School district accounting for federal COVID-19 funding

Pennsylvania school districts are receiving much needed federal funds to address the challenges created by the COVID-19 pandemic.

From support for the needs of low-income children and those with learning disabilities to paying for new computers and after school programs, the funds come at a critical time for districts struggling to meet their students’ needs in the face of pandemic-caused disruptions.

However, with the funding coming from various sources and targeted for specific purposes, it may be difficult to know the proper accounting for the various funds.  Districts must use care in accounting for the money so they are prepared for the year-end audit. 

The following are tips on how to properly track funds received and avoid audit nightmares, as well as a listing of the federal assistance available:

Tracking funds

Many of the funding sources are the same for various grants. We suggest districts account for each grant separately using a unique account code dimension, such as a particular cost center code. OMB Uniform Guidance requires that entities receiving federal funds must maintain records sufficient to permit the preparation of reports and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the federal award.  Using a unique account code dimension allows you to track expenditures more efficiently and makes report preparation easier. 

Correctly accounting for COVID-related federal funds is also necessary to determine if your district is subject to a Single Audit.  A Single Audit is required if the district expends over $750,000 in federal funds.  Many districts that were not required to have a Single Audit in the past may meet the threshold with the additional federal funds.

Funding types, purposes, and additional details:

ELEMENTARY AND SECONDARY SCHOOL EMERGENCY RELIEF (ESSER) I AND II FUNDS

ESSER I Funds

• Amount available: $471.4 million was distributed to schools based on the same formula used to allocate 2019-20 Title 1 Part A funds.
• Application info: Schools were permitted to submit applications for ESSER funds in May 2020.
• Time frame for use: The funds are retroactive back to March 13, 2020 and must be obligated by September 30, 2022.
• Accounting: ESSER I funds are separate from Title 1 funds – track them separately using funding source 986. Account for the revenue in function 8741.
• Allowable uses:
  • Coordinate preparedness and response efforts to COVID-19.
  • Provide principals and other school leaders with resources to address individual school needs.
  • Address the unique needs of low-income children, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including outreach and service delivery.
  • Implement systems to improve LEA preparedness and response efforts.
  • Deliver professional development for LEA staff on sanitation and minimizing the spread of infectious disease and purchasing supplies to sanitize and clean LEA facilities.
  • Plan for and coordinate operations during long-term closures, including how to provide meals, technology for online learning, guidance for carrying out IDEA requirements, and providing educational services consistent with applicable requirements.
  • Purchase educational technology (including hardware, software and connectivity) for students.
  • Provide staff and student mental health services and supports.
  • Plan and implement summer learning and supplemental afterschool programs.
  • Initiate other activities necessary to maintain LEA operations and services and employ existing LEA staff, including any activity authorized by ESEA which include the Title programs, IDEA, Adult Education and Family Literacy Act, Perkins, and McKinney-Vento.

ESSER II Funds

Amount available: Pennsylvania received $2.2 billion in ESSER II funding.  Preliminary allocations to schools are based on 2020-21 Title 1-A allocations, which will not be finalized until February 2021.

Application info: Grant applications were available to Pennsylvania School Districts on January 15, 2021.  

Time frame for use: ESSER II funds are retroactive to March 13, 2020 and must be obligated by September 30, 2023. 

Accounting: ESSER II is a separate grant from Title 1 and ESSER I funding and should be tracked separately using funding source 989.  ESSER II revenue should be coded to 8743.

Allowable uses: Districts can use ESSER II funds for all the allowable expenses under ESSER I plus the following:

• Addressing learning loss among students, including low-income students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and children and youth in foster care, of the local educational agency, including by:

• Administering and using high-quality assessments that are valid and reliable, to accurately assess students’ academic progress and assist educators in meeting students’ educational needs, including through differentiating instruction.
• Implementing evidence-based activities to meet the comprehensive needs of students.
• Providing information and assistance to parents and families on how they can effectively support students, including in a distance learning environment.
• Tracking student attendance and improving student engagement in distance education.

• Making school facility repairs and improvements to enable schools' operation to reduce risk of virus transmission and exposure to environmental health hazards and support student health needs.
• Inspecting, testing, repairing, and other projects to improve the indoor air quality in school facilities, including mechanical and non-mechanical heating, ventilation, air conditioning systems, filtering, purification, and additional air cleaning, fans, control systems, and window and door repair and replacement.

GOVERNOR’S EMERGENCY EDUCATION RELIEF (GEER) FUNDS

Schools are also receiving GEER funds to support early learning, students with special needs, historically underserved students, high-speed internet connection, and continuing education and equity grants.  GEER funds received should be coded to account 8742.  Funding source 988 should be used for GEER funds, with each grant accounted for separately using a unique account code dimension.  The following GEER funds are available to school districts:

Early Intervention GEER funds

• Amount available: $3 million to support early intervention programs for children ages 3 to 5 with developmental delays and disabilities and an additional $5 million to provide Preschool Intervention compensatory education services.
• Application info: Early intervention GEER funds were announced on July 28, 2020.
• Allowable uses: To purchase personal protective equipment and pandemic- related supplies and compensatory education services.

Special Education COVID- 19 Impact Mitigation (SECIM) grant

• Amount available: $15 million, consists of $10 million from GEER funds and $5 million from Individuals with Disabilities Education Act (IDEA) federal funds.
• Application info: These funds were announced on August 20, 2020.
• Allowable uses: To help schools provide compensatory education services for students with special needs.

Continuity of Education and Equity Grants

• Amount available: $14 million.
• Application info: Round one of these grants was announced on April 24, 2020.
• Accounting: State funded Continuity of Education and Equity Grants should be accounted for separately and coded to revenue 7521 and funding source 390.
• Allowable uses: To provide additional financial support for schools with the highest percentages of students unable to participate in continuity of education.

Connectivity and Technology Grants

• Amount available: $15 million.
• Application info: These funds were announced September 10, 2020.
• Allowable uses: To pay for secure broadband, mobile hot spots, and other platforms that increase equitable access to remote learning.

Services for Historically Underserved Students Grants

• Amount available: $15 million. Grants were calculated based on the Title 1 Part A formula elements, including the number of economically disadvantaged students and other school enrollment data.
• Application info: These grants were announced on August 25, 2020.
• Allowable uses: To improve students’ educational services at schools designated for Additional Targeted Support and Improvement (ATSI) under the federal Every Student Succeeds Act (ESSA).

SCHOOL SAFETY AND SECURITY GRANTS

Initial Pennsylvania Commission on Crime and Delinquency (PCCD) funds:

• Amount available: PCCD awarded $150 million in School Safety and Security grants, funded through Coronavirus Aid, Relief and Economic Security (CARES) Act monies.
• Application info: Applications for the grant funding opened on June 16, 2020. On October 30, 2020, funds were to be obligated and were retroactive back to March 1, 2020.
• Accounting: Record the revenue to account 8749, with a funding source code of 987.

Additional PCCD funds:

• Amount available: An additional $49.8 million in federal ESSER funding was made available through PCCD to address additional COVID-19 related health and safety needs for school districts.  Funding distribution is determined via formula based on the 2018-19 average daily membership for each district.
• Application info: These funds were announced on October 27, 2020.
• Time Frame: The project period is 30 months with a start date of March 13, 2020 and an end date no later than September 30, 2022.
• Accounting: Record revenue from this grant in account 8741 with a funding source code of 986. These funds should be tracked separately from the ESSER I funds by using a unique account code dimension.

PCCD grant allowable uses

Eligible uses for the funding include

• Purchasing cleaning and sanitizing products
• Training and professional development of staff on sanitation and minimizing the spread of infectious diseases
• Equipment purchases
• Modifying existing areas to support appropriate social distancing of students and staff
• Providing mental health services and supports
• Purchasing educational technology for distance learning
• Other health and safety programs, items or services necessary to address the COVID-19 pandemic.

If you have questions, Boyer & Ritter has answers

If you have questions regarding accounting for federal funds related to COVID-19 or the requirements for a Single Audit, the Boyer & Ritter team is ready to help. Keeping track of the various grants and preparing for an audit can be daunting. Cathy Harlow, CPA, has more than 22 years’ experience as a Business Administrator and six years as a Superintendent. Cathy is ready to help your district navigate the complex web of regulations and requirements. You can contact Cathy at 814-234-6919 or charlow@cpabr.com.