Grants

San Jose Unified School District Fiscal Year 2008-2009





ADMINISTRATIVE BULLETIN

GRANTS & MEMORANDA OF UNDERSTANDING (MOU’S)

Bulletin: 2009-327

Date: August 1, 2008

To: All Administrators

From: Rosemarie Pottage, Director, Finance

Re: Grants and MOU’s

For Questions, Contact: Florence Eng, Internal Auditor, ext. 6144

From time to time schools and departments will apply for grants. Grants are subject to

separate District oversight and will be assigned a resource number by the Fiscal Services

department. Any of the following criteria classify the funds as a grant and will require

the District Office to be involved in separate accounting for these funds:



 The grant requires an application and/or budget proposal. All grant applications must

follow procedures established by Board policy. This includes Board approval.

 The grant has an expiration date and/or it requires a formal or informal report on how

the funds were used or what results were achieved.

 The grant is for a specific restricted purpose, and any funds not used for this purpose

must be returned to the grantor.

 The grant is on a reimbursement basis. This means that the District must first expend

funds and then claim reimbursement from the grantor.



If funds have any of the above restrictions or reporting requirements, the administrator

will request that these conditions be spelled out in writing by the grantor prior to district

grant approval so that no confusion arises at a later date. No grants may be entered into

orally.



THE GRANT APPLICATION PROCESS

Whenever a grant application is made, a copy of the application must be sent to the Fiscal

Services department. Whenever an award letter is received a copy must be sent to the

Fiscal Services Department. Whenever the grantor requires the District to expend its

own funds and then receive reimbursement, the Fiscal Services Department must be

involved at the earliest possible stage. Do not make expenditures from “other” funds

(e.g. SLIBG or Title I) with the intent that these will then moved to the grant when the

money arrives. Instead, Fiscal Services will establish a separate budget for such

expenditures. The importance of this required procedure cannot be over-stated.



Items sometimes overlooked in Grant applications:



 Indirect Cost Rate: Always include the district’s indirect cost as an expenditure line

item.

 Matching Funds (in kind): This is sometimes referred to as Cost Sharing. Indicate

specific salaries, facilities costs or other costs that are designated as matching funds.

This item needs to be clearly identified and broken out so that these items can be

identified and tracked internally.

 Matching Funds (cash match): Some grants require a cash match. The source of

these funds as well as the expenditures to be made from such funds must be

specifically identified.



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ADMINISTRATIVE BULLETIN

GRANTS & MEMORANDA OF UNDERSTANDING (MOU’S)

 Employee cost increases: Employee salaries and benefits identified in the grant will

probably be higher in the year the award is made than in the year the application is

made.



Conditions in Grant applications that are often problematic and require coordination with

the appropriate department:



 Financial Reporting: The grantor may require the grantee (school or district) to

provide reports in an unachievable timeline. For example, because of year end close

activities, annual reports of actual expenditures cannot be promised to the grantor

earlier than August 31st (September 30th is preferred). Progress financial reporting

(e.g. quarterly reports) need to be coordinated with Fiscal Services to ensure that the

period being reported has actually been closed to further transactions.

 Performance Reporting: Grants that require reporting of other data need to be

coordinated with the appropriate department. For example, reporting of student

testing results must be coordinated with the Educational Accountability Department.

 Funding Dependent on Meeting Performance Goals: Grants where funding is

dependent on meeting specific performance goals (such as test scores or attendance)

can lead to unfunded expenditures at the end of the grant period. Such requirements

must be clearly identified in the board agenda item when the grant application is

approved.

 Audit Requirements: Some grants (e.g. from the City of San Jose) require a separate

independent audit. The cost of this audit must be included in the budget section of

the grant application.





WHO APPLIES FOR GRANTS

Schools and departments may apply for grants. From time to time external agencies

(such as foundations) may wish to apply for grants on behalf of the school or district.

These MUST be coordinated with the school principal or appropriate departmental

director before the application is made. External entities cannot obligate the school or

district. They cannot act on behalf of the district in hiring employees nor may they bind

the school or district to reporting or performance requirements. As a rule, schools or

departments should apply for grants, not an affiliated foundation or parent group.



GRANT FUNDING

When proceeds are received, forward all checks and copies of all correspondence to the

Fiscal Services Department. The Fiscal Services department will establish a separate

budget for the funds and will assist with reporting, reimbursement, and other compliance

issues.



MEMORANDA OF UNDERSTANDING (MOU’s)

A Memorandum of Understanding (MOU) is generally initiated by an organization that

agrees to provide services to students or the community directly, without providing cash

to the district. For example another organization may agree to provide free after school

tutoring to students. The MOU that is presented to the site or department often is written

by the outside organization and generally contains language that describes the service to

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ADMINISTRATIVE BULLETIN

GRANTS & MEMORANDA OF UNDERSTANDING (MOU’S)

be performed as well as what the school agrees to provide (e.g. a clean space and a snack

for students). Despite the seemingly innocuous nature of an MOU there are many

potential pitfalls in such a document. Unless it specifically says that it is non-binding it

is, in fact, a contract. Even if the outside agency is not providing grant funding, there can

be a cost to the district. Additionally, Education Code still applies. For example, an

outside agency cannot place personnel on a school site without fingerprinting or TB

testing. The District will want to ensure that the outside agency has insurance.



Therefore, all Memoranda of Understanding are to be treated in the same manner as

contracts and also require approval of the Board of Education.



See attachment for some grant-writing tips and suggestions









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ADMINISTRATIVE BULLETIN

GRANTS & MEMORANDA OF UNDERSTANDING (MOU’S)

APPENDIX 2009-327

GRANT WRITING 101 (From a Fiscal Perspective)

Grants are usually awarded by governmental organizations (federal, state, local) or

private philanthropic foundations or individuals for the purpose of financing a particular

activity of importance to the donor. The primary advantage of grants is that recipients do

not have to use their own resources to pay the specific eligible costs that the grants cover.

Many grants (and all federal grants) have supplanting restrictions.



SUPPLEMENT: Grants augment current activities, or permit new activities that a district

otherwise could not afford

SUPPLANT: Grant dollars can be substituted for other dollars that currently support an

activity (no increase in service)



Applying for grants can be time-consuming. It can often take months for the awarding

organization to process grant applications. Due to intense competition, applicants may

not be awarded funding. Due to grant eligibility limitations, only a percentage of the total

project costs may be eligible for project assistance. Providing matching funds, often

ranging from 5 to 50 percent, may be difficult. Grants often have conditions that affect

the scope, intent, nature or cost of the project. Most federal grants require that grantees

comply with other federal laws and regulations. Grant funding can be unstable, making it

difficult to plan ahead. When grant funding ends, consideration should be given to how

an ongoing successful activity with ongoing costs will continue to be funded.



Nevertheless, grants are an important source of funds to supplement school district

activities.



GRANT BUDGET DEVELOPMENT

Find out from the application guidelines all the regulations set down by the funding

agency. All proposals must include a budget which clearly delineates all costs to be

covered by the grant. Budgets should show income and expenses and should be

structured in columnar form (not just a narrative form). If a group or individual verbally

proposes to fund an activity, work with them to put all the requirements in writing before

proceeding any further. Develop a budget which they will approve, even if they don’t

require it. The Board of Education and the district’s budget office will need assurance

that the donor has approved of all the proposed expenditures - in advance.



Direct Costs

Direct costs are those costs that are directly incurred by the project. These costs would

not be incurred if the grant was not awarded. For example:

 Computers and instructional aide for a technology project

 A resource teacher, staff development activities and books for a reading grant



Find out if the granting agency places restrictions on what it will pay for. Will it support:

 Consultants

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GRANTS & MEMORANDA OF UNDERSTANDING (MOU’S)

 Travel

 Equipment

 Salaries for administrators

 Facilities

 Indirect costs



Indirect Costs

Indirect costs are the type of costs that an organization incurs based on overhead costs of

the school district that cannot be directly attributed to a single activity. These include

such things as heat, lights, maintenance, payroll issuance costs, purchase order processing

costs, insurance etc. The indirect cost that is charged to a grant represents estimated

amount of such costs that can be reasonably attributed to the grant’s activities. Every

district is assigned an indirect cost rate each year, based on an audit of the previous year's

transactions. (No district arbitrarily sets its own rate). Some grants set a maximum

allowable indirect cost rate. Often it is phrased as “the lower of 4% or the district’s

approved indirect cost rate”. Usually indirect costs cannot be applied to the cost of

equipment above a specified dollar amount. Sometimes grant-writers inadvertently omit

indirect costs in the budget development process. If a grant is approved without indirect

costs, this line item often cannot be added later. Only rarely do grants not permit indirect

costs to be charged.



Indirect costs must be taken whenever allowable. They represent the recovery of

increased overhead costs that are caused by grant activity. If such increased overhead

were not recovered, this would divert funds from basic educational programs.



Cost Sharing

Many agencies require that some part of the cost of a project be borne by the applicant.

This is usually provided by pledging some portion of personnel salaries with related

fringe benefits, and in some cases, indirect costs. Other sources of cost sharing can be

used. Cost sharing must be carefully documented for auditing purposes.



Cost Matching

Cost matching is a term used to mean either cost sharing (identifying costs that are in-

kind) or actual pledges of cash. Be sure to understand what the grantor is expecting vis-à-

vis cost matching. Matching costs that are commitments by the district to spend its own

funds are a commitment of actual dollars rather than an in-kind contribution.



BUDGETING EXPENDITURES

You will not be able to pin down all the expenses associated with the project until the

program details and timing have been worked out. Thus the main financial data gathering

takes place after the narrative part of the master proposal has been written. Budgeted

expense information should show:

 Personnel costs such as salary and benefits

 Direct non-personnel expenses such as travel, postage, equipment, supplies

 Indirect costs



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ADMINISTRATIVE BULLETIN

GRANTS & MEMORANDA OF UNDERSTANDING (MOU’S)

If costs exceed total funding, the scope of project may need to be reduced and the

narrative will have to be rewritten.



BUDGETING REVENUE

Sources of income should be listed separately as part of budget information. Sources for

funding may include:

 fees

 other grants,

 individual donations



A GOOD BUDGET...

 Tells the same story as the proposal narrative

 Is detailed in all aspects

 Includes all projected costs

 Contains no large unexplained amounts for “miscellaneous” or “contingency”

 Includes all items asked of the funding source

 Includes all items paid for by other sources

 Includes all volunteers

 Includes all consultants

 Details fringe benefits, separate from salaries

 Separately details all non-personnel costs

 Includes separate columns for listing all donated services

 Includes indirect costs whenever possible

 Is sufficient to pay for all the tasks described in the narrative.



SOMETIMES OVERLOOKED...

 Salary increases / step & column increases

 Benefit costs

 Indirect costs

 Bargaining unit contract requirements

 Communication with other departments

 Board approval









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