Federal Fiscal Requirement: Time Distribution Reporting (Time and Effort)
Denise Dusek, MPA
Education Service Center, Region 20
Presentation at “Charting the Course” theNetwork Summer Summit 2014
June 2014
Objective
• The presentation will review the basic Federal requirements for Time Distribution Reporting (Time & Effort) that is applicable to any employee whose payroll costs are paid in full or in part with Federal funds.
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Time Distribution Reporting
• Federal Requirement
– 2 CFR Part 225 (OMB Circular A‐87)
• Appendix B Selected Costs
– (h) Support of salaries and wages
• Most refer to the requirement as “Time & Effort”
– Time & Effort is actually a component of Time Distribution Reporting
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Reason for the Requirement
• Compensation for personal services, which includes but is not limited to wages, salaries, and fringe benefits, are allowable with Federal funds to the extent they satisfy the Federal Cost Principles*
*Must also meet allowable use of funds for the relevant Federal program
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Reason for the Requirement
• Federal Cost Principles* stipulate expenditures with Federal funds must be:
– Reasonable
– Necessary
– Allocable (must provide an allocable benefit to the Federal program)
*These are just three of many Federal Cost Principles
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Reason for the Requirement
• To demonstrate payroll charges are allocable, Time Distribution Records are required:
– To ensure that payroll charges to each Federal program reflect an accurate account of the employee’s time and effort devoted to that program
– To demonstrate how the Federal fund source is aligned with the actual effort (activity)
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Reason for the Requirement
• To demonstrate payroll charges are allocable, Time Distribution Records are required:
– To ensure the Federal fund source is not being charged for work that was not related to the program
– Not to document how you are paid, but to document how you work to ensure you are being paid correctly
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Not Optional
• Time Distribution Reporting is Not Optional
• All personnel paid in full or in part from Federal funds are subject to Time Distribution reporting
– Requirement not applicable to contractors
• Failure to maintain Time Distribution records may result in an audit finding
– Must keep Time Distribution Records to charge payroll costs to a Federal Fund source
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Three Types of Records
• There are three types of Time Distribution Records
• The basis for determining the type of record you must use is the cost objective:
– Single Cost Objective, or
– Multiple Cost Objectives
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Definition of Cost Objective
• USDE Definition:
– Function, organizational subdivision, contract, grant, or other activity for which cost data are needed and for which costs are incurred
• Simple Definition:
– An employee’s activities, based on the program or student population type, determine the cost objective
– Although the cost objective must be connected to the employee’s payroll fund source, the fund source alone does not determine the cost objective
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Cost Objectives
SINGLE COST OBJECTIVE
MULTIPLE COST OBJECTIVES
Employee works on:
Single function
Federal award and a non‐Federal award
(different activities)
Single grant
More than one Federal grant (different activities)
Single activity
Indirect cost activity and a direct cost activity
Single program
Unallowable activity and a direct or indirect cost activity
Single type of student/class
Two or more indirect activities allocated using different allocation bases
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Determination of Cost Objective
• The significant factor in determining whether an employee works on a Single Cost Objective or Multiple Cost Objectives is the number of cost objectives, not the number of fund sources
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Single Cost Objective
• It is possible to be paid from more than one fund source but work on a single cost objective:
– Federal funds and non‐Federal funds; same program • Special education teacher paid from IDEA‐B funds and State special education allotment
– More than one Federal fund source; same student population type
• Preschool special education teacher funded partially under IDEA‐B Formula and partially under IDEA‐B Preschool
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Single Cost Objective
• Not determined solely by funding, but by activities
• If the employee’s payroll costs can be supported in full from either fund source, it is considered a Single Cost Objective, even if the payroll costs are charged to multiple fund sources
• Key concept: Can the employee be paid for 100% of their time from either fund source and meet program criteria for allowable use of funds?
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Single Cost Objective Examples
• Special education teacher paid from IDEA‐B funds and State or local funds
• Preschool special education teacher paid from IDEA‐B Formula and IDEA‐B Preschool funds
• In both examples, the activity or population type is singular: Serving students with disabilities
• The teacher could be paid in full from either of these fund sources
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Single Cost Objective Examples
• Title I, Part A funds and CEIS (Coordinated Early Intervening Services) funds
– Serving low‐achieving students
• Same eligibility criteria for students from either fund source
– Teaching low‐achieving students is a single cost objective because it can be fully supported under either Title I, Part A or CEIS
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Single Cost Objective Examples
• Title I, Part A funds and State Compensatory (SCE) funds
– A supplemental math teacher is serving low‐
achieving students
– Teaching math to low‐achieving students is a single cost objective because it can be fully supported under Title I, Part A*
*Assuming expenditures for a supplemental math teacher are an allowable use of Title I, Part A funds
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Single Cost Objective Examples
• Title I, Part A Schoolwide Program
– Schoolwide program funded from multiple funding sources is considered a Single Cost Objective
• Employees who work 100% of their time in the schoolwide
program are working on a Single Cost Objective
• However, if employee’s time is split between activities in the schoolwide program and activities not included in the schoolwide program, the employee is working on Multiple Cost Objectives
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Multiple Cost Objective Examples
• Works partially on Schoolwide Program activities and partially on program whose funds have not been consolidated in the Schoolwide pool, such as Reading First
• Works partially on Title I, Part A and partially on IDEA‐B activities
• Works partially on Title I, Part A and partially on Title I, Part C (Migrant) activities
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Stipends, Extra Duty, After‐School
• If state‐funded employee is paid a stipend with Federal funds for professional development, submit a Semi‐Annual Certification for the stipend
• For extra‐duty or after‐school activities:
– Treat “day job” separately from “after‐school job”
– Keep two, separate Semi‐Annual certifications, or one PAR, whichever is applicable for the situation
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De Minimus Benefit
• Limited work of 5% or less on another cost objective does not require Time Distribution reporting
• Limited duties, such as cafeteria or bus duty, won’t deprive a benefit from the intended beneficiaries
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When in Doubt
• In all instances, it is best to error on side of caution
– Better to have a record and not need it rather than need a record and not have it
– If record is required and you don’t have it, it may result in a finding
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Three Types of Records
IF: THEN:
COST OBJECTIVE REPORT TYPE:
TYPE:
FREQUENCY OF SUBMISSION:
Single Cost Objective
Periodic (Semi‐Annual) Certification
At least Semi‐Annually
Multiple Cost Objectives
Time & Effort PAR At least Monthly
(Personnel Activity Report)
OR
Substitute System for Time & Effort (in lieu of monthly PARS) for employees with a set schedule
Education Service Center, Region 20 | June 2014 At least Semi‐Annually
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Prior to 2012‐2013 in Texas
ISD
Charter School
OMB Circular
A‐87 (Local Educational Agencies)
A‐122 (Non‐Profits)
Periodic (Semi‐Annual) Certification
Yes
No
Time & Effort PAR Yes
(Personnel Activity Report)
Yes
Substitute System for Time & Effort (in lieu of monthly PARS) No
No
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Effective 2012‐2013 in Texas
ISD
Charter School
OMB Circular
A‐87 (Local Educational Agencies)
A‐122 (Non‐Profits)
Periodic (Semi‐Annual) Certification
Yes
No
Time & Effort PAR Yes
(Personnel Activity Report)
Yes Substitute System for Time & Effort (in lieu of monthly PARS) Optional
Optional
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Effective 2013‐2014 in Texas
ISD
Charter School
OMB Circular
A‐87 (Local Educational Agencies)
A‐87 (Local Educational Agencies
Periodic (Semi‐Annual) Certification
Yes
Yes
Time & Effort PAR Yes
(Personnel Activity Report)
Yes Substitute System for Time & Effort (in lieu of monthly PARS) Optional
Optional
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Semi‐Annual (Periodic) Certification Certificates must:
• Be used by employees who work on a Single Cost Objective
• Be prepared at least semi‐annually
• State the cost objective the employee worked on
– Cost objective, not fund source • Be signed after‐the‐fact
– By either the employee OR a supervisory official having firsthand knowledge of the work performed by the employee
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Semi‐Annual Certification
• Examples of certification periods:
– Every six months:
• August through January
• February through July
– Less than six months, based on semester:
• August through December
• January through May • Key concepts: At least semi‐annually and after‐
the‐fact
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Semi‐Annual Certification
• Common Audit finding:
– Certificate indicates January through June, but employee signs it May 30 because that is the last day of school
• Solution: Change the certificate‘s period to January 1 through May 30
• Certification period may be less than six months, it just can’t exceed six months
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Semi‐Annual Certification Sample
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Personnel Activity Report (PAR)
PAR (commonly referred to as Time & Effort) must:
• Be used by employees who work on Multiple Cost Objectives
• Be prepared at least monthly and coincide with one or more pay periods
• Account for the total activity for which the employee is compensated
• Be signed after‐the‐fact by the employee
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Personnel Activity Report (PAR) Sample from TEA
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Personnel Activity Report (PAR)
• Budget and actual must be compared at least quarterly
– If the differences between budgeted and actual costs are less than 10 percent, you may wait until the end of the year to make accounting adjustments
– If the differences between budgeted and actual costs are 10 percent or greater, adjustments must be made at least quarterly
• Any deviation between budgeted and actual cost must be adjusted to ensure all costs are allocable to the grant
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Substitute System
• May be used in lieu of PAR for employees working on multiple cost objectives who have set schedules and work on only one activity at a time
• Designed to ease the administrative burden of Time & Effort Reporting (PARs)
• Allows for semi‐annual reporting instead of monthly reporting
• Optional
• Must be signed by employee AND supervisory official with firsthand knowledge of employee’s work
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Substitute System –
Management Certificate
• Must obtain approval from TEA to use Substitute System
– Via submittal of Management Certificate
• Management Certification must be submitted to TEA annually if the LEA chooses to participate
– LEA certifies their compliance with requirements for Substitute System
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Substitute System – Management Certificate
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Substitute System –
Management Certificate
• Deadlines to submit Management Certificate for 2014‐2015:
To implement the substitute system for… Submit the certification by…
Fall 2014, spring 2015, and summer 2015 semesters
September 4, 2014
Spring and summer 2015 semesters
December 15, 2014
Summer 2015 semester
May 15, 2015
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Substitute System –
Employee Schedule and Certification
• Employee Schedule/Certification must be completed and certified at least semi‐annually
• The employee must work on Multiple Cost Objectives
• The employee must work on specific activities or cost objectives based on a pre‐determined, consistent schedule
– Not applicable for administrators
• The employee may not work on multiple activities or cost objectives at the same time
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Substitute System –
Employee Schedule and Certification
• Must include the specific activity/cost objective that the employee worked on for each segment of the employee’s schedule
• Must account for the total hours the employee is compensated
• If the employee’s schedule changes by 10% or more, must resubmit schedule/certificate
• Must be signed by the employee and supervisor with first‐hand knowledge of work
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Substitute System –
Employee Schedule and Certification
• If an employee’s schedule is not consistent, that particular employee is not eligible to use the Substitute System
• Only employees with consistent schedules may use the Substitute System
• Employees working on Multiple Cost Objectives with inconsistent schedules must use Time & Effort PARs (Personnel Activity Reports)
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Substitute System – Employee Schedule
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Substitute System – Employee Certification
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Three Types of Reports An LEA could potentially have all three types of reports submitted by different employees:
 The Substitute System, if approved by TEA For employees with Multiple Cost Objectives, consistent schedule
 Monthly Time & Effort PARs
For employees with Multiple Cost Objectives, inconsistent schedule, and
 Periodic (Semi‐Annual) Certifications
For employees with Single Cost Objectives
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Determining Type of Report Education Service Center, Region 20 | June 2014 44
Determining Type of Report for Multiple Cost Objectives
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Certifying the Three Reports
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URLs
• USDE Guidance on Cost Objectives:
http://www2.ed.gov/policy/fund/guid/gposbul/tim
e‐and‐effort‐reporting.html
• TEA:
http://www.tea.state.tx.us/index2.aspx?id=214751
0385
• ESC‐20:
http://www.esc20.net/default.aspx?name=ci_se.Co
nference‐Webinar
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Questions
ESC‐20:
TEA:
Denise Dusek, MPA
Federal Funding Specialist
Division of Grants Administration
[email protected]
(210) 370‐5378
[email protected]
(512) 463‐8525
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