Accounting for AB 86 Funding – IPI and ELO Grants

To assist local educational agencies (LEAs) with reopening schools in the 2020–21 school year and to implement a learning recovery program, the state legislature approved Assembly Bill 86 (Chapter 10, Statutes of 2021) that provides funding to support these activities – In-Person Instruction Grant and Expanded Learning Opportunities Grant, as amended by Assembly Bill 130 (Chapter 44, Statutes of 2021) that includes a shift of $2.015 billion from General Fund to federal stimulus funds for the Expanded Learning Opportunities Grant.

Following is guidance to assist LEAs with accounting for these grants.

In-Person Instruction (IPI) Grant

The California Department of Education (CDE) has established Resource 7422, In-Person Instruction (IPI) Grant, effective 2020–21, to allow LEAs to account for IPI grant revenues and expenditures. Resource 7422 is subject to unearned revenue and available for expenditures through September 30, 2024. LEAs will not recognize revenue until all eligibility requirements are met, which is when LEAs offer in-person instruction pursuant to Education Code (EC) Section 43521(c)(3) by May 15, 2021.

Note that IPI grant revenue is affected by the number of days the LEA delays offering in-person instruction, pursuant to EC Section 43521(c)(2)(B)(i). Revenue recognized should reflect these adjustments, if applicable. No revenue should be recognized by LEAs that did not provide in-person instruction by May 15, 2021. Any funding that must be returned to CDE should be recorded to Object 9590, Due to Grantor Governments.

Expanded Learning Opportunities (ELO) Grant

The CDE has established the following federal and state resources to allow LEAs to account for ELO grant revenues and expenditures and all are effective 2020–21:

Federal Resources

• Resource 3216, Expanded Learning Opportunities (ELO) Grant: ESSER II State Reserve – available for obligation through September 30, 2023
• Resource 3217, Expanded Learning Opportunities (ELO) Grant: GEER II – available for obligation through September 30, 2023
• Resource 3218, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve Emergency Needs – available for obligation through September 30, 2024
• Resource 3219, Expanded Learning Opportunities (ELO) Grant: ESSER III State Reserve Learning Loss – available for obligation through September 30, 2024

Information about obligations for federal grants can be found in the California School Accounting Manual (CSAM), Procedure 765, Recognition of Legal Obligations in Reporting for Federal Grants.

Because of the additional federal requirements, eligible LEAs are required to submit applications for these federal funds. These four new federal resources (i.e. 3216, 3217, 3218, and 3219) are subject to unearned revenue. As such, LEAs will not recognize revenue until all eligibility requirements are met, including the incurrence of qualifying expenditures. Since these resources may be used for costs dating back to March 13, 2020, qualifying expenditures may be recorded in 2020–21; however, receivables and corresponding revenues should not be recorded in 2020–21 because grant awards/agreements were not executed by June 30, 2021. Generally accepted accounting principles for modified accrual basis accounting require that there be an executed agreement in order for asset and revenue recognition to take place.

Because expenditures, but not revenues, may be reported using these federal resources in 2020–21, negative fund balances in these resources will occur. These negative balances will also result in a few warning technical review check exceptions in the Standardized Account Code Structure (SACS) financial reporting software for 2020–21 unaudited actuals reporting. It is appropriate for LEAs to provide explanations for these exceptions, for example “per CDE guidance, ELO federal expenditures are allowed to be reported in 2020–21, but revenue will not be reported until grant awards/agreements are executed in 2021–22.”

State Resources

• Resource 7425, Expanded Learning Opportunities (ELO) Grant
• Resource 7426, Expanded Learning Opportunities (ELO) Grant: Paraprofessional Staff

Resources 7425 and 7426 are subject to ending fund balances and available for expenditures through September 30, 2024. Carryovers of unexpended balances in these resources are reported as restricted ending balances (Object 9740).

EC Section 43522(c) requires that at least ten percent of the funds appropriated under EC Section 43521(b)(3) (part of the ELO grant) must be used to hire paraprofessional staff to provide supplemental instruction and support throughout the learning recovery program as defined in EC Section 43522(a). Therefore, Resource 7426, Expanded Learning Opportunities (ELO) Grant: Paraprofessional Staff, was established to assist LEAs in complying with this requirement.

Expenditures reported using Resource 7426 should be limited to paraprofessional staff salaries and benefits, e.g., Object 2100, Classified Instructional Salaries, and corresponding benefit objects 3XX2, using the appropriate goal and/or functions. In order to reduce the potential reporting burden on LEAs in the event that paraprofessional expenditures exceed the minimum ten percent required, (e.g., having to split one staff’s salary and benefit expenditure entries between Resource 7425 and Resource 7426), all ELO paraprofessional staff expenditures should be reported using Resource 7426.

Revenue reported in Resource 7426 using Object 8590, All Other State Revenue, should equal ten percent of the funds appropriated under EC 43521(b)(3), as provided in column D.2 of the schedule of revised allocations for the ELO grant, available on the CDE IPI and ELO Grants Funding Results web page. Since Resource 7426 is used to record total ELO paraprofessional salary and benefit expenditures, LEAs should record a contribution from Resource 7425 to Resource 7426 using Object 8990, Contributions from Restricted Revenues, for the excess of expenditures over the minimum required ten percent, i.e., amount reported in Object 8590. Please note that the contribution should be limited to the actual expenditures incurred. In addition, restricted contributions can only be made to Resource 7426 from Resource 7425.

Contributions to ELO and IPI Grants

Please note that CDE will not open resources 3216, 3217, 3218, 3219, 7422, 7425, and 7426 in combination with Object 8980, Contributions from Unrestricted Revenues. Because ELO and IPI grant awards are intended to provide emergency relief to LEAs to address the impact that COVID-19 has had on education, and not a “program,” in the sense that it is not “a group of related activities that operate together to accomplish specific purposes or objectives,” it would be counterintuitive to the reason for contributions to allow them for these funding sources. The customary reason for recording unrestricted contributions to a program is to keep program expenditures together, which does not apply in this context. Furthermore, because LEAs have a statutory requirement to report the receipt and use of ELO and IPI grant, contributions to resources 3216, 3217, 3218, 3219, 7422, 7425, and 7426 would distort ELO and IPI expenditures and not result in the intended reporting transparency.

For these same reasons, Object 8990, Contributions from Restricted Revenues, will not be opened for resources 3216, 3217, 3218, 3219, and 7422. Note that restricted contributions are allowed from Resource 7425 to Resource 7426, as discussed previously under the ELO grant accounting guidance. Appropriate documentation should be maintained to demonstrate that the contribution is made from Resource 7425 to Resource 7426.

Contacts

Questions regarding this accounting guidance may be emailed to the Financial Accountability and Information Services office at sacsinfo@cde.ca.gov.

Questions regarding the IPI and ELO grants may be emailed to InPersonGrants@cde.ca.gov and ELOGrants@cde.ca.gov respectively.

Further information regarding ELO and IPI funding can be found on the CDE COVID-19 Relief and School Reopening Grant web page.