Changes to Federally Funded Time Keeping Requirements — Effective Now!
School Advisor , 2006 Issue No. 2

This spring the Michigan Department of Education (MDE) clarified the time keeping requirements for staff charged to federal programs. Some of the changes will simplify reporting requirements, and some will increase reporting requirements. These clarifications are effective for the year ended June 30, 2006 !

The requirements were discussed in detail in the MDE’s Accounting and Auditing Risk Alert, on the MDE listserver, and by the Michigan School Business Officials. The discussion that follows summarizes the changes. However, the actual release should be obtained by the district. The release is located in the Office of Audits department at michigan.gov/mde.

Clarifications for 100% Funded Staff

An individual can be considered 100% funded in the following situations:

1. The individual is charged 100% to one federal program.
2. The individual functions in a single “cost objective” (essentially performing the same function), even if not 100% federally funded. An example would be a special education teacher that is working in the same class but the function is part federally funded and part state funded.
3. The individual is working in a “schoolwide building,” that is a building meeting the definition of “schoolwide” in the Title I regulations.

If the individual meets one of these definitions the district should obtain a certification signed by the staff person or their supervisor semiannually. The certification is sufficient support for the allocation of cost to the federal program.

Clarifications for Part Funded Staff

An individual is considered part funded if they do not meet one of the above definitions. That is, they spend part of their time working in a federal program and part of the time doing “other things” (more than one cost objective). In this case the allocation of time and cost to the federal program must be documented.

Generally, time allocation should be done in one of the following ways:

1. Personal Activity Reports (PARs) – These reports should be signed at least monthly and account for total activity of the individual. The federal activity portion should clearly indicate what program was served.
2. Time Sheets – Hourly staff can use signed time sheets (at least monthly), if the time sheet reflects actual activity that was worked on by the individual.
3. Signed Lesson Plans – Signed lesson plans can be used to document the time allocation for teachers. However, they must indicate what the teacher actually did and the lesson plan must cover the total time spent by the teacher. The lesson plans should be retained by the district.

Based on our discussions with school districts we believe it is possible that districts may not be maintaining the information as outlined by the MDE. While maintaining more than required documentation is not a problem, it may be an unnecessary use of district resources. Maintaining less than the required documentation could create audit findings in the single audit report and possibly questioned costs. To limit that possibility, we suggest the district consider the following:

• Obtain the actual MDE guidance and distribute it to the individuals responsible for federal grant compliance
• Review current documentation procedures to see if adjustments are necessary
• Pay particular attention to part funded teaching staff as documentation on lesson plans may need to be improved
• Be prepared to tell the auditor how the district applied the MDE clarification

We appreciate that this clarification was issued midyear and that the district may not have had a chance to revise its processes until late in the year. As the MDE has included the clarification in the School Audit Manual, the auditor is expected to evaluate compliance for this fiscal year. At this late date we encourage you to take whatever steps you can to try to bring your district into compliance with the Federal Time Keeping documentation requirements.