Illinois Department of Public Aid - Prescott E. Bloom Building 201 South Grand Avenue East Springfield, Illinois 62763-0001

Illinois Department of Public Aid
                                          Prescott E. Bloom Building
                                          201 South Grand Avenue East
                                          Springfield, Illinois 62763-0001

        Rod R. Blagojevich, Governor      Telephone: (217) 524-7110
            Barry S. Maram, Director           TTY: (800) 526-5812

                               INFORMATIONAL NOTICE
                                                                      September 8, 2003

To: Local Education Agencies (LEAs)

RE: School-Based Health Services Administrative Claims

The Department of Public Aid (DPA), as the Medicaid single state agency, has responsibility for
reviewing and monitoring activities performed by local education agencies (LEAs), including special
education cooperatives enrolled as LEAs participating in the Medicaid Program. The objective of these
review activities is to obtain reasonable assurance that all administrative claims are valid, reliable and
accurate. However, LEAs are ultimately responsible for the expenditure and time study information
submitted as their quarterly administrative claim. LEAs must maintain sufficient, adequate, and
auditable documentation to support the claims. Below are some reminders to assist LEAs in filing
administrative claims.

   Appropriate amounts must be entered for the LEA-wide Personnel Expenditures discounting
   percentage. On the “Claim Expenditures” screen, the dollar amounts that must be entered into the
   “For All LEA Personnel” boxes (Salaries, Benefits, Training Costs, Travel Costs) are the district-
   wide totals for all district employees, not just expenditures for the time-studied personnel.

   “Claimable LEA-wide Expenditures for Insurance, Rental, Dues and Fees, and Interest Payments”
   are defined in OMB Circular A-87, Cost Principals for State, Local and Indian Tribal Governments
   (Circular). DPA currently allows only the following selected items of costs, described in Attachment
   B of the Circular, to be claimed in the LEA-wide expenditure categories: 25. Insurance and
   indemnification, 26. Interest, 30. Memberships, subscriptions, and professional activities, and 38.
   Rental costs. See the Circular for a discussion and description of allowable costs within these
   categories. OMB ASMB C-10, the implementing document for A-87, provides a more
   comprehensive discussion of these cost items in a question and answer format. Only expenditures
   meeting these definitions may be included in these respective categories. Attached are guidelines to
   further assist LEAs in determining whether costs are appropriate for claiming under the above
   expenditure categories.

   E-mail: dpa_webmaster@state.il.us                              Internet: http://www.dpaillinois.com/

Unless an LEA has prior written approval from DPA for an alternative sampling methodology, total
   Full Time Equivalent personnel (FTEs) should equal Sampled FTEs. If an FTE does not complete a
   time study, costs attributable to this individual should be backed out of the claim.

   When submitting an adjusted claim(s), LEAs must include a brief yet descriptive explanation of the
   reason(s) for each adjustment. Simply stating “to correct inconsistencies”, “update avg.” or
   “incorrect data entered” does not provide sufficient information to determine why a claim is being
   adjusted.

   Contracted personnel’s costs and time study results can be included in the administrative claim only
   if the LEA can document a de facto employer-employee relationship.

Questions regarding this notice should be directed to School-Based Health Services at
(217) 524-4976 or e-mailed School Based Health Services.

                                                   Anne Marie Murphy, Administrator
                                                   Division of Medical Programs

School Based Health Services Administrative Outreach Claim
                       Claimable LEA Wide Expenditures

Section 580 of the Illinois School-Based Health Services Administrative Claiming Guide
describes the methodology by which districts may claim certain district-wide costs.
These costs may be in part attributable to Title XIX and are not specific to individual
employees of an LEA. To be included in the LEA Wide Expenditure calculation, the
LEA must determine:

If the cost is already being claimed? If yes, it cannot be claimed as an LEA Wide
Expenditure for purposes of the School Based Health Services Administrative Outreach
Claim. Many district costs are captured in the computation of the district’s Indirect Cost
Rate and enter the administrative claim by application of this rate to the total calculated
claimable cost. Typically, these costs are accounted for and detailed under function
codes 2510, 2520, 2540, 2570, 2640 and 2660 as reported in Illinois State Board of
Education Form 50-35, Illinois School District Annual Financial Report. If not already
claimed, then the cost may be claimable if;

The cost meets the test for allowability as defined in OMB CIRCULAR A-87, COST
PRINCIPALS FOR STATE, LOCAL AND INDIAN TRIBAL GOVERNMENTS,
Attachment B, Selected Items of Cost, 25. Insurance and indemnification, 26.
Interest, 30. Memberships, subscriptions, and professional activities, and 38.
Rental costs. Costs not meeting the definitions may not be claimed under this cost
category.

See the following examples of selected costs that may or may not be claimed
under “CLAIMABLE LEA WIDE EXPENDITURES.” If not listed on the attachment
under “CLAIMABLE LEA WIDE EXPENDITURES”, costs may currently not be claimed.

SCHOOL BASED HEALTH SERVICES ADMINISTRATIVE OUTREACH CLAIM
                         CLAIMABLE LEA-WIDE EXPENDITURES

INSURANCE: (Other than Employee Benefits)

CLAIMABLE
Liability Insurance
Vehicle Insurance
Pupil Transportation Insurance
Workers Compensation Insurance *
Unemployment Compensation Insurance *

*Workers and unemployment compensation insurance can be claimed in employee benefits instead of under
LEA-Wide Expenses provided the accounting system accommodates "benefits attributable to the
individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards
and other activities." OMB Circular A-87, Attachment B, Section 11.d.5. These expenses cannot be claimed
in both benefits and LEA-Wide Expenditures. LEAs must be consistent in their claiming practices.

NON-CLAIMABLE
Building Insurance
Health, Life, Dental Insurance
Workers Compensation or Unemployment Compensation Insurance if claimed under Employee Benefits

INTEREST:

CLAIMABLE
Interest costs are claimable if associated with acquisition, construction, fabrication, reconstruction, or
remodeling of a building or for the purchase of equipment

NON-CLAIMABLE
Principal

DUES & FEES (Memberships, subscriptions, and professional activities):

CLAIMABLE
Memberships in business, technical, professional organizations
Subscriptions to business, professional, technical periodicals
Meetings, conferences with primary purpose to disseminate technical information
Membership in civic, community, social organizations

NON-CLAIMABLE
Tuition
Residential Placement
Billing Agent Fee
Ads in newspapers
Transportation Costs
Membership in organizations substantially engaged in lobbying
Legal Fees
Audit Fees
Special Education Cooperative Fees

RENTAL:

CLAIMABLE
Bus Lease - ONLY IF LEA DRIVERS ARE EMPLOYED BY THE LEA & THE LEA OPERATES THE BUSES
Building/Facilities Rental
Non Data Processing Equipment Rental

NON-CLAIMABLE
Bus Lease - IF LEA DOES NOT EMPLOY THE DRIVERS AND OPERATE THE BUSES
Special Ed Transportation
Fuel/Fuel Esculator
Data Processing Equipment
Purchased Services, such as Uniform Service, Shop Towels, Cafeteria Towels, Telephone Charges, Contracted Food Services, Copier Machine
Repairs
Repairs and Maintenance Services
Operation and Maintenance of Plant Services (2540)