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Consolidation of NCLB Funds for Administration

Letter Head: Jack O'Connell, State Superintendent of Public Instruction, Phone number 916-319-0800

March 10, 2006

Dear County and District Superintendents, County and District Chief Business Officials, and Charter School Administrators:


The Elementary and Secondary Education Act (ESEA), as amended by the No Child Left Behind Act (NCLB), allows a local educational agency (LEA), upon approval by the state education agency, to consolidate funds for the administration of one or more NCLB programs (Section 9203(a)). California has implemented this provision beginning in 2005-06. This letter describes the accounting guidance relative to such consolidation.

Benefits of Consolidation

Consolidating funds for administration means pooling funds under various NCLB programs into one account, to be used for the administration of one or more NCLB programs. This will provide flexibility in charging administrative costs and result in simplified accounting and personnel activity timekeeping. LEAs that consolidate or pool administrative costs will have considerable discretion in how those costs get distributed back to the individual NCLB programs, as discussed later. Further, the consolidated funds may be treated as one cost objective; as such, LEAs are not required to maintain separate records by individual program to account for costs relating to administration, nor maintain personnel activity reports to document the time spent for administrative activities performed exclusively for the programs. (Note that a semi-annual certification must still be completed. Refer to Procedure 905 of the California School Accounting Manual, available on the California Department of Education's (CDE) Web site at

Request and Approval to Consolidate

Requests to consolidate NCLB funds for administration should be submitted to the CDE in Part II of the Consolidated Application (ConApp). CDE approval of Part II will authorize such consolidation, and will be valid only for the fiscal year for which the ConApp was approved. Requests to consolidate for 2005-06 should already have been included in the ConApp that was due on January 31; however, if your agency did not include such a request but now would like to consolidate administrative funds for this fiscal year, you may update the ConApp and resubmit it to CDE prior to the end of the fiscal year. An LEA that does not request to consolidate administrative funds in one year is not prevented from doing so in subsequent years.

Programs and Amounts Eligible for Consolidation

The NCLB programs that may be included in the consolidation are:



Title I, Part A (Basic Programs)


Title I, Part C (Migrant Education)


Title I, Part D (Neglected and Delinquent Children)


Title I, Part F (Comprehensive School Reform)


Title II, Part A (Teacher Training and Recruiting)


Title II, Part A (Principal Training and Recruiting)


Title II, Part D (Enhancing Education Through Technology)


Title III (English Language Instruction)


Title IV, Part A (Safe and Drug-Free Schools and Communities)


Title IV, Part B (21st Century Community Learning Centers)


Title V, Part A (Innovative Programs)


For Title III and Title IV, Part A, the maximum amount available for administrative costs is two percent of the grant funds, pursuant to ESEA Sections 3115(b) and 4114(a)(2), respectively. For the other programs, since no percentages are specified in the ESEA, the maximum amount available for administrative costs is what is reasonable and necessary for the proper and efficient administration of the programs, provided that the LEA budgets and expends at least 85 percent of the grant amounts at school sites for direct services to pupils, pursuant to Education Code Section 63001.

When an LEA chooses to consolidate administrative funds in a particular fiscal year, it may not use any other funds under the participating programs for administration in that fiscal year. (Ref: ESEA Section 9203(c)). That is, all administrative costs for the participating programs must be paid from the administrative cost pool; no additional administrative cost may be charged directly to a participating program (see Accounting for Pooled Costs in a later section).

Allowable Expenditures

Consolidated funds may be used for the administration of any program included in the consolidation, and may be used, at the school district and school levels, for such activities as:

  • Coordination of the NCLB programs with other federal and nonfederal programs.
  • Establishment and operation of peer-review mechanisms under NCLB.
  • Administration of Title IX of ESEA (General Provisions).
  • Dissemination of information regarding model programs and practices.
  • Technical assistance under any NCLB program.
  • Training personnel engaged in audit and other monitoring activities.

As a reminder, pursuant to Office of Management and Budget (OMB) Circular A-87, Attachment A, Section C, to be allowable, costs must meet the following general criteria:

  • Be necessary and reasonable for proper and efficient performance and administration of federal awards.
  • Be allocable to federal awards under the provisions of that Circular.
  • Be authorized or not prohibited under State or local laws or regulations.
  • Conform to any limitations or exclusions set forth in these principles, federal laws, terms and conditions of the federal award, or other governing regulations as to types or amounts of cost items.
  • Be consistent with policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the governmental unit.
  • Be accorded consistent treatment.
  • Except as otherwise provided for in the Circular, be determined in accordance with generally accepted accounting principles.
  • Not be included as a cost or used to meet cost sharing or matching requirements of any other federal award in either the current or a prior period, except as specifically provided by federal law or regulation.
  • Be net of all applicable credits.
  • Be adequately documented.

Accounting for Pooled Costs

Consolidated administrative funds will be accounted for in SACS Resource Code 3155, NCLB: Consolidated Administrative Funds. When administrative costs are incurred, they will be charged to this resource rather than to the individual participating program resources, except for indirect costs, as explained below.

Administrative costs will be accumulated in Resource 3155 in combination with the optional Function 2150, Instructional Administration of Special Projects, or the more general Function 2100, Instructional Supervision and Administration, and with the applicable objects of expenditures.

Because Section 1127 of the ESEA (as amended by the NCLB Act) requires that allowable program carryover be calculated based on total program expenditures, the pooled costs (Resource 3155 expenditures) must ultimately be distributed to and reported as expenditures of the programs participating in the consolidation before carryover can be calculated. The costs will be distributed using Object 5710, Transfers of Direct Costs, resulting in zero net expenditures at the end of the year.

The eventual distribution of pooled costs back to the individual programs does not have to be based on the benefits received by each program, nor in the same ratio that each program's maximum allowable administrative costs bear to the total for all programs, provided that the amounts distributed to any program are within that program's maximum allowable administrative costs and the total grant amount is not exceeded after the distribution.

Illustrative accounting entries relative to consolidation of funds for administration are shown in the Attachment.

Indirect Costs

Indirect costs are considered costs of administration for purposes of consolidating administrative funds. However, to simplify the necessary accounting entries, the CDE recommends that indirect costs that pertain to the individual programs be charged directly to those programs, rather than to Resource 3155, at the end of the year after all pooled administrative costs have been distributed.

The process is as follows:

  1. At the end of the year, distribute all Resource 3155 costs to the participating programs.
  2. Compute the indirect costs for the base direct costs charged to the programs (including the administrative costs charged per Step 1, if applicable).
  3. Charge the computed indirect costs to the individual programs.

The indirect costs will be recorded using Function 7210, General Administration Cost Transfers, and Object 7310, Transfers of Indirect Costs.

See the Attachment for the accounting entries involved.


For questions on the consolidation of NCLB funds for administration, please contact the School Fiscal Services Division at 916-322-1770 or by e-mail at For any questions regarding a specific NCLB program, contact the person designated as the program contact shown in the SACS Query Web site at


Scott Hannan, Director
School Fiscal Services Division

Last Reviewed: Wednesday, June 21, 2017

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