How Does My Charter’s Fiscal Risk Rating Affect Us?

How Does My Charter’s Fiscal Risk Rating Affect Us?

July 30, 2021 | Financial Management

Federal regulations require TEA to annually evaluate each grant recipient’s risk of noncompliance with the federal statutes, rules, terms, and conditions of their award. To comply with this requirement, TEA conducts a risk assessment of each recipient, including charter schools, and assigns each entity a fiscal risk rating level of low, medium, or high.

At Charter School Success, we work closely with our clients to ensure the most favorable rating is awarded, and that is just the beginning!  We do this by providing you with a series of 1-on-1 meetings, webinars, and ongoing guidance and expert support as you navigate the world of Federal Grant Management.

How Does My Charter’s Fiscal Risk Rating Affect Us?

The implications that come with each rating do not have to do with whether or not your charter is actually in or out of compliance, but rather with the level of stringency your charter should expect in the application and negotiation processes for receiving federal grants and in determining the likeliness of your charter to be selected for closer fiscal monitoring.

An organization’s risk level will be used by TEA in the following ways:

  • Differentiated Grant Negotiation. TEA uses a differentiated grant negotiation process for federal grant applications. Organizations with a medium or high risk level are subject to a more stringent grant negotiation review than those with a low risk level.
  • Subrecipient Monitoring. Each year, TEA selects subrecipients for fiscal monitoring according to their risk levels. The higher your organization’s risk level, the more likely you are to be selected for monitoring; however, TEA monitors subgrantees from  each risk level.

How Are Fiscal Risk Rating Levels Determined?

The fiscal risk assessment model is updated annually to reflect the weights of possible risks.  For the school year 2021-2022 (fiscal year 2022), the risk assessment ratings were released in late July, and this assessment model reflected the following criteria and point system:

  1. The subrecipient did not submit the required annual financial and compliance report (AFR), including the single-audit report, to TEA by the required due date or did not submit an AFR.
  2. The independent auditor who prepared the subrecipient’s AFR, including the single-audit report, did not express an unqualified opinion.
  3. The subrecipient was not required to have a single audit conducted under Office of Management and Budget (OMB) Circular A-133 because it did not meet the federal grant spending threshold.
  4. The subrecipient’s independent auditor identified in the single-audit report at least one of the following: (1) an instance of material noncompliance; (2) material weaknesses in internal controls; (3) questioned costs of federal funds; (4) a finding that was also a finding in the prior year.
  5. The subrecipient has a large amount of federal expenditures compared to total operating costs.
  6. The subrecipient has been referred by other agency divisions for significant issues or deficiencies that may affect its use of federal grant funds or its implementation of federal grant programs.
  7. The subrecipient has not been monitored recently by the Division of Federal Fiscal Monitoring.
  8. The subrecipient has not drawn down federal funds by January of the current school year for one or more of the following federal grant programs:  Title I, Part A, Carl D. Perkins, or IDEA-B Formula.
  9. The subrecipient has lapsed funds for grants awarded in the NCLB consolidated grant application.
  10. The subrecipient has lapsed funds for grants awarded in the IDEA-B Formula grant.
  11. The subrecipient has carried over excessive amounts of funds for federal grants awarded in the NCLB consolidated grant application.
  12. The subrecipient has changed the primary contact and/or authorized official two or more times in the past three years in the programs in the NCLB consolidated, special education consolidated, or Carl D. Perkins grant applications.

Additionally, we recently learned from a direct TEA contact that failure to submit all required NCLB (soon to be ESSA) reports on time is another factor considered with risk level.

How Can I Access My Charter’s Risk Level?

  1. Login to TEAL
  2. Select the GFFC Reports and Data Collections in TEASE
  3. Then select Risk Assessment Level
  4. Select 2021-22

Ready for Help from the Experts?

Charter School Success’s Federal Grant Management Services provide you with an expert that serves as a coach, partner, and trainer specifically addressing your federal grant needs.  Some of the things we do that help keep your fiscal risk rating low include hands-on assistance with:

  • The process of developing all appropriate support documentation for the expenditure of federal funds
  • The planning and budgeting of expenditures before and throughout the year
  • The timely preparation of all required reports
  • Conducting periodic spending reviews to assure funds are spent in accordance with written plans and fiscal guidelines
  • Providing ongoing training throughout the year and as needed when grant requirements change.

Need help?

Please contact Charter School Success:

Have questions?

Ask questions, get answers, and discuss this topic on the Charter School Community Roundtable now.