Key Fiscal Compliance Requirements: Recent Monitoring Insights

Overview of Key Fiscal Compliance Requirements and Concerns Based on Recent Monitoring Jennifer Bennett, Senior Director, School Business Services Shirley McFadden, NCDPI Monitoring and Compliance Manager Presented on 10/17/22 .

Topics 1. Attendance and Absence Programs 2. Written Policies and Procedures 3. Procurement 1. Competition 2. MWBE 3. Debarred Vendors 4. Equipment and Inventory 5. Contracts 6. Subscriptions 7. Construction 1. Prior Approvals 2. Ownership Requirements 2

Attendance and Absence Programs Summary of the Requirements of the Principal 1. Report and Certify daily attendance 2. Compulsory Attendance Duties NC Laws Related to Attendance Any parent, guardian, or other person violating the provisions of the Compulsory Attendance Law is guilty of a class 1 misdemeanor. (G.S. 115C-380). Any superintendent, principal, teacher, or other school employee of the public schools, who knowingly and willfully makes or procures another to make any false reports or records respecting daily attendance of students in the public schools shall be guilty of a class 1 misdemeanor, and the certificate of such person to teach in the public schools of North Carolina will be revoked by the State Superintendent of Public Instruction. (G.S. 115C-276(p), 115C-288(b), and 115C- 307(g)). 3

Written Policies and Procedures Required Authorizing Citation 2 CFR 200 200.302(b)(6), 200.305 Cash Management 200.302(b)(7) 200.313(d) Determining Costs are Allowable Equipment Management 200.318(c) Conflict of Interest 200.319(d) Procurement (Specific levels described in 200.67, 200.88, 200.320 subject to change.) Procurement: Competitive Proposals 200.320(e)(2)(ii) 200.430(a)(1) Compensation Personal Services (Time and Effort, Substitutes, Stipends, Bonuses etc.) 200.474(b) Travel 4

Procurement - Competition Must have documented and use Local and Federal Guidelines Informal Procurement $10,000 or less - Micro-Purchase No required quotes; however, must consider price as reasonable, and, to the extent practical, distribute equitably among suppliers $10,000.01 - $250,000 -Small Purchase Procedures Obtain/document quotes from a reasonable number of qualified sources Formal Procurement Greater than $250,000 Sealed Bids Proposals Noncompetitive Procurement currently requires DPI approval 5

Procurement - MWBE MWBE Uniform Guidance Requirements: Must take all necessary affirmative steps to assure that minority businesses, women's business enterprises, and labor surplus area firms are used when possible (regardless of cost). Affirmative Action Must: (1) Place qualified organizations on solicitation lists; (2) Assuring that the organizations are solicited when they are potential sources; (3) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation; (4) Establishing delivery schedules, where the requirement permits, which encourage participation the organizations; (5) Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and (6) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps 6

Procurement - Debarred Vendors Process to ensure vendor is not debarred from doing business using federal funds 180.220, 180.300 Possible procedures to consider: Print screen evidence Checklist indicating performance 7

Equipment and Inventory Equipment per unit cost $5k and useful life more than one year and high-risk items (technology) Requirements 200.313d (1) (2) Inventory Records must be maintained A physical inventory of the property must be taken every two years. Safeguards to prevent loss, damage, or theft Adequate maintenance procedures (3) (4) 8

Contracting Contracts must contain the applicable provisions described in appendix II to 2 CFR 200 & NCGS: All contracts All Construction Contracts Prohibition on certain telecommunications and video surveillance services or equipment. All Prime Construction Contracts > $2k Include the equal opportunity clause Contracts > $10k Should, provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States Include a provision for compliance with the Davis- Bacon Act Must address termination for cause and for convenience Indebtedness Clause for Charter Schools NCGS 115c- 238.29h Comply with section 6002 of the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act. 9

Contracting Contracts > $100k Contracts > $150k Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-3708). Contracts over $100k that involve the employment of mechanics or laborers Contracts > $250k Clean Air Act (42 U.S.C. 7401-7671q.) Federal Water Pollution Control Act (33 U.S.C. 1251-1387) Address administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as appropriate. Byrd Anti-Lobbying Amendment - Contractors that apply or bid for an award exceeding $100,000 must file the required certification. Contracts over $100k that involve the employment of mechanics or laborers 10

Subscriptions Obligations can be made through the Budget period, per EDGAR and UG Payment cannot cover a period that goes beyond the Period of Performance The Budget Period for the award and Period of Performance dates may not be the same (ESSER funds have the same Budget and Period of Performance dates) Example: 2-year subscription for a license starts July 1, 2021 June 30, 2023 want to use PRC 163. Budget period and Period of Performance for PRC 163 is 9/30/22. 11

Construction: Definitions of Capital Expenditure Equipment 200.1 Tangible personal property (including information technology systems) Having a useful life of more than one year and A per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. Capital assets200.1 (1) Tangible or intangible assets used in operations having a useful life of more than one year (i) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture, exchange, or through a lease (ii) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance). 12

Construction: Planning & Approvals A grantee must have or obtain a full title or other interest in the site, including: right of access, that is sufficient to insure the grantee's undisturbed use, and possession of the facilities for 50 years or the useful life of the facilities, whichever is longer 13

Construction: Planning & Approvals Prior written approval needed for capital expenditures: How are projects approved? general purpose equipment (with a unit cost of $5,000 or more), buildings and land, including material improvements to buildings and land For ESSER related purchases, present project in the CCIP application for approval 14

Construction: Design Phase DPI School Planning: School Planning professionals conduct design reviews for new schools, additions, and renovations. Design reviews encompass code compliance, life safety, longevity, durability, economy, and efficiency of building construction systems. Design review conferences are available at each design phase After design phase review DPI will issue a Certificate of Review ***School Planning Review is required per G.S. 115C-521(c): DPI Capital Project Submittal Procedures: https://www.dpi.nc.gov/districts- schools/district-operations/school- planning/design-review DPI Facility Design Guidelines: https://files.nc.gov/dpi/documents/schoolpla nning/facility-design-guidelines.pdf 15

Many Other Federal Requirements 2 CFR 200 and EDGAR has many other requirements examples include: Domestic Preference -200.323 Bonding Provisions 200.325 Contingency Provisions 200.433 Use of Recovered Material 200.323 Contractor wanting to bid, can t assist with specifications 200.319b Price or cost analysis if over $250k, cost estimate required 200.323 Use of time and material type contracts are permitted only after a determination that no other contract is suitable and that the contract includes a ceiling price that the contractor exceeds at its own risk 200.318(j) 16

Bi-weekly Charter School Finance Meetings Weekly School Business Newsletter NC DPI School Business Webpages Construction Guidance Resources 17

Questions? Shirley McFadden Shirley.mcfadden@dpi.nc.gov Last Updated 9/14/21 18