensure that the audit engagement letter between the agency and the CPA states that the audit will be performed in accordance with the CDE Audit Guide (see Section 160.C.2) and identifies the date that the final audit report must be submitted (due dates in Section 210).
- Except for contractors on conditional status, a CSPP contractor may be granted a one-time-only per year, 30 calendar-day extension of the audit due date, provided the inability of the contractor to submit the audit by the due date was beyond the fault and control of the contractor. The extension request due date and instructions for submission are specified in Section 212.
- Per Section 360, as of FY 2020–21 audit submissions, contractors are required to submit a quality review checklist along with their audit reports and include a supplemental schedule titled Notes to the Child Development Contract Supplemental Information in the audit report. CDE will make the checklist and a template of the supplemental schedule available on its website at https://www.cde.ca.gov/fg/au/pm/ and by request at AuditSubmissions@cde.ca.gov.
- Section 310.A provides an overview of the AUD forms. Also see A&I’s Resources Page for AUD form instructions.
- Preparation of the Audited Reserve Account Activity Report (form AUD 9530‑A) is explained in Section 350. Detailed instructions for preparing the AUD 9530-A form are included in the AUD form instructions.
- The AUD forms and supplementary information are required for subcontracts, except for subcontractors that operate preschool programs for school districts (Section 345). The contractor is responsible for providing an audit report of its subcontractor that includes the supplementary information detailed in Chapter 200, Exhibit A and the AUD forms for any subcontracts (Section 210.D).
- If start-up expenses (service level exemption) are reported on the AUD forms, the audit report must include a “Schedule of Reimbursable Start-up Expenses” (Section 320).
- Include in the audit report a “Combining Statement of Activities” (Section 315.B). Revenues reported on the “Combining Statement of Activities” must be traceable to individual CDE contracts in the revenue section of the respective AUD form.
- If CDE reporting requirements differ from those of Generally Accepted Accounting Principles (GAAP), e.g., for depreciation, a “Reconciliation of CDE and GAAP Expense Reporting” is required (Section 315.C).
- Cost Allocation Guidance is provided in Section 718.
Costs Disallowed in Child Development Audits
The following are examples of costs disallowed in audits of preschool programs. When costs are disallowed by CPAs or the A&I, the CDE will not reimburse those costs. Each example is followed by a bracketed citation to identify the applicable requirement in the contract Funding Terms and Conditions (FT&Cs) for Preschool Programs. The FT&Cs can be found at: https://www.cde.ca.gov/fg/aa/cd/ftc2021.asp
- Payroll costs for salaries and benefits are disallowed when a contractor does not adequately support its claim for reimbursement, e.g., does not maintain payroll records that indicate the actual amount of time spent performing direct cost activities in each program per day for multi-funded employees (FT&C, Section VI.E).
- The following costs are disallowed, as they are specifically prohibited by the contract. Note, this is only a partial list (FT&C, Section V.H):
- Bad debts, excepting parent fees if collection attempts are adequately documented
- Amusement and entertainment
- Idle facilities for full-year programs, e.g., office or classroom used for storage
- Fines and penalties
- Costs incurred outside the contract period, except for audit fees (FT&C, Section V.I)
- Costs are disallowed if they are not reasonable and necessary to the performance of the contract (FT&C, Section V.B), for example:
- Granite counter tops in kitchen and bathrooms
- Cellular telephones for employees’ spouses and children
- High-end office furnishings
- Depreciation is disallowed when claimed on: (a) assets purchased with public funds, (b) donated assets; or (c) idle or excess facilities (FT&C, Section III.D).
- When a contractor lacks prior written approval from the Early Learning and Care Division, costs are disallowed for:
- Renovation and repairs or equipment purchases in excess of the FT&Cs thresholds (FT&C, Section III.E)
- Subcontracts for direct early learning and care services (FT&C, Section IV.D)
- Rent is disallowed (FT&C, Section II.P):
- On property owned by the contractor (an expense may be claimed only as depreciation or use allowance)
- On property owned by affiliates, officers or other key personnel of the contractor or their families, unless the contractor obtains (and claims no more than) a fair market rental cost estimate from an independent appraiser licensed by the California Office of Real Estate Appraisers
- Claims for reimbursement are disallowed if there is insufficient documentation to support the claim, e.g., no paid invoice or receipt to support an expense; the contractor has the burden of proof. (FT&C, Section VI.E).
- Costs of advertising are disallowed when the advertisement is not necessary to meet the requirements of the Child Development contract (Title 2 Code of Federal Regulations, Section 200.421).
For additional information regarding the AUD forms or audit requirements, please contact the CDE Audits and Investigations Division at 916-322-2288.
If you have questions or need clarification about any other topic covered in this letter, please contact your assigned EENFS Fiscal Analyst.